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Notes to Accounts of Mawana Sugars Ltd.

Mar 31, 2017

1. (B) The Indian sugar industry, particularly in the State of Uttar Pradesh, had faced difficulties on account of increased sugar cane prices and corresponding lower than expected recovery of sugar from cane, lower sugar prices and consequential under recovery of cost of production in recent times. These factors adversely affected the Company''s operations and financial performance, resulting into eroded net worth, cash losses, mounting cane dues arrears due to which its current liabilities exceeded its current assets and defaults in debt obligations.

The Company got registered with the Board for Industrial and Financial Reconstruction (BIFR) on 10th September

2013 as sick industrial company (in terms of Section 3(1)(o)) under the provisions of Section 15 (1) of the Sick Industrial Companies (Special Provisions), Act, 1985 (SICA). Meanwhile, the Ministry of Finance issued Notifications S.O. 3568 (E ) & S.O. 3569 (E ) dated 25 November, 2016 to the effect that SICA has been repealed with effect from 1 December, 2016 and all the references or inquiry pending before the BIFR shall stand abated. With this Notification BIFR ceased to exist.

Since the previous sugar season, the industry has witnessed a steady increase in sugar prices and improved cane recoveries. This has resulted in the Company generating profits during the last financial period as well as in current year ended March 31, 2017.

The Company has taken the following steps to improve its financial position through a business and financial restructuring as indicated below:

* Executed a Business Transfer Agreement (BTA) on November 18, 2016 with Indian Potash Limited (IPL) to sell off its Agreed Assets and Liabilities excluding contingent liabilities of Titawi Sugar Complex (unit) as a going concern on an ‘AS IS WHERE IS WHAT IS'' basis by way of a slump sale. Such sale is on certain terms and conditions, part of which have been fulfilled and the rest are under process. The sale is governed by the BTA which stipulates completion of these activities within a certain time frame as mutually agreed between the parties.

Accordingly, IPL has taken control of the unit and these accounts reflect comprehensive sale of aforesaid assets/ liabilities. The Company has recognized a net gain of Rs. 2347.04 million which has been reflected under exceptional item in the Statement of Profit and Loss.

* Effected one time settlement agreements with three lenders, which resulted in the waiver of principal and interest amounting to Rs. 1028.23 million which has been reflected as a gain under exceptional item in the Statement of Profit and Loss.

* Pursuant to the assignment of all rights, titles and interests in the financial assistance granted by two other lenders to the Company with an asset reconstruction company, a major portion of the outstanding debts has been restructured for repayment till 2021.

* The Company has resolved its debt liability with one more lender during the current year by way of one time settlement (OTS). In terms of the settlement, the OTS amount is payable till 30th June, 2018.

The above measures have resulted in positive new worth of the Company as on 31st March 2017.

In view of the above, the Management of the Company is confident that the Company would be in a position to realize its assets and discharge its liabilities successfully in the normal course of its business. Accordingly, these financial statements have been prepared on a going concern basis.

(i) There are no changes in issue, subscribed and fully paid up capital during the year and in the previous period.

(ii) The Company has changed its Authorized Share Capital from 175,000,000 Equity Shares of Rs. 10/- each to 100,000,000 Equity shares of Rs. 10/- each aggregating to Rs.1,000 million and 7,500,000 Preference Shares of Rs. 100/- each aggregating to Rs.750 million in AGM held on 13.06.2016. Each holder of equity shares is entitled to one vote per share except 1,192 equity shares held by Siel Infrastructure & Estate Developers Private Limited, a subsidiary which pursuant to second proviso of section 19(1) of the Companies Act, 2013, has no right to vote at the meetings of the Company. Each holder of equity shares have a right to receive per share dividend declared by the Company. In event of liquidation of the Company, holder of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.

1 Includes Rs. 991.46 million (previous period Rs. 991.46 million) representing the extinguishment of the debts of erstwhile Mawana Sugars Limited (MSL), which got discharged pursuant to the surplus arising on sale of shares of Shivajimarg Properties Limited.

# a) During the previous period, pursuant to an assignment of all rights, titles and interest in the financial assistance i.e Long term borrowings, Short term borrowing, cash credit and Funded Interest Term Loan granted by two term lenders to the Company with an Asset Reconstruction Company, Rs. 2210 million which was earlier restructured for repayment till 2023 has been rescheduled for repayment till 2021 in the current year*.

b) The Company has resolved its debt liability with one more lender during the current year by way of one time settlement (OTS). In terms of the settlement, the OTS amount is payable till 30th June, 2018*.

* Accordingly such Long term borrowings, Short term borrowings, cash credits and Funded Interest Term Loans which hither to were classified under Long term borrowings, Short term borrowings and other current liabilities have now been reflected under Long term borrowings and Other current liabilities in Note 4 and 9 respectively.

c) Effected one time settlement agreements with three lenders, which resulted in the waiver of principal and interest amounting to Rs. 1028.23 million which has been reflected as a gain under exceptional item in the Statement of Profit and Loss.

A i) Cash credit / overdraft amounting to Nil (previous period Rs. 422.10 million) are secured by first pari-passu charge on the current assets of the Company and third pari-passu charge on the fixed assets of sugar units of the Company. This limit is also secured by second pari-passu charge on the fixed assets of chemical division of the Company. Further, these loans are also secured by corporate guarantee issued by Siel Industrial Estate Limited and equitable mortgage of its industrial estate land measuring 455.23 acres at Rajpura in the state of Punjab and personal guarantee of the former Chairman and Managing Director of the Company.

ii) Cash credit amounting to Nil (previous period Rs. 46.34 million) are secured by first pari-passu charge on the current assets of the Company and fixed assets of chemical division of the Company situated at Rajpura in the state of Punjab.

iii) Refer note 4 (#b)

B The period and amount of continuing default in repayment of borrowings as at the year/period end:

c) The Company has provided bank guarantees aggregating Rs. 72.01 million (Previous period Rs. 72.01 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous period, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31, 1997, or prior to March 31, 1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 43.68 million (Previous period Rs. 43.68 million) have been received. These demands are presently under various stages of appeal.

d) During the previous periods, the Company had given a counter indemnity/guarantee in favour of existing directors of Transiel India Limited to protect their interest against any loss/ future liabilities that may arise after the name of the said subsidiary has been struck off under the Easy Exit Scheme, 2011.

2 Research and development expenses included under relevant heads in the Statement of Profit and Loss amounting to Rs. 6.00 million (previous period Rs. 4.21 million).

3 Accounting for taxes on income:-

In accordance with the Accounting Standard (AS) 22 ‘Accounting for Taxes on Income'' specified under Section 133 of the Companies Act, 2013,deferred tax assets have been recognized only to the extent of deferred tax liabilities, the details of which are as under:

4 Sales are net of commission of Rs. 21.37 million (previous period Rs. 37.21 million).

@ Rs. 74.75 million (Previous period Rs. 99.92 million) has not been funded

# The plan assets are maintained with Life Insurance Corporation of India (LIC) Gratuity Scheme. The details of investments maintained by LIC are not made available to the Company and therefore has not been disclosed.

5 Segment reporting

A. Business Segment

Based on the guiding principles given in Accounting Standard (AS) 17 “Segment Reporting” specified under Section 133 of the Companies Act, 2013, the Company''s Business segments include Sugar, Power, Chemical and Distillery.

B. Geographical Segment

Since the Company''s activities/operations are primarily within the country and considering the nature of products/ services it deals in, the risks and returns are same and as such there is only one geographical segment.

C. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note 1(A) above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

c) Inter segment revenues:

Inter segment revenues between operating segments are accounted for at market price. These transactions are eliminated in consolidation.

6 Related party disclosures under Accounting Standard 18

Name of related party and nature of related party relationship

Promoter:

Mr. Siddharth Shriram Subsidiaries:

Siel Financial Services Limited,

Siel Industrial Estate Limited,

Siel Infrastructure & Estate Developers Private Limited Key Management Personnel(KMP):

Mr. Dharam Pal Sharma - Whole Time Director (w.e.f. August 13, 2015)

Dr. Anil Arora - Chief Financial Officer (w.e.f. November 05, 2015)

Mr. Ashok Kumar Shukla - Company Secretary (w.e.f. July 04, 2015)*

Mr. Ritesh Jain - Company Secretary (resigned w.e.f. March 10, 2015)*

Enterprises over which key management personnel/Promoter have significant influence:

Usha International Limited

Mawana Foods Private Limited (Formerly known as Mawana Foods Limited) (subsidiary company of Usha International Limited).

7 Operating lease:

The Company has taken properties on cancellable and non-cancellable operating lease and has recognized rent of Rs. 33.72 Million (Previous period Rs. 52.66 Million) during the year in the Statement of Profit and Loss.

8. i) The Central Government had approved the erstwhile Chairman and Managing Director''s remuneration (w.e.f. October

15, 2012) vide letter dated April 21, 2014 at an amount lower than that approved by the shareholders in their general meeting. Consequent thereto, the Company had made a representation to the Central Government on November 5, 2014 for waiver of excess remuneration paid to Chairman and Managing Director (ceased to be Managing Director w.e.f. July 31, 2014). Pending outcome thereof, refund of excess remuneration amounting to Rs. 7.04 million paid in terms of shareholders'' approval has not been obtained by the Company.

ii) The Central Government had approved the former Whole time Director (WTD) remuneration (w.e.f. February 01, 2014) vide letter dated June 30, 2015 at an amount lower than that approved by the shareholders in their general meeting. Consequent thereto, the Company had made a representation to the Central Government on July 21, 2015 for waiver of excess remuneration paid to the former Whole Time Director (ceased to be WTD w.e.f. December 31, 2014). Pending outcome thereof, refund of excess remuneration amounting to Rs. 6.61 million paid in terms of shareholders'' approval has not been obtained by the Company.

iii) The remuneration amounting to Rs 2.89 million (previous period Rs. 1.08 Million) paid to Whole Time Director (WTD)(w.e.f. August 13, 2015) up to March 31, 2017 is subject to the approval of the Central Government under the provisions of the Companies Act, 2013.

9 During the previous period ended March 31, 2016, pursuant to an Order of Hon''ble High Court of Punjab & Haryana , the Company''s 100% subsidiary viz. Siel Industrial Estate Limited (Siel IE) was ordered to pay additional compensation to the farmers from whom the Land had been acquired. Having regard to the fact that Siel IE has no business activity/ income of its own, the Company paid Rs. 40.00 million to Siel IE by way of subscription to the Right Issue of 4,000,000 5 % Redeemable Cumulative Preference Shares of Rs 10 each fully paid.

10 In the previous period ended March 31, 2016, pursuant to Companies Act, 2013 (‘the Act'') being effective from January 1, 2015, the company had revised depreciation rates on fixed assets as per the useful life specified in Part ‘C'' of schedule II of the Act. As a result of this change, the depreciation charged for the period ended March 31, 2016 was lower by Rs. 243.53 Million. In respect of the assets whose useful life was already exhausted as at December 31, 2014, depreciation of Rs. 49.13 million had been adjusted in the Statement of Profit and Loss for the period ended March 31, 2016 in accordance with the requirement of the Schedule II of the Act.

11 Pursuant to judgment dated 10.5.1996 passed by the Hon''ble Supreme Court of India in a public interest litigation the Company surrendered 46.58 acres of land to the Delhi Development Authority (‘DDA'') and dedicated it exclusively for the development of green belt and open spaces. Consequently, the Company is no longer in physical possession of 46.58 acres owned by it.

The Company had filed a Review Petition in the Hon''ble Supreme Court of India challenging the order of surrender of land to the DDA. During the pendency of this Review Petition, the DDA leased out some portion of the land surrendered by the Company to Delhi Metro Rail Corporation (‘DMRC''). The Company filed an application before the Hon''ble Supreme Court of India in the pending Review Petition against the leasing of land by DDA to DMRC as this was contrary to the purpose for which the Company has surrendered and dedicated the land.

Although the Hon''ble Supreme Court of India dismissed the aforesaid Review Petition by order dated 25.3.2010 but on the Company''s application against the leasing of land by DDA to DMRC stated and directed as follows : “...the DDA which holds the surrendered and dedicated land in Trust cannot use it for any purpose other than as green belt or other spaces for the benefit of the community. In the event of any acquisition or development of surrendered land, the owner - dedicator will have the benefit of compensation on account of land ceasing to be ‘land dedicated to the community purpose of lung/open space.'' when such acquisition/alienation takes place, DDA and the land owner will be entitled to share the compensation at 50% each.”

In view of the aforesaid judgment, benefits earned by DDA from the surrendered land are to be shared equally with the Company.

12 In the previous period ended March 31, 2016, the Government of Uttar Pradesh had announced subsidy on sugar cane purchased during the sugar season 2014-15 linked to average selling price of sugar and its by-products during the period 1st October, 2014 to 31st May, 2015. As such, the Company had recognized the full subsidy of Rs. 28.60 per qtl. aggregating to Rs. 766.2 million which has been netted off from the cost of material consumed for period ended March 31, 2016.

13 The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

14 There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company

15 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

On the basis of supplier information available with the Company who have registered under the Micro Small and Medium Enterprise Development Act, 2006 (MSMED Act, 2006), the following are the details.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

16 Consequent upon restructuring of debts of the Company, a part of the principal amount of the term loan amounting to Rs

640.78 million, that was availed in the past for acquisition of capital assets, has been written back and credited as an exceptional item in the Statement of Profit and Loss of the Company for the year. Based upon decision of Income Tax Appellate Tribunal in respect of such matter rendered in another case and legal opinions obtained from expert tax consultants, this amount is treated as capital receipt and not included in book profit for the purposes of calculation of tax under section 115 JB of the Income Tax Act 1961.

The statutory auditors have expressed qualification in respect of the matter referred to in Note 48 above.

17 Previous period''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosures.

18 The current financial year is for a period of 12 months and includes the operations of Titawi Sugar Complex (Unit) up to October 31, 2016 after which it has been sold to Indian Potash Limited (refer note 1(B)) whereas the previous financial period is for 15 months and includes the operations of Titawi Sugar Complex (Unit) for the full period. As such, the figures of the current financial year are not comparable with the figures of the previous period.

''Includes 49.29% (Previous year 49.29%) held by Siel Infrastructure & Estate Developers Private Limited. (SIEL-IED), a wholly owned subsidiary.


Dec 31, 2014

1. The Company over the last few years has been incurring cash losses due to which its net worth has been completely eroded and its current liabilities are far in excess of its current assets. The Indian sugar industry, particularly in the State of Uttar Pradesh, has faced difficulties on account of increasing sugar cane prices and corresponding lower than expected recovery of sugar from cane, lower sugar prices and consequential under recovery of cost of production. These factors have adversely affected the Company''s operations and financial performance. Higher finance costs have also added to the cash losses.

The Company got registered with the BIFR on 10th September 2013 under the provisions of Section 15(1) of the Sick Industrial Companies (Special Provisions), Act, 1985 (SICA). The process for revival/rehabilitation of the Company is under way in line with the prescribed procedure and rules under SICA.

The State and Central Government have initiated various steps to support the sugar industry like decontrol of free sale of sugar release mechanism, doing away with levy quota system and also considering linking the sugar cane price with sugar price. All the aforesaid measures are expected to support the industry and also the operations of the Company in the near future. The Company has also initiated various steps including cane developement activities, enhancing plant efficiencies, costs reduction etc. to improve the performance of the Company.

As such, the Company is confident that BIFR will approve a rehabilitation scheme which would entail part sale of its surplus/non-core assets to discharge some of its financial obligations and improve cash flow, reschedulement of the outstanding debt/payables (including overdue debt/payables), and other requisite financial restructuring in consultation with various stakeholders to improve its financial position including net worth. Based on an internal assessment and valuation done by an independent valuer, the Management is confident that the current fair market value of the aforesaid assets it proposes to dispose as part of the rehabilitation scheme would be sufficient to discharge its financial obligations as envisaged in the scheme.

In view of the above, the Board of Directors of the Company is confident that the Company would be in a position to realize its assets and discharge its liabilities by successfully implementing the rehabilitation scheme and in the normal course of its business. Accordingly, these financial statements have been prepared on a going concern basis."

(i) The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share except 1,192 equity shares held by Siel Infrastructure & Estate Developers Private Limited, a subsidiary which pursuant to second provision of section 19(1) of the Companies Act, 2013, has no right to vote at meeting of the Company. Each holder of equity shares have a right to receive per share dividend declared by the Company. In event of liquidation of the Company, holder of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.

1. Cash credit / overdraft amounting to Rs. 1909.97 million (previous year Rs. 2006.75 million) are secured by first pari- passu charge on the current assets of the Company and third pari-passu charge on the fixed assets of sugar units of the Company. This limit is also secured by second pari-passu charge on the fixed assets of chemical division of the Company. Further, these loans are also secured by corporate guarantee issued by Siel Industrial Estate Limited and equitable mortgage of its industrial estate land measuring 455.23 acres at Rajpura in the state of Punjab and personal guarantee of the erstwhile Chairman and Managing Director of the Company.

2. Cash credit amounting to Rs. 51.35 (previous year Rs. 84.68 million) are secured by first pari-passu charge on the current assets of the Company and fixed assets of chemical division of the Company situated at Rajpura in the state of Punjab.

3. Cash credit / overdraft amounting to Rs. Nil (previous year Rs. 1627.13 million) are secured by pledge of sugar stocks with U.P. Co-operative Bank and District Co-operative Banks in the State of Uttar Pradesh.

4. The Company has provided bank guarantees aggregating Rs. 72.01 million (Previous year Rs. 78.18 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous year, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31, 1997, or prior to March 31, 1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 43.68 million (Previous year Rs. 44.53 million) have been received. These demands are presently under various stages of appeal.

5. During a previous period, the Company had given a counter indemnity/guarantee in favour of existing directors of Transiel India Limited to protect their interest against any loss/ future liabilities that may arise after the name of the said subsidiary has been struck off under the Easy Exit Scheme, 2011.

I. Research and development expenses included under relevant heads in the Statement of Profit and Loss amounting to Rs. 4.09 million (previous year Rs. 2.99 million).

II. Accounting for taxes on income:-

In accordance with the Accounting Standard (AS) 22 ''Accounting for Taxes on Income'' notified in the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") read with rule 7 of the Companies (Accounts) Rules, 2014) deferred tax assets and liabilities have been recognized on the basis of projections after considering unabsorbed depreciation and timing differences which will be reversed against future taxes in accordance with AS-22. Accordingly, deferred tax assets have been recognized only to the extent of deferred tax liability, the details of which are as under:

III. Sales are net of commission of Rs. 29.30 million (previous year Rs. 36.60 million).

IV. Employee Benefits:

Disclosures required under Accounting Standard (AS) - 15 "Employees Benefits" notified in the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") read with rule 7 of the Companies (Accounts) rules, 2014):

V. Segment reporting

A. Business Segment

Based on the guiding principles given in Accounting Standard (AS) 17 "Segment Reporting" notified in the Companies (Accounting Standards) Rules, 2006 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts) rules, 2014), - the Company''s business Segment includes Sugar, Power, Chemical and Distillery.

B. Geographical Segment

Since the Company''s activities/operations are primarily within the country and considering the nature of products/ services it deals in, the risk and returns are same and as such there is only one geographical segment.

C. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note 1(A) above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

c) Inter segment revenues:

Inter segment revenues between operating segments are accounted for at market price. These transactions are eliminated in consolidation.

VI. Related party disclosures under Accounting Standard 18 Name of related party and nature of related party relationship

Promoter:

Mr. Siddharth Shriram- (Chairman and Managing Director Upto July 31,2014)

Subsidiaries:

Siel Financial Services Limited,

Siel Industrial Estate Limited,

Siel Infrastructure & Estate Developers Private Limited Key Management Personnel:

Mr. Siddharth Shriram - Chairman and Managing Director (resigned w.e.f. August 01,2014)

Mr. Rajendra Khanna - Whole Time Director (resigned w.e.f. December 31,2014)

Mr. A. K. Mehra - Whole Time Director (resigned w.e.f. July 31,2014)

Mr. Sunil Kakria - Managing Director (resigned w.e.f. August 01,2013)

Enterprises over which key management personnel have significant influence:

Usha International Limited (holding company upto June 20, 2013)

Mawana Foods Private Limited (Formerly known as Mawana Foods Limited) (subsidiary company upto June 28, 2013) Details of Related Party Transactions:

VI. In the previous year, prior period adjustment represents elimination of profit from the value of the investments held by the Company in Siel Infrastructure and Estate Developers Private Limited to give effect to the Statutory Auditor''s qualification on the Company''s financial statements for the period ended September 30, 2012.

VII. In the previous year, exceptional items represent profit on sale of investment in Mawana Foods Private Limited (MFPL) (Formerly known as Mawana Foods Limited) and Ceratizit India Private Limited (CIPL) of Rs. 50.10 million and Rs. 137.36 million respectively.

VIII. The Central Government had approved the Chairman and Managing Director remuneration (w.e.f. October 15, 2012) vide letter dated April 21,2014 at an amount lower than that approved by the shareholders in their general meeting. Consequent thereto, the Company had made a representation to the Central Government on November 5, 2014 for waiver of excess remuneration paid to Chairman & Managing Director (cease to be managing director w.e.f. August 01, 2014). Pending outcome thereof, refund of excess remuneration amounting to Rs. 70.40 lacs paid in terms of shareholders approval has not been obtained by the Company.

IX. Pursuant to judgment dated 10.5.1996 passed by the Hon''ble Supreme Court of India in a public interest litigation the Company surrendered 46.58 acres of land to the Delhi Development Authority (''DDA'') and dedicated it exclusively for the development of green belt and open spaces. Consequently, the Company is no longer in physical possession of 46.58 acres owned by it.

The Company had filed a Review Petition in the Hon''ble Supreme Court of India challenging the order of surrender of land to the DDA. During the pendency of this Review Petition, the DDA leased out some portion of the land surrendered by the Company to Delhi Metro Rail Corporation (''DMRC''). The Company filed an application before the Hon''ble Supreme Court of India in the pending Review Petition against the leasing of land by DDA to DMRC as this was contrary to the purpose for which the Company has surrendered and dedicated the land.

Although the Hon''ble Supreme Court of India dismissed the aforesaid Review Petition by order dated 25.3.2010 but on the Company''s application against the leasing of land by DDA to DMRC stated and directed as follows : "...the DDA which holds the surrendered and dedicated land in Trust cannot use it for any purpose other than as green belt or other spaces for the benefit of the community.In the event of any acquisition or development of surrendered land, the owner - dedicator will have the benefit of compensation on account of land ceasing to be ''land dedicated to the community purpose of lung/ open space.'' when such acquisition/alienation takes place, DDA and the land owner will be entitled to share the compensation at 50% each."

In view of the aforesaid judgment, benefits earned by DDA from the surrendered land are to be shared equally with the Company.

X. The current financial year is for a period of fifteen months from October 01, 2013 to December 31, 2014 whereas the corresponding previous year figures were for a period of twelve months from October 01,2012 to September 30, 2013. Therefore, the corresponding figures of previous year are not directly comparable with those of current period.

XI. Previous period''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosures.


Sep 30, 2013

1. Pursuant to the Scheme of Arrangement for Amalgamation (the "Scheme") of the erstwhile Mawana Sugars Limited (MSL) with the Company under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon''ble High Court of Delhi vide its Order dated September 11, 2007 which became effective on October 15, 2007 on fling of the certifed copy of the Order of the High Court in the Offce of Registrar of Companies, NCT Delhi & Haryana, all the properties, assets, both movable and immovable, liabilities including contingent liabilities and reserves of erstwhile MSL have without further act or deed, been transferred to and vested in the Company at their book values, as a going concern with effect from the appointed date i.e. October 1, 2006. Subsequently, the name of the Company has been changed to Mawana Sugars Limited w.e.f. January 4, 2008.

2. Contingent liabilities:

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

- Income tax 336.70 336.70

- Sales tax 81.03 80.98

- Excise Duty/Service tax 221.69 176.55

- Others 357.74 235.48

*All the above matters are subject to legal proceedings in the ordinary course of business. The legal proceedings, when ultimately concluded, in the opinion of the management, will not have a material effect on the results of the operations or fnancial position of the Company.

b) Guarantee given to bank for repayment of fnancial facilities 70.00 70.00 provided to Mawana Foods Limited

Dues outstanding 33.61 34.51

c) The Company has provided bank guarantees aggregating Rs. 78.18 million (Previous period Rs. 78.18 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous year, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31, 1997, or prior to March 31, 1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 44.53 million (Previous period Rs. 44.53 million) have been received. These demands are presently under various stages of appeal.

d) During a previous period, the Company had given a counter indemnity/guarantee in favour of existing directors of Transiel India Limited to protect their interest against any loss/ future liabilities that may arise after the name of the said subsidiary has been struck off under the Easy Exit Scheme, 2011.

3. Research and development expenses included under relevant heads in the Statement of Proft and Loss amounting to Rs. 2.99 million (previous period Rs. 3.44 million).

4. Accounting for taxes on income:- In accordance with the Accounting Standard (AS) 22 ''Accounting for Taxes on Income'' notifed in the Companies (Accounting Standards) Rules, 2006, deferred tax assets and liabilities have been recognized on the basis of projections after considering unabsorbed depreciation and timing differences which will be reversed against future taxes in accordance with AS-22. Accordingly, deferred tax assets have been recognized only to the extent of deferred tax liability, the details of which are as under:

5. Sales are net of commission of Rs. 36.60 million (previous period Rs. 39.54 million).

6. The Company had imported plant and machinery in previous years under EPCG scheme. An export obligation (''EO'') amounting to USD 91.68 million was placed on the Company which was to be fulflled in a period of 8 years starting from April 1997. Subsequently, the said EO was refxed at USD 73.74 million and the EO period was extended to 30.03.2007 in terms of the Foreign Trade Policy Handbook of procedure (HBP) 2002-2007.

By letter dated May 4, 2011 the DGFT had extended the EO period by 765 days w.e.f. April 19, 2011.

The Company has fulflled the entire EO. The application for redemption of EPCG license was fled and had been redeemed by the licensing authority.

7. Employee Benefts:

Disclosures required under Accounting Standard (AS) - 15 "Employees Benefts" notifed in the Companies (Accounting Standards) Rules, 2006 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs), are as under:

i) Defned Contribution Plan and amount recognized in the Statement of Proft and Loss.

8. Segment reporting

A. Business Segment

Based on the guiding principles given in Accounting Standard (AS) 17 "Segment Reporting" notifed in the Companies (Accounting Standards) Rules, 2006 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs), - the Company''s business Segment includes Sugar, Power, Chemical and Distillery.

B. Geographical Segment

Since the Company''s activities/operations are primarily within the country and considering the nature of products/ services it deals in, the risk and returns are same and as such there is only one geographical segment.

C. Segment accounting policies:

In addition to the signifcant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fxed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

c) Inter segment revenues:

Inter segment revenues between operating segments are accounted for at market price. These transactions are eliminated in consolidation.

9. There are various issues relating to sales tax, income tax etc. arisen / arising out of the reorganisation arrangement of DCM Limited which will be settled and accounted for in terms of the Scheme of Arrangement of DCM Limited and memorandum of understanding between all the companies involved as and when the liabilities/benefts are fully determined.

In the opinion of the management, having regard to the current status of the assessment proceedings at various stages and since no demand has been received by the Company on this account, the effect of these matters on the fnancial statements, though not determinable at this stage, are not expected to be signifcant.

10. Related party disclosures under Accounting Standard 18

Name of related party and nature of related party relationship

Subsidiaries:

Siel Financial Services Limited,

Siel Industrial Estate Limited,

Siel Infrastructure & Estate Developers Private Limited (Formerly known as Avro Sales Private Limited) (w.e.f. September

13, 2012)

Key Management Personnel:

Mr. Siddharth Shriram – Chairman and Managing Director

Mr. K.P. Singh – Whole Time Director (deceased on April 20, 2011)

Mr. A. K. Mehra – Whole Time Director

Mr. Sunil Kakria – Managing Director (resigned w.e.f. August 1, 2013)

Enterprises over which key management personnel have signifcant infuence:

Usha International Limited (holding company upto June 20, 2013) Mawana Foods Limited (subsidiary company upto June 28, 2013)

11. The Company has facilitated Agri loans from Punjab National Bank (Bank) to the farmers who supply sugarcane to the Company. These loans were distributed to the farmers through an Escrow Account operated by the Company. The Company has facilitated repayment of loans by the farmers to the Bank against the payments to be made to them against supply of sugarcane to the Company. A sum of Rs. Nil and Rs. 57.54 million has been lying in Escrow Account as on September 30, 2013 and September 30, 2012 respectively.

12. (a) The Company had in an earlier year accounted for cane purchases for crushing season 2007-08 at a price of Rs. 110 per quintal in terms of the interim order passed by the Hon''ble Supreme Court as against the State Advised Price of Rs. 125 per quintal. Pursuant to Hon''ble Supreme Court''s order dated January 17, 2012 the differential cane liabilities of Rs. 465.53 million has been accounted for during the previous period as an exceptional item and the same have been paid on April 16, 2012.

(b)(i) A Memorandum of Understanding (MOU) was signed between the Company and Government of Punjab in 1993 for setting up an Industrial Estate in Punjab. Siel Industrial Estate Limited (Siel – IE) was incorporated in an earlier year as a wholly owned subsidiary of the Company for setting up the Industrial Estate. The clear and un-encumbered title and possession of the land for the aforesaid Industrial Estate came to Siel IE in October, 2011 and now Siel – IE holds approximately 455 acres of land at Rajpura, Punjab.

The Company, Siel - IE and Siel Infrastructure and Estate Developers Private Limited (Siel - IED), which was acquired, and consequently, became a wholly owned subsidiary of the Company during the fnancial year 2011-12, had entered into a Joint Development Agreement for the development of the Industrial Estate. During the fnancial year 2011-12, the Company had sold 13,475,000 equity shares of Rs. 10/- each of Siel – IE to Siel - IED for a consideration aggregating to Rs. 1350.20 million, as determined through an independent valuation of Siel – IE. The consideration was received by the Company in the form of 13,501,950 equity shares of Rs. 100/- each fully paid up of Siel - IED. Accordingly, the Company had recognized a proft of Rs. 1215.45 million in the Statement of Proft and Loss as an exceptional item. In the Auditors'' report on the Company''s fnancial statements for the period ended September 30, 2012, the Auditors'' had qualifed their report regarding the recognition of a proft of Rs. 1215.45 million by the Company on the non-monetary transfer of shares held in Siel - IE on the grounds that the proft represents surplus arising out of recognition of the fair value of Siel – IE shares exchanged for the additional shares acquired in Siel - IED without dilution in the Company''s control over Siel – IE, as both entities were under common control of the Company.

During the current year ended September 30, 2013, in order to give effect to the Statutory Auditors'' qualifcation as stated above, the proft of Rs. 1215.45 million has been eliminated from the value of the investments held by the Company in Siel-IED and the corresponding loss of Rs. 1215.45 million has been charged as a prior period adjustment in the Statement of Proft and Loss.

(b)(ii) During the current year the Company has sold 31,30,000 equity shares of Rs. 10/- fully paid up (65.03% of paid up capital) held by it in Mawana Foods Limited (MFL), a subsidiary of the Company at a price of Rs. 26.12 per share to Usha International Limited (UIL) for a total consideration of Rs. 81.76 million. Consequently, MFL ceased to be subsidiary of the Company w.e.f. June 29, 2013 and the Company has recognized a proft of Rs. 50.46 million. The Company has also sold its entire investments in Ceratizit India Private Limited (CIPL) i.e. 2,300,000 equity shares of Rs. 5 /- each for a total consideration of Rs. 160 million and the Company has recognised a proft of Rs.137.00 million.

13. The Company had been legally advised that the "Capital reserve" to the extent of Rs. 991.46 million, as depicted under Note 3 - Reserves and Surplus, pertaining to the profts earned by formerly Siel Limited from sale of shares of Shivajimarg Properties Limited during the year ended March 31, 2006 which formed part of capital reserve in the books of account of the erstwhile Mawana Sugars Limited and subsequently, became a part of capital reserve in the books of the Company, pursuant to merger of erstwhile Mawana Sugars Limited with the Company, is to be considered as part of "free reserves" for the purposes of computing "net worth" under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA ").

14. Pursuant to judgment dated 10.5.1996 passed by the Hon''ble Supreme Court of India in a public interest litigation the Company surrendered 46.58 acres of land to the Delhi Development Authority (''DDA'') and dedicated it exclusively for the development of green belt and open spaces. Consequently, the Company is no longer in physical possession of 46.58 acres owned by it.

The Company had fled a Review Petition in the Hon''ble Supreme Court of India challenging the order of surrender of land to the DDA. During the pendency of this Review Petition, the DDA leased out some portion of the land surrendered by the Company to Delhi Metro Rail Corporation (''DMRC''). The Company fled an application before the Hon''ble Supreme Court of India in the pending Review Petition against the leasing of land by DDA to DMRC as this was contrary to the purpose for which the Company has surrendered and dedicated the land.

Although the Hon''ble Supreme Court of India dismissed the aforesaid Review Petition by order dated 25.3.2010 but on the Company''s application against the leasing of land by DDA to DMRC stated and directed as follows : "…the DDA which holds the surrendered and dedicated land in Trust cannot use it for any purpose other than as green belt or other spaces for the beneft of the community…In the event of any acquisition or development of surrendered land, the owner – dedicator will have the beneft of compensation on account of land ceasing to be ''land dedicated to the community purpose of lung/open space…'' when such acquisition/ alienation takes place, DDA and the land owner will be entitled to share the compensation at 50% each."

In view of the aforesaid judgment, benefts earned by DDA from the surrendered land are to be shared equally with the Company.

15. During the year ended on September 30, 2013, there has been an inter-se transfer of equity shares, wherein Usha International Limited (UIL) has transferred 2,59,77,735 equity shares of Rs. 10 each (66.41% of the paid up capital) at a price of Rs. 10 per share to Mr. Siddharth Shriram, promoter of the Company. Consequently the Company ceased to be the subsidiary of UIL w.e.f. June 20, 2013.

The Board of Directors in its meeting held on August 13, 2013 has taken cognizance that UIL ceased to be a Promoter of the Company.

16. The current fnancial year is for a period of twelve months from October 01, 2012 to September 30, 2013 whereas the corresponding previous period fgures were for a period of eighteen months from April 01, 2011 to September 30, 2012.

Therefore, the corresponding fgures of previous period are not directly comparable with those of current year.

17. Previous period''s fgures have been regrouped / reclassifed wherever necessary to correspond with the current year''s classifcation / disclosures.


Mar 31, 2011

1. Pursuant to the Scheme of Arrangement for Amalgamation (the "Scheme") of the erstwhile Mawana Sugars Limited (MSL) with the Company under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon'ble High Court of Delhi vide its Order dated September 11,2007 which became effective on October 15, 2007 on filing of the certified copy of the Order of the High Court in the Office of Registrar of Companies, NCT Delhi & Haryana, all the properties, assets, both movable and immovable, liabilities including contingent liabilities and reserves of erstwhile MSL have without further act or deed, been transferred to and vested in the Company at their book values, as a going concern with effect from the appointed date i.e. October 1, 2006. Subsequently, the name of the Company has been changed to Mawana Sugars Limited w.e.f. January 4,2008.

2. Contingent liabilities: (Rs. in million) As at As at March 31,2011 September 30, 2009

a) Claims against the Company not acknowledged as debts in respect of*:- - Income Tax 629.22 149.40

- Sales Tax 78.24 81.04

- Excise Duty/ Service Tax 99.01 64.88

License fee for railway siding - 60.68

- Others 69.27 70.84

*AII the above matters are subject to legal proceedings in the ordinary course of business. The legal proceedings, when ultimately concluded will not. in the opinion of the management, have a material effect on the results of the operations or financial position of the Companv.

c) The Company has provided bank guarantees aggregating Rs. 78.18 million (Previous year Rs. 78.18 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous year, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31,1997, or prior to March 31,1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 52.32 million (Previous year Rs. 52.32 million) have been received. These demands are presently under various stages of appeal.

d) During the period, the Company has given a counter indemnity/guarantee in favour of existing directors of Transiel India Limited to protect their interest against any loss/ future liabilities that may arise after the name of the said subsidiary has been struck off under the Easy Exit Scheme, 2011.

3. The Company had contracted for import of 60000 MT of Raw Sugar. Due to adverse international and domestic market conditions and resultant falling prices, the Company has exited from these contracts in July, 2010 incurring a loss of Rs. 223.82 million (previous year Rs. NIL).

4. Research and development expenses amounting to Rs. 11.57 million (previous year Rs. 14.22 million) have been charged to the respective revenue accounts.

5. Sales are net of commission of Rs. 48.12 million (previous year Rs. 31.90 million).

6. The Company had imported plant and machinery in previous years under EPCG Scheme. An export obligation ('EO') amounting to USD 91.68 million was placed on the Company which was to be fulfilled in a period of 8 years starting from April 1997. Subsequently, the said EO was refixed at USD 73.74 million and the EO period was extended to 30.3.2007 in terms of the Foreign Trade Policy Handbook of Procedure (HBP) 2002-2007. The balance unfulfilled EO as at March 31,2011 is USD 7.84 million. The said EO period was further extended upto 30.3.2009 on payment of 50% duty payable in proportionate to unfulfilled export obligation amounting to Rs. 16.68 million and the EPCG License has been duly endorsed by Director General of foreign Trade (DGFT) extending the EO fulfillment period upto 30.3.2009.

To fulfill the remaining EO, the Company applied to obtain a release order from Directorate of Sugar to export sugar. Directorate of Sugar vide its letter dated 20.3.2009 has informed the Company that it is not possible to issue release orders for export of sugar and the request of the Company will be considered when the sugar situation improves in the country.

By letter dated 29.9.2009 the DGFT has informed the Company that having regard to the provision of Public Notice No.26 dated 3.6.2008 the extension in export obligation period equivalent to the duration of ban is automatic without composition fee in respect of EPCG authorization issued prior to imposition of ban on such product.

By letter dated May 5,2011 the DGFT has extended the EO period 765 days w.e.f. April 19,2011.

Subsequent to March 31,2011, the Company has received the release orders for export of 5922.5 MT sugar on April 26,2011.

The Company is in process of export of sugar to meet the unfulfilled export obligation.

7. Directors' Remuneration *

The Company has sought approval of the Central Government for excess remuneration paid to the Managing Director/ Whole Time Director amounting to Rs. 6.72 million which had been declined by the Central Government.

Pursuant thereto, the Company has made a fresh application seeking approval of the Central Government for the aforesaid remuneration and additional remuneration amounting to Rs. 6.72 million and Rs. 3.42 million respectively. Pending approvals of the Central Government, the excess remuneration paid has been shown under Schedule 6 - Loans and Advances.

Further Rs. 3.42 million is also subject to approval of the shareholders in the general meeting.

8. Segment reporting

A. Business Segment

Based on the guiding principles given in Accounting Standard (AS) 17 "Segment Reporting" notified in the Companies (Accounting Standards) Rules, 2006, - the Company's business Segment includes Sugar, Power, Chemical and Other (Distillery).

B. Geographical Segment

Since the Company's activities/operations are primarily within the country and considering the nature of products/services it deals in, the risk and returns are same and as such there is only one geographical segment.

C. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses: Segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

c) Inter segment revenues: Inter segment revenues between operating segments are accounted for at market price. These transactions are eliminated in consolidation.

9. Based on the information available with the Company, the principle amount and interest due to Micro and Small Enterprise as defined under "The Micro, Small and Medium Enterprises Development Act, 2006 (Act) is Rs. 3.68 million (previous year Rs. 2.20 million) and Rs. 0.27 million (previous year Rs. 0.27) respectively.

10. There are various issues relating to sales tax, income tax etc. arisen / arising out of the reorganisation arrangement of DCM Limited which will be settled and accounted for in terms of the Scheme of Arrangement of DCM Limited and memorandum of understanding between all the companies involved as and when the liabilities/benefits are fully determined.

In the opinion of the management, having regard to the current status of the assessment proceedings at various stages the effect of these matters on the accounts could not be determined at this stage.

11. Related party disclosures under Accounting Standard 18 Name of related party and nature of related party relationship

Holding Company:

Usha International Limited w.e.f. July 26,2010 (Enterprises over which key management personnel have significant influence up to July 25, 2010)

Subsidiaries:

Siel Financial Services Limited, Transiel India Limited (up to January 27,2011), Siel Industrial Estate Limited, Siel Edible Oils Limited, SFSL Investments Limited (up to January 31,2011)

Key Management Personnel:

Mr. Siddharth Shriram - Chairman and Managing Director Mr. K.P. Singh - Whole Time Director (deceased on April 20,2011) Mr. A. K. Mehra - Whole Time Director Mr. Sunil Kakria - Managing Director

12. The accounts for the period ended March 31,2011 have been prepared after considering sugar cane purchase price @ Rs. 110 per quintal as an interim measure for paying the price of sugar cane to sugar cane grower in accordance with the Order of Hon'ble Supreme Court dated September 8,2008 in case No. 18681 of 2008 for sugar season 2007-08 filed by the Company. Necessary adjustments will be made by the Company in accordance with the final order of the Hon'ble Court in this matter.

13. The current financial period is for a period of eighteen months from October 1,2009 to March 31,2011 whereas the corresponding previous year figures are for a period of twelve months from October 1,2008 to September 30,2009.

Therefore, the corresponding figures of previous year are not directly comparable with those of current period.

14. The Company has facilitated Agri loans from Punjab National Bank (Bank) to the farmers who supply sugarcane to the Company. These loans were distributed to the farmers through an Escrow Account operated by the Company. The Company had facilitated repayment of loans by the farmers to the Bank against the payments to be made to them against supply of sugarcane to the Company. A sum of Rs. Nil and Rs. 1.04 million has been lying in Escrow Account as on March 31,2011 and September 30, 2009 respectively.

15. The Company has been legally advised that the "capital reserve" to the extent of Rs. 991.46 million, as depicted under Schedule 2- Reserve and Surplus, pertaining to the profits earned by formerly Siel Limited from sale of shares of Shivajimarg Properties Limited during the year ended 31st March, 2006, which formed part of capital reserve in the books of the erstwhile Mawana Sugars Limited and subsequently, became a part of capital reserve in the books of the Company, pursuant to merger of erstwhile Mawana Sugars Limited with the Company, is to be considered as part of "free reserves" for the purposes of computing "net worth" under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA").

16. Previous year figures have been regrouped wherever necessary.


Sep 30, 2009

1. Pursuant to the Scheme of Arrangement for Amalgamation (the "Scheme") of the erstwhile Mawana Sugars Limited (MSL) with the Company under Sections 391 to 394 of the Companies Act, 1956 approved by the Honble High Court of Delhi vide its Order dated September 11,2007 which became effective on October 15, 2007 on filing of the certified copy of the Order of the High Court in the Office of Registrar of Companies, NCT Delhi & Haryana, all the properties, assets, both movable and immovable, liabilities including contingent liabilities and reserves of erstwhile MSL have without further act or deed, been transferred to and vested in the Company at their book values, as a going concern with effect from the appointed date i.e. October 1, 2006. Subsequently, the name of the Company has been changed to Mawana Sugars Limited w.e.f. January 4, 2008.

For giving effect to the amalgamation in the nature of merger the pooling of interests method as prescribed by the Accounting Standard -14 "Accounting for amalgamations" notified in the Companies (Accounting Standards) Rules, 2006, was followed in the previous period wherein, the assets and liabilities including contingent liabilities as at October 1, 2006 and the transactions including income and expenses for the period October 1, 2006 to March 31, 2007 of erstwhile MSL (being the period when pending effectuation of the Scheme, the business and activities of erstwhile MSL were being run and managed in trust for the Company) for the six months period ended March 31, 2007 were incorporated in the accounts of the previous period.

(Rs. in million) As at As at September 30, 2009 September 30, 2008

2. Contingent liabilities :

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

- Income Tax 149.40 223.13

- Sales Tax 81.04 84.89

- Excise Duty/Service Tax 64.88 62.20

- License fee for railway siding 60.68 60.68

- Others 70.84 65.53

*AII the above matters are subject to legal proceedings in the ordinary course of business. The legal proceedings, when ultimately concluded will not, in the opinion of the management, have a material effect on the results of the operations or financial position of the Company.

c) The Company has provided bank guarantees aggregating Rs. 78.18 million (Previous period Rs. 126 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous year, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31,1997, or prior to March 31,1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 52.32 million (Previous period Rs. 89.45 million) have been received. These demands are presently under various stages of appeal.

3. The Company had surrendered on October 23, 2003 possession of 46.58 acres of its land at 15, Shivaji Marg, New Delhi to the Delhi Development Authority (DDA) pursuant to the order of Honble Supreme Court. The matter regarding validity of this surrender is sub-judice before Honble Supreme Court under a review petition.

4. Research and development expenses amounting to Rs. 14.22 million (previous period Rs.4.36 million) have been charged to the respective revenue accounts.

5. Accounting for taxes on income in accordance with the Accounting Standard (AS) 22 Accounting for Taxes on Income, notified in the Companies (Accounting Standards) Rules, 2006.

6. Sales are net of commission of Rs. 31.90 million (previous period Rs. 24.95 million).

7. The Company had imported plant and machinery in previous years under EPCG Scheme. An export obligation (EO) amounting to USD 91.68 million was placed on the Company which was to be fulfilled in a period of 8 years starting from April 1997. Subsequently, the said EO was refixed at USD 73.74 million and the EO period was extended to 30.3.2007 in terms of the Foreign Trade Policy Handbook of Procedure (HBP) 2002-2007.

The balance unfulfilled EO as at September 30, 2009 is USD 7.92 million.

The said EO period was further extended upto 30.3.2009 on payment of 50% duty payable in proportionate to unfulfilled export obligation amounting to Rs. 16.68 million and the EPCG License has been duly endorsed by Director General of Foreign Trade (DGFT) extending the EO fulfillment period upto 30.3.2009.

To fulfill the remaining EO, the Company applied to obtain a release order from Directorate of Sugar to export sugar. Directorate of Sugar vide its letter dated 20.3.2009 has informed the Company that it is not possible to issue release orders for export of sugar and the request of the Company will be considered when the sugar situation improves in the country.

By letter dated 29.9.2009 the DGFT has informed the Company that having regard to the provision of Public Notice No.26 dated 3.6.2008 the extension in export obligation period equivalent to the duration of ban is automatic without composition fee in respect of EPCG authorization issued prior to imposition of ban on such product.

At this stage, the Company is awaiting the release orders for export of sugar to fulfill the aforesaid EO.

8. Segment reporting

A. Business Segment

Based on the guiding principles given in Accounting Standard (AS) 17 "Segment Reporting" notified in the Companies (Accounting Standards) Rules, 2006, - the Companys business Segment includes Sugar, Power, Chemical and Other (Distillery).

B. Geographical Segment

Since the Companys activities/operations are primarily within the country and considering the nature of products/services it deals in, the risk and returns are same and as such there is only one geographical segment.

C. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

c) Inter segment revenues:

Inter segment revenues between operating segments are accounted for at market price. These transactions are eliminated in consolidation.

9. Used on the information available with the Company, the principle amount and interest due to Micro and Small Enterprise as defined under The Micro, Small and Medium Enterprises Development Act, 2006 (Act) is Rs. 2.20 million (previous period Rs. 7.01 million) and Rs. 0.27 million (previous period Rs. Nil) respectively.

10. There are various issues relating to sales tax, income tax etc. arisen / arising out of the reorganisation arrangement of DCM Limited which will be settled and accounted for in terms of the Scheme of Arrangement of DCM Limited and memorandum of understanding between all the companies involved as and when the liabilities/benefits are fully determined.

In the opinion of the management, having regard to the current status of the assessment proceedings at various stages the effect of these matters on the accounts could not be determined at this stage.

11. The Company has an investment of Rs.150 million, comprising Rs.100 million in preference shares and Rs.50 million in equity shares of Transiel India Limited (Transiel), a wholly owned subsidiary. As per the latest audited balance sheet, Transiel has accumulated losses of Rs.140.84 million upto March 31, 2009. The Company, as a measure of prudence, has made a total provision of Rs. 140 million for the estimated diminution in the value of investment on the basis of its own assessment of the erosion of the net worth of the subsidiary. The management has confirmed to auditors that the provision made is adequate and the remaining balance of investment is good and fully recoverable.

12. Consequent to import of 16385.73 metric tonnes of raw sugar, the Company has an obligation to export 15605.52 metric tonnes of white sugar by December 31, 2009. Against this export obligation, 6415.80 metric tonnes of white sugar has been exported upto the year ended September 30, 2009.

13. Related party disclosures under Accounting Standard 18 Name of related party and nature of related party relationship Subsidiaries: SFSL Investments Limited, Siel Financial Services Limited, Transiel India Limited , Siel Industrial Estate Limited and Siel Edible Oils Limited. Enterprises over which key management personnel have significant influence:

Greenfields Commercial Private Limited.

Usha International Limited

Key Management Personnel and their relatives:

Mr. Siddharth Shriram

Mr. K,P. Singh

Mr. A. K. Mehra (w.e.f.October 15,2007)

Mr. Sunil Kakria (w.e.f. January 7,2008)

14. The accounts for the year ended September 30,2009 have been prepared after considering sugar cane purchase price @ Rs. 110 per quintal as an interim measure for paying the price of sugar cane to sugar cane grower in accordance with the Order of Honble Supreme Court dated September 8,2008 in case No. 18681 of 2008 for sugar season 2007-08 filed by the Company. Necessary adjustments will be made by the Company in accordance with the final order of the Honble Court in this matter.

15. The debts of erstwhile Mawana Sugars Limited have been restructured under a package approved by Corporate Debt Restructuring (CDR) Empowered Group in its meeting held on September 26, 2007. In terms of the CDR package, the Company has issued 43,83,561 equity shares of Rs. 10 each fully paid up at a premium of Rs. 26.50 per share to a promoter of the Company on preferential basis on September 26, 2009 and the proceeds aggregating to Rs. 160.00 million have been utilized as per the CDR package.

16. The current financial year is for a period of twelve months from October 1,2008 to September 30,2009 whereas the corresponding previous period figures were for a period of eighteen months from April 1,2007 to September 30, 2008.

Therefore, the corresponding figures of previous period are not directly comparable with those of current year.

17. The Company has facilitated Agri loan from Punjab National Bank to the farmers who supply sugar cane to the Company. Such loan has to be distributed to such farmers through an Escrow Account to be operated by the Company and the Company has to facilitate repayment of loan by the farmers to the Bank against the payment to be made to them against supply of sugar cane to the Company. A sum of Rs. 1.04 million and Rs. 401.68 million has been lying in Escrow Account as on 30.09.2009 and 30.09.2008 respectively

18. Previous year figures have been regrouped wherever necessary.

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