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Directors Report of Parrys Sugar Industries Ltd.

Mar 31, 2015

To all the members of Parrys Sugar Industries Limited

The Directors have pleasure in presenting their Twenty Ninth Annual Report together with the audited financial statements for the Financial Year ended March 31,2015.

FINANCIAL RESULTS

The financial summary, performance highlights, operations/state of affairs of the Company for the year are summarised below:

Rs in Lakhs

Particulars 2014 -15 2013- 14

Gross Income 19946.53 17252.83

Profit/(Loss) Before Interest and Depreciation 805.00 (660.66) (EBITDA)

Finance Charges 1666.43 2303.17

Gross Profit/(Loss) (861.43) (2963.83)

Provision for Depreciation 712.55 639.91

Net Profit/(Loss) Before Tax (1573.98) (3603.74)

Taxes - -

Net Profit/(Loss) After Tax (1573.98) (3603.74)

DIVIDEND & RESERVES

In view of the losses incurred, your Board is unable to recommend any dividend for the financial year ended March 31,2015.

The Company has not transferred any amount to the reserves for the year ended March 31,2015.

SHARE CAPITAL

During the year, the Company has allotted 1,30,00,000, 8% Redeemable Cumulative Non-Convertible Preference shares of Rs.10/- each to the Holding Company aggregating to Rs.13 Crores. Consequently, the paid up share capital of the Company stood at Rs.80.52 Crores w.e.f. March 21,2015.

During the year, the Company has not issued any equity shares. As on March 31, 2015, none of the Directors of the Company hold any shares or convertible instruments of the Company.

The Paid up Equity Share Capital of the Company as on March 31,2015 was Rs.80.52 Crores.

COMPANY PERFORMANCE

During the year under review, the total revenue of the Company from operations was Rs.19836.63 lakhs, 15.24% higher than Rs.17213.81 lakhs in the previous year. Operating profit (EBITDA) was Rs.805 Lakhs as against the loss of Rs660.66 Lakhs in the previous year. The interest cost was Rs.1666.43 Lakhs as against Rs.2303.17 Lakhs during the last year. The year was a challenging year for the Company in the face of high sugarcane procurement cost and a volatile sugar price. Operation -ally, Company has performed well in as much as the Company could bring down the losses by 56.32% as compared to the losses of the previous year.

The Sugar industry in India at present is going through an unprecedented crisis due to an all time low sugar selling price caused by fifth straight year of surplus production as well as a drop in global prices and high sugarcane procurement cost. For the 2014-15 sugar season, the Central Government fixed the Fair and Remunerative Price @ Rs.2200/- per Tonne for a basic recovery rate of 9.5% with a premium of Rs.2.34 for every 0.1% increase in the recovery rate. The steep rise in sugar cane price year after year which accounts for about 70 percent of total operation costs is expected to significantly impact the profitability of sugar mills this year. The continuous losses of several years have already made cane dues across the country to hit a record high. The Government is contemplating a series of measures to check the falling prices of sugar in the domestic market so that mills earn more revenue to clear the mounting sugar cane arrears due to farmers. The Indian Sugar Mills Association (ISMA) estimates that around a quarter of mills across the country could go into negative net worth and may not be able to crush cane next season. Though the linking sugar cane prices to the prices of end-products has long been advocated for long-term financial health and sustenance of the industry, the same is yet to be implemented by the State Governments effectively.

The major thrust of the Company is to work towards improving the yield, increasing the cane cultivation in its command area, further improving the operating efficiency and take measures to counter the challenge of low sugar price and threat of continuous increase in cane price.

PERFORMANCE OF BUSINESS SEGMENTS Sugar

During the year, the Company crushed a total 5.55 Lakhs MT of cane as against 4.96 Lakhs MT of cane crushed in the previous year. The Company produced 6.73 Lakhs quintals of sugar as against 5.85 Lakhs quintals of sugar produced during the previous year.

The recovery of sugar from sugar cane was at 12.14% during the year as against the recovery of 11.80% during the previous year.

Power

The total power generated by our Co-generation plant was 382.75 Lakhs units as against the 329.16 Lakhs Units generated during the previous year. The revenue from sale of power was at Rs.785.64 Lakhs as against Rs.628.56 Lakhs during the previous year.

SUBSIDIARY

The Company has no subsidiary.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in Section 134(3) of the Companies Act, 2013, your Directors to the best of their knowledge and belief and according to information and explanations obtained from the management, confirm that:

- in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed and there are no material departures from the same;

- the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2015 and of the loss of the Company for the year ended on that date;

- the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- The Directors have prepared the Annual Accounts on a going concern basis.

- The Directors have laid down proper internal financial controls to be followed by the Company and such controls are adequate and operating effectively.

- the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. D. Kumaraswamy retired as Managing Director of the Company w.e.f. September 1, 2014. Mr. Kumaraswamy was appointed as a Director in May 2010 and became the Managing Director of the Company from August 28, 2010. The Board records its deep appreciation for the commendable services rendered by him in steering the company through the most difficult and challenging times.

The Board appointed Mr. V. Ramesh as the Managing Director with effect from September 1,2014 subject to approval of the members at the Annual General Meeting.

Ms. Lalitha Balakrishnan was appointed as an Additional & Independent Director of the Company by the Board of Directors with effect from March 30, 2015. Ms. Lalitha Balakrishnan holds office as a Director until the ensuing Annual General Meeting and is eligible for appointment as Director. The Company has received notice under Section 160 of the Companies Act, 2013 from a member signifying his intention to propose the candidature of Ms. Lalitha Balakrishnan.

The Board of Directors recommended to the Shareholders, the appointment of Ms. V. Ramesh as Managing Director without any remuneration and Ms. Lalitha Balakrishnan as an Independent Director.

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with the Articles of Association of the Company, Mr. V. Ravichandran, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

As required under clause 49 of the Listing Agreement a brief resume, expertise and details of other directorships of Mr. V. Ramesh, Mr. V. Ravichandran and Ms. Lalitha Balakrishnan are annexed to the Notice convening the 29th Annual General Meeting of the Company.

All the Independent Directors viz., Mr. K. Balasubramanian, Mr. K. Ramadoss, Mr. C. R. Rajan and Ms. Lalitha Balakrishnan have submitted declarations confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges.

The Board met 5 times during the financial year 2014-15, the details of which are given in the Corporate Governance Report.

In accordance with the provisions of Section 134 of the Act and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the performance of Committees of the Board, namely, Audit Committee, Risk Management Committee, Stakeholders Relationship Committee and Nomination and Remuneration Committee and also the directors individually. The manner in which the evaluation was carried out and the process adopted has been mentioned in the Corporate Governance Report.

The Board, on the recommendation of the Nomination & Remuneration Committee, has framed a policy for selection and appointment of Directors, Senior Management and their remuneration and also framed the criteria for determining qualifications, positive attributes and independence of directors. The Remuneration Policy and criteria for Board nominations are given in Annexure - A to this Report.

Mr. V. Ramesh, Managing Director; Mr. V. Suri, Chief Financial Officer and Mr. Amar Kumar Dora, Company Secretary are the Key Managerial Personnel of the Company as per Section 203 of the Companies Act, 2013.

AUDITORS AND AUDITOR'S REPORT Statutory Auditors

The Shareholders at the 28th Annual General Meeting held on July 25, 2014, have appointed M/s R.G.N. Price & Co., as Statutory Auditors of the Company to hold office until the conclusion of 30th Annual General Meeting subject to ratification of their appointment at every intermittent AGM. M/s R.G.N. Price & Co., being eligible have expressed their willingness to continue as auditors of the Company and accordingly, the ratification of their appointment is recommended to the Shareholders.

Cost Auditors

As per Section 148 of the Companies Act 2013 read with Rule 4 of the Companies (Cost Records and Audit) Rules, 2014, the cost records maintained by the Company in respect of its Sugar and Cogeneration activity are required to be audited by a Cost Auditor. The Board of Directors, based on the recommendation of the Audit Committee, appointed M/s Narashima Murthy & Co, Cost Accountants (FRN: 000042), as the Cost Auditors for auditing the cost accounting records maintained by the Company for the financial year 2015-16 on a remuneration of ' 90,000/- plus service tax as applicable and reimbursement of out of pocket expenses. As required under the Companies Act, 2013, a resolution seeking members approval of the remuneration payable to the Cost Auditor forms part of the notice convening the Annual General Meeting.

The Cost Audit Report for the year 2013-14 was filed with the Ministry of Corporate Affairs in August 2014.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s V. Sreedharan & Associates, Company Secretaries in practice as the Secretarial Auditor to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is given in Annexure-B to this Report.

There are no qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditors/Secretarial Auditors in their respective reports. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company during the year under review.

RISK MANAGEMENT

As required under Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board's Report.

The Company has a mechanism to identify, assess, monitor and mitigate various risks to its key business objectives. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis. The Company has formulated a Risk Management Policy which is also available on the Company's website at www.parrysugar.com.

INTERNAL FINANCIAL CONTROLS

The Company has adequate Internal Financial Controls with proper checks to ensure that transactions are properly authorised, recorded and reported apart from safeguarding its assets. These systems are reviewed and improved on a regular basis. It has a comprehensive budgetary control system to monitor revenue and expenditure against approved budget on an ongoing basis. The internal auditors of the Company reviews the controls across the key processes and submits reports periodically to the Management and significant observations are also presented to the Audit Committee for review. Follow up mechanism is in place to monitor the implementation of the various recommendations.

CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES.

Section 135 of the Companies Act, 2013 provides the threshold limit for applicability of the CSR to a Company i.e. (a) net worth of the Company to be Rs500 crore or more; or (b) turnover of the company to be Rs1,000 crore or more; or (c) net profit of the company to be Rs5 crore or more. As the Company does not fall under any of the threshold limits given above, the provisions of Section 135 are not applicable to the Company.

RELATED PARTY TRANSACTIONS

All contracts/arrangements/transactions entered into during the financial year with the related parties were on arm's length basis and were in the ordinary course of business. Section 188(1) of the Companies Act, 213 exempts related party transactions that are in the ordinary course of business and are on arm's length basis. However, under clause 49 of the Listing Agreement, all material Related Party Transactions requires approval of the shareholders through special resolution. Accordingly, the Company has obtained the approval of the shareholders by way of special resolution for the material related party transactions. The Board of Directors and the Audit Committee have also approved the said related party transactions.

There are no materially significant related party transactions with the promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The policy on dealing with Related Party Transactions as approved by the Board is available at the investors section of the Company's website at www.parrysugar.com

The particulars of contracts/arrangements entered into by the Company with related parties as required to be disclosed are given in Annexure-C to this Report.

CORPORATE GOVERNANCE

The Report on corporate governance as stipulated under the Listing Agreement forms part of this Report. The requisite certificate from M/s V. Sreedharan & Associates, Practicing Company Secretaries confirming compliance with the conditions of corporate governance is attached to the Corporate Governance Report. The report also contains the details as required to be provided on Board evaluation, remuneration policy, implementation of risk management policy, whistle blower policy/vigil mechanism etc.

The Managing Director and the Chief Financial Officer have submitted a certificate to the Board regarding the financial statements and other matters as required under the Listing Agreement.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement, form part of this Annual Report.

TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND

During the year, the Company has transferred an amount of Rs647,641/- being the unclaimed dividend for the year 2006-07 to the Investor Education and Protection Fund established by the Central Government.

DISCLOSURES

Committees of the Board

During the year, in accordance with the Companies Act, 2013 the Board re-constituted/re-named some of its Committees and presently the Company has the following Committees:

- Audit Committee

- Nomination & Remuneration Committee

- Stakeholders Relationship Committee

- Risk Management Committee

The details of all the Committees alongwth their composition, terms of reference and meetings held during the year are provided in the "Report on Corporate Governance" forming part of this Annual Report.

Vigil Mechanism & Whistle Blower Policy

The Company has a vigil mechanism and a whistle blower policy. The same has been posted on the Company's website and the details of the same are given in the Corporate Governance Report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure-D to this Report.

Particulars of Loans, Guarantees or Investments

During the financial year 2014-15, the Company has not given any guarantees/loan or made any investments.

Credit Rating

The Rating Committee of ICRA has reaffirmed the rating at [ICRA] BBB (pronounced as ICRA triple B plus) for the long term credit to the Company and [ICRA] A2 (pronounced as ICRA A two) for the short term credit to the Company. The outlook on the long term rating is Stable. The aforesaid ratings are valid till November 30, 2015.

Particulars of Employees

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure -E to this Report.

Extract of the Annual Return

The details of the extract of the Annual Return in Form MGT-9 are given in Annexure-F to this Report.

Report to the Board for Industrial and Financial Reconstruction (BIFR)

As the members are aware, the Company had reported the erosion in the net worth of the Company by more than 50% of the peak networth as required under Section 23 of the Sick Industrial Companies (Special Provisions) Act, 1985 to BIFR. The Company has been filing quarterly reports with BIFR from time to time.

GENERAL

Your Directors state that no disclosure is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Companies Act, 2013.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company's operations in future.

PERSONNEL RELATIONS

Your directors hereby place on record their appreciation for the services rendered by the executives, staff and workers of the Company for their hard work, dedication and commitment. During the year under review, relations between the employees and the management continued to remain cordial.

APPRECIATION

Your directors thank the various Central and State Government Authorities and Agencies for the continued help and cooperation extended by them. The Directors gratefully acknowledge all stakeholders of the Company viz., farmers, customers, members, dealers, vendors and banks for their excellent support during the year. The Directors also place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued cooperation to the Company.

For and on behalf of the Board of Directors

Chennai K. Balasubramanian April 24, 2015 Chairman


Mar 31, 2013

The Directors have pleasure in presenting their 27th Annual Report together with the audited fnancial statements for the year ended March 31, 2013.

The fnancials for the year 2012-13 are summarised below:

(Rs. in Lakhs)

2012-13 2011-12

particulars (9 months)

Revenue from operations 10,073.46 46,739.09

Other Income 10.19 5.75

Total Income 10,083.65 46,744.84

Proft before Interest and Depreciation 625.36 5,515.20

Interest 1,428.72 5,178.17

Depreciation 489.91 2,349.96

(Loss) before taxation (1,293.27) (2,012.93) Provision for tax:

Current

Deferred Tax (1,375.60)

(Loss) after Tax (1,293.27) (637.33)

DIVIDEND

In view of the losses incurred, your Board is unable to recommend any dividend for the year ended March 31, 2013.

DemerGer of the units at sankilli and Haliyal

Subsequent to the approval accorded by the Board of Directors and shareholders at their respective meetings held on April 25, 2012 and October 8, 2012, the Scheme of Arrangement (Demerger) between the Company and the Holding Company, E.I.D.-Parry (India) Ltd., (EID Parry) under Sections 391 to 394 of the Companies Act, 1956 for transfer and vesting of the Company’s manufacturing facilities located at Haliyal and Sankili to and into EID Parry w.e.f April 1, 2012 has been sanctioned by the Hon’ble High Court of Karnataka and Hon’ble High Court of Judicature, Madras vide their respective order dated February 01, 2013 & February 18, 2013. The Scheme has become efective from March 18, 2013 pursuant to fling of the orders of the Hon’ble High Courts of Karnataka and Madras with the Registrar of Companies, Bangalore and Registrar of Companies, Chennai, respectively.

Accordingly, the fnancial results of the Company for the year ended March 31, 2013 pertains to that of Ramdurg Unit only. However, the audited results of the Company for the year ended March 31, 2012 included the results of the demerged business undertakings also and hence, to that extent, previous year fgures are not comparable with the current year fgures.

CompanY performanCe

During the year under review, your company’s total income was Rs.10,083.65 lakhs as against Rs.46,744.84 lakhs in the previous year. The proft before interest and depreciation was Rs.625.36 lakhs as against Rs.5,515.20 Lakhs of last year. After providing for Rs.489.91 Lakhs for depreciation and Rs.1,428.72 Lakhs for interest, the loss for the year was Rs.1,293.27 Lakhs. The loss is after providing for Rs. 799.75 Lakhs towards cane price for 2011-12.

During the year, on completion of the expansion project, the operations at the Ramdurg Unit was stabilised at 4250 TCD. The capacity enhancement and the ongoing debottlenecking of the facility helped the Company to achieve sustained performance during the current sugar season. The Company also successfully commissioned the cogeneration unit of 13 MW and the enhanced capacity was operational resulting in higher earnings from the export of power.

During the year, the Ramdurg Unit crushed a total 5.75 Lakhs MT of cane, produced 6.31 Lakhs qtls of sugar. The average recovery rate was 10.98%. The recovery of all the sugar mills in North Karnataka was lower mainly on account of prolonged drought and less water in reservoirs and bore wells leading to more dryness in the cane and the fowering of cane as early as November 2012.

The total power generated by the Ramdurg Co-generation plant was 339 Lakh units and export of power was at 141 Lakh units in the current year as against 6 Lakh units during last year. The revenue on power sales was better than last year due to higher export on account of the commissioning of the 13 MW cogeneration plant.

The major challenge for the Company is to protect its cane area, further improve its operating efciencies and improve the quality of output. The Company proposes to take various measures in this direction, the key being to improve the recovery and also stabilise the operations at the present capacity.

Cane prICe

For the sugar year 2012-13, the Government of India declared the Fair Remunerative Price (FRP) at Rs.1700/MT of cane linked to a recovery of 9.5% with additional Rs. 17.90 for every 0.1% recovery increase. In Karnataka, till the 2012-13 sugar seasons, the cane price was fxed by mutual discussions between the Mills and Sugarcane growers association with limited intervention of the Government of Karnataka. The cane price has been showing a steady increase year after year with no corresponding improvement in sugar price and recovery. The cane price for the 2012/13 sugar season was Rs. 2500 per tonne (ex-feld). Besides this, the company also had to pay an additional price of Rs. 350 per tonne for the 2011/12 sugar season. The high cane price resulted in a major dent in the performance of the company without corresponding increase in selling price and recovery .

Similar to the practice prevailing in U.P and other sugar cane growing states, the Legislative Council of the Government of Karnataka on February 13, 2013 passed the Karnataka Sugarcane (Regulation of Purchase and Supply) Bill, 2013 which has a provision for constitution of Sugarcane Control Board to advise regarding State Sugarcane Advisory Price (SAP). This bill empowers the state government to make rules to decide sugarcane price on revenue sharing basis taking into consideration actual revenue realised from sugar, bagasse, molasses and press mud which takes into account some of the recommendations made by the Rangarajan Committee appointed by the Govt of India to advise on the sugar decontrol.

sugar Industry & sugar price

Sugar price which had shown improvement during the period July to September 2012 giving a huge relief to the millers who could recover some of their losses, subsequently shown a reverse trend unfavourably afecting the mills across the country. The decline was primarily driven by abundant sugar, as expected during the start of the domestic crushing season in November, 2012. Additionally, the high non-levy sugar quota announced by the Government for four months of December 2012 to March 2013 afected the domestic sugar prices. The then prevailing muted global sugar prices trends, was also a supplementary factor. At the current prices, it would be very difcult for the sugar mills to make payments to cane farmers in time which might force farmers to look at other crops which would be a threat to the sugar industry prospects.

The cost of production for most of the sugar companies in 2012/13 was higher than 2011/12, as sugarcane costs increased by 16%-17% over the last season. Also, particularly for mills based in Karnataka and Maharashtra, a decline in sugarcane availability and recovery from unfavourable climatic conditions impacted cost. Rise in the cost of sugar production and decline in sugar prices resulted in lower operating margins for sugar mills across the country.

Recently, the government of India announced partial de-control of the sugar industry by dismantling the release mechanism. The Government had also abolished the levy-sugar mechanism, under which private millers were under an obligation to give 10% of production to the government at concessional rates. These welcome measures are a huge plus for the long-term sustainability of the industry.

CHanGe In CapItaL struCture

Upon the Scheme of Arrangement (Demerger) becoming efective, the share capital of the Company was restructured as follows as envisaged in the Scheme.

10,00,00,000 Crores 8% Redeemable Cumulative Preference shares of Rs.10/- each aggregating to Rs.100 Crores and 105,05,460 8% Redeemable Non-Cumulative Preference shares of Rs.11/- each aggregating to Rs.11.55 Crores held by EID Parry, the holding Company, were extinguished.

Further, during the year the Company allotted 150 Lakh, 8% Cumulative Redeemable Preference shares of Rs.10/- each to the Holding Company aggregating to Rs.15 Crores. Consequently, the paid up share capital of the Company stands at Rs.37.52 Crores.

DIreCtors

Mr. C. R.Rajan and Mr. P. Gopalakrishnan were appointed as Additional Directors of the Company in accordance with Section 260 of the Companies Act, 1956 on April 24, 2013. Mr. C. R.Rajan and Mr. P. Gopalakrishnan will hold ofce till the date of the Annual General Meeting to be held on July 22, 2013. The requisite notices together with necessary deposit have been received from members pursuant to Section 257 of the Companies Act, 1956 proposing the candidature of Mr. C. R.Rajan and Mr. P. Gopalakrishnan as Directors of the Company.

Mr.S. Sandilya and Mr. K. Balasubramanian, Directors retire by rotation in terms of Article 108 of the Articles of Association of the Company and being eligible, ofer themselves for re-appointment. A brief resume, expertise and details of other directorships of Mr. S.Sandilya, Mr. K.Balasubramanian, Mr. C. R.Rajan and Mr. P. Gopalakrishnan are provided in the Corporate Governance Report.

DIreCtors’ responsIBILItY statement

Pursuant to Section 217(2AA) of the Companies Act, 1956 and on the basis of explanation given by the executives of the Company and also subject to disclosures in the Annual Accounts, your Directors to the best of their knowledge and belief confrm as under:

i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanations relating to material departures.

ii. that the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of afairs of the Company at the end of the fnancial year and of the loss of the Company for the period.

iii. that the Directors had taken proper and sufcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. that the Directors had prepared the annual accounts for the fnancial year ended 31st March 2013 on a going concern basis.

FIXED DEPOSITS

During the year under review, your Company has neither invited nor accepted any fxed deposits from the public as per the provisions of Section 58A of the Companies Act 1956. As such, no amount of principal or interest was outstanding as on the date of the Balance Sheet.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance Requirements as set out by SEBI and is in conformity with most of the requirements of the voluntary guidelines on Corporate Governance issued by the Ministry of Corporate Afairs.

Ceo/Cfo CertIfICatIon

Mr. D.Kumaraswamy, Managing Director and Ms.G. Jalaja, Chief Financial Ofcer, have given a certifcate to the Board as contemplated under Clause 49 of the Listing Agreement with the Stock Exchanges.

transfer to tHe InVestor eDuCatIon anD proteCtIon funD

In terms of Section 205C of the Companies Act, 1956, an amount of Rs.10,41,623/- being the unclaimed dividend was transferred during the year to the Investor Education and Protection Fund established by the Central Government.

CreDIt ratInG

During the year, rating agency ICRA has reafrmed the Long term ratings at [ICRA] BBB (Pronounced as ICRA triple B Plus) and Short term ratings at [ICRA] A2 (Pronounced as ICRA A two). The aforesaid ratings are valid till December 31, 2013.

personneL reLatIons

Your directors hereby place on record their appreciation for the services rendered by the executives, staf and workers of the Company. During the year under review, relations between the employees and the management continued to remain cordial.

ConserVatIon of enerGY, teCHnICaL aBsorptIon anD foreIGn eXCHanGe earnInGs anD outGo

The information relating to conservation of energy, technical absorption and foreign exchange earnings and outgo pursuant to Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

auDItors

The Auditors, M/s.R.G.N Price & Co., retire at the conclusion of the ensuing Annual General Meeting. The Auditors have confrmed their willingness to act as Auditors of the Company for the fnancial year 2013-14 and have confrmed that their appointment, if made, would be within the prescribed limits under Section 224 (1B) of the Companies Act, 1956.

Cost auDItors

M/s. Narasimha Murthy & Co, Cost Accountants, were appointed as the Cost Auditors for the fnancial year 2012-13. M/s. Narasimha Murthy & Co have confrmed their willingness to act as Cost Auditors of the Company for the fnancial year 2013-14 and have confrmed that their appointment, if made, would be within the prescribed limits under Section 224 (1B) of the Companies Act, 1956.

partICuLars of empLoYees

The information required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure forming part of this Report.

aCKnoWLeDGement

Your directors acknowledge and express their grateful appreciation for the co-operation and assistance received from Banks, Government Authorities, Customers, Farmers and Suppliers.

Your directors also thank the shareholders for the confdence reposed by them in the management of the Company and for their continued support and co-operation.

For and on behalf of the Board of Directors

Chennai s. sandilya

April 24, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting their 26th Annual Report together with the audited financial statements for the Financial Year (9 months) ended 31st March 2012.

The financials for the year 2011-2012 are summarized below.

(Rs in Lakhs) 2011-12 2010-11 (9 months) (15 months)

Revenue from operations 46739.09 41784.06

Other Income 5.75 10.61

Total Income 46744.84 41794.67

Profit before Interest and Depreciation 5515.20 1035.42

Interest 5178.17 7823.24

Depreciation 2349.96 3665.80

(Loss) before taxation (2012.93) (10453.62)

Provision for tax:

- Current - (123.97)

- Deferred Tax (1375.60) (862.24)

(Loss) after Tax (637.33) (9467.41)

CHANGE IN FINANCIAL YEAR

The financial year 2010-11 of the Company was extended up to 30th June 2011. Consequently the current financial year of the Company is for a period of 9 months ended on 31st March 2012 and hence not comparable with the results of the previous financial year 2010-2011 which was for a 15 months period.

DIVIDEND

In view of the losses incurred, your Board is unable to recommend any dividend for the financial year ended 31st March 2012. COMPANY PERFORMANCE

During the year under review, your Company's total income was Rs 46744.84 lakhs as against Rs 41794.67 lakhs in the previous year. The profit before interest and depreciation was Rs 5515.20 lakhs vs. Rs 1035.42 Lakhs of last year. The interest cost was Rs 5178.17 Lakhs vs Rs 7823.24 Lakhs last year. During the year the operations of the Company improved across all parameters. The cane crushed was higher, the average recovery was higher, the Company could mobilise harvesting labour in time leading to consistent and continuous operation at all the units. The capacity enhancement at Haliyal and Ramdurg and debottlenecking of the facilities helped the Company to achieve sustained performance during the current sugar season. The operations at Sankili was stabilized.

The sugar prices which showed an increasing trend till the start of season 2011-12 in October 2011 fell once new sugar started coming to the market and remained sluggish till March 2012 due to anticipated higher sugar output during sugar year 2011- 12. With the close of season, prices have started showing some improvement. The sugar production in the Country witnessed a 16% percent growth over the last two years driven mainly by improved cane acreage in response to higher cane prices. In line with the industry in North Karnataka, the Company had to pay Rs 200 per tonne of cane as additional cane price for the cane supplied in Karnataka units during the previous sugar season. The continued increase of cane price year after year with no significant and proportionate increase in sugar sales price is a challenge for the sugar industry in the long term to sustain performance. The Government's continued control over the sugar industry through release mechanism, cane price and other restrictions affect the Industry.

In Karnataka, the unit at Haliyal performed significantly better with improved reliability of machinery and equipment. The unit recorded a peak recovery of 13.3%, which is the highest in Karnataka and average recovery of 12.2%. The unit crushed a total quantity of 5.52 lakhs MT of Cane vs. 3.48 Lakhs MT last year, an increase of 59%. The average cane crushed per day was 3248 MT with the crushing touching a maximum of 4835 MT in a particular day. The crushing of cane in the month of March 2012 was affected due to the limited availability of cane and drop in the cane yield.

The performance of the plant at Ramdurg was also significantly better than last year with a crushing of 5.39 Lakhs MT of cane vs 3.95 Lakhs MT last year, an increase of 36%. The average annual recovery was at 12.10% and the crushing touched a maximum of 4000 MT in a particular day. The Company has already placed order for the enhancement of its cogen unit at Ramdurg to 13 MW and the enhanced capacity is expected to be operational before the next crushing season resulting in higher earnings for the unit.

The performance of the plant at Sankili was also significantly better than last year with a crushing of 5.55 Lakhs MT of cane vs 3.67 Lakhs MT last year, an increase of 51%. The average annual recovery was at 9.88% and the crushing touched a maximum of 4348 MT in a particular day.

During the year, the Company crushed a total 16.45 Lakhs MT of cane, produced 18.77 Lakhs qtls. of sugar as against 11.11 Lakhs MT of cane, 11.95 Lakhs qtls. of sugar during the previous year, an increase of 48% and 58% respectively. The average recovery rate was 11.41% vs 10.76 % last year.

The major challenge for the Company for the future is to further improve operating efficiencies and improve the quality of output. Distillery Division

The distillery division produced 186 Lakh liters of industrial Alcohol /Ethanol/ENA as against 139 Lakh litres in the previous year registering an increase of 34%. In value terms, the sale of industrial alcohol/Ethanol/ENA during the year was Rs 51.22 Crores as against Rs 41.88 Crores in the previous year registering an increase of 22%. Increase in production and sale was due to higher cane crushing resulting in higher production of molasses. The sale of ENA/Ethanol produced at Distilleries fetches better revenue and can act as a stabilizer to the threat of cyclicality of sugar business. The Company is availing the Certified Emission Reduction (CER) benefits for its distillery unit at Sankili, Andhra Pradesh under Clean Development Mechanism (CDM) of United Nations Framework Convention on Climate Change (UNFCCC).

Power Division

The total power generated by our Co-generation plants were 1345 Lakhs units as against 1267 Lakhs units in the previous year mainly due to availability of more bagasse from higher sugarcane crushing. The Company has not purchased any coal during the year due to maximum availability of bagasse thereby substantially improving the performance and operations of its cogen units. The sale of power was at Rs 2842 Lakhs in the current year as against Rs 2263 Lakhs recorded in the previous year registering an increase of 26%. The revenue on power sales was better than last year due to higher export coupled with higher rate on account of the sale through power exchange by the Haliyal unit which was earlier under the power purchase agreement with the State Government Utility. The issuance of Order by the Government of Karnataka under Section 11 of the Electricity Act, 2003 mandating to supply to the State Government utilities at a remunerative rate had also contributed to the revenue. At Sankili the Company continues to reel under pressure due to the lower tariff offered by the State Government under the long term Power Purchase Agreement entered into by the Company. The dispute pertaining to the revision of power tariff from the Year 2004 as pronounced by the State Commission is pending before the Appellate Tribunal for Electricity (ATE). Any favourable Order by the ATE will be in the interest of the Cogen power producers in the state of Andhra Pradesh. Increase in power generation capacity, both during the season and off season shall be the future thrust area for the Company.

The Government has launched the Renewable Energy Certificate (REC) mechanism to mainstream the renewable energy sources across the nation. Though REC is a market based instrument enabling the obligated entities to meet their Renewable Purchase Obligation (RPO) and in the process enabling the renewable energy producers to get higher revenue through sale of such Certificates, the regulations framed by the State Electricity Commissions pose a hindrance to avail such benefit. Going forward it is expected that the various State Commissions will modify the regulations in due course to enable all renewable energy producers to take advantage and benefit from the REC Mechanism.

CHANGE IN CAPITAL STRUCTURE

During the year, the Company allotted 250 Lakhs, 8% cumulative preference shares of Rs 10/- each to the Holding Company, E.I.D. - Parry (India) Ltd. aggregating to Rs 25 Crores. Consequently, the paid up share capital of the Company has increased to Rs 134.08 Crores w.e.f. 30th August, 2011.

SOCIAL RESPONSIBILITY

The Company in collaboration with Help Age India, have launched a project to run a Mobile Medicare Unit in and around Rajam, Srikakulam District, Andhra Pradesh to provide basic and essential medicare, to the poor, needy and elderly population of the society irrespective of caste, creed or religion. At Sankili, the Company is providing assistance to children of sugar cane farmers for quality education by rembursing their school fees. The Company has taken measures to provide drinking water facilities in the villages in and around its command area. During the year, medical facilities were provided and blankets were distributed during the winter to the harvesting and transportation labourers working in the cane field. The Company is in the process of improving the infrastructure to provide better facilities to these migrant labourers and their children in the field of education and health care. The Company is also rembursing the collage fees, cost of books etc., for one child in the family of those who have sold land to the company in Haliyal.

SUBSIDIARY COMPANY

The Company's wholly owned subsidiary, Alagawadi Bireshwar Sugars Pvt. Ltd. (ABSPL), proposes to set up an integrated sugar plant at Raibagh, Karnataka and the land acquisition process has been completed. The Company is in the process of conversion of land and obtaining various other clearances/approvals.

SUBSIDIARY ACCOUNTS

In terms of the Circular No.: 2 /2011 dated 8th February 2011 issued by the Central Government u/s 212(8) of the Companies Act, 1956, copies of the Balance Sheet, Profit & Loss Account, and Reports of the Board and the Auditors of the Company's wholly owned subsidiary, Alagawadi Bireshwar Sugars Pvt. Ltd. have not been attached to the Balance Sheet of the Company as at 31st March 2012.

However, as directed by the Central Government, the financial data of the subsidiary has been separately furnished forming part of this Annual Report. These documents will also be available for inspection at the Registered Office of the Company and of the concerned subsidiary company during working hours up to the date of the Annual General Meeting. However, the related detailed information of the Annual Accounts of the Subsidiary Company will be made available to the Holding Company's shareholders seeking such information at any point of time. The Annual Accounts of the Subsidiary Company will also be kept for inspection by the investors at the Registered Office of the Company and that of the Subsidiary Company.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the same together with Auditors' Report thereon form part of the Annual Report.

REPORT TO THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION

As the Members are aware, a meeting of the Members was convened on November 17, 2011 to consider the erosion in net worth of the Company as on June 30, 2011 by more than 50% of the peak net worth during the immediately preceding four financial years and to report the fact of such erosion to the Board for Industrial and Financial Reconstruction ("BIFR") as required under Section 23 of the Sick Industrial Companies (Special Provisions) Act, 1985. Accordingly, the Company has reported the fact of such erosion to the BIFR"

CREDIT RATING

During the year, rating agency ICRA has reaffirmed the Long term ratings at [ICRA] BBB (Pronounced as ICRA triple B Plus) and Short term ratings at [ICRA] A2 (Pronounced as ICRA A two). The aforesaid ratings are valid till January 2, 2013.

DIRECTORS

Mr. K. Ramadoss and Mr. V. Ravichandran, Directors retire by rotation in terms of Article 108 of the Articles of Association of the Company and being eligible, offers themselves for re-appointment. A brief resume, expertise and details of other directorships of Mr. K. Ramadoss and Mr. V. Ravichandran are provided in the Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 and on the basis of explanation given by the Executives of the Company and also subject to disclosures in the Annual Accounts, your Directors to the best of their knowledge and belief confirm as under:

i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanations relating to material departures.

ii. that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period.

iii. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. that the Directors had prepared the annual accounts for the financial year ended 31st March 2012 on a going concern basis.

FIXED DEPOSITS

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public as per the provisions of Section 58A of the Companies Act, 1956. As such, no amount of principal or interest was outstanding as on the date of the Balance Sheet.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance Requirements as set out by SEBI and is in conformity with most of the requirements of the voluntary guidelines on Corporate Governance issued by the Ministry of Corporate Affairs.

CEO/CFO CERTIFICATION

Mr. D. Kumaraswamy, Managing Director and Ms. G. Jalaja, Chief Financial Officer, have given a certificate to the Board as contemplated under Clause 49 of the Listing Agreement with the Stock Exchanges.

TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 205C of the Companies Act, 1956, an amount of Rs 10.09 Lakhs being the unclaimed dividend was transferred during the year to the Investor Education and Protection Fund established by the Central Government.

PERSONNEL RELATIONS

Your directors hereby place on record their appreciation for the dedication and competence of all the executives, staff and workers of the Company. During the year under review, relations between the employees and the management continued to remain cordial.

CONSERVATION OF ENERGY, TECHNICAL ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to conservation of energy, technical absorption and foreign exchange earnings and outgo pursuant to Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

AUDITORS

The Auditors, M/s. R.G.N Price & Co., retire at the conclusion of the ensuing Annual General Meeting. The Auditors have confirmed their willingness to act as Auditors of the Company for the financial year 2012-13 and have confirmed that their appointment, if made, would be within the prescribed limits under Section 224 (1B) of the Companies Act, 1956.

COST AUDITORS

M/s Narasimha Murthy & Co., Cost Accountants, were appointed as the Cost Auditors for conducting the cost audit of Sugar, Distillery and Cogen divisions of the Company for the financial year 2011-12. M/s Narasimha Murthy & Co. have confirmed their willingness to act as Cost Auditors of the Company for the financial year 2012-13 and have confirmed that their appointment, if made, would be within the prescribed limits under Section 224 (1B) of the Companies Act, 1956.

PARTICULARS OF EMPLOYEES

The information required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure forming part of this Report.

ACKNOWLEDGEMENT

Your directors acknowledge and express their grateful appreciation for the co-operation and assistance received from Banks, Government Authorities, Customers, Farmers, Vendors and also the Members for the confidence reposed by them in the management of the Company and for their continued support and co-operation. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board of Directors

Chennai S. Sandilya

April 24, 2012 Chairman


Jun 30, 2011

Dear Members,

The Directors have pleasure in presenting their 25th Annual Report together with the audited financial statements for the 15-month period ended 30th June 2011.

The financials for the year 2010-2011 are summarised below.

(Rs. in Lakhs)

2010-11 2009-10 (15 months)

Sales Income 41381.30 19764.50

Other Income 413.37 2991.76

Total Income 41794.67 22756.26

Profit before Interest and Depreciation 1035.42 913.73

Interest 7823.24 4209.89

Depreciation 3665.80 2687.48

(Loss) before taxation (10453.62) (5983.64)

Provision for tax:

Earlier year (123.97) 55.56

Deferred Tax (862.24) (196.11)

(Loss) after Tax (9467.41) (5843.09)

Balance in Profit and loss account brought forward from previous year (270.42) 5572.66

Balance carried forward to Balance Sheet (9737.83) (270.42)



CHANGE IN FINANCIAL YEAR

The financial year 2010-11 of the Company was extended upto June 30, 2011 to fully refect the performance of the Company for the sugar season 2010-11 which continued beyond March 2011 due to availability of cane. Hence, the financial results for the year under review cover a period of 15 months and not comparable with the results of the previous financial year 2009-2010 which is a 12 months period.

DIVIDEND

In view of the losses incurred, your Board is unable to recommend any dividend for the financial year ended on June 30, 2011.

COMPANY PERFORMANCE

During the year under review your Company's total income was Rs. 41794.67 lakhs as against Rs. 22756.26 lakhs for the previous year. The Profit before interest and depreciation of Rs. 1035.42 lakhs was marginally higher compared to last year. The loss before taxation was Rs. 10453.62 lakhs compared to a loss of Rs. 5983.64 lakhs of the last year.

The performance of the Company was adversely affected mainly due to the low sugar selling price and high cost of sugarcane. The sugar prices remained sluggish due to higher sugar output during the year 2010-11 which witnessed a 30-35 percent growth driven mainly by improved cane acreage in response to higher cane prices paid in last two sugar years. Further, during the year in line with the industry, the Company had to pay Rs. 200 per tonne of cane in Karnataka units as additional cane price for the cane supplied during the previous year.

In Karnataka, the unit at Haliyal had a major technical breakdown which affected the production for nearly a month during the peak season thereby seriously affecting performance of the unit. The performance of the plant at Ramdurg was signifcantly better than last year with a crushing of 457703 MT of cane Vs 205071 MT last year, an increase of 123%. The Company has more or less stabilised the operation of mobilising the harvesting and transportation labour to ensure smooth, continued and unhindered crushing operations.

The performance of the plant at Sankili was better than last year despite adverse impact due to heavy rains leading to delay in start of the crushing season and disruptions in cane supply.

During the year, the Company crushed a total 1295502 MT of cane, produced 1397519 qtls of sugar as against 585352 MT of cane and 566855 qtls of sugar during the previous year, an increase of 121.32% and 146.54% respectively. The average recovery rate was 10.80% Vs 9.70% last year.

The major challenge for the Company in the coming year is to remove the production bottlenecks and to stabilise the plants at all locations to enhance the crushing operations. The Haliyal plant which is equipped with all modern equipments such as diffuser for milling to achieve higher recovery and low power consumption, in-line shredder to achieve better cane preparations and high pressure Boiler to achieve better efficiencies, have to be tested for the frst time with crushing at peak capacity. Most of these equipments have been used for the frst time by the Company and the various defciencies in the system alignments have to be rectifed which is expected to improve the recovery and performance of the unit the coming year. The Company is also poised to increase the capacity of Haliyal unit and Ramdurg Unit up to 4000 TCD and the coming season will see an increase in the operations of the Company's Karnataka Units. The growth of Sugar industry in South India is expected to be in Karnataka and it is imperative that the Company ramps up production capabilities within the next three years to take advantage of the up-cycle in the sugar cycle as cane is likely to be abundantly available in the next two/three years.

Distillery Division

The distillery division produced 188.85 lakh litres of industrial Alcohol/Ethanol against 95.92 lakh litres in the previous year registering an increase of 96.88% due to commencement of operations of the distillery unit at Haliyal. In value terms, the sale of industrial alcohol/ethanol during the year was Rs. 57.38 crores as against Rs. 35.37 crores in the previous year registering an increase of 62.21%. Increase in production and sale was due to availability of more sugarcane resulting in higher production of molasses.

Power Division

The total power generated by our Co-generation plants was 1508.06 lakhs units as against 1025.57 lakhs units in the previous year mainly due to availability of more bagasse from sugarcane crushing. The sale of power was at Rs. 3179.31 lakhs in the current year as against Rs. 3238.01 lakhs recorded in the previous year. The power exported during the previous year includes export during the off season realising a better tariff. The revenue of the Company is affected by lower tariff of the State Govt. utilities and the Company is exploring the possibility of higher revenue through third party exports and sale through power exchange. Increase in power generation capacity, both season and off season shall be the future thrust area of the Company. The Company is also completing the post registration formalities to avail certified Emission Reduction (CER) benefits under Clean Development Mechanism (CDM) of United Nations Framework Convention on Climate Change (UNFCCC).

In an attempt to boost renewable energy production in the country, the Govt. has launched the Renewable Energy Certifcate (REC) mechanism which aims at mainstreaming renewable energy sources across the nation. Renewable Energy Certifcate is a market based instrument which enables the obligated entities to meet their Renewable Purchase Obligation (RPO). In India, all energy distribution licensees are entitled to buy a minimum level of renewable energy as per the Electricity Act imposed by the State Electricity Regulatory Commission. The Company is actively exploring to avail the benefit of the REC mechanism.

MEASURES TAKEN FOR CANE DEVELOPMENT

Your Company has undertaken a comprehensive Cane Development Program to improve cane acreage and yield in the coming years. Major cane development programmes will continue to be initiated by the Company aiming at improving area under cultivation, cane yield and improving the quality of cane to cater to the enhanced crushing capacity.

SHARE PURCHASE AGREEMENT

As informed in the last year's report, pursuant to the Share Purchase Agreement dated April 25, 2010 entered into by E.I.D.- Parry (India) Ltd. (EID Parry) with the erstwhile promoters and the consequent open offer made under the SEBI (Substantial Acquisition of Shares and Takeover) Regulations,1977 (Takeover Code), EID Parry have acquired 12975110 shares representing 65% of the paid up share capital of the Company. Consequently, your Company has become a subsidiary of EID Parry with effect from August 27, 2011 and EID Parry has become the promoter of the Company under the applicable Regulations.

CHANGE IN CAPITAL STRUCTURE

During the year, the Company allotted 750 Lakhs, 8% cumulative preference shares of Rs. 10/- each to the Holding Company aggregating to Rs. 75 crores. Consequently the paid up share capital of the Company has increased to Rs. 109.08 crores with effect from June 30, 2011.

SOCIAL RESPONSIBILITY

The Company through its CSR initiatives seeks to provide quality education, improve access to public health system, nutritional inputs and enhance economic opportunities of families and community through the promotion of sustainable agriculture and by providing training to farmers. The Company in collaboration with HelpAge India, has launched a project to run a Mobile Medicare Unit in and around Rajam, Srikakulam District, Andhra Pradesh to provide basic & essential Medicare, to the poor, needy and elderly population of the society.

SUBSIDIARY COMPANY

The Company's wholly owned subsidiary, Alagawadi Bireshwar Sugars Pvt. Ltd. (ABSPL), proposes to set up an integrated sugar plant at Raibagh, Karnataka and the land acquisition process is completed. The Company is in the process of conversion of land and obtaining various other clearances/approvals.

SUBSIDIARY ACCOUNTS

In terms of the Circular No: 2 /2011 dated February 8, 2011 issued by the Central Government u/s 212(8) of the Companies Act, 1956, copies of the Balance Sheet, Profit and Loss Account, and Reports of the Board and the Auditors of the Company's wholly owned subsidiary, Alagawadi Bireshwar Sugars Pvt. Ltd. have not been attached to the Balance Sheet of the Company as at June 30, 2011.

However, as directed by the Central Government, the financial data of the subsidiary have been separately furnished forming part of this Annual Report. These documents will also be available for inspection at the Registered office of the Company and of the subsidiary company during working hours up to the date of the Annual General Meeting. However, the related detailed information of the Annual Accounts of the Subsidiary Company will be made available to the Holding Company's investors seeking such information at any point of time. The Annual Accounts of the Subsidiary Company will also be kept for inspection by the investors at the Registered office of the Company and that of the Subsidiary Company.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared by the Company in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the same together with Auditors' Report thereon form part of the Annual Report.

DIRECTORS

Consequent to change in the ownership of the Company there was a reconstitution of the Company's Board. Effective August 27, 2010, Mr. R. Ramakrishnan, Mr. V.P. Singh, Mr. Uday M. Chitale, Mr. T. C. S. Reddy and Mr. N.V. Varadarajulu resigned from the directorship of the Company and Mr. V.Ravichandran, Mr. N. Srinivasan, Mr. K. Ramadoss were appointed as Additional Directors of the Company.

The Board places on record its appreciation for the valuable contributions made by Mr. R. Ramakrishnan, Mr. V.P. Singh, Mr. Uday, M. Chitale, Mr. T. C. S. Reddy and Mr. N. V.Varadarajulu.

Mr. K. Balasubramanian resigned as the Chairman of the Company but continues as a Director of the Company. Mr. S. Sandilya was appointed as the Chairman of the Company.

Consequent to the resignation of Mr. R. Ramakrishnan as the Managing Director, Mr. D. Kumaraswamy was appointed as the Managing Director of the Company with effect from August 28, 2010.

Mr. V. Ravichandran, Mr. N. Srinivasan and Mr. K. Ramdoss hold office till the ensuing Annual General Meeting. The Company has received notices from members proposing the appointments of Mr. V. Ravichandran, Mr. N. Srinivasan and Mr. K.Ramadoss as Directors of the Company. A brief resume, expertise and details of other directorships of Mr. V. Ravichandran, Mr. N. Srinivasan and Mr. K.Ramadoss are provided in the Corporate Governance Report.

Mr. S. Sandilya retires by rotation in terms of Articles 108 of the Articles of Association of the Company and being eligible, offers himself for re-appointment. A brief resume, expertise and details of other directorships of Mr. S. Sandilya are provided in the Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 and on the basis of explanation given by the Executives of the Company and also subject to disclosures in the Annual Accounts, your Directors to the best of their knowledge and belief confrm as under:

i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanations relating to material departures.

ii. that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period.

iii. that the Directors had taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. that the Directors had prepared the annual accounts for the financial year ended June 30, 2011 on a going concern basis.

FIXED DEPOSITS

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public as per the provisions of Section 58A of the Companies Act, 1956. As such, no amount of principal or interest was outstanding as on the date of the Balance Sheet.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance Requirements as set out by SEBI and is in conformity with most of the requirements of the voluntary guidelines on Corporate Governance issued by the Ministry of Corporate Affairs.

CEO/CFO CERTIFICATION

Mr. D. Kumaraswamy, Managing Director and Ms. G. Jalaja, Chief Financial officer, have given a certifcate to the Board as required under Clause 49 of the Listing Agreement with the stock exchanges.

PERSONNEL RELATIONS

Your directors hereby place on record their appreciation for the services rendered by the executives, staff and workers of the Company. During the year under review, relations between the employees and the management continued to be cordial.

CONSERVATION OF ENERGY, TECHNICAL ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to conservation of energy, technical absorption and foreign exchange earnings and outgo pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

AUDITORS

The Auditors, M/s. Pricewaterhouse, retire at the conclusion of the ensuing Annual General Meeting and have expressed that they do not wish to be reappointed at the ensuing Annual General Meeting. M/s. R.G.N Price & Co, Chartered Accountants have confrmed their willingness to act as Auditors of the Company for the financial year 2011-12 and have confrmed that their appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956.

COST AUDITORS

Narashima Murthy & Co., Cost Accountants, was appointed as the Cost Auditor for conducting the cost audit of Sugar Units of the Company for the financial year 2010-11. As per the Circular No.52/26/CAB/2010 dated 02.05.2011 of the Central Government, the Company is also required to conduct the cost audit of its distillery and cogen units with effect from the financial year 2011-12. Accordingly, Narashima Murthy & Co. has also been appointed as Cost Auditor for conducting the cost audit of Sugar, Distillery and Cogen Units of the Company for the financial year 2011-12.

PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is given in the Annexure forming part of this Report.

ACKNOWLEDGEMENTS

Your directors acknowledge and express their grateful appreciation for the co-operation and assistance received from Banks, Government Authorities, Customers, Farmers and Suppliers.

Your directors also thank the shareholders for the confdence reposed by them in the management of the Company and for their continued support and co-operation.

For and on behalf of the Board

Place: Chennai S. Sandilya

Date: July 25, 2011 Chairman

 
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