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Directors Report of Dwarikesh Sugar Industries Ltd.

Mar 31, 2015

The Members of the Company,

The Directors take pleasure in presenting their Twenty first Annual Report together with the audited accounts for the period ended 31st March, 2015.

1. FINANCIAL RESULTS

Rs. in lacs Rs. in lacs Eighteen months period ended Year ended 31.03.2015 30.09.2013

Gross profit before depreciation, interest & tax 9,586.58 7,182.82

Less: Depreciation 4,724.64 3,318.52

Finance Costs 7,520.98 7,056.09

Profit / (Loss) before tax and exceptional items (2,659.04) (3,191.79)

Less: Provision for taxes -- 9.98

Deferred tax liability / (asset) (984.02) (1,265.74)

Profit /(Loss) after tax (1,675.02) (1,936.03)

Add: Balance brought forward from previous year (5,201.44) (3,265.41)

Amount available for appropriation (6,876.46) (5,201.44)

Appropriations: -- --

Balance carried forward to next year (6,876.46) (5,201.44)

2. DIVIDEND

In view of losses during the period, your directors are compelled to skip dividend on 8% (Series M,MI & IV) and 12% (series I) Cumulative Redeemable Preference Shares and also on the Equity Shares for the year.

The dividend on Cumulative Redeemable Preference Shares (both 8% & 12% series) is being accumulated and will be paid in the year of profit.

3. YEAR IN RETROSPECT OPERATIONS:

Salient features of the crushing operations in Dwarikesh are listed herein under:

- Accounts for the current period consists of 18 months encompassing 2 crushing seasons viz. crushing season 2013-14 (completed) and crushing season 2014-15 (partial, up to 31st March, 2015): whereas the previous year 2012-13 covers operations of completed crushing season of 2012-13. Therefore the figures are not comparable.

Season 2013-14 vis-a-vis season 2012-13:

Season 2013-14 (completed season)

Particulars 2013-14 2012-13 % Change

Crushing (Lac/Quintals) - total at all three units 208.71 242.60 -13.97%

Recovery % (Combined) 10.22 9.81

Production (Lac/Quintals) - total at all three units* 21.33 23.81 -10.42%

*including small quantity of non-marketable (Brown) sugar

- Crushing suffered a setback during the season 2013-14 owing to lesser availability of sugarcane. It was lesser by nearly 14% as compared to the previous season.

- However the recovery recorded was significantly better (10.22% vis-a-vis 9.81%). Consequently production was lesser by only 10.42% (21.32 lac quintals vis-a-vis 23.80 lac quintals).

Particulars 2014-15 2013-14 % Change

Crushing (Lac/Quintals) - total at all three units 209.00 188.86 10.66%

Recovery % (Combined) 10.57 10.04

Production (Lac/Quintals) - total at all three units* 22.09 18.98 16.39%

*including small quantity of non-marketable (Brown) sugar at DD unit.

- Sugar recoveries higher at all the 3 units.

- Higher recoveries were mainly on account of optimum mix of better cane varieties.

However since the season 2014-15 is completed a comparison of full season 2014-15 & full season 2013-14 is as given below:

Season 2014-15 (completed season)

Particulars 2014-15 2013-14 % Change

Crushing (Lac/Quintals) - total at all three units 233.07 208.71 11.67%

Recovery % (Combined) 10.78 10.22

Production (Lac/Quintals) - total at all three units * 25.12 21.33 17.59%

*including small quantity of non-marketable (Brown) sugar

- Season 2014-15 witnessed improved availability of sugarcane, mainly driven by improved yield at farm level.

- Crushing at 233.07 lac quintals was higher by 11.67% over crushing of 208.71 lac quintals clocked during the season 2013-14.

- Higher crushing coupled with higher recovery (10.78% vis-a-vis 10.22%) resulted in higher production of 25.12 lac quintals of sugar as compared to 21.33 lac quintals of sugar produced during the season 2013-14.

- During the season 2014-15 recovery of 11.11% was recorded at DN plant. Typically recovery in mills of North India is lower and the average recovery of UP sugar mills is in the band of 9.25% to 9.50%. Outstanding recovery at DN has been possible on account of optimum varietal mix, proficient logistics management resulting in lowest lead time between harvesting & crushing of sugarcane.

- Recovery recorded at DP plant is also an impressive 10.98% whereas at DD plant recovery of 10.14% was recorded.

- Group recovery of 10.78% clocked during the season 2014-15 is among the highest in North India.

- Sugarcane variety Co 0238 has brought about a revolution in the recovery pattern of mills in Uttar Pradesh and has contributed significantly for the better recovery of the Company.

Performance of cogeneration division: Metrics of power sold:

Period 2013-15 Season 2013-14 Unit (01.10.2013 to 31.03.2015) (01.10.2013 to 30.09.2014)

Power sold in Amount in Power sold in Amount lac units Rs. lacs lac units in Rs. lacs

DN 441 1,904 241 1,009

DP 1,086 4,910 577 2,535

DD 1,298 5,870 678 2,976

Total 2,825 12,684 1,496 6,520



Unit Season 2012-13 (01.10.2012 to 30.09.2013) Power sold in Amount lac units in Rs. lacs

DN 262 1,074

DP 648 2,789

DD 772 3,318

Total 1682 7,181

Highlights:

a. Power evacuation and sales during the season 2013-14 lower on account of lesser crushing & lesser number of crushing days.

b. UPERC has revised tariff effective 20th January, 2015 Performance of Distillery:

During the period under review, 50,38,103* Litres of Industrial Alcohol (previous year 34,31,173 Litres) and 5,74,205 Litres Ethanol (previous year 7,11,883 Litres) was produced at Dwarikesh Nagar Unit of the Company. In value terms the sale of rectified spirit was Rs. 1,320.97 lacs (previous year Rs. 836.26 lacs) & sale of Ethanol was Rs. 123.23 lacs (Previous Year Rs. 268.59 lacs).

*Includes 2,00,155 ltrs. on conversion of ethanol and 12,651 ltrs. additional moisture (water) thereon.

4. FINANCIAL PERFORMANCE:

- Last few years have been extremely challenging for your company and the sugar industry in general. The State Govern- ment hasn't announced any increase in sugarcane price (SAP) over the last three crushing seasons. However on account of previous, year on year, successive & excessive increase in sugarcane price for almost 4 to 5 crushing seasons, sugarcane price and resultantly the costs are fastened at extremely higher & unviable levels. Sugarcane price in Uttar Pradesh is among the highest in the world. With no commensurate increase in the price of sugar & by-products, economics of sugar industry has gone haywire.

- Both globally and domestically sugar supply/ production exceeds sugar demand / consumption. Consequently there is a surplus / glut situation which has caused a drag on the sugar prices. Since sugarcane price is not linked to sugar prices in Uttar Pradesh, sugar industry in Uttar Pradesh is on loss making trajectory. The pain of the sector is showing no signs of abatement.

- State Government has announced multi-tier payment mechanism for the season 2014-15, besides announcing various other financial reliefs and subsidies. However fall in price of sugar is so pronounced that, the benefits announced have negligible impact on the overall health of the industry. Benefits were announced on the basis of benchmark price of sugar & by-products. However since the announcement prices have fallen, thus rendering the benefits grossly inadequate. In- crease in sugarcane price during the earlier years is continuing to torment the industry.

Double whammy of higher raw material cost and falling sugar prices has impacted the bottom-line of your company, though the bottom-line, during the period, on account higher recovery and improved operational efficiencies is relatively better as compared to the bottom-line of previous year. Your Company posted after tax loss of Rs. 16.75 crores (for the 18 months period) as compared to loss of Rs. 19.36 crores posted during the year 2012-13. However, your Company did manage to earn cash profit.

Financial scorecard:

Lac Rs.

Particulars 2013-15 % 2012-13 %

Net Sales 1,13,607 100.00 92,761 100.00

EBIDTA 9,587 8.44 7,183 7.74

EBDTA 2,066 1.82 127 0.14

EBT (2,659) (2.34) (3,192) (3.44)

EAT (1,675) (1.47) (1.936) (2.09)

Following inference can be drawn from the above numbers:

1. EBIDTA in absolute terms as well as in percentage terms is higher than the EBIDTA for the earlier year. While comparison of EBIDTA in absolute terms may not capture & articulate the true picture, the fact that in % terms it is better at 8.44% as compared to 7.74% during the year 2012-13 is a matter of some consolation.

2. Cash profit of Rs. 20.66 crores compares favourably, both in absolute terms and in % terms with the cash profit earned during 2012-13.

3. The non-satisfactory financial results are on account of:

- Fastening of sugarcane price at an raised up level of Rs. 280 per quintal for the general variety for the last 3 crushing seasons.

- Rapidly declining price of sugar (presently hovering between Rs. 2,400 and Rs. 2,600 per quintal). Sugar prices are on downward spiral. Both Central Government & the State Government are seized of the problems facing the industry and are attempting to resolve the same.

- EBIDTA margin of your Company has improved on account better recoveries.

- Company's efforts to recalibrate its debt profile with a view to augment the cash flows and with a view to rationalise interest costs continues. In fact the annualized finance cost during the period is significantly less than the finance cost of year 2012-13.

5. A CANE & SUGAR POLICY:

The main policies of the government in relation to the sugar industry during the year were:

a) The ratio of levy and free sale sugar was 10:90 for the period up to 31st March, 2013 & thereafter levy obligation was abolished pursuant to adoption of recommendations contained in the report of Dr. Rangarajan.

b) The Fair & Remunerative Price (FRP) for the crushing season 2014-15 was Rs. 220 per quintal and the same has now been increased to Rs. 230 per quintal for 2015-16, both are linked to recovery @ 9.50 %.

c) Chronology of SMP /FRP announced by the Central Government on the basis of recovery is given herein under:

Season SMP/F&RP Rs. / Quintal

2000- 01(SMP) 59.50*

2001- 02 62.05*

2002- 03 64.50*

2002- 03 (Revised) 69.50*

2003- 04 73.00*

2004- 05 74.50*

2005- 06 79.50&

2006- 07 80.25&

2007- 08 81.18&

2008- 09 81.18&

2009- 10 (SMP since replaced by F&RP ) 129.84@

2010- 11 139.12@

2011- 12 145.00@

2012- 13 170.00@

2013- 14 210.00@

2014- 15 220.00@

* Linked to recovery of 8.50 % & Linked to recovery of 9%%

@Linked to recovery of 9.50%

d) The Company is required to pay State Administered Price (SAP) .For the crushing season 2014-15, the State Govern- ment of Uttar Pradesh announced SAP of Rs. 280 per quintal for general variety with concessions/reliefs to the extent of Rs. 28.60 per quintal based on certain parameters.

B. CHANGE IN NATURE OF BUSINESS:

There is no change in nature of business of the company.

C. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINAN- CIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No Material changes have occurred subsequent to the close of the financial year of the Company to which the balance sheet relates and the date of the report.

D. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IM- PACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

No significant & Material orders have been passed impacting the Going concern Status & Company's operations in future.

E. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS.

The Company has adequate internal financial control in place .The Company has got robust systems in place to ensure prepayment audits of transactions, concurrent internal audit of all transactions of various segments of activities of the company.

F. SHARE CAPITAL

The company has not issued any shares during the period.

G. EXTRACT OF THE ANNUAL RETURN

The extract of the annual return in Form No. MGT - 9 by way of annexure I is annexed and forming part of the Board's report.

H. CORPORATE SOCIAL RESPONSIBILITY

The company is incurring losses in last few years and hence the provisions of CSR are mandatorily not applicable, however the Company is carrying out CSR activities.

I. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

Details of Composition of Board, Audit Committee & details of their meetings are given in Corporate Governance report.

J. VIGIL MECHANISM

The Company has adopted policy on Vigil Mechanism in the Board meeting held on May 9, 2014. No complaints were received under this policy during the period.

K. NOMINATION & REMUNERATION COMMITTEE

Details of Composition of the Committee & details of their meetings are given in Corporate Governance report.

L. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 No Loans, Guarantees or investments are made during the period.

M. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub- section (1) of section 188 of the Companies Act, 2013 are approved by the Board and given by way of annxure II & if required, approval is sought from shareholders in General meeting.

N. MANAGERIAL REMUNARTION:

a) Details of the ratio of the remuneration of each director to the median employee's remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given below:

Name of Director Category Ratio to median employees remuneration

Shri G R Morarka Managing Director 42.27:1

Shri Vijay S Banka Whole Time Director & CFO 21.69:1

Shri B J Maheshwari Whole Time Director & CS cum CCO 21.14:1

Shri B K Agarwal Independent Director 0.40:1

Shri K N Prithviraj Independent Director 0.19:1

Ms Malathi Mohan Independent Director 0.13:1

Shri K L Garg* Independent Director 0.06:1

Shri L P Aggarwal* Independent Director 0.10:1

* Resigned during the year

b) Median Remuneration

There is increase of 60.25% in median remuneration of employee during the current accounting period of 18 months over the previous accounting year consisting of 12 months, hence figures are not comparable.

c) Permanent employees

As at 31st March, 2015, the Company has on its payroll 1,584 permanent employees.

d) The explanation on the relationship between average increase in remuneration and company performance; Although performance of the Company has deteriorated on account of high cost of Sugarcane & low realization of its products, the average increase in remuneration of employees is commensurate with increase in Sugar Industry.

e) Comparison of the remuneration of the Key Managerial Personnel against the performance of the company; The operating performance of the Company has been one of the best, however financial performance is marred by high cost of Sugarcane & low realization of Sugar. Remuneration of Key Managerial personnel is in line with the trends & remuneration paid by others in Sugar Industry in state of Uttar Pradesh

f) Variations in the market capitalisation of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies,

i) Particular As at 1/10/2013 31/3/2015 Change

Market Cap (Rs. in Crores) 27.13 33.28 6.15%

P E Ratio* NA NA NA

Price of shares Rs. 16.63 20.40 3.77%

*Since there are losses in both the period GDR price: Rs. 182 per share

Market price as on 1/10/2013 - Rs. 16.63, Decrease Rs. 165.37, (-ve) 90.86% Market price as on 31/3/2015 - Rs. 20.40, Decrease Rs. 161.60, (-ve) 88.79 % ii) Return on annualized basis:

Market price as on 1/10/2013 - Rs. 16.63, annualized return, (-ve) 10.10% Market price as on 31/3/2015 - Rs. 20.40, annualized return, (-ve) 9.87 %

g) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

The increase in average Salaries of median employee is 60.25% & average increase in salaries of Key Managerial personnel's remuneration is 69.32% for accounting period of 18 months over previous accounting year of 12 months Hence the figures are not comparable.

h) Comparison of the each remuneration of the Key Managerial Personnel against the performance of the company;

Although performance of the Company has deteriorated on account of high cost of Sugarcane & low realization of it's products, the increase in remuneration is commensurate with increase in Sugar Industry.

i) The key parameters for any variable component of remuneration availed by the directors;

Only Managing Director is entitled to receive commission & that too only in case of profits as computed u/s 198 of the Companies Act, 2013.

j) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: Not Applicable

k) Affirmation that the remuneration is as per the remuneration policy of the company

Remuneration paid to Managing Director & Whole Time Director is as per approved policy of the Company.

l) A statement showing the name of every employee of the company, who-

(i) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than sixty lakh rupees: Nil

(ii) if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than five lakh rupees per month: Nil

m) Any director who is in receipt of any commission from the company and who is a Managing Director or Whole-time Director of the Company shall receive any remuneration or commission from any Holding Company or Subsidiary Company of such Company subject to its disclosure by the Company in the Board's Report. Not Applicable

n) Details of remuneration with break up of Components paid to Managing Director, Whole Time Director, terms of appointment are stated in Corporate Governance Report.

O. SECRETARIAL AUDIT REPORT:

A Secretarial Audit Report given by M/s VKM & Associates, a company secretary in practice is submitted & annexed as annexure III. There are no qualifications, reservation or adverse remarks or disclaimer in the Secretarial Audit Report.

P. RISK MANAGEMENT POLICY:

A statement indicating development and implementation of a risk management policy for the Company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company

Q. POLICY ON ANTI SEXUAL HARASSMENT: The Company has put in place a policy on Anti Sexual harassment, No complaints have been received under this policy during the period.

6. DIRECTORS

A) Changes in Directors and Key Managerial Personnel

During the period from October 1, 2013 to March 31, 2015, Shri G R Morarka has been re-designated as a Managing Director from Chairman & Managing Director pursuant to the requirement of Companies Act, 2013 on account of a ban on holding dual position unless stated otherwise by Articles of the Company. Shri K L Garg, Nominee Director of IDBI Bank Ltd has discontinued as a Director of the company since his nomination was withdrawn by IDBI Bank Ltd. Shri L P Aggarwal, who was appointed as an additional director has tendered his resignation on account of his preoccupations. Ms Malathi Mohan has been appointed as an additional woman director to meet the requirements of section 149 of the Companies Act, 2013.

Pursuant to the requirements of the Companies Act, 2013, Independent directors are not liable to retire by rotation and hence all the Whole Time Directors are liable to retire by rotation. Since the tenure of Shri B J Maheshwari and Shri Vijay S Banka has been ending on April 30, 2015, both of them are proposed to be re appointed for the period of 3 years. Shri G R Morarka is liable to retire by rotation and has offered himself for re appointment.

B) Declaration by an Independent Director(s) and re- appointment

Pursuant to the requirements of section 149(7) of the Companies Act, 2013, the company has received the declarations from all the independent directors confirming the fact that they all are meeting the eligibility criteria as stated in section 149(6) of the Companies act, 2013.

All the three independent directors are appointed/re appointed in the meeting of Board of Directors held on August 13, 2014 for a period of 5 years as per the requirements of section 149 of the Companies act, 2013 & their reappointment is being regularized in the ensuing Annual General meeting.

C) Formal Annual Evaluation

Pursuant to the requirements of section 134(3)(p) of the Companies Act, 2013 read with clause 49 of the listing agree- ment, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees.

A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Secretarial Department. The Directors expressed their satisfaction with the evaluation process.

D) POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

The Board shall have minimum 3 and maximum 12 directors, unless otherwise approved. No person of age less than 21 years shall be appointed as a director on the Board. The company shall have such person on the Board who complies with the requirements of the Companies Act, 2013, Provisions of the Listing Agreement, Memorandum of Association and Articles of Association of the company and all other statutory provisions and guidelines as may be applicable from time to time. Composition of the Board shall be in compliance with the requirements of Clause 49 of the Listing Agreement of the Stock Exchanges. Majority of the Directors shall have specialised knowledge/ experience in the areas like Sugar sector, Strategic management, Legal, Risk Management, Accountancy, Finance, etc. Except for whole time directors, no other di- rectors are paid remuneration, but are paid only sitting fees. The MD is paid remuneration as approved by other applicable authorities, but are not paid sitting fees. MD, Company Secretary and Chief Financial Officer shall be the Key Managerial

Personnel (KMPs) of the company. All persons who are Directors / KMPs, members of Senior Management and all other employees shall abide by the Code of Conduct.

Directors/KMPs shall not acquire any disqualification and shall be persons of sound integrity and honesty, apart from knowledge, experience, etc. in their respective fields.

DIRECTORS APPOINTMENT AND REMUNERATION POLICY:

PREFACE:

Pursuant to section 134(3)(e) read with section 178(1) & (3) of the Companies Act, 2013 there shall be a need for all the listed companies and such other companies as specified in this act to have policy on Director's appointment and remuneration.

The company being listed entity on both the bourses of NSE and BSE, is required to form a policy on Director's appointment and remuneration including the criteria for determining qualifications, positive attributes, independence of a director and other matters mentioned in section 178(3) of the Companies Act, 2013, which is as follows:

Appointment of Executive & Non-executive Directors:

While appointment of any person as a director of the company, the Nomination & Remuneration Committee shall consider the following:

No person shall be eligible for appointment as a managing or whole-time director (hereinafter referred to as managerial person) of a company unless he satisfies the following conditions, namely

(a) he had not been sentenced to imprisonment for any period, or to a fine exceeding one thousand rupees, for the conviction of an offence under any of the Statutory Acts as mentioned in Schedule V of the Companies Act, 2013.

(b) he had not been detained for any period under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974):

Provided that where the Central Government has given its approval to the appointment of a person convicted or detained under sub-paragraph (a) or sub-paragraph (b), as the case may be, no further approval of the Central Government shall be necessary for the subsequent appointment of that person if he had not been so convicted or detained subsequent to such approval.

(c) he has completed the age of twenty-one years and has not attained the age of seventy years:

Provided that where he has attained the age of seventy years; and where his appointment is approved by a special resolution passed by the company in general meeting, no further approval of the Central Government shall be necessary for such appointment;

(d) where he is a managerial person in more than one company, he draws remuneration from one or more companies subject to the ceiling provided in section V of Part II;

(e) he is resident of India as per explanation I of Schedule V of the Act.

Further, Nomination & Remuneration committee shall ensure while appointing the independent directors the requirements stated in section 150 (4) of the Companies Act, 2013.

Remuneration to Independent / Non-Executive Directors:

1. Payment of Remuneration :

None of the independent / Non-executive directors shall be entitled to any remuneration as stated in section 197(1)(ii)(a) and

(b) of Companies Act, 2013.

2. Payment of sitting fees:

All the independent / Non-Executive directors shall be entitled to receive sitting fees for attending Board Meetings and / or Committee Meetings as may be decided by the Board from time to time,which shall not exceedRs 1,00,000 per meeting. At present, they have been paid a sitting fees at the rate of Rs. 2,500 to Rs. 10,000 depending on whether it is a committee meeting or board meeting.

The sitting fees shall be payable in line with fees being paid to independent directors and shall be in comparison with company's peers. If so required, it may be enhanced within the limits of Rs. 1,00,000 from time to time to attract various professionals and elite person to join the Board room.

3. Payment / Reimbursement of Out of pocket expenditure:

Besides sitting fees as stated above, the independent / non-executive directors shall also entitled to receive out of pocket expenditure for an amount not exceeding Rs. 1,000 per meeting subject to the approval of shareholders in ensuing general meeting of the company, if required.

Remuneration to Whole time / Executive Directors:

Currently, there are only 3 whole time executive directors as follows:

Sr No Name of Director Designation

1 Mr. Gautam R Morarka MD

2 Mr. B J Maheshwari Whole Time Director & CS cum CCO

3 Mr Vijay S Banka Whole Time Director & CFO

Remuneration:

In case if the company has adequate profits:

All the three executive directors putting them together shall be entitled to get overall upto 10% of the net profits computed in a manner stated in section 198 of the Companies Act, 2013. Further, in no case it shall exceed 5% of the net profits computed in the manner stated in section 198 of the Act to a single executive director.

In case if the company has losses or inadequate profits:

If during any financial year the company has incurred losses or it has earned inadequate profits then in such case, the remuneration to the whole time / executive directors shall be payable as per the provisions of Schedule V of the Companies Act, 2013 on the basis of effective capital of the company.

Maximum Remuneration payable to each of the three executive directors may extend to the maximum of Rs. 60 lacs per annum plus 0.01% of the effective capital in excess of Rs. 250 crores.

Besides above, the whole time directors may also be entitled to get such other benefits / emoluments/ allowances / perquisites as stated in section IV of Schedule V of the Companies Act, 2013 in the manner and to the extend provided thereat.

The company shall approach the Central Government for payment / increase in remuneration exceeding the amount stated in Schedule V of the Companies Act, 2013 in case if the company has losses or inadequate profits or terms and conditions stipulated in schedule V have not been met with.

In terms of academic qualifications, although there shall be no any written norms but the preference shall be given to IAS, IPS, CS, CA, CMA and other professional persons to be inducted on the Board of the company. The person should have a skill and experience in the arena of his profession. He should enhance the quality of governance and should be a team member to provide positive input in strategic management to the and being in the top brass of the company. To be an independent director, the person should fulfil the following criteria as specified in section 149 (6) of the Companies Act, 2013.

(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;

(b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate company;

(ii) who is not related to promoters or directors in the company, its holding,subsidiary or associate company;

(c) who has or had no pecuniary relationship with the company, its holding,subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;

(d) none of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;

(e) who, neither himself nor any of his relatives—

(i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;

(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of—

(A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or

(B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten percent or more of the gross turnover of such firm;

(iii) holds together with his relatives two percent or more of the total voting power of the company; or

(iv) is a Chief Executive or director, by whatever name called, of any non-profit organisation that receives twenty-five percent or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two percent or more of the total voting power of the company; or

(f) who possesses such other qualifications as may be prescribed.

The nomination and remuneration committee understands and acknowledges the matters set out in section 178(4)(a) (b)&(c) and shall always endeavour to reward the quality directors and other key managerial personnel [section 203(1)]. The qualification, merits and experience shall be asserted while deciding the remuneration and it shall be endeavour to attract, retain and enhance the human capital being biggest asset of the company.

7. STATEMENT OF DIRECTOR'S RESPONSIBILITIES

As required under the provisions of Section 134(3)( c ) of the Companies Act, 2013, your Directors confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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 the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

8. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges in India, Management's Discussion and Analysis Report for the period under review is presented in a separate segment which is forming part of the Annual Report.

9. CORPORATE GOVERNANCE

As per clause 49 of the Listing Agreement with the Stock Exchanges, a report on Corporate Governance together with the Auditors Certificate regarding compliance of the conditions of corporate governance, Management Discussion and Analysis statement forms part of the Annual report.

10. DISCLOSURES:

CSR Committee

The CSR Committee comprises Shri B K Agarwal as Chairman, Shri G R Morarka and Shri B J Maheshwari as other members. Audit Committee

The Audit Committee comprises of Independent Directors namely Shri B K Agarwal as Chairman, Shri K N Prithviraj, Ms Malathi Mohan and Shri V S Banka as other members.

All the recommendations made by the Audit Committee were accepted by the Board.

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Pursuant to section 134 (3)(m) of the Companies Act, 1956, the particulars in respect of conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in Annexure - IV and form a part of this report.

12. SUBSIDIARY COMPANY'S REPORT:

The Company does not have any subsidiary in terms of provisions of Companies Act, 2013

13. AUDITORS & AUDITOR'S REPORT:

There are no qualifications in the Auditors report.

The Auditors, M/s. S S Kothari Mehta & Co., Chartered Accountants retire at the ensuing Annual General Meeting of the Company. You are requested to re-appoint the Auditors for the accounting year 2015-16 and fix their remuneration. M/s S S Kothari Mehta & Co., Chartered Accountants, being eligible, have offered themselves for reappointment.

All remarks of the auditors having reference to the accounting policies or notes to the account are self-explanatory and do not require any further explanation. There are no qualifications in the Auditors report. However, there is a matter of emphasis in respect of deferred tax assets on unabsorbed depreciation & business losses and the same has been explained in note no.12 of the financial statements, further regarding observation in point no. xvii in Annexure to Auditors report, Company is in the process of arranging long term funds to set right the mismatch.

14. COST AUDITORS:

As per the directions issued by the Central Government pursuant to the provisions of section 148 of the Companies Act, 2013 M/s Ramanath Iyer & Co, Cost Accountants were appointed to conduct cost audits relating to sugar, electricity and industrial alcohol for the year ended March 31, 2015.

15. PUBLIC DEPOSITS

The Company does not have any fixed deposits at the beginning of the year in terms of Section 74 of the Companies Act, 2013. The Company did not accept any deposits during the year.

16. ACKNOWLEDGEMENT

Your directors wish to place on record their sincere gratitude and appreciation to its share holders, sugar cane growers, em- ployees, bankers, financial institutions, Central & State Government Agencies for their valuable contribution in the growth of the organisation.

By Order of the Board For DWARIKESH SUGAR INDUSTRIES LIMITED

G. R. MORARKA

MANAGING DIRECTOR

VIJAY S BANKA

WHOLE TIME DIRECTOR & CFO

Place : Mumbai B J MAHESHWARI

Dated : May 28, 2015 WHOLE TIME DIRECTOR & CS Cum CCO


Sep 30, 2013

The Directors take pleasure in presenting their Twentieth Annual Report together with the audited accounts for the year ended 30th September 2013.

1. fInanCIal reSultS

Rs.in lacs Rs.in lacs Year ended Year ended 30.09.2013 30.09.2012

Gross proft before depreciation, interest & tax 7,182.82 9,610.93

Less: Depreciation 3,318.52 3,289.04

Finance Costs 7,056.09 7,885.90

Proft / (Loss) before tax and exceptional items (3,191.79) (1,564.01)

Less: Provision for taxes 9.98

Deferred tax liability (1,265.74) (433.47)

Proft /(Loss) after tax (1,936.03) (1,130.54)

Add: Balance brought forward from previous year (3,265.41) (2,134.87)

Amount available for appropriation (5,201.44) (3,265.41)

appropriations:

Balance carried forward to next year (5,201.44) (3,265.41)

2. DIVIDenD

In view of losses during the year, your directors are compelled to skip dividend on 8% (Series II,III & IV) and 12% (series I) Cumulative Redeemable Preference Shares and also on the Equity Shares for the year.

The dividend on Cumulative Redeemable Preference Shares (both 8% & 12% series) are being accumulated and will be paid in the year of proft.

3. InCreaSe In authorISeD, ISSueD, SuBSrIBeD anD paID up Share CapItal

The company has increased its'' Authorised share capital by creation of 10,00,000 preference shares of Rs. 100 each during the year by creating a new series IV cumulative redeemable preference share by obtaining shareholders approval in Extra Ordinary General Meeting held on March 22, 2013.The Authorised Share capital at present is as follows: The Authorised Share Capital of the Company is Rs. 54,00,00,000/- (Rupees Fifty Four Crores Only) divided in to 1,75,00,000 (One Crore Seventy Five Lac Only) Equity Shares of Rs. 10/- each, 1,50,000 (One Lac Fifty Thousand Only) 12% Cumulative Redeemable Preference Shares of Rs. 100/- each (Series I) and 15,00,000 (Fifteen Lac Only ) Cumulative Redeemable Preference Shares of Rs. 100/- each (Series II), 10,00,000 (Ten Lac Only ) Cumulative Redeemable Preference Shares of Rs. 100/- each (Series III) and 10,00,000 (Ten Lac Only ) Cumulative Redeemable Preference Shares of Rs. 100/- each (Series IV).

4. Year In retroSpeCt operatIonS:

Metrics of sugarcane crushed, sugar produced and recovery achieved during the year is given herein under:

units Cane crushed in (Qtl) Sugar produced in quintals recovery in %

Dwarikesh Nagar (DN) 77,30,481 7,97,890 10.32

Dwarikesh Puram (DP) 83,90,189 8,38,650 10.00

Dwarikesh Dham (DD) 81,39,741 7,44,505 9.15

Total 2,42,60,411 23,81,045

Your Directors are pleased to inform that the recovery recorded at DN plant was the highest in State of Uttar Pradesh.

performance of cogeneration division: metrics of power sold:

2012-13 2011-12 unit power sold in lac units amount in Rs.lacs Power sold in lac units amount in Rs. lacs

DN 262 1,074 255 1,016

DP 648 2,789 628 2,641

DD 772 3,318 869 3,659

total 1,682 7,181 1,752 7,316

performance of Distillery:

During the year 3,431,173 Litres of Industrial Alcohol (previous year 3,809,947 Litres) and 711,883 Ethanol (previous year 576,219) was produced at Dwarikesh Nagar Unit of the Company. In value terms the sale of rectifed spirit was Rs. 836.25 lacs (previous year Rs. 852.84 lacs) & sale of Ethanol was Rs. 268.58 lacs (Previous Year Rs. 230.42 lacs).

5. fInanCIal performanCe:

Financially, year 2012-13 proved to be one most challenging year in the recent history of the Company and the sugar industry in Uttar Pradesh. The sugar prices were relatively better to begin with. However since January, 2013 they are on downward spiral. Deregulation of the sector on the sell-side and consequent lifting of curbs on the quantity that each sugar mill could sell every month / quarter also accentuated the free fall in the prices. The abolition of levy obligation did provide some succour to the industry. Given the backdrop of higher domestic and international production, sugar prices are now below Rs. 3,000 per quintal with no trace of any early resurrection. However sharp increase in the SAP announced by the State Government from Rs. 240 per quintal in 2011-12 to Rs. 280 per quintal in 2012-13 proved to be catastrophic.

Sharp increase in the raw material price coupled with declining sugar prices had its impact on the bottom-line of your Company. Your Company posted after tax loss of Rs. 19.36 crores as against after tax loss of Rs. 11.31 crores in the previous year. However, your Company did manage to earn minuscule cash proft.

Financial highlights are given below:

Lac Rs.

particulars 2012-13 % 2011-12 %

Net Sales 92,761 100.00 69,860 100.00

EBIDTA 7,183 7.74 9,611 13.76

EBDTA 127 0.14 1,725 2.47

EBT (3,192) (3.44) (1,564) (2.25)

Following analogy can be drawn from the above numbers:

1. EBIDTA in absolute terms as well as in percentage terms is lesser than the EBIDTA for the earlier year. The EBIDTA in absolute terms is lesser by approximately Rs. 24 crores and in % terms is 7.74%, down by more than 6%.

2. The non satisfactory fnancial results are on account of:

a. Irrationally high sugarcane price (SAP of Rs. 280 as against SAP of Rs. 240 last year), an increase of more than 16%.

b. Non commensurate increase in the selling price of sugar. On full year basis the Company realised a price of Rs. 3,151 per quintal on the quantity of sugar sold. This is as compared to an average price realisation of Rs. 2,897 per quintal in the previous year (after factoring for 10% of levy sugar sold at a price of less than Rs. 2,000 per quintal).

3. Net Sales during the year is higher on account of higher quantity of sugar sold. Post deregulation of the sector effective 1st April, 2013, sugar companies were at liberty to sell sugar at any time and any quantity they deemed appropriate depending on their market perception. This resulted in many companies liquidating their sugar stock with a view to shrink their interest burden. The company produced 23.81 lac quintals of sugar as compared to 22.87 lac quintals of sugar produced in the previous year.

4. EBIDTA margin of your Company is lower on account of increase in raw material cost and less than commensurate increase on the selling price of sugar. The dichotomy of the sugar business is that while the price of fnished product is market driven, the price of raw material price is regulated by the Government and is always skewed against the sugar mills.

5. Company''s efforts to recalibrate its debt profle with a view to augment the cash fows and with a view to rationalise interest costs continues.

6. Cane & SuGar polICY:

The main policies of the government in relation to the sugar industry during the year were:

1. The ratio of levy and free sale sugar was 10:90 for the period up to 30th September, 2012 & thereafter levy obligation was abolished pursuant to adoption of recommendations contained in the report of Dr. Rangarajan.

2. The Fair & Remunerative Price (FRP) for the crushing season 2012-13 was Rs. 170 per quintal and the same has now been increased to Rs. 210 per quintal for 2013-14.

3. Chronology of SMP announced by the Central Government on the basis of recovery is given herein under:

Season SMP/F&RP (Rs. Quintal)

2000-01(SMP) 59.50*

2001-02 62.05*

2002-03 64.50*

2002-03 (Revised) 69.50*

2003-04 73.00*

2004-05 74.50*

2005-06 79.50&

2006-07 80.25&

2007-08 81.18&

2008-09 81.18&

2009-10

(SMP since replaced by F&RP) 129.84@

2010-11 139.12@

2011-12 145.00@

2012-13 170.00@

* Linked to recovery of 8.50 % & Linked to recovery of 9% @Linked to recovery of 9.50%

4. The Company is required to pay State Advised Price (SAP) .For the crushing season 2011-12, the State Government of Uttar Pradesh announced SAP of Rs. 240 per quintal of sugarcane of the general variety to be delivered at the factory gate, which has now been steeply increased to Rs. 280 per quintal for general variety, an increase of Rs. 40 per quintal for the season 2012-13 .The said increase is sharp rise of around 17% for the General variety of Sugar cane and is another blow to the beleaguered sugar industry.

7. DIreCtorS

Pursuant to Article 146 of the Articles of Association of the company, Shri B.K. Agarwal & Shri K. N. Prithviraj retire in the ensuing Annual General Meeting and being eligible offer themselves for reappointment.

Shri L.P. Aggarwal who was appointed as an Additional Director of the company with effect from 27th November, 2013 by the Board of Directors and holds offce upto the date of ensuing Annual General Meeting under section 269 of the Companies Act, 1956 ( the act) read with Article 132 of the Atricles of Association of the Company, but being eligible, offers himself for re-appointment and in respect of whom the Company has received a notice in writing under section 257 of the Act from a shareholder signifying his intention to propose Shri L.P. Aggarwal as a candidate for the offce of a Director.

8. Statement of DIreCtor''S reSponSIBIlItIeS

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

(i) in the preparation of the annual accounts, applicable Accounting Standards have been followed with proper explanation relating to material departures, if any;

(ii) 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 fnancial year and of the proft of your company for that period;

(iii) Taken proper & suffcient care for the maintenance of 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) Prepared the Annual accounts on a going concern basis.

9. Corporate GoVernanCe

As per clause 49 of the Listing Agreement with the Stock Exchanges, a report on Corporate Governance together with the Auditors Certifcate regarding compliance of the conditions of corporate governance, Management Discussion and Analysis statement forms part of the Annual report.

10. emploYeeS

In accordance with the provisions of sections 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the directors report, as an addendum thereto. However, as per the provisions of section 219 (1)(b)(iv) of the Companies Act, 1956, the report and accounts, as therein set out, are being sent to all members of the company excluding the aforesaid information about employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Offce of the Company.

11. ConSerVatIon of enerGY, teChnoloGY aBSorptIon anD foreIGn exChanGe earnInGS anD outGo:

Pursuant to section 217 (1)(e) of the Companies Act, 1956, the particulars in respect of conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in Annexure –I and form a part of this report.

12. SuBSIDIarY CompanY''S report:

The Company presently do not have any subsidiary in terms of provisions of Companies Act, 1956 However, Pursuant to provisions of section 2(87) (ii) of the Companies Act, 2013, Dwarikesh Informatics Limited is a subsidiary of the company as on September 30, 2013. However, provisions relating to consolidation of accounts pursuant to section 129 (3) of the Companies Act, 2013 is still not notifed to be operational as on date.

13. auDItorS & auDItor''S report:

There are no qualifcations in the Auditors report.

The Auditors, M/s. S S Kothari Mehta & Co., Chartered Accountants retire at the ensuing Annual General Meeting of the Company. You are requested to re-appoint the Auditors for the accounting year 2013-14 and fx their remuneration. M/s S S Kothari Mehta & Co., Chartered Accountants, being eligible, have offered themselves for reappointment.

Regarding observation in point no. xvii in Annexure to Auditors report, Company is in the process of arranging long term funds to set right the mismatch.

14. CoSt auDItorS:

As per the directions issued by the Central Government pursuant to the provisions of section 233B of the Companies Act, 1956 M/s Ramanath Iyer & Co, Cost Accountants were appointed to conduct cost audits relating to sugar, electricity and industrial alcohol for the year ended September 30, 2013.

The cost audit report for the fnancial year ended September 30, 2013 shall be fled by the cost auditors latest by March 28, 2014 which shall be well within the due date.

15. puBlIC DepoSItS

The Company does not have any fxed deposits at the beginning of the year in terms of Section 58A of the Companies Act, 1956. The Company did not accept any deposits during the year.

16. aCknoWleDGement

Your directors wish to place on record their sincere gratitude and appreciation to its share holders, sugar cane growers, employees, bankers, fnancial institutions, Central & State Government Agencies for their valuable contribution in the growth of the organisation.

By Order of the Board

for DWarIkeSh SuGar InDuStrIeS lImIteD

G. r. morarka

CHAIRMAN & MANAGING DIRECTOR

VIJaY S Banka

WHOLE TIME DIRECTOR & CFO

Place : New Delhi B J maheShWarI

Dated : November 27, 2013 WHOLE TIME DIRECTOR & CS Cum CCO


Sep 30, 2012

The Members of the Company,

The Directors take pleasure in presenting their Nineteenth Annual Report together with the audited accounts for the year ended 30th September 2012.

1. FINANCIAL RESULTS

INR in lacs INR in lacs Year ended Year ended 30.09.2012 30.09.2011

Gross profit before depreciation, interest & tax 9,610.93 7,483.40

Less: Depreciation 3,289.04 3,271.80

Finance Costs 7,885.90 5,977.83

Profit / (Loss) before tax and exceptional items (1,564.01) (1,766.23)

Less: Provision for taxes (including previous year) - 128.39

Deferred tax liability (433.47) (578.31)

Profit /(Loss) after tax (1,130.54) (1,316.31)

Add: Balance brought forward from previous year (2,134.87) (818.56)

Amount available for appropriation (3,265.41) (2,134.87)

Appropriations: - -

Balance carried forward to next year (3,265.41) (2,134.87)

(3,265.41) (2,134.87)

2. DIVIDEND

In view of losses during the year, your directors are compelled to skip dividend on 8% and 12% Cumulative Redeemable Preference Shares and also on the Equity Shares for the year.

The dividend on Cumulative Redeemable Preference Shares (both 8% & 12% series) are being accumulated and will be paid in the year of profit.

3. RECLASSIFICATION OF SHARE CAPITAL

The company has reclassified its unissued Authorised share capital by replacing 100,00,000 equity shares of Rs 10 each with 1,000,000 cumulative redeemable preference share of Rs 100 each during the year by creating a new series III cumulative redeemable preference share by obtaining shareholders approval in Extra Ordinary General meeting held on 10th September,2012.The reclassified Authorised Share capital is as follows: The Authorised Share Capital of the Company is Rs. 44,00,00,000/- (Rupees Forty Four Crores Only) divided in to 1,75,00,000 (One Crore Seventy Five Lac Only) Equity Shares of Rs. 10/- each, 1,50,000 (One Lac Fifty Thousand Only) 12% Cumulative Redeemable Preference Shares of Rs. 100/- each (Series I) and 15,00,000 (Fifteen Lac Only ) Cumulative Redeemable Preference Shares of Rs. 100/- each (Series II), 10,00,000 (Ten Lac Only ) Cumulative Redeemable Preference Shares of Rs. 100/- each (Series III).

4. YEAR IN RETROSPECT OPERATIONS:

Metrics of sugarcane crushed, sugar produced and recovery achieved during the year is given herein under:

Units Cane crushed in MT Sugar produced in quintals Recovery in %

Dwarikesh Nagar (DN) 7,66,276 778198 10.16

Dwarikesh Puram (DP) 7,88,832 767410 9.73

Dwarikesh Dham (DD) 8,15,736 741195 9.09

Total 23,70,844 22,86,803

Your Directors are pleased to inform that the recovery recorded at DN plant was amongst the highest in State of Uttar Pradesh.

Performance of cogeneration division: Metrics of power sold:

2011-12 2010-11

Unit Power sold in lac units Amount in Rs. lacs Power sold in lac units Amount in Rs. lacs

DN 255 1,016 222 867

DP 628 2,641 538 2,212

DD 869 3,659 606 2,490

Total 17521 7,3161 1,3661 5,569

Performance of Distillery:

During the year 38,09,947 Litres of Industrial Alcohol (previous year 4,347,511 Litres) and 5,76,219 Ethanol (previous year NIL) was produced at Dwarikesh Nagar Unit of the Company. In value terms the sale of rectified spirit was Rs 852.84 lacs (previous year Rs. 1,183.28 lacs) & sale of Ethanol was Rs. 230.42 lacs (Previous Year NIL).

5. FINANCIAL PERFORMANCE:

Financially, year 2011-12 continued to be difficult. The sugar prices remained subdued and range-bound. Throughout the year price of free sale sugar hovered in the band of Rs. 2,700 and Rs. 3,000 per quintal. However, domestic sugar prices started reviving from July, 2012 and are currently hovering around Rs. 3,400 per quintal. Levy sugar produced during 2011-12 was sold at Rs. 1,953 per quintal. SAP for sugarcane was announced at Rs. 240 per quintal, a hopping increase of 17% for the general variety of sugarcane.

Surplus sugar production in the nation and flip flop on lifting of embargo on export of sugar pegged the sugar prices at lower levels. Lower selling price of sugar and other by-products, had its impact on the bottom-line of your Company. Your Company posted after tax loss of Rs. 11.31 crores as against after tax loss of Rs. 13.16 crores in the previous year. However your Company earned cash profits during the year.

Financial highlights are given below:

Lac/Rs.

Particulars 2011-12 % 2010-11 %

Net Sales 69,860 100.00 59,313 100.00

EBIDTA 9,611 13.76 7,483 12.62

EBDTA 1,725 2.47 1,505 2.53 EBT (1,564) (2.25) (1,766) (2.98)

Following analogy can be drawn from the above numbers:

1. EBIDTA in absolute terms as well as in percentage terms is better than the EBIDTA for the earlier year. The EBIDTA in absolute terms is higher by approximately Rs. 21 crores and in % terms is at least 1% better.

2. Evidently drag on the profitability was caused by:

a. Higher sugarcane cost (SAP of Rs. 240 as against SAP of Rs. 205 last year).

b. Lower per quintal realisation on sale of sugar.

c. Incremental sugarcane of Rs. 22.68 crores paid pertaining to crushing 2007-08, pursuant to order of Supreme Court.

d. Higher interest costs. Interest cost during the year at Rs. 79 crores was higher by Rs. 19 crores over the interest cost of previous year. Incidence of interest was higher on account the following reasons:

e. Carrying of larger inventory and consequently higher requirement of working capital.

f. Multiple upward revisions in interest rates by Banks.

3. Net Sales during the year is higher on account of higher quantity of sugar sold. Production of sugar was also at least 27% more than the production of sugar in the previous crushing season.

4. EBIDTA margin of your Company is better on account of revival of sugar prices in the last quarter of the year. Plant capacity configuration and enhanced share of power income in the total revenue stream has also played a major role in improvement of EBIDTA margins.

5. Though your Company continues to ruthlessly and relentlessly attack costs, it is helpless in putting a lid on the interest cost. The Company strives to rationalise its interest cost by recalibrating its debt profile, wherever possible.

6. CANE & SUGAR POLICY:

The main policies of the government in relation to the sugar industry during the year were:

1. The ratio of levy and free sale sugar was 10:90 for the crushing season 2011-12.

2. The price of levy sugar for Central U.P. has been increased during the year to Rs. 1959.41 per quintal for the sugar season 2011-12.

3. The Fair & Remunerative Price (FRP) for the crushing season 2010-11 was Rs. 139.12 per quintal and the same has now been increased to Rs. 145 per quintal for 2011-12.

4. Chronology of SMP announced by the Central Government on the basis of recovery is given herein under:

Season SMP Rs. / Quintal.

2000-01 59.50

2001-02 62.05

2002-03 64.50

2002-03 (Revised) 69.50

2003-04 73.00

2004-05 74.50

2005-06 79.50

2006-07 80.25

2007-08 81.18

2008-09 81.18

2009-10 107.76

2009-10 (SMP replaced by FRP) 129.84

2010-11 139.12

2011-12 145.00

5. For the crushing season 2010-11, the State Government of Uttar Pradesh announced State Administered Price (SAP) of Rs. 205 per quintal of sugarcane of the general variety to be delivered at the factory gate, which has now been steeply increased to Rs. 240 per quintal for general variety, an increase of Rs. 35 per quintal and to Rs. 250 per quintal for early variety,an increase of Rs. 40 per quintal for the season 2011-12 .The said increase is sharp rise of around 17% for the General variety of Sugar cane and is another blow to the beleaguered sugar industry.

7. DIRECTORS

During the year, Shri S.S. Vaidya, Shri L N Heda & Shri Harshvardhan Neotia have resigned from their directorships in the company. Pursuant to Article 146 of the Articles of Association of the company, Shri B.K.Agarwal & Shri K.N.Prithviraj, retire in the ensuing Annual General Meeting and being eligible offer themselves for reappointment.

8. STATEMENT OF DIRECTOR''S RESPONSIBILITIES

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

(i) in the preparation of the annual accounts, applicable Accounting Standards have been followed with proper explanation relating to material departures, if any;

(ii) 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) Taken proper & sufficient care for the maintenance of 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) Prepared the Annual accounts on a going concern basis.

9. CORPORATE GOVERNANCE

As per clause 49 of the Listing Agreement with the Stock Exchanges, a report on Corporate Governance together with the Auditors Certificate regarding compliance of the conditions of corporate governance, Management Discussion and Analysis statement forms part of the Annual report.

10. EMPLOYEES

In accordance with the provisions of sections 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the directors report, as an addendum thereto. However, as per the provisions of section 219 (1)(b)(iv) of the Companies Act, 1956, the report and accounts, as therein set out, are being sent to all members of the company excluding the aforesaid information about employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Pursuant to section 217 (1)(e) of the Companies Act, 1956, the particulars in respect of conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in Annexure -I and form a part of this report.

12. SUBSIDIARY COMPANY''S REPORT:

The company is not having any subsidiary as on September 30, 2012.

13. AUDITORS & AUDITOR''S REPORT:

There are no qualifications in the Auditors report.

The Auditors, M/s S S Kothari Mehta & Co., Chartered Accountants retire at the ensuing Annual General Meeting of the Company. You are requested to re-appoint the Auditors for the accounting year 2012-13 and fix their remuneration. M/s S S Kothari Mehta & Co., Chartered Accountants, being eligible, have offered themselves for reappointment.

The observation regarding conversion of free sugar into levy sugar & non provision of Society Commission have been explained satisfactorily in note no 4 & 14 respectively of Schedule B to the Notes on accounts.

14. COST AUDITORS:

As per the directions issued by the Central Government pursuant to the provisions of section 233B of the Companies Act, 1956 M/s Ramanath Iyer & Co, Cost Accountants, were appointed to conduct cost audits relating to sugar, electricity and industrial alcohol for the year ended September 30, 2012.

The cost audit report for the financial year ended September 30, 2012 shall be filed by the cost auditors latest by March 28, 2013 which shall be well within the due date.

15. PUBLIC DEPOSITS

The Company does not have any fixed deposits at the beginning of the year in terms of Section 58A of the Companies Act, 1956. The Company did not accept any deposits during the year.

16. ACKNOWLEDGEMENT

Your directors wish to place on record their sincere gratitude and appreciation to its share holders, sugar cane growers, employees, bankers, financial institutions, Central & State Government Agencies for their valuable contribution in the growth of the organisation.

By Order of the Board

For DWARIKESH SUGAR INDUSTRIES LIMITED

G. R. MORARKA

CHAIRMAN & MANAGING DIRECTOR

VIJAY S BANKA

WHOLE TIME DIRECTOR & CFO

B J MAHESHWARI

WHOLE TIME DIRECTOR & CS Cum CCO

Place : Mumbai

Dated : 25th October, 2012


Sep 30, 2010

The Directors take pleasure in presenting their seventeenth Annual Report together with the audited accounts for the year ended 30th September 2010.

1. FINANCIAL RESULTS

Rs in lacs Rs in lacs Year ended Year ended 30.09.2010 30.09.2009

Gross profit before depreciation, interest & tax 6,500.24 12,597.84

less: Depreciation 3,205.86 3,295.50

Interest 4,630.69 6,164.42

Profit / (Loss) before tax and exceptional items (1,336.31) 3,137.92

Less: provision for taxes (including previous year) 12.46 (130.65)

Fringe Benefit Tax (2.68) 4.24

Deferred tax liability (440.55) 756.67

Profit after tax (905.55) 2,507.66

Add: Balance brought forward from previous year 86.99 (1,672.69)

Amount available for appropriation (818.56) 834.97

Appropriations:

Proposed Dividend

- On equity shares Rs 244.72

- On preference shares Rs 266.40

Additional tax on dividend Rs 86.86

Transferred to general reserve Rs 150.00

Balance carried forward to next year (818.56) 86.99

(818.56) 834.97



2. DIVIDEND

In view of losses during the year & on account of inadequate amount available in Profit & loss account brought forward from the earlier year, your Directors are compelled to skip dividend on 8% and 12% Cumulative Redeemable preference shares as also on equity shares for the year.

The Dividend on Redeemable Cumulative preference shares (both 8% & 12% series) are being accumulated & will be paid in the year of profit.

3. YEAR IN RETROSPECT OPERATIONS:

Metrics of sugarcane crushed, sugar produced and recovery achieved during the year is given herein under:

Units Cane crushed in MT Sugar produced in Recovery in % quintals

Dwarikesh Nagar (DN) 6,61,507 6,83,165 10.31%

Dwarikesh Puram (DP) 6,48,301 6,34,460 9.77%

Dwarikesh Dham (DD) 5,85,508 5,14,082 8.77%

Total 18,95,316 18,31,707 9.67%



Your Directors are pleased to inform that the recovery recorded at DN plant was the highest in state of Uttar Pradesh.

Performance of Cogeneration division: Metrics of power Sold:

2009-10 2008-09

Unit Power sold in lac units Amount in Rs lacs Power sold in lac units Amount in Rs lacs

DN 203 773 135 400

DP 627 2,541 307 966

DD 559 2,257 275 868

Total 1,389 5,571 717 2,234

Performance of Distillery:

During the year 4,226,785 litres of Industrial Alcohol (previous year 3,305,401 litres) and 516,214 Llitres of Ethanol (previous year 2,093,983) was produced at Dwarikesh Nagar unit of the Company. In value terms the sale of rectified spirit was Rs 882.13 lacs (previous year Rs 270.70 lacs) and sales of ethanol was NIL (previous year Rs 550.28 lacs).

4. FINANCIAL PERFORMANCE:

From financial perspective, the year 2009-10 was a lacklustre year. The year started of impressively with sugar prices touching a high of Rs 4,200 per quintal in January, 2010. However, Government intervention and a series of measures initiated by the Government dampened the market sentiments and the price reversal thereafter were rapid and fast. the initial estimates of lower cane availability triggered a price war for procurement of sugarcane. While sugar prices plummeted, increase in sugarcane prices beyond SAP was irreversible.

Higher than estimated sugarcane availability coupled with unabated imports resulted in abundant availability of sugar. Government measures aimed at reining in sugar prices resulted in reduced demand for sugar. Institutional sugar consumers, Whole-sellers and retailers who constitute a vital cog in the supply chain operated with bare minimum stocks. Institutional sugar consumers were encouraged to import their sugar requirement directly. the aforesaid factors dealt lethal blow to the market sentiments and sentiments have yet not shown signs of perking up. While the first quarter results were heart cockling, the results in the subsequent quarters doused all the enthusiasm.

The saving grace was that in spite of numerous odds faced by the industry, your Company managed to earn cash profits.

Financial highlights are enumerated herein Under:

lac/Rs

particulars 2009-10 2008-09

Net Sales 55,507 46,188

EBIDTA 6,500 12,598

EBDTA 1,870 6,433

EBT (1,336) 3,138

1. Almost 65% increase in landed cost of sugarcane whereas only 39% increase in average realization of non- levy sugar was mainly responsible for shrinking EBIDTA margins.

2. Though levy sugar price increased by 36% but increase in levy obligation from 10% to 20% had overall adverse impact. Increase in raw material procurement cost was more than commensurate with increase in levy sale price. There was significant drop in the prices of by-products also.

3. EBIDTA margins, though declined during the year, compare favorably with EBIDTA margins of companies in the peer group. Comparatively, better EBIDTA margins bears testimony of overall effciencies and lower cost of production.

4. Since the company is highly leveraged the bottom-line continues to be under stress, though efforts of the Company to rationalize interest costs has paid dividends as the interest cost during the year declined to Rs 47 crores as compared to Rs 62 crores in the previous year.

5. CANE & SUGAR POLICY:

The main policies of the government in relation to the sugar industry during the year were

1. the ratio of levy and free sale sugar was 20:80 for the crushing season 2009-10. However, the same now stands restored to 10:90 for the year 2010-11

2. The price of levy sugar for Central U.P. for the year was raised to Rs 1,808.47 per quintal for the production & supply of levy sugar from 1st October, 2009 as against Rs 1,330.77 per quintal till the last season.

3. The Fair & Remunerative price (FRP) for the crushing season 2009-10 was Rs 129.84 per quintal linked to recovery of 9.50%. the same has been increased to Rs 139.12 per quintal for the season 2010-11.

4. Chronology of SMP announced by the Central Government on the basis of recovery is given herein under:

Season SMP Rs / Quintal.

2000-01 59.50

2001-02 62.05

2002-03 64.50

2002-03 (Revised) 69.50

2003-04 73.00

2004-05 74.50

2005-06 79.50

2006-07 80.25

2007-08 81.18

2008-09 81.18

2009-10 107.76

2009-10 (SMP replaced by FRP) 129.84

2010-11 139.12

5. For the crushing season 2010-11 the state Government of Uttar Pradesh announced state Administered price (SAP) of Rs. 205 per quintal of sugarcane of the general variety to be delivered at the factory gate. this is as against state Administered price (SAP) of Rs. 165 per quintal of sugarcane of the general variety to be delivered at the factory gate for the crushing season 2009-10. the increase in SAP of Rs 40 is unprecedented and does not augur well for the industry.

6. DIRECTORS

Pursuant to Article 146 of the Articles of Association of the company, Shri M.G. Diwan, Shri K.P. Medhekar, Shri Harshvardhan Neotia and Shri K.N.Prithviraj, retire in the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

7. STATEMENT OF DIRECTORS RESPONSIBILITIES

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

(i) In the preparation of the annual accounts, applicable Accounting standards have been followed with proper explanation relating to material departures, if any;

(ii) 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) Taken proper & sufficient care for the maintenance of 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) Prepared the Annual accounts on a going concern basis.

8. CORPORATE GOVERNANCE

As per clause 49 of the listing Agreement with the stock exchanges, a report on Corporate Governance together with the Auditors Certificate regarding compliance of the conditions of corporate governance, Management Discussion and Analysis statement forms part of the Annual report.

9. EMPOYEES

In accordance with the provisions of sections 217 (2A), read with the Companies (particulars of employees) Rules, 1975, the names and other particulars of employees are to be set out in the directors report, as an addendum thereto. However, as per the provisions of section 219 (1)(b)(iv) of the Companies Act, 1956, the report and accounts, as therein set out, are being sent to all members of the company excluding the aforesaid information about employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EAENINGS AND OUTGO:

pursuant to section 217 (1)(e) of the Companies Act, 1956, the particulars in respect of conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in Annexure – I and form a part of this report.

11. SUBSIDIARY COMPANYS REPORT:

Faridpur sugars ltd., (FSL) a wholly owned subsidiary of the Company was incorporated on February 9, 2010. Your company holds the entire 100% equity share capital of FSL. The first accounting year of Faridpur Sugars limited shall end on March 31, 2011 and hence the details of Faridpur sugars limited as required u/s 212 of the Companies Act shall be included in the annual report of the company for the year ended on September 30, 2011.

12. AUDITORS & AUDITORS REPORT:

The Auditors, M/s S S Kothari Mehta & Co., Chartered Accountants retire at the ensuing Annual General Meeting of the Company. You are requested to re-appoint the Auditors for the accounting year 2010-11 and fix their remuneration. M/s S S Kothari Mehta & Co., Chartered Accountants, being eligible, have offered themselves for reappointment.

The observations regarding cane price and conversion of free sugar into levy sugar have been explained satisfactorily in note no 12 and 13 respectively of schedule B to the notes on accounts. Further observation regarding funding of long term assets of Rs 53.10 crores through short term loans from bank has been explained under item no xvii of the annexure to Auditors report.

13. PUBLIC DEPOSITS

The Company does not have any fixed deposits at the beginning of the year in terms of Section 58A of the Companies Act, 1956. the Company has not accepted any deposits during the year.

14. ACKNOWLEDGEMENT

Your directors wish to place on record their sincere gratitude and appreciation to its share holders, sugar cane growers, employees, bankers, financial institutions, Central & State Government Agencies for their valuable contribution in the growth of the organisation.

By order of the Board

For DWARIKESH SUGAR INDUSTRIES LIMITED

VIJAY S BANKA

WHOLE TIME DIRECTOR & CFO

B J MAHESHWARI

WHOLE TIME DIRECTOR & CS Cum CCo

Place: New Delhi

Dated: 29th November, 2010


Sep 30, 2009

The Directors take pleasure in presenting their Sixteenth Annual Report together with the audited accounts for the year ended 30th September, 2009.

1. FINANCIAL RESULTS:

INR in lacs INR in lacs Year ended Year ended 30.09.2009 30.09.2008

Gross profit before depreciation, interests & tax 12,597.84 4,957.51

Less: Depreciation 3,295.50 2,943.15

Interest 6,164.42 4,947.21

Profif/(Loss) before tax and exceptional items 3,137.92 (2,932.85)

Less: Provision for taxes (including previous year) (130.65) 3.72

Fringe benefit tax 4.24 10.04

Deferred tax liability 756.67 (468.57)

Profit after tax 2,507 66 (2,478.04)

Add: Balance brought forward from previous year (1,672.69) 806.24

Amount available for appropriation 834.97 (1,671.80)

Appropriations:

Proposed Dividend

On equity shares 244.72 --

On preference shares 266.40 --

Additional tax on dividend 86.86 0.89

Transferred to general reserve 150.00 --

Balance carried forward to next year 86.99 (1,672.69)

834.97 (1,671.80)

2. DIVIDEND:

Your directors recommend a payment of dividend at Rs. 12 per preference share of Rs. 100 each on 12 % Cumulative Redeemable Preference Shares for the year 2008-09 & arrear for the year 2007 - 08, aggregating to INR 26.40 lacs.

Your directors also recommend a payment of dividend at Rs. 8 per preference share of Rs. 100 each on 8 % Cumulative Redeemable Preference Shares for the year 2008-09 & arrear for the year 2007-08, aggregating to INR 240 lacs.

Your directors recommend a payment of dividend at INR 1.50 per equity share of Rs. 10 each amounting to INR 244.72 lacs.

Total outgo on account of dividend on Preference Shares (including arrears) and equity shares and additional tax thereon amounts to INR 597.98 lacs

3. YEAR IN RETROSPECT

OPERATIONS.-

Metrics of sugarcane crushed, sugar produced and recovery achieved during the year is given herein under:

Units Cane crushed Sugar produced Recovery in % in MT in quintals

Dwarikesh Nagar(DN) 506,474 522,037 10.31

Dwarikesh Puram (DP) 457,562 454,380 9.93

Dwarikesh Dham (DD) 300,658 258,461 8.61

Total 1,264,694 1,234.878 9.77

Your Directors are pleased to inform that the recovery recorded at DN plant was the highest in State of Uttar Pradesh and recovery recoded at DP plant was the second highest in the State.

Performance of co-generation division: metrics of power sold:

2008-09 2007-08 Unit Units of Power Rs. in lacs Units of Power Rs. in lacs

DN 135 400 228 669

DP 307 966 215 667

DD 275 868 173 539

Total 717 2,234 616 1,875

Performance of Distillery:

During the year, 3,305,401 Litres of industrial alcohol (previous year 5,684,611 Litres) and 2,093,983 litres of ethanol (previous year 4,075,725) was produced at Dwarikesh Nagar Unit of the Company. In value terms, the sale of rectified spirit was Rs. 270.70 lacs (previous year Rs 294.13 lacs) and sales of ethanol was Rs. 550.28 lacs (previous year Rs 994.24 lacs).

4. FINANCIAL PERFORMANCE:

From financial perspective, the year 2008-09 was a heart cockling year. A melange of surging sugar prices across the globe and accelerated releases under the sugar sale mechanism, resulted in posting of healthy topline and an equally healthy bottomline. Sugar prices, internationally have gone up and both raw sugar and white sugar prices have posted their 30 years high. Your company has been able to reverse the trend of losses posted in the last two years and has posted earnings after tax of INR 25.08 crores. This is in sharp contrast to the loss of INR 24.78 crores posted in the previous year.

Improvement in financial performance was palpable. Financial highlights are enumerated herein under:

1. Increase in the price of sugar and other by-products. While 10% obligation of levy sugar was sold @ Rs. 1,331, the rate at which it was sold in the earlier years, average realization on sale of free sale sugar increased to Rs. 2,136 per quintal in the current year as compared to average realization of Rs. 1,428 per quintal in the previous year.

2. Liquidation of low value carried forward free sale stock: During the year Company sold 1,999,209 quintals of sugar as compared to 1,528,961 quintals of sugar sold in the previous year. In effect there was significant depletion in the stock levels. Stock of sugar as on 30h September, 2009 was 397,636 as compared to 1,161,967 quintals of sugar stock on the same date last year.

3. The quantitative, year on year, growth in sales was 31%. In value terms, Sales (net of excise duty), at Rs. 461.88 crore is 69% more than the sales of Rs. 272.65 crore clocked in the previous year. The difference in the percentage growth is adequate reflection on the impact of increase in sugar price on the top-line of your Company. Quarter on quarter the price of free sale sugar was on an ascending curve. While in the first quarter, average price realisation was Rs. 1,723 per quintal, it was Rs. 2,064 per quintal in the second quarter, Rs. 2,285 per quintal in the third quarter and Rs. 2,620 per quintal in the last quarter.

4. The expansion executed in the last two years was leveraged expansion. The gearing therefore is on the higher side. However the Company is making all out efforts to not only rationalize interest costs, but is also making concerted efforts to prepay debt. With the upsurge in the price of sugar, the Company is confident that it would deleverage itself substantially in the coming years. The static ratios such as Debt to equity, current ratio among others are on path of recovery.

Noteworthy achievements:

1. Recovery recorded at DN plant was the highest in Uttar Pradesh and recovery recorded at DP plant was the second highest in the State. The coveted first and second position thus belonged to the Companys plants. As far as the recovery is concerned, DN plant has the unique distinction of being among top echelon in Uttar Pradesh since inception. Within a short span of

4 years the DP plant has also established itself in the top echelon.

2. The operating/dynamic ratios of the Company are robust. In fact the EBIDTA margin at 27.28% is one among the best in the peer group.

5. CANE & SUGAR POLICY:

The main policies of the government in relation to the sugar industry during the year were:

1. The ratio of levy and free sale sugar was 10:90 for the crushing season 2008-09. However the same is now revised and is at 20:80.

2. The price of levy sugar for Central UP. for the year continued to be Rs. 1,330.77 per quintal. There has been no increase in the price of levy sugar for the last 5 years. Consequent to the upsurge of domestic sugar prices, Central Government has lifted the ban on import of sugar. Both raw sugar and white sugar are now allowed to be imported liberally. Nearly 3 millions tonne of sugar has already been imported.

3. The statutory minimum price (SMP) of sugarcane for the year was Rs. 81.18 per quintal, linked to sugar recovery of 9% with premium for higher recovery. SMP announced for the season 2009-10 is Rs 107.76 per quintal, linked to 9.50% recovery. The Central Government has replaced SMP by a fair & remunerative price (F&RP) of Rs 129.84 linked to recovery of 9.50% for the year 2009-10. For every 0.10% increase in recovery over 9.50%, mills would be required to pay Rs 1.37 a quintal extra. However the latest development is that the Central Government has scrapped the ordinance which promulgated the applicability of F&RR

4. Chronology of SMPannounced by the Central Government on the basis of recovery is given herein under:

Season SMP Rs./Quintal.

2000-01 59.50

2001-02 62.05

2002-03 64.50

2002-03 (Revised) 69.50

2003-04 73.00

2004-05 74.50

2005-06 79.50

2006-07 80.25

2007-08 81.18

2008-09 81.18

2009-10 107.76

2009-10 (SMP replaced by F&RP) 129.84

5. For the crushing season 2009-10, the State Government of Uttar Pradesh announced State Administered Price (SAP) of Rs. 1 65 per quintal of sugarcane of the general variety to be delivered at the factory gate. This is as against SAP of Rs. 140 per quintal of sugarcane of the general variety to be delivered at the factory gate for the crushing season 2008- 09. The industry has challenged the SAP for the year 2008-

09. Your Company has paid for & accounted purchase of sugarcane at SAP

For the year, 2007-08, the State Government of Uttar Pradesh had announced SAP of Rs. 125 per quintal of sugarcane of the general variety to be delivered at the factory gate. However most of the sugar mills in the State, in pursuance of a Supreme Court order paid and accounted for sugarcane at a price of Rs. 110 per quintal.

The matter of SAP for 2007-08 & 2008-09 is sub-judice and now subject to decisions of courts pending at various stages.

Agitated by the price annou need by both Centra I Government and State Government for the crushing season of 2009-

10, various association and bodies of farmers launched a nation-wide agitation.

The UP Sugar Mills Association in the meantime announced that they shall not only pay SAP but shall in addition pay an incentive of INR 1 5 per quintal. The price thus worked out to INR 180 per quintal of general variety of sugarcane delivered ai factory gate. Not satisfied with the price, the agitation of the farmers continued relentless and they virtually laid seize over the Nations Capital, New Delhi. A broad understanding is now reached among the mills and the leaders representing various factions of farmers. Consensus has now been arrived at a price of INR 190 per quintal. (SAP of INR 165-plus an incentive of INR 25 per quintal).

6. FORFEITURE OF DEPOSIT FOR ISSUE OF WARRANTS:

In accordance with the terms of the issue, the Company has during the year forfeited deposit of a sum of Rs. 59.87 lacs towards allotment of convertible warrants for non exercise of the option by the allottees within the stipulated time limit.

7. DIRECTORS:

Pursuant to Article 146 of the Articles of Association of the company, Mr. S.S. Vaidya, Mr. L.N. Heda and Mr. Balkumar Agarwal, retire in the ensuing Annual General Meeting and being eligible offer themselves for reappointment.

Mr. B.J. Maheshwari, Mr. Vijay S. Banka, Mr. K.N. Prithviraj and Mr. Harshvardhan Neotia have been inducted as Additional Directors on the Board during the year. Notices u/s 257 of the Companies Act, 1956 have been received from a shareholder together with requisite deposit signifying his intention to propose their candidature for the appointment of directors.

Mr. G. R. Morarka, Chairman & Managing Directors reappointment falls due on 1st April, 2010 & is sought to be reappointed for the tenure of next three years & the remuneration needs to be fixed accordingly.

8. STATEMENT OF DIRECTORS RESPONSIBILITIES:

As required under the provisions of Section 21 7(2AA) of the Companies Act, 1956, your Directors confirm that:

(i) in the preparation of the annual accounts, applicable Accounting Standards have been followed with proper explanation relating to material departures, if any;

(ii) 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) Taken proper & sufficient care for the maintenance of 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) Prepared the annual accounts on a going concern basis.

9. CORPORATE GOVERNANCE:

As per Clause 49 of the Listing Agreement with the stock exchanges, a report on Corporate Governance together with the Auditors Certificate regarding compliance of the conditions of corporate governance, management discussion and analysis statement forms part of the annual report.

10. EMPLOYEES:

In accordance with the provisions of Sections 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the directors report, as an addendum thereto. However, as per the provisions of section 219 (l)(b)(iv) of the Companies Act, 1956, the report and accounts, as therein set out, are being sent to all members of the company excluding the aforesaid information about employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Pursuant to section 217 (l)(e) of the Companies Act, 1956, the particulars in respect of conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in Annexure-I and form a part of this report.

12. AUDITORS & AUDITORS REPORT:

There are no qualifications in the Auditors Report.

The Auditors, M/s. S. S. Kothari Mehta & Co., Chartered Accountants retire at the ensuing Annual General Meeting of the Company. You are requested to reappoint the Auditors for the accounting year 2009-10 and fix their remuneration. M/s. S. S. Kothari Mehta & Co., Chartered Accountants, being eligible, have offered themselves for reappointment.

The observations regarding cane price and conversion of free sugar into levy sugar have been explained satisfactorily in note Nos. 13 and 14 respectively of Schedule B to the Notes on accounts. Further observation regarding funding of long term assets of Rs 10.01 crore through short term loan from bank has been explained under item no xvii of the annexure to Auditors report.

13. PUBLIC DEPOSITS:

The Company does not have any fixed deposits at the beginning of the year in terms of Section 58A of the Companies Act, 1 956. The Company did not accept any deposits during the year.

14. ACKNOWLEDGEMENT:

Your directors wish to place on record their sincere gratitude and appreciation to its share holders, sugar cane growers, employees, bankers, financial institutions, Central & State Government Agencies for their valuable contribution in the growth of the organisation.

By Order of the Board For DWARIKESH SUGAR INDUSTRIES LIMITED

VIJAY S. BANKA WHOLE TIME DIRECTOR & CFO

B.J. MAHESHWARI WHOLE TIME DIRECTOR & CS cum CCO

Place: New Delhi

Dated: 30th November, 2009

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