Notes to Accounts of K S Oils Ltd.

Mar 31, 2015

(a) There have been delays in filing of returns and documents with Regulatory Authorities and in some instances documents fled/ required to be fled are not traceable with the Company. The liability, if any, in this regard is not ascertainable.

(b) Matter in regard to dishonor of cherubs issued by the Company during the financial period is pending. The liability, if any, in this regard is not ascertainable.

(c) As regards cultivation & maintenance of Jatropha plantation by the Company, one of the conditions in FIPB approval has put restrictions on such activity. The liability if any is not ascertainable. The Company has undertaken such activity in financial year 2008-09 and as stated by the management the company has not extended it further and only maintain the same.

(d) In respect of remuneration of Rs. 96 lacs paid in financial year 2010-11(fifteen months ended as on 30.06.11) which was in excess of ceiling prescribed under schedule XIII of the companies Act, 1956. The Company has not yet obtained approval of the central government, the liability if any is not ascertainable.

Note:

1 Amounts aggregating Rs. 213 Lacs and Rs. 212 Lacs are deposited as appeal advance as on March 31, 2015 and March 31, 2014 respectively against Excise & Custom matters and Sales tax matters.

2 Payment of redemption premium @ 64% of preference share (face value of Rs. 10/- each)is subject to the condition to that the same is being paid out from the cash balance is available with Company in excess of Rs. 7500 Lacs.

Note 1 : Search Operation

Search Operation was conducted by Income Tax Department on Company and promoters on March11, 2010 and various documents and materials were seized by the Department during the search proceedings. The Company in order to have early resolution of matter preferred application before The Hon'ble Settlement Commission in previous year. The Hon'ble Settlement Commission, Mumbai Bench vide its order dated 24th June, 2013 has settled all the cases of the Company from FY 2003-04 to FY 2010-11. However Income tax department filled an appeal before hon'ble Bench of High court at Gwalior. The matter is still pending for consideration.

Note 2 : Corporate Debt Restructuring:

a) The restructuring package was approved by CDR empowered group on 20th December, 2011. The Master Restructuring Agreement has also been signed with the lenders participating in the CDR package ('CDR Lenders') on 14th March, 2012.

b) However the Company has not been able to service its repayment obligations as sanctioned under CDR scheme and have been made delays and defaults in repayment obligations. Such delays and defaults have consequential impact on the financial statements in terms of approved CDR Scheme and the CDR Scheme has been called off by the CDR Empowered Group in a meeting held in July 2013.

c) Subsequent to above, the Group of Lenders have issued Demand notice U/s 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of security Interest Act, 2002 for calling of the entire loan amount including interest due thereon for Wind Energy Business and Edible Oil Business dated 26th Dec 2013 & 4th March 2014 respectively. By virtue of above notices, the Company has to repay the entire outstanding loan amount to the lenders within 60 days from the date of notice. However it could not be done.

d) Lenders have sold of 82 windmills of 67.2 MW out of total 92 windmills of 78 MW to different buyers between the periods from January 2015 to March 2015 through a separate bidding process for Rs 176.84 Cr. The sales proceed shall be utilized for repayment of outstanding loan liability of windmill division as the fund lying with bankers.

Note 3: Interest on Borrowing and Finance Charges

The Company had been served demand notice under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SERFAESI), 2002 on dated 26th Dec, 2013 for Wind Energy Business and dated 4th March, 2014 for Edible Oil Business respectively for payment of outstanding principal amount including interest etc. Total outstanding loan up to date of serving of SERFAESI Notice was Rs.3535.14 Cr as against Rs. 2886.10 Cr appearing in books of accounts. Due to Pending details such as overdue interest, penalties, damages, cost etc. as considered by lenders in SARFAESI notices, the Company is not able to quantify the Shortfall in interest and financial charges to be provided in books of accounts. Further the Company has not provided any interest liability for the current period due to non charging of interest by majority of banks and non availability of their statements of accounts.

Note 4: Agricultural Activity

During the Financial Year 2008-2009, Government of Madhya Pradesh has allotted a land admeasuring 2,000 hectares to the Company on a license basis for no consideration, for carrying out the agricultural activity for a period of two years; consequently this has not been recognized as a grant.

Note 5: Variance in Cost and Sales Margin

Though the quantity of production has changed as compared with those for the earlier periods, the change in relevant expenses is not in the same proportion. This was mainly on account of plant efficiency and cost control measures. Further, there have been fluctuations in average realization of sales price during this period. This was on account of market conditions and quality of goods.

Note 6: Inventory Verification

The management of the Company confirms that they have carried out physical verification of inventory at the end of the year. However the statutory auditors could not carryout or associate for physical verification as they were appointed on 17th march 2015.

Note 7: Going Concern

During the financial period the Company has incurred loss of Rs 22987 Lacs and its net worth has been completely eroded. Paucity of adequate working capital has also affected the operations, resulting in partial running of plants on job work basis or closure of plants. Company is in the process of restructuring its business; hive off whole or part of core and non-core assets for reducing debt burden. Resulting of the same during the year some portion of the noncore assets (windmill division) have been sold. To deal with the above situation, the Company is actively pursuing option of re-organization of existing business and/or enters into some strategic alliance or introduces any potential investor. This would enable the Company to ease its continuing financial burden and ensure smoother running of its plants. To implement such strategy the Company and lenders consortium have appointed a reputed consultancy frm to look into the possible alternatives and suggest plan to be implemented for restructuring including sale of whole or part of Edible Oil business, which is in progress. Under the circumstances, the financial statements have been prepared on Going Concern basis and in the opinion of the management no adjustments are considered necessary to the carrying value of its assets and liabilities.

Note 8: Preferential issue of equity shares and warrants:

a) In order to meet the fund requirement of the Company for its (i) Expansion of fernery in India along with other allied expenditure (ii) Investment in its overseas subsidiaries for development of Greenfield palm plantations and acquisition of mature palm plantations and / or CPO mills, all in Indonesia, the Company has come out with preferential allotment of Equity Shares and Warrants to the promoters & other foreign Investors in July, 2009 at an issue price calculated under SEBI (DIP) Guidelines, 2000 on preferential basis duly approved by Shareholders and Board of Directors of the Company.

b) The entire proceeds received towards the warrants have been utilized for the purpose of expansion of fernery in India along with other allied expenditure and for investment in its subsidiaries, except Rs.5065 Lacs. Such unutilized funds of preferential issue which were kept in FD's with the banks in previous periods, except for FD's aggregating Rs. 1117 lacs, balance amount of Rs 3948 lacs have been utilized for the working capital of the company instead of for expansion work in foreign business, which was the primary object of raising funds.

Note 9: Non Transfer of Dividends:

Company recommended dividend in FY2009-10 of Rs 858 lacs (Rs 0.18 per share) (inclusive of Dividend Distribution Tax of Rs 122 lacs). Out of the dividend so declared, an amount of Rs 90 lacs remains unpaid.

Due to severe liquidity crunch, the promoters opted to waive off the receipt of their part of dividend. For the same reasons the company has not transferred un- paid dividend to a separate Bank account in terms of the requirement of Sec. 205 of the Companies Act, 1956.

Note 10: AGM and Results:

The Company has made an application to the Registrar of Companies (ROC) vide letter dated September 22, 2015 for extension of holding 29th AGM of the company for further 3 months according to the provisions of the Companies Act, 2013 the Company was required to hold the AGM within the six months from the close of financial year but due to the most of the key personnel's have left the Company and consolidation of the foreign subsidiaries accounts, the company has not finalized and get audited the accounts within the stipulated time.

Note 11 : Derivatives

a) Derivative Instruments

There are no yearend foreign currency exposure that have been hedged by derivative instrument

b) The yearend foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

Note 12 : Related Party Disclosures

a) Transactions with Related Parties as specified under Accounting Standard-18

Subsidiary K.S. Natural Resources Pte Ltd.,

Fellow Subsidiaries Singapore

K. S.Oils SDN.BHD, Malaysia

K.S.Agri Resources Pte Ltd.,

Singapore

PT Buana Mega Sentosa Plantation,

Indonesia

PT Mega Artha Peresada, Indonesia

PT Biodiesel Jambi, Indonesia

PT Tunas Bersusun Abadi, Indonesia

PT Luvang Urip, Indonesia

Enterprises over which Key K.S.Food Products Managerial Personnel K.S Enterprises

exercises significant influence Ramesh Chand Sourabh Kumar

HUF

Sourabh Garg HUF Neiil Education Pvt. Ltd. KS Oils Ltd. Group Gratuity Scheme Garg Family Trust

Key Managerial Personnel on the Board

Mr. Ramesh Chand Garg Chairman and Managing Director

Mr. Davesh Agarwal Whole time Director

Relatives of Key Managerial Personnel

Mr. Sourabh Garg Son of CMD

Mrs. Sheela Devi Garg Spouse of the CMD

Mrs. Meeta Garg Spouse of Son (Mr. Sourabh Garg)

Mr. Shyam Kumar Garg Brother of CMD

Mr.Om Prakash Garg Brother of CMD

Mr.Mohan Lal Garg Brother of CMD

Note: Rental cost is annually escalated between seven and twenty percentage. Annual escalation for every transaction is considered from the effective date of rent agreement. Except in case of some agreement where the escalation is effective after the execution of the rent agreement.

On expiration of the above stated lease agreements, the same can be renewed on the basis of mutual consent of the lessor and lessee.

Additional amount of service tax will be paid on the above stated lease rental amount according to the rates applicable at the time of respective lease rental payments.

Total lease rental cost recognized in the financial statement is of Rs 41 Lacs (previous year Rs. 112 Lacs).

Note 13: Earning Per Share

In determining earnings per share, the Company considers the net profit after tax and includes the post tax effect of any extra- ordinary / exceptional item. The numbers of shares in computing basic earnings per share is the weighted average numbers of shares outstanding during the period. The numbers of shares used in computing diluted earnings per share comprises weighted averages shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value (i.e. the average market value of outstanding shares). Statement showing the computation of EPS is as under:

Note 14: Discontinuing Operation as per AS-24

Pursuant to the note 32 (a) & (b), The Company proposes to sell whole or part of the Edible Oil Assets & Windmill Energy Assets of the Company to a buyer identify in accordance with the sale process to be undertaken by State Bank of India (acting on behalf of lenders) to repay the outstanding debt including interest of the Company. The sale of the above assets are subject to approval of shareholders u/s 293 (1) (a) of the Companies Act, 1956 through postal Ballot.

In order to above, an ordinary resolution has been passed by the shareholders of the Company u/s 293 (1)(a) on dated 7th September, 2013 through postal ballot.

(A) In accordance with the disclosure requirement of Accounting Standard - 24 "Discontinuing Operations", following disclosures are made as under for windmill Assets:

a) Company had several windmills in the various states of the country through which it generates power.

b) Operations of windmill activity are shown as a part of Business Segment in accordance with the requirement of AS – 17 "Segment Reporting".

c) Assets related Windmill Energy Business is required to be sold off on priority basis.

d) Carrying amount of fixed assets is shown under note no- 11 "Fixed assets" and for assets and liabilities refer note no. 43 "Segment reporting" under consolidated financial statement.

e) Revenue and Expenditure in respect to ordinary activities attributable to Windmill Energy Business are shown in note no. 43 "Segment reporting" under consolidated financial Statement.

B) In accordance with the disclosure requirement of Accounting Standard - 24 "Discontinuing Operations", following disclosures are made as under for Edible Oil Business:

a) Company has five manufacturing units in the various states of the country through which it manufacture edible oil.

b) Operations of Edible Oil activity are shown as a part of Business Segment in accordance with the requirement of AS – 17 "Segment Reporting".

c) Assets related Edible oil Business is required to be sold off on priority basis.

d) Carrying amount of fixed assets is shown under note no- 11 "Fixed assets" and for assets and liabilities refer note no. 43 "Segment reporting" under consolidated financial statement.

e) Revenue and Expenditure in respect to ordinary activities attributable to Edible Oil Business are shown in note no. 43 "Segment reporting" under consolidated financial Statement.

Note 15 : Comparatives Figures

The current financial statements is prepared for twelve months period ended March 31, 2015, hence figures for the same are not comparable with that of previous financial statements, which was prepared for the fifteen months period ended March 31, 2014.

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Mar 31, 2014

(A) Preferential Issue of Equity Shares

In order to meet the fund requirement of the Company for working capital and general corporate purposes, the Company came out with the preferential issue of equity shares to the Qualified Institutional Buyers (QIB) through Qualified Institutional Placement during the period at an issue price calculated under SEBI (ICDR) Regulation, 2009 on preferential basis duly approved by the Board of Directors and the Shareholders.

On April 09, 2012 the Company has allotted 33,767,282 Equity Shares of Rs. 1/- each at a premium of Rs. 6.25 to the QIB's and raised Rs. 2448.13 lacs.

The entire poceeds received towards the QIP isssue have been utilized by the company for the purpose of working capital requirement.

(B) Terms / rights attached to Equity Shares:

1 The Company has a single class of equity shares having a par value of Rs 1/- per share

2 Each holder of equity share is entitled to one vote per share.

3 The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing annual general meeting.

4 In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company in proportion to the number of equity shares held by each shareholder, after settlement of all preferential obligations.

(C) Terms of Issue of 1% Cumulative Redeemable Preference Share (CRPS)

1 The Company has issued 1% CRPS at face value of Rs. 10 each to the Lenders under the terms and conditions of CDR package.

2 The CRPS arising out of conversion of 20% of all term loans (except the Wind Mill Term Loan) aggregating to Rs. 2985 Lacs shall carry a dividend of 1% p.a. Dividend shall be payable at the end of each year from the date of allotment of the CRPS till the date of redemption.

3 The CRPS shall be redeemable after completion of 7 (seven) years from the date of allotment of the same i.e., in FY 2021 with a redemption premium of 64% on Face Value.

4 Payment of redemption premium is subject to the condition that the same being paid out of the cash available with the Company and is in excess of Rs. 7500 Lacs.

(A) Personal Guarantee from each promoter to all the lenders

(B) Pledge of 100% Promoters shareholding in the Company, free of all encumbrances, including additional shares acquired by the Promoters on infusion of equity in the Company (If any)

(C) Pledge of 100% of the following investments held by the Borrower, free of all encumbrances,

(A) Personal Guarantee from each promoter to all the lenders

(B) Pledge of 100% Promoters shareholding in the Company, free of all encumbrances, including additional shares acquired by the Promoters on infusion of equity in the Company (If any)

(C) Pledge of 100% of the following investments held by the Borrower, free of all encumbrances,

Note 2: Commitments and Contingent Liabilities

(Rs. In Lacs)

As at As at March 31, 2014 Dec. 31, 2012

a) Claims against the Company not acknowledged as debts in respect of

i) Excise & custom duty matters under dispute1 52 52

ii) Commercial Taxes matter under dispute 7575 664

iii) Income Tax 0 6

b) Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) 1653 1653

c) Bank Gurantee 143 147

d) Export Promotion against Capital Goods. 276 276

e) Other Commitment

i) Preference Dividend 388 63

ii) Dividend Distribution Tax 66 11

iii) Premium payable on Redemption of Cumulative Redeemable Preference Shares in June 2021 16632 16632

(f) There have been delays in filing of returns and documents with Regulatory Authorities and in some instances documents filed/ required to be filed are not traceable with the Company. The liability, if any, in this regard is not ascertainable.

(g) Matter in regard to dishonour of cheques issued by the Company during the financial period is pending. The liability, if any, in this regard is not ascertainable.

(h) As regards cultivation & maintenance of Jatropha plantation by the Company, one of the conditions in FIPB approval has put restrictions on such activity. The liability if any is not ascertainable. The Company has undertaken such activity in financial year 2008-09 and as stated by the management the company has not extended it further and only mainataing the same.

(i) In respect of remuneration of Rs. 96 lacs paid in financial year 2010-11(fifteen months ended as on 30.06.11) which was in excess of ceiling prescribed under schedule XIII of the companies Act, 1956. The Company has not yet obtained approval of the central government, the liability if any is not ascertainable.

Note:

1 Amounts aggregating Rs. 209 Lacs and Rs. 126 Lacs are deposited as appeal advance as on March 31, 2014 and Dec 31, 2012 respectively against Excise & Custom matters and Sales tax matters.

2 Payment of redemption permium @ 64% of preference share (face value of Rs. 10/- each)is subject to the condition to that the same is being paid out from the cash balance is available with Company in excess of Rs. 7500 Lacs.

Note 3 : Search Operation

Search Operation was conducted by Income Tax Department on Company and promoters on March11,2010 and various documents and materials were seized by the Department during the search proceedings. The Company in order to have early resolution of matter preferred application before The Hon'ble Settlement Commission in previous year. The Hon'ble Settlement Commission, Mumbai Bench vide its order dated 24th June, 2013 has settled all the cases of the Company from FY 2003-04 to FY 2010-11. However Income tax department filled an appeal before hon'ble Bench of High court at Gwalior. The matter is still pending for consideration.

Note 4 : Corporate Debt Restructuring:

a) The restructuring package was approved by CDR empowered group on 20th December, 2011. The Master Restructuring Agreement has also been signed with the lenders participating in the CDR package ('CDR Lenders') on 14th March, 2012.

b) However the Company has not been able to service its repayment obligations as sanctioned under CDR scheme and have been made delays and defaults in repayment obligations. Such delays and defaults have consequential impact on the financial statements in terms of approved CDR Scheme and the CDR Scheme has been called off by the CDR Empowered Group in a meeting held in July 2013.

c) Subsequent to above, the Group of Lenders have issued Demand notice U/s 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of security Interest Act, 2002 for calling of the entire loan amount including interest due thereon for Wind Energy Business and Edible Oil Business dated 26th Dec 2013 & 4th March 2014 respectively. By virtue of above notices, the Company has to repay the entire outstanding loan amount to the lenders within 60 days from the date of notice. However it could not be done.

d) Subsequent to balance sheet date the Lenders have sold of 82 windmills of 67.2 MW out of total 92 windmills of 78 MW to different buyers between the periods from January 2015 to March 2015 through a separate bidding process for Rs 176.84 Cr. The sales proceed will be utilised for repayment of outstanding loan liability of windmill division. The Net book value of Sold windmills are Rs 266.71 Cr as on 31st March 2014.

Note 5: Interest on Borrowing and Finance Charges

The Company had been served demand notice under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 on dated 26th Dec, 2013 for Wind Energy Business and dated 4th March, 2014 for Edible Oil Business respectively for payment of outstanding principal amount including interest etc. The total amount payable as per notices aggregates to Rs. 3535.14 Cr as against Rs. 2886.10 Cr appearing in books of accounts. The difference of Rs 640.04 Cr. Due to Pending details such as overdue interest, penalties, damages, cost etc. as considered by lenders in SARFEASI notices, the Company is not able to quantify the Shortfall in interest and financial charges to be provided in addition to amount already charged by lenders in their statement during the accounting period ended 31st March, 2014.

Note 6: Agricultural Activity

During the Financial Year 2008-2009, Government of Madhya Pradesh has allotted a land admeasuring 2,000 hectares to the Company on a license basis for no consideration, for carrying out the agricultural activity for a period of two years; consequently this has not been recognized as a grant.

Note 7: Varriance in Cost and Sales Margin

Though the quantity of production has changed as compared with those for the earlier periods, the change in relevant expenses is not in the same proportion. This was mainly on account of plant efficiency and cost control measures. Further, there have been fluctuations in average realization of sales price during this period. This was on account of market conditions and quality of goods.

Note 8: Inventory Verification

The Company extended its financial year to end on March 31, 2014 (i.e. covering fifteen months period) in November 2013 as per decision of the board of directors of the Company. The inventory verification was undertaken in the month of March'14 by an Independent Firm of Chartered Accountants appointed by lead Bank on tested basis who roll forwarded inventory as on 31st December, 2013. The discrepancy found by stock auditor has been duly delt with in the books of accounts. The management of the Company confirms that they have carried out physical verification of inventory as on 31st march 2014. However the statutory auditors couldnot carryout or associate for physical verification as they were appointed on 17th March 2015.

Note 9: Going Concern

During the financial period the Company has incurred loss of Rs 151039 Lacs and its net worth has been completely eroded. Paucity of adequate working capital has also affected the operations, resulting in partial running or closure of plants (for a limited period). Company is in the process of restructuring its business; hive off whole or part of core and non-core assets for reducing debt burden. Besides, CDR package has been called off by CDR empowered group; the Company is actively pursuing option of re-organization of existing business and/or enters into some strategic alliance or introduces any potential investor. This would enable the Company to tide over its continuing financial burden and ensure smoother running of its plants. To implement such strategy the Company and lenders consortium have appointed a reputed consultancy firm to look into the possible alternatives and suggest plan to be implemented for restructuring including sale of whole or part of Edible Oil and Windmill business, which is in progress. Under the circumstances, the financial statements have been prepared on Going Concern basis and in the opinion of the management no adjustments are considered necessary to the carrying value of its assets and liabilities.

Note 10: Preferential issue of equity shares and warrants:

a) In order to meet the fund requirement of the Company for its (i) Expansion of refinery in India along with other allied expenditure (ii) Investment in its overseas subsidiaries for development of Greenfield palm plantations and acquisition of mature palm plantations and / or CPO mills, all in Indonesia, the Company has come out with preferential allotment of Equity Shares and Warrants to the promoters & other foreign Investors in July, 2009 at an issue price calculated under SEBI (DIP) Guidelines, 2000 on preferential basis duly approved by Shareholders and Board of Directors of the Company.

b) The entire proceeds received towards the warrants have been utilized for the purpose of expansion of refinery in India along with other allied expenditure and for investment in its subsidiaries, except Rs.5065 Lacs. Such unutilized funds of preferential issue which were kept in FD's with the banks in previous periods, except for FD's aggregating Rs. 1227 lacs, balance amount of Rs 3838 lacs have been utilized for the working capital of the company instead of for expansion work in foreign business, which was the primary object of raising funds.

Note 11: Non Transfer of Dividends:

Company recommended dividend in FY2009-10 of Rs 858 lacs (Rs 0.18 per share) (inclusive of Dividend Distribution Tax of Rs 122 lacs). Out of the dividend so declared, an amount of Rs 350 lacs remains unpaid of which Rs 260 lacs is to be paid to promoters and balance members of the Company.

Due to severe liquidity crunch, the promoters opted to defer the receipt of their part of dividend till the liquidity improves. For the same reasons the company has not transferred un- paid dividend to a separate Bank account in terms of the requirement of Sec. 205- A of the Companies Act, 1956.

Note 12: AGM and Results:

The Company has extended accounting period to fifteen months ending on March 31, 2014. Pursuant to which, according to the Provision of Companies Act, the Company was required to hold on AGM within the three months from the close of financial year, however extension of the AGM was granted by the ROC for further three months vide letter dated 3rd January, 2014. But due to the most of the key personnel's have left the Company during the period and Auditors resignation on 13th February, 2015 the company was not able to get its accounts audited within the stipulated time and was unable to produce the financial statement in the AGM held on 30th September, 2014.

Note 13 : Derivatives a) Derivative Instruments

There are no yearend foreign currency exposure that have been hedged by derivative instrument

b) The yearend foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

ii) Defined Benefit Plan:

- Gratuity (Funded)

- Leave Encashment (Non funded)

In terms of the guidance on implementing the revised AS 15, issued by the Accounting Standards Board of the Institute of Chartered Accountants of India, the Gratuity trust set up by the Company is treated as defined benefit plan since the Company has to meet the shortfall, if any. However, at the year end, no shortfall remains unprovided for.

Leave encashment is payable to eligible employees who have earned leaves, during the employment and/or on separation as per the Company's policy.

Valuations in respect of Gratuity and Leave encashment, as at the Balance Sheet date, based on the following assumptions:

a) Transactions with Related Parties as specified under Accounting Standard-18

Subsidiary Fellow Subsidiaries

K.S. Natural Resources Pte Ltd., Singapore

K. S.Oils SDN.BHD, Malaysia K.S.Agri Resources Pte Ltd., Singapore

PT Buana Mega Sentosa Plantation, Indonesia

PT Mega Artha Peresada, Indonesia PT Biodiesel Jambi, Indonesia PT Tunas Bersusun Abadi, Indonesia PT Luvang Urip, Indonesia

Enterprises over which Key Managerial Personnel exercises significant influence

K.S.Food Products K.S Enterprises

Ramesh Chand Sourabh Kumar HUF

Sourabh Garg HUF Neiil Education Pvt. Ltd.

KS Oils Ltd. Group Gratuity Scheme Garg Family Trust

Key Managerial Personnel on the Board

Mr. Ramesh Chand Garg Chairman and Managing Director

Mr. Davesh Agarwal Whole time Director

Relatives of Key Managerial Personnel

Mr. Sourabh Garg Son of CMD

Mrs. Sheela Devi Garg Spouse of the CMD

Mrs. Meeta Garg Spouse of Son (Mr. Sourabh Garg)

Mr. Shyam Kumar Garg Brother of CMD

Mr.Om Prakash Garg Brother of CMD

Mr.Mohan Lal Garg Brother of CMD

Note 14: Earning Per Share

In determining earnings per share, the Company considers the net profit after tax and includes the post tax effect of any extra- ordinary / exceptional item. The numbers of shares in computing basic earnings per share is the weighted average numbers of shares outstanding during the period. The numbers of shares used in computing diluted earnings per share comprises weighted averages shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value (i.e. the average market value of outstanding shares). Statement showing the computation of EPS is as under:

Pursuant to the note 32 (a) & (b), The Company proposes to sell whole or part of the Edible Oil Assets & Windmill Energy Assets of the Company to a buyer identify in accordance with the sale process to be undertaken by State Bank of India (acting on behalf of lenders) to repay the outstanding debt including interest of the Company. The sale of the above assets are subject to approval of shareholders u/s 293 (1) (a) of the Companies Act, 1956 through postal Ballot.

In order to above, an ordinary resolution has been passed by the shareholders of the Company u/s 293 (1)(a) on dated 7th September, 2013 through postal ballot.

(A) In accordance with the disclosure requirement of Accounting

Standard - 24 "Discontinuing Operations", following disclosures

are made as under for windmill Assets:

a) Company had several windmills in the various states of the country through which it generates power.

b) Operations of windmill activity are shown as a part of Business Segment in accordance with the requirement of AS - 17 "Segment Reporting".

c) Assets related Windmill Energy Business is required to be sold off on priority basis.

d) Carrying amount of fixed assets is shown under note no- 11 "Fixed assets" and for assets and liabilities refer note no. 43 "Segment reporting" under consolidated financial statement.

e) Revenue and Expenditure in respect to ordinary activities attributable to Windmill Energy Business are shown in note no. 43 "Segment reporting" under consolidated financial Statement.

B) In accordance with the disclosure requirement of Accounting

Standard - 24 "Discontinuing Operations", following disclosures are made as under for Edible Oil Business:

a) Company has five manufacturing units in the various states of the country through which it manufacture edible oil.

b) Operations of Edible Oil activity are shown as a part of Business Segment in accordance with the requirement of AS - 17 "Segment Reporting".

c) Assets related Edible oil Business is required to be sold off on priority basis.

d) Carrying amount of fixed assets is shown under note no- 11 "Fixed assets" and for assets and liabilities refer note no. 43 "Segment reporting" under consolidated financial statement.

e) Revenue and Expenditure in respect to ordinary activities attributable to Edible Oil Business are shown in note no. 43 "Segment reporting" under consolidated financial Statement.

1) The current financial statements is prepared for fifteen months period ended March 31,2014, hence figures for the same are not comparable with that of previous financial statements, which was prepared for the eighteen months period ended December 31,2012.

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Dec 31, 2012

Note 1 :Commitments and Contingent Liabilities (Rs. in Lacs)

As at December As at June 31, 2012 30, 2011

a) Claims against the Company not acknowledged as debts in respect of

i) Excise & custom duty matters under dispute1 52 52

ii) Commercial Taxes matter under dispute 664 114

iii) Income Tax 6 20

b) Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) 1653 1913

c) Bank Gurantee 147 139

d) Export Promotion against Capital Goods. 276 276

e) Other Commitment

i) Preference Dividend 63

ii) Dividend Distribution Tax 11

iii) Premium payable on Redemption of Cumulative Redeemable

Preference Shares in June 2021 16632 -

(f) There have been delays in filingofreturnsanddocuments with RegulatoryAuthorities and insome instances documents filed/ requiredtobefiled are not traceable with the Company. The liability, if any,inthis regard is not ascertainable.

(g) Matter in regard to dishonour of cheques issued by the Company during the financial year is pending. The liability, if any, in this regard is not ascertainable.

(h) As regards cultivation & maintenance of Jatropha plantation by the Company, one of the conditions in FIPB approval has put restrictions on such activity. The liability if any is not ascertainable. The Company has undertaken such activity in financial year 2008-09 and as stated by the management the company has not extended it further and only maintaining the same.

(i) In respect of remuneration of Rs. 96 Lacs paid in financial year 2010-11(fifteen months ended ason 30.06.11) which was in excess of ceiling prescribed under schedule XIII of the companies Act, 1956. The Company has not yet obtained approval of the central government, the liability if any is not ascertainable.

Note:

1 Amounts aggregating Rs.126 Lacs and Rs. 47 Lacs are deposited as appeal advance as on Dec 31, 2012 and June 30, 2011 respectively against Excise & Custom matters and Sales tax matters.

2 payment of redemption permium @ 65% of preference share (face value of Rs. 10/- each)is subject to the condition to that the same is being paid out from the cash balance is available with Company in excess of Rs. 7500 Lacs.

3 Short Term Loans and advances includes an amount of C.Y 39.05 Lacs being the excess of contractual remuneration paid to the Chairman and Managing Director and Director over the maximum remuneration payable under Schedule XIII of The Companies Act, 1956. Such amount has since been recovered from them.

Note 2 : Search Operation

Search Operation was conducted by Income Tax Department on Company and promoters on March11, 2010 and various documents and materials were seized by the Department during the search proceedings. The Company in order to have early resolution of matter preferred application before The Hon''ble Settlement Commission in previous year. The Hon''ble Settlement Commission, Mumbai Bench vide its order dated 24th June, 2013 has settled all the cases of the Company from FY 2003-04 to FY 2010-11. The order has no material impact. However Company has offered additional income of Rs. 625 Lacs in its application, towards which it has paid taxes of Rs. 184 Lacs for settlement of cases. The effects arising out of settlement order will be given in the accounts in the next accounting period.

Note 3 : Corporate Debt Restructuring:

a) During the financial year under consideration, mainly due to the reasons of large scale expansion/ modernization, untied fund based working capital limit and investments in overseas palm plantations, the Company started facing liquidity crunch and it was not able to fulfil its repayment obligations in respect of its borrowings from banks and financial institutions. In order to overcome the debt repayment obligations, the Company made a reference to the Corporate Debt Restructuring (CDR) cell for restructuring of the debts of the Company through CDR Mechanism. The final restructuring package was approved by CDR empowered group on 20th December, 2011. The Master Restructuring Agreement has also been signed with the lenders participating in the CDR package (''CDR Lenders'') on 14th March, 2012.CDR comprise of restructuring of loan, extension of tenure of loans, reduction of rate of interest and infusion of Rs.15,000 Lacs promoters contribution.

b) Out of the required amount of funds to be infused by the promoters as at Balance Sheet date, promoters have been able to infuse Rs. 5000 Lacs. Subsequent to the balance sheet date and at the request of the Company, the CDR Empowered Group has extended the time for balance contribution of Rs. 10,000 Lacs till 30th September, 2013.

However, pending this the Company has already taken credit for the lower rate of interest available in the CDR scheme. Consequently the interest charged to the profit and loss account for the period is lower by Rs. 6,800 Lacs as compared with the interest at the original contracted rates.

c) Subsequent to the balance sheet date, the Company has not been able to service its repayment obligations as sanctioned under CDR scheme and there have been delays and defaults. Such delays and defaults could have consequential impact on the financial statements in terms of approved CDR Scheme, which is not presently ascertainable.

Note 4 : Agricultural Activity

During the Financial Year 2008-2009, Government of Madhya Pradesh has allotted a land admeasuring 2,000 hectares to the Company on a license basis for no consideration, for carrying out the agricultural activity for a period of two years; consequently this has not been recognized as a grant. The license is under renewal.

Note 5 : Employees Stock Option Plan

Company had 125 Lacs no. of shares in ESOP scheme. As 44 Lacs no of share shares were not granted by the Company to its employees under such scheme and even after considering its cosistant lower market price, Company had decided during the period under consideration to cancel its ESOP scheme. Accordingly all such shares under ESOP scheme are now cancelled.

Further, 76 Lacs no of shares were granted by the Company in such schemes to its employees. In all such cases the Company has received a waiver letter from its employees. Accordingly all such allotments are also cancelled pursuant to the cancellation of the scheme.

Note 6 : Varriance in Cost and Sales Margin

Though the quantity of production has changed as compared with those for the earlier periods, the change in relevant expenses is not in the same proportion. This was mainly on account of plant efficiency and cost control measures. Further, there have been fluctuations in average realization of sales price during this period. This was on account of market conditions and quality of goods.

Note 7 : Inventory Verification

The Company extended its financial year to end on December 31, 2012 (i.e. covering eighteen months period) in September 2012as per decision of its board. The inventory verification was undertaken towards end December 2012 and early January 2013 by an Independent Firm of Chartered Accountants appointed by lead Bank, who roll forwarded inventory as on October 31, 2012. The discripency found by stock auditor amounted to Rs. 13,263 Lacs. Due to this, the management of the Company did not undertake any separate physical verification of inventory and statutory auditors were not able to participate in observing physical verification of inventory.

Note 8 : Going Concern

During the financial period the Company has incurred loss of Rs.1,37,203 Lacs and its net worth is eroded. Paucity of adequate working capital has also affected the operations, resulting in partial running or closure of plants (for a limited period). Company is in the process of restructuring its business; hive off non- core assets for reducing debt burden. Besides, CDR package sanctioned by lenders, the Company is actively pursuing option of re-organization of existing business and/or enter into some strategic alliance or introduce any potential investor. This would enable the Company to tide over its continuing financial burden and ensure smoother running of its plants. To implement such strategy the Company and lenders consortium have appointed a reputed consultancy firm to look into the possible alternatives and suggest plan to be implemented for restructuring, which is in progress. Under the circumstances, the financial statements have been prepared on Going Concern basis and in the opinion of the management no adjustments are considered necessary to the carrying value of its assets and liabilities.

Note 9 : Preferential issue of equity shares and warrants:

a) In order to meet the fund requirement of the Company for its (i) Expansion of refinery in India along with other allied expenditure (ii) Investment in its overseas subsidiaries for development of Greenfield palm plantations and acquisition of mature palm plantations and / or CPO mills, all in Indonesia, the Company has come out with preferential allotment of Equity Shares and Warrants to the promoters & other foreign Investors in July, 2009 at an issue price calculated under SEBI (DIP) Guidelines, 2000 on preferential basis duly approved by Shareholders and Board of Directors of the Company.

b) The entire proceeds received towards the warrants have been utilized for the purpose of expansion of Lacs. Such unutilized funds of preferential issue which were kept in FDs with the banks in previous periods, except for FD''s aggregating Rs. 2,030 Lacs, balance amount of Rs 3,035 Lacs have been utilized for the working capital of the company instead of for expansion work in foreign business, which was the primary object of raising funds.

Note 10 : Non Transfer of Dividends:

Company recommended dividend in FY2009-10 of Rs. 858 Lacs (Rs 0.18 per share) (inclusive of Dividend Distribution Tax of Rs 122 Lacs). Out of the dividend so declared, an amount of Rs 366 Lacs remains unpaid of which Rs 260 Lacs is to be paid to promoters and balance members of the Company.

Due to severe liquidity crunch, the promoters opted to defer the receipt of their part of dividend till the liquidity improves. For the same reasons the company has not transferred un- paid dividend to a separate Bank account in terms of the requirement of Sec. 205 of the Companies Act, 1956.

Note 11 : AGM and Results:

The Company has extended current accounting period to eighteen months ending on Dec 31, 2012. Pursuant to which, according to the provision of the Companies Act, the Company was required to hold on AGM within the three months from the close of the financial year. However, as most of the key personnel''s have left the Company during this period and considering the large period of the financial year and paucity of time, the company was not able get its accounts audited with in stipulated time and was unable to produce financial statement in the AGM.

Note 12 : Derivatives

a) Derivative Instruments

There are no yearend foreign currency exposure that have been hedged by derivative instrument

b) The yearend foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

i) Amount receivable in foreign currency on account of the following:

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Mar 31, 2010

1. Commitments and Contingent Liabilities

(Rs. in Lacs)

Particulars As at As at 31st March, 2010 31st March, 2009

(I) Claims against the company not acknowledged as debts in respect of

(a) Excise and custom duty matters under dispute 48.46 48.46

(b) Commercial Taxes matter under dispute 237.35 32.31

(c) Income Tax 19.11 4.35

(II) Estimated amount of contracts remaining to be executed on 3,694.50 6,575.98

capital account and not provided for (Net of advances)

(III) Bank/ Corporate Guarantee 8,012.76 255.26

(IV) Export Promotion against Capital Goods. 283.24 15.78

Note:

An amount of Rs. 52.35 Lacs and Rs. 30.95 Lacs is deposited as appeal advance as on 31st March, 2010 and 31st March, 2009 respectively against Excise and Customs matters and Sales tax matters.

NOTES

forming part of the Financial Statements

2. Preferential Issues of Equity Shares and Warrants

a) In order to meet the fund requirement of the Company for its (i) Expansion of refinery in India along with other allied expenditure (ii) Investment in its overseas subsidiaries for development of Greenfield palm plantations and acquisition of mature palm plantations and/or CPO mills, all in Indonesia. The Company has come out with preferential allotment of Equity Shares and Warrants to the promoters and other foreign Investors during the year at an issue price calculated under SEBI (DIP) Guidelines, 2000 on preferential basis duly approved by Shareholders and Board of Directors of the Company.

b) During the year Company has allotted 2,79,21,406 Equity Shares of Rs. 1/- each at a premium of Rs. 47.43/- each to NSR Direct PE Mauritius, LLC and raised Rs. 13,522.30 Lacs.

c) On 5th September, 2009 the Company has allotted 86,72,566 Warrants to Baring Private Equity Asia III Mauritius Holdings (3) Limited of Rs. 1/- each at premium of Rs. 55.50/- per Warrant and receive 25% of the Issue price and raised Rs. 1,225.43 Lacs.

d) On 5th September, 2009 the Company has allotted 86,72,566 Warrants to:-

1. CVCIGP II Client Rosehill Limited - 55,59,115.

2. CVCIGP II Employee Rosehill Limited - 31,13,451

of Rs. 1/- each at premium of Rs. 55.50/- per Warrant upon receipt of 25% of the Issue price and raised Rs. 1,225.43 Lacs.

e) During the year the Company has allotted 2,88,07,339 warrants to promoter of Rs. 1/- each at a premium of Rs. 53.50/- each on receipt of Rs. 3,926.00 Lacs towards 25% of issue price. Further on 29th January, 2010, Company has allotted 1,23,46,002 equity shares of Rs. 1/- each to promoters upon conversion of 1,23,46,002 promoters warrants on receipts of Rs. 5,046.00 Lacs towards balance 75% of issue price. The Company had also received an additional amount of Rs. 2,454.00 Lacs which has been appropriated towards exercise price of promoter warrants pending for allotment.

f) The entire proceeds have been utilized for the purpose of expansion of refinery in India along with other allied expenditure and for investment in its subsidiaries except having Rs. 7,537.17 Lacs which were in the shape of Fixed Deposit Receipts at the end of the year.

3. GDR Issue

a) The Company has also come out with GDR Issue during July, 2009 to meet its requirement of expenditure for the purpose of expansion of refinery in India along with other allied expenditure and for investment in its subsidiaries. These overseas subsidiaries shall use these amounts for development of Greenfield palm plantations and acquisition of matured palm plantations and/or CPO mills, all in Indonesia. The Company has issued 12,40,952 GDRs on 15th July, 2009 to foreign investors and raised Rs. 6,008.35 Lacs (US$ 123.40 Lacs). The GDRs are listed with Singapore Stock Exchange and each GDR is entitled to be converted into 10 Equity Shares of Rs. 1/- each.

b) Out of the amount raised by the Company through GDR Issue during financial year 2009-10, the entire proceed has been utilized for the purpose of expansion of refinery in India along with other allied expenditure and for investment in its subsidiaries.

4. Share Issue Expenses

To be in conformity with Accounting Standards-26 on "Intangible Assets" and as per provision of Section 78 of Companies Act, 1956, "Share issue expenses" (Including GDR/ Private Equity issue expenses) amounting to ` 380.69 Lacs (Previous year - ` 27.57 Lacs) are charged off against Security Premium Account.

5. Agricultural Activity

During the Financial Year 2008-2009, Government of Madhya Pradesh has allotted a land admeasuring 2,000 hectares to the Company on a license basis for no consideration, for carrying out the agricultural activity for a period of two years; consequently this has not been recognized as a grant.

6. Derivatives

a) Derivative Instruments

The following are the outstanding hedge contracts:

ii. Commodities Hedging Contracts

The Company has entered into commodity contracts (being a derivative instrument), which are intended for hedging purpose.

7. Employee Stock Option Scheme

a) During the year, the Company has not granted any Employee Stock Options to employees of the Company.

b) Method of accounting of ESOS –

The Company has adopted intrinsic value method in accounting for employee cost on account of ESOS. For 17,75,000 Options, the intrinsic value of the shares based on closing market price of BSE/ NSE as on 24th October, 2008 was Rs. 40.30 and Rs. 40.10 respectively and the exercise price fixed by the compensation committee of the Company was Rs. 42.00 and for 5,75,000 Options the intrinsic value of the shares based closing market price of BSE/NSE as on 14th November, 2008 was Rs. 39.55 and Rs. 39.45 respectively and the exercise price was fixed by the compensation committee of the Company was Rs. 42.00/- The difference between the intrinsic value and the exercise price is being amortized as employee compensation cost over the vesting period. The total amount to be amortized over the vesting period is Nil. Accordingly, the Company has not taken any impact in Profit and Loss account towards Employee Compensation cost.

d) Certain Disclosures in respect of the scheme are as under:

i. As the options are granted using the Face value, no employee compensation cost will arise. ii. Weighted Average exercise price of Options granted whose:

iii. Method and Assumptions used to estimate the fair value of options granted during the year: The fair value has been calculated using the Black Scholes Option Pricing model

b) Defined Benefit Plan:

1. Gratuity (Funded)

2. Leave Encashment (Non-funded)

In terms of the guidance on implementing the revised AS 15, issued by the Accounting Standards Board of the Institute of Chartered Accountants of India, the Gratuity trust set up by the Company is treated as defined benefit plan since the Company has to meet the shortfall, if any. However, at the year end, no shortfall remains unprovided for.

Leave encashment is payable to eligible employees who have earned leaves, during the employment and/or on separation as per the Companys policy.

Valuations in respect of Gratuity and Leave encashment, as at the Balance Sheet date, based on the following assumptions:

8. Related Party Disclosures

a) Transactions with Related Parties as specified under Accounting Standard-18 issued by the Institute of Chartered Accountants of India -

Subsidiary K S Natural Resources Pte Ltd. Fellow Subsidiaries K S Oils SDN.BHD. K S Agri Resources Pte. Ltd. PT Buana Mega Sentosa Plantation PT Mega Artha Peresada PT Biodiesel Jambi PT Tunas Bersusun Abadi PT Luvang Urip

Enterprises over which Key Managerial Personnel exercises significant influence. K S Food Products K S Enterprises Ramesh Chand Sourabh Kumar HUF Sourabh Garg HUF K S Oils Ltd. Employees Group Gratuity Scheme

Key Managerial Personnel on the Board

Mr. Ramesh Chand Garg Chairman Mr. Sanjay Agarwal Managing Director Mr. Sourabh Garg Whole-Time Director Mr. R. Ganesh Whole-Time Director

Relatives of Key Managerial Personnel

Mrs. Sheela Devi Garg Spouse of the Chairman Mrs. Meeta Garg Spouse of Whole-Time director (Mr. Sourabh Garg) Mr. Shyam Kumar Garg Brother of the Chairman Mr. Om Prakash Garg Brother of the Chairman Mr. Mohan Lal Garg Brother of the Chairman

Notes:

1. Rental cost is annually escalated between seven and twenty percentage. Annual escalation for every transaction is considered from the effective date of rent agreement. Except in case of some agreement where the escalation is effective after the execution of the rent agreement.

2. On expiration of the above stated lease agreements, the same can be renewed on the basis of mutual consent of the lessor and lessee.

3. Additional amount of service tax will be paid on the above stated lease rental amount according to the rates

applicable at the time of respective lease rental payments.

4. Total lease rental cost recognized in the financial statement is of ` 1,207.19 Lacs (Previous Year Rs. 285.70 Lacs).

5. The Companys significant leasing arrangements are in respect of plant and machinery, storage tank and factory premises taken on lease for manufacturing activities at Kota and Ratlam. The arrangements range between 11 months and 10 years generally and are usually renewable by mutual consent of both parties or mutually agreeable terms.

Disclosures

A. Primary Segment

a) Business Segment:

Segment identified by the Company comprises as under:

i. Edible Oil: Extraction of seed, Refind oil, Vanaspati oil, Income from commodity hedging transaction

(Derivatives), High sea sales and local trading. ii. Power Generation: Windmill. iii. Others: Agriculture income.

By-products under each segment have been included under the respective segment.

b) Segment Revenue and Expenses:

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 enterprises as a whole and are not allocable to a segment on a reasonable basis have been disclosed as "Unallocable"

c) Segment Assets and Liabilities:

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

d) Inter segment Transfers:

Segment revenue, segment expenses and segment results include transfer between business segments, such transfers are eliminated in consolidation.

e) Accounting Policies:

The accounting policies consistently used in the Preparation of the financial statements are also applied to item of revenue and expenditure in individual segments.

B. Secondary Segment: Geographical Segment

Out of the total turnover, majority portion of revenue pertains to domestic turnover; hence Secondary segment has not been disclosed.

9. Earning Per Share (EPS)

In determining earnings per share, the Company considers the net profit after tax and includes the post tax effect of any extra-ordinary/ exceptional item. The numbers of shares in computing basic earnings per share is the weighted average numbers of shares outstanding during the period. The numbers of shares used in computing diluted earnings per share comprises weighted averages shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value (i.e. the average market value of outstanding shares). Statement showing the computation of EPS is as under:

10. Comparative Figures

Previous years figures have been regrouped/ reclassified wherever necessary to conform to current years classification.