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Notes to Accounts of Oudh Sugar Mills Ltd.

Mar 31, 2015

1. CORPORATE INFORMATION

The Oudh Sugar Mills Limited (the Company) is a public Company domiciled in India. Its shares are listed on National and Bombay Stock Exchanges in India. The Company is primarily engaged in manufacture and sale of Sugar and its By-products (Molasses and Bagasse), Spirits including Ethanol, Power and Food Processing Products. The Company presently has manufacturing facilities at Hargaon District Sitapur, Dhadha Bujurg District Kushinagar, Rosa District Shahjahanpur and Allahabad in the State of Uttar Pradesh and at Narkatiaganj District West Champaran in the State of Bihar.

2. BASIS OF PREPARATION

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

(b) Terms / rights attached to Equity Shares

Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution to equity shareholders will be in proportion to the amount paid on the shares held by them.

(c) Terms of redemption of Preference Shares

The Non-Convertible Cumulative Redeemable Preference Shares (CRPS) carries dividend @ 8.5% per annum.

CRPS shall be redeemable at par on 2nd August 2023 being twelve years and one day from the date of allotment i.e. 01st August 2011 with a right vested to the Board of Directors to redeem it earlier, subject to the consent of the lenders and dividend is payable at the time of redemption of the CRPS. However, the Board reserves the right to pay the dividend earlier with the consent of the Lenders and subject to the availability of profit.

(a) Term Loans and FITL from Banks carry interest rate in the range of 13.77% to 14.99% and are repayable in 32 and 12 quarterly instalments respectively by 30th June 2020 and 30th June 2015. These loans are secured by first mortgage / charge on all the immovable and movable assets (save and except book debts), present and future, of the Company's Sugar Units at Hargaon, Narkatiaganj and Dhadha Bujurg (Hata) and Distillery Unit at Hargaon, ranking pari-passu amongst the various lenders, subject to prior charges created on movables for working capital borrowings from the Company's bankers.

The above Term Loans including FITL are further secured as follows.

(i) Second charge on current assets of Sugar Unit at Dhadha Bujurg (Hata) ranking pari-passu amongst the various lenders.

Second charge on fixed assets of Sugar Unit at Rosa ranking pari-passu amongst the various lenders.

(ii) Third charge on current assets of Sugar Unit at Narkatiaganj.

(iii) Third charge on current assets of Sugar & Distillery Units at Hargaon.

(iv) Pledge of 64,79,294 equity shares of the Company held by the promoter group companies, ranking pari- passu amongst the various lenders.

(b) Term loans from banks under Financial Assistance Scheme (SEFASU 2014), carry interest rate in the range of 12% to 13% p.a. and is repayable in 12 quarterly instalments by 30th June 2019. The Company is entitled to interest subvention from the Government of India upto 12% as per terms of scheme and the same will be directly reimbursed to bank by Department of Food & Public Distribution and hence, no liability towards interest has been provided in these accounts. The above loan is secured by the first pari passu charge on all the fixed assets of both present and future of Sugar and Co-generation units of the Company at Hargaon & Dhadha Bujurg (Hata) and Sugar units of the Company at Narkatiaganj & Rosa.

(c) Term loans from the Sugar Development Fund, which carry interest of 4% p.a., are secured by a second charge on all the immovable / movable assets (save and except book debts) present and future of the Company's Sugar Units at Hargaon and Narkatiaganj.

Cash Credit from bank other than from District Co-operative Bank Ltd. is secured by hypothecation of the entire current assets of the Company and also by a charge on the immovable assets as follows :

(i) Canning factory at Allahabad - First Charge;

(ii) Sugar Unit at Rosa - First Charge;

(iii) Sugar Unit at Dhadha Bujurg (Hata) - Second Charge;

(iv) Sugar Units at Hargaon and Narkatiaganj - Third Charge.

In addition, Cash Credit from banks are also secured by pledge of 64,79,294 equity shares of the Company held by the promoter group companies, ranking pari-passu amongst the various lenders.

Cash credit of Rs. 12,156.16 lacs (Rs. 14,082.15 lacs) from District Co-operative Bank Ltd. is secured by pledge of the Stock of Sugar pertaining to Sugar Units at Hargaon and Rosa.

Cash Credit borrowings carry interest rates ranging between 11.75% to 13.00% p.a.

3. GRATUITY - DEFINED BENEFIT PLAN

The Company has a defined benefit gratuity plan. Every employee who has completed at least five years or more of service is entitled to Gratuity on terms as per the provisions of The Payment of Gratuity Act, 1972. The Company has got an approved gratuity fund which has taken an insurance policy with Life Insurance Corporation of India (LIC) to cover the gratuity liabilities.

The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the plan.

4. Bearer Equity Share Coupons having a realized value of Rs. 0.06 lacs (Rs. 0.06 lacs) has been shown separately under "Shareholders' Funds" as the holders of such coupons are yet to tender coupon certificates to claim the underlying security i.e. equity shares of equal paid up value.

5. SEGMENT INFORMATION

The primary segment reporting format is determined to be business segments as the company's risks and rates of return are affected predominantly by differences in the products produced. Secondary information is reported geographically. The operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Accordingly, the Company has identified "Sugar", "Spirits", "Co-generation" and "Food processing" as the operating segments :

Sugar - Consists of manufacture, trading and sale of Sugar, Molasses and Bagasse

Spirits - Consists of manufacture and sale of Industrial Spirits (including Ethanol), Fusel Oil and Bio-Compost Co-generation - Consists of generation and transmission of Power

Food Processing Products - Consists of Canned Fruits and Vegetables, Jams, Jellies, Squashes and Juices

The Company primarily operates in India and therefore the analysis of geographical segments is demarcated into its Indian and Overseas Operations.

6. CONTINGENT LIABILITIES

Rs. in lacs

Year Ended Year Ended 31st March 2015 31st March 2014

(a) Demands / Claims by various Government Authorities and others not acknowledged as debt and contested by the Company :

(i) Excise Duty & Service Tax 10,329.87 5,908.33

(ii) Sales & Entry Tax 174.22 96.08

(iii) Duty under State Acts 361.04 188.92

(iv) Others 68.28 144.90

Total 10,933.41 6,338.23

(b) Outstanding towards Crop Loan disbursed to growers for which corporate

588.52 762.35

guarantee is given to a bank

(c) Bank Guarantees outstanding 1,157.97 935.28 (d) Bills discounted with banks - 83.80

(e) Arrear Dividend (including tax) on Non-convertible Cumulative Redeemable 1,835.57 1,325.60

Preference Shares (CRPS)

* Based on discussions with the solicitors / favourable decisions in similar cases / legal opinions taken by the Company, the management believes that it is possible but not probable the action will succeed and accordingly no provision there against is considered necessary.

7. A civil suit is pending against the Company's sugar unit at Dhadha Bujurg (Hata), which is already in operation. The Company has been legally advised that the said civil suit is not tenable as per law.

8. The Government of Uttar Pradesh has announced Subsidy for Sugar Industry for the Sugar Season 2014-2015 linked to average selling price of sugar and its by-products during the period 1st October 2014 to 31st May 2015. The average selling prices of sugar and the by-products have been significatly lower than the thresholds specified in the subsidy scheme considering the actual and future realisation. In view of this, the Company has estimated and recognised subsidy amounting to Rs. 6,172.61 lacs during the year. The Company is confident of realising the subsidy in view of the current prices of sugar and the by-products.

9. The Company's Board of Directors at its meeting held on 13th March 2015 has approved a Composite Scheme of Arrangement amongst the Company, Upper Ganges Sugar & Industries Limited, Palash Securities Limited, Allahabad Canning Limited, Ganges Securities Limited, Cinnatolliah Tea Limited, Vaishali Sugar & Energy Limited, Magadh Sugar & Energy Limited, Avadh Sugar & Energy Limited in terms of the provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956 & Companies Act, 2013, to the extent applicable to restructure and de-link its multiple business in separate new entities w.e.f. 1st April 2015 subject to necessary approvals. Accordingly, the Company has incorporated new subsidiaries namely Allahabad Canning Limited, Palash Securities Limited, Vaishali Sugar & Energy Limited and the joint venture entity namely Avadh Sugar & Energy Limited. The Company is in the process of filing the scheme for approval with the concerned authorities.

10. Due to Steep decline in sugar realization, the Company has incurred significant higher losses during the current year and net- worth of the Company is completely eroded. The Sugar manufacturers are in active discussions with the State and Central Governments on the matter of sugar cane and other incentives for the sugar industry in order to make the operations viable. The management is hopeful of positive outcome from the discussions with the Governments and expects to be in a position to generate positive cash flow and profitability in future and accordingly, these financial statements have been drawn up on the going concern assumption.


Mar 31, 2014

CORPORATE INFORMATION

The oudh Sugar Mills Limited (the Company) is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on National and Bombay Stock Exchanges in india. The Company is primarily engaged in manufacture and sale of Sugar and its By-products (Molasses and Bagasse), Spirits including Ethanol, Power and Food Processing Products. The Company presently has manufacturing facilities at Hargaon District Sitapur, Dhadha Bujurg District Kushinagar, Rosa District Shahjahanpur and Allahabad in the State of uttar Pradesh and at Narkatiaganj District West Champaran in the State of Bihar.

BASIS OF PREPARATION

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 read with General Circular 8/2014 dated 4 April 2014, issued by the Ministry of Corporate Affairs. The financial statements have been prepared on an accrual basis and under the historical cost convention.

1. Share capital

(a) Terms / rights attached to Equity Shares

Each holder of equity shares is entitled to one vote per share. in the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution to equity shareholders will be in proportion to the amount paid on the shares held by them.

(b) Terms of redemption of preference Shares

The Non-Convertible Cumulative Redeemable Preference Shares (CRPS) carries dividend @ 8.5% per annum.

CRPS shall be redeemable at par on 2nd August 2023 being twelve years and one day from the date of allotment i.e. 1st August 2011 with a right vested to the Board of Directors to redeem it earlier, subject to the consent of the lenders. However, no redemption will take place before 30th June 2014.

Dividend is payable at the time of redemption of the CRPS. However, the Board reserves the right to pay the dividend earlier with the consent of the Lenders and subject to the availability of profit.

2. Long-term borrowings

(a) Term Loans and FiTL from Banks carry interest rate in the range of 13.77% to 14.99% and are repayable in 32 and 12 quarterly instalments respectively by 30th June 2020 and 30th June 2015. These loans are secured by first mortgage / charge on all the immovable and movable assets (save and except book debts), present and future, of the Company''s Sugar units at Hargaon, Narkatiaganj and Dhadha Bujurg (Hata) and Distillery unit at Hargaon, ranking pari-passu amongst the various lenders, subject to prior charges created on movables for working capital borrowings from the Company''s bankers.

The above Term Loans including FiTL are further secured as follows.

(i) Second charge on current assets of Sugar unit at Dhadha Bujurg (Hata) ranking pari-passu amongst the various lenders.

Second charge on fixed assets of Sugar unit at Rosa ranking pari-passu amongst the various lenders.

(ii) Third charge on current assets of Sugar unit at Narkatiaganj.

(iii) Third charge on current assets of Sugar & Distillery units at Hargaon.

(iv) Pledge of 64,79,294 equity shares of the Company held by the promoter group companies, ranking pari- passu amongst the various lenders.

(b) Term loans from a bank under Financial Assistance Scheme (SEFASu 2014), carry interest of 12% p.a. and is repayable in 12 equal quarterly instalments by 30th March 2019. The Company is entitled to interest subvention from the government of india upto 12% as per terms of scheme and the same will be directly reimbursed to bank by Department of Food & Public Distribution and hence, no liability towards interest has been provided in these accounts. The above loan is to be secured by the first pari passu charge on all the fixed assets of both present and future of Sugar and Co-generation units of the Company at Hargaon & Dhadha Bujurg (Hata), and Sugar units of the Company at Narkatiaganj & Rosa.

(c) Term loans from the Sugar Development Fund, which carry interest of 4% p.a., are secured by a second charge on all the immovable / movable assets (save and except book debts) present and future of the Company''s Sugar units at Hargaon and Narkatiaganj and Distillery unit at Hargaon.

3. PROVISIONS

A provision is recognised for expected warranty claims on products based on the management''s estimate computed on the basis of past experience. It is expected that the entire provision will be utilised within one year of the reporting date, since the warranty is generally for one year. The table below gives information about movement in warranties provisions.

4. SHORT-TERM BORROWINGS

Cash Credit from banks other than from State Bank of Patiala, District Co-operative Bank Ltd. and U.P. Co-operative Bank Ltd. are secured by hypothecation of the entire current assets of the Company and also by a charge on the immovable assets as follows :

(i) Canning factory at Allahabad - First Charge;

(ii) Sugar Unit at Rosa - First Charge;

(iii) Sugar Unit at Dhadha Bujurg (Hata) - Second Charge;

(iv) Sugar Units at Hargaon and Narkatiaganj - Third Charge.

In addition, Cash Credit from banks are also secured by pledge of 64,79,294 equity shares of the Company held by the promoter group companies, ranking pari-passu amongst the various lenders.

Cash credit of Rs.14,082.15 lacs Rs. 5 603.17 lacs) from State Bank of Patiala, District Co-operative Bank Ltd. and U.P. Co- operative Bank Ltd. are secured by pledge of the Stock of Sugar pertaining to Sugar Units at Rosa, Hargaon and Dhadha Bujurg (Hata).

Cash Credit borrowings carry interest rates ranging between 11.25% to 13.00% p.a.

5. TANGIBLE ASSETS

(a) Includes Rs. 3.46 lacs 3.46 lacs) being the value of agricultural land measuring about 3839 acres together with estimated written down value of immovable assets thereon, taken over by the Government of Uttar Pradesh under the U.P. Imposition of Ceiling of Land Holding Act,1960, a case whereof is pending in the court.

(b) Title deeds for Rs. 433.26 lacs (Rs. 433.26 lacs) are yet to be executed in favour of the Company.

(c) Includes assets held in joint ownership with others - Gross Block Rs. 201.22 lacs (Rs. 166.01 lacs) and Net Block Rs. 104.91 lacs (Rs. 77.13 lacs).

6. NON-CURRENT INVESTMENTS

(a) Deposited / pledged with various Government authorities.

(b) The figures, being less than Rs. 500, have been shown above as blank.

(c) The cost of following unquoted investments in equity shares (fully paid up) had been written off, though quantity thereof appears in the books.

7. DEFERRED TAX ASSET (NET)

Although, there is carried forward unabsorbed depreciation and business losses as on the reporting date, yet in view of the future profitability projections, the Company is virtually certain that there would be sufficient taxable income in future, to claim the above tax credit.

8. GRATUITY - DEFINED BENEFIT PLAN

The Company has a defined benefit gratuity plan. Every employee who has completed at least five years or more of service is entitled to Gratuity on terms as per the provisions of The Payment of Gratuity Act, 1972. The Company has got an approved gratuity fund which has taken an insurance policy with Life Insurance Corporation of India (LIC) to cover the gratuity liabilities.

The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the plan.

* Experience adjustments on plan liabilities and assets are not readily available for the year 2009-10 and hence not disclosed.

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The overall expected rate of return on assets is determined based on the market prices prevailing on the date, applicable to the year over which the obligation is to be settled.

9. LEASES

Operating lease

Certain office premises, godowns, cane purchasing centre etc. are held on operating lease. The leases range upto 3 years and are renewable for further year either mutually or at the option of the Company. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease agreements. There are no subleases. The leases are cancellable.

10. Bearer Equity Share Coupons having a realised value of Rs. 0.06 lacs (Rs. 0.06 lacs) has been shown separately under "Shareholders'' Funds" as the holders of such coupons are yet to tender coupon certificates to claim the underlying security i.e. equity shares of equal paid up value.

11. SEGMENT INFORMATION

The primary segment reporting format is determined to be business segments as the company''s risks and rates of return are affected predominantly by differences in the products produced. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Accordingly, the Company has identified "Sugar", "Spirits", "Co-generation" and "Food processing" as the operating segments :

Sugar - Consists of manufacture, trading and sale of Sugar, Molasses and Bagasse

Spirits - Consists of manufacture and sale of industrial Spirits (including Ethanol), Fusel oil and Bio-Compost

Co-generation - Consists of generation and transmission of Power Food Processing Products - Consists of Canned Fruits and Vegetables, Jams, Jellies, Squashes and Juices

The Company primarily operates in India and therefore the analysis of geographical segments is demarcated into its Indian and overseas operations.

12. CAPITAL AND OTHER COMMITMENTS

Estimated amount of contracts remaining to be executed on Capiytal Account and not provided for (net of advances) Rs. 144.75 lacs (Rs. 55.34 lacs).

13. CONTINGENT LIABILITIES Rs. in lacs

31st March, 2014 31st March, 2013

(a) Demands / Claims by various Government Authorities and others not acknowledged as debt and contested by the Company :

(i) Excise Duty & Service Tax 5,908.33 3,739.56

(ii) Sales & Entry Tax 96.08 106.84

(iii) Duty under State Acts 188.92 180.99

(iv) others 144.90 144.41

Total * 6,338.23 4,171.80

(b) Outstanding towards Crop Loan disbursed to growers for which corporate guarantee is given to a bank 62.35 666.16

(c) Bank Guarantees outstanding 935.28 40.04

(d) Bills discounted with banks 83.80 71.90

(e) Arrear Dividend (including tax) on Non-convertible Cumulative Redeemable Preference Shares (CRPS) 1,325.60 828.37

* Based on discussions with the solicitors / favourable decisions in similar cases / legal opinions taken by the Company, the management believes that it is possible but not probable the action will succeed and accordingly no provision there against is considered necessary.

14.. A civil suit is pending against the Company''s sugar unit at Dhadha Bujurg (Hata), which is already in operation. The Company has been legally advised that the said civil suit is not tenable as per law.

15. Loans and advances in the nature of loans given to subsidiaries and associates and firms/companies in which the directors are interested and which are outstanding at the end of the year in terms of Clause 32 of the Listing Agreement with Stock Exchanges.

16. Previous year''s figures including those given in brackets have been regrouped / rearranged wherever necessary. Further, the previous period figures, being for nine months, are not comparable with current year figures.


Mar 31, 2013

1. CORPORATE INFORMATION

The Oudh Sugar Mills Limited (the Company) is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on National and Bombay Stock Exchanges in India. The Company is primarily engaged in manufacture and sale of Sugar and its By-products (Molasses and Bagasse), Spirits including Ethanol, Power and Food Processing Products. The Company presently has manufacturing facilities at Hargaon District Sitapur, Dhadha Bujurg District Kushinagar, Rosa District Shahjahanpur and Allahabad in the State of Uttar Pradesh and at Narkatiaganj District West Champaran in the State of Bihar.

2. BASIS OF PREPARATION

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year.

3. GRATUITY - DEFINED BENEFIT PLAN

The Company has a defined benefit gratuity plan. Every employee who has completed at least five years or more of service is entitled to Gratuity on terms not less favourable than the provisions of The Payment of Gratuity Act, 1972. The Company has got an approved gratuity fund which has taken an insurance policy with Life Insurance Corporation of India (LIC) to cover the gratuity liabilities.

The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the plan.

4. LEASES

Operating lease:

Certain office premises, godowns, cane purchasing centre etc. are held on operating lease. The leases range upto 3 years and are renewable for further year either mutually or at the option of the Company. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease agreements. There are no subleases. The leases are cancellable.

5. Bearer Equity Share Coupons having a realised value of Rs. 0.06 lacs (Rs. 0.06 lacs) has been shown separately under "Shareholders'' Funds" as the holders of such coupons are yet to tender coupon certificates to claim the underlying security i.e. equity shares of equal paid up value.

6. SEGMENT INFORMATION

The primary segment reporting format is determined to be business segments as the company''s risks and rates of return are affected predominantly by differences in the products produced. Secondary information is reported geographically.

The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Accordingly, the Company has identified "Sugar", "Spirits", "Co-generation" and "Food processing" as the

operating segments:

Sugar - Consists of manufacture, trading and sale of Sugar, Molasses and Bagasse

Spirits - Consists of manufacture and sale of Industrial Spirits (including Ethanol), Fusel Oil and Bio-Compost

Co-generation - Consists of generation and transmission of Power

Food Processing Products - Consists of Canned Fruits and Vegetables, Jams, Jellies, Squashes and Juices

The Company primarily operates in India and therefore the analysis of geographical segments is demarcated into its

Indian and Overseas Operations.

7. CAPITAL AND OTHER COMMITMENTS

(a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) Rs. 55.34 lacs (Rs. 125.62 lacs).

(b) For commitments relating to lease arrangements, please refer note 31.

8. CONTINGENT LIABILITIES

Rs. in lacs 31st March, 2013 30th June, 2012

(a) Demands/Claims by various Government Authorities and others not acknowledged as debt and contested by the Company:

(i) Excise Duty & Service Tax 3,739.55 2,552.88

(ii) Sales & Entry Tax 106.84 104.28

(iii) Duty under State Acts 180.99 157.89

(iv) Others 144.41 275.65

Total * 4,171.80 3,100.70

(b) Outstanding towards Crop Loan disbursed to growers for which 666.16 884.56 corporate guarantee is given to a bank

(c) Bank Guarantees outstanding 40.04 551.99

(d) Bills discounted with banks 71.90 117.83

(e) Arrear Dividend (including tax) on Non-convertible Cumulative 828.37 452.11 Redeemable Preference Shares (CRPS)

* Based on discussions with the solicitors/favourable decisions in similar cases/legal opinions taken by the Company, the management believes that the Company has a good chance of success in above-mentioned cases and hence, no provision there against is considered necessary.

9. A civil suit is pending against the Company''s sugar unit at Dhadha Bujurg (Hata), which is already in operation. The Company has been legally advised that the said civil suit is not tenable as per law.

10. In view of brought forward loss or unabsorbed depreciation as per books of accounts in terms of the provisions of Section 115JB of the Income Tax Act, 1961, there is no taxable income and hence no provision for current tax has been made in these accounts.

11. Loans and Advances in the nature of loans given to subsidiaries and associates and firms/ companies in which the directors are interested and which are outstanding at the end of the year in terms of Clause 32 of the Listing Agreement with Stock Exchanges.

12. The Ministry of Consumer Affairs, Food and Public Distribution, Government of India vide its Notification 281 (E) dated May 2,2013 has dispensed away the levy obligation from sugar season 2012-13 onwards. Accordingly, all Sugar Stocks for the current sugar season have been valued as Free Sugar.

13. The Company has changed its Accounting year ending on 30th June to 31st March and hence, the current period figures being for nine months period from 1st July, 2012 to 31st March, 2013 are not comparable with those of the previous year.

14. Previous year''s figures including those given in brackets have been regrouped/rearranged wherever necessary.


Jun 30, 2012

1. CORPORATE INFORMATION

The Oudh Sugar Mills Limited (the Company) is a public limited Company domiciled in India and an existing company under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is primarily engaged in manufacture and sale of Sugar and its By-products (Molasses and Bagasse), Spirits including Ethanol, Power and Food Processing Products. The Company presently has manufacturing facilities at Hargaon District Sitapur, Dhadha Bujurg District Kushinagar, Rosa District Shahjahanpur and Allahabad in the State of Uttar Pradesh and at Narkatiaganj District West Champaran in the State of Bihar.

2. BASIS OF PREPARATION

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notifi ed under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year, except for the change in accounting policy explained in 2.1 (a) below.

(a) Terms / rights attached to Equity Shares

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

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution to equity shareholders will be in proportion to the amount paid up or credited as paid up.

(b) Terms of redemption of Preference Shares

The Non-Convertible Cumulative Redeemable Preference Shares (CRPS) issued during the year carries dividend @ 8.5% per annum.

CRPS shall be redeemable at par upon expiry of a period of twelve years and one day from the date of allotment i.e. 1st August 2011 with a right vested to the Board of Directors to redeem earlier, subject to the consent of the lenders. However, no redemption will take place before 30th June 2014.

Dividend is payable at the time of redemption of the CRPS. However, the Board reserves the right to pay the dividend arlier with the consent of the Lenders and subject to the availability of profit.

(a) Term Loans and FITL from Banks carry interest rate in the range of 13.77% to 14.99%. The loans are repayable in quarterly instalments starting from 30th September, 2012 and are secured by first mortgage / charge on all the immovable and movable assets (save and except book debts), present and future, of the Company's Sugar Units at Hargaon, Narkatiaganj and Dhadha Bujurg (Hata) and Distillery Unit at Hargaon, ranking pari-passu amongst the various lenders, subject to prior charges created on movables for working capital borrowings from the Company's bankers.

The above Term Loans including FITL are further secured as follows.

(i) - Second charge on current assets of Sugar Unit at Dhadha Bujurg (Hata) ranking pari-passu amongst the various lenders.

- Second charge on fixed assets of Sugar Unit at Rosa ranking pari-passu amongst the various lenders.

(ii) Third charge on current assets of Sugar Unit at Narkatiaganj.

(iii) Third charge on current assets of Sugar & Distillery Units at Hargaon.

(iv) Pledge of 64,79,294 equity shares of the Company held by promoter group companies, ranking pari-passu amongst the various lenders.

(b) Term loans under Financial Assistance Scheme (Excise Duty Loan) were secured by a residual charge on entire Fixed Assets (movable and immovable), present and future of the Company's Sugar units at Hargaon, Rosa and Narkatiaganj. The said loan has been repaid during the year as per the stipulated terms of repayments.

(c) Term loans from the Sugar Development Fund, carry interest of 4% p.a., are secured by a second charge on all the immovable / movable assets (save and except book debts) present and future of the Company's Sugar Units at Hargaon and Narkatiaganj.

3. LEASES

Operating lease :

Certain office premises, godowns, cane purchasing centre etc. are held on operating lease. The lease term is ranging upto 3 years and renewable for further year either mutually or at the option of the Company. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease agreements. There are no subleases. The leases are cancellable.

4.

Bearer Equity Share Coupons having a realised value of 0.06 lacs (30th June, 2011 : 0.06 lacs) has been shown separately under "Shareholders' Funds" as the holders of such coupons are yet to tender coupon certifcates to claim the underlying security i.e. equity shares of equal paid up value.

5.

The Company had received Preference Share Application Money 3,750 lacs during the year ended 30 June 2011 against 8.5% Non-Convertible Cumulative Redeemable Preference Shares (CRPS) of 10 each to be issued at par. The Company has issued, during the reporting year, CRPS against the said share application money.

6.

During the year, Company has paid 2,422.19 lacs towards differential cane price for its Hargaon and Rosa Sugar units in Uttar Pradesh for the sugar season 2007-08 in term of the order of the Hon'ble Supreme Court dated 17th January, 2012, which has been shown as "Exceptional Item" in the statement of profit and loss.

7. SEGMENT INFORMATION

The primary segment reporting format is determined to be business segments as the Company's risks and rates of return are affected predominantly by differences in the products produced. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Accordingly, the Company has identified "Sugar", "Spirits", "Co-generation" and "Food processing" as the operating segments:

Sugar - Consists of manufacture, trading and sale of Sugar, Molasses and Bagasse

Spirits - Consists of manufacture and sale of Industrial Spirits (including Ethanol), Fusel Oil and Bio-Compost

Co-generation - Consists of generation and transmission of Power

Food Processing Products - Consists of Canned Fruits and Vegetables, Jams, Jellies, Squashes and Juices

Others - Consist of Miscellaneous business comprising of less than 10% revenues.

The Company primarily operates in India and therefore the analysis of geographical segments is demarcated into its Indian and Overseas Operations.

 
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