Notes to Accounts of SBEC Sugar Ltd.

Mar 31, 2018

Note: 1. Company Overview

SBEC Sugar Limited (‘the Company'') is a Public Limited Company incorporated in India under the provisions of the Companies Act and its shares are listed on Bombay Stock Exchange and National Stock Exchange. The registered office of the Company is situated at Village-Loyan, Malakpur, Baraut, District- Baghpat, 250611 (UP), and its principal place of business is at Malakpur, Baraut District- Baghpat, 250611 (UP), the Company is engaged in production of sugar, incorporated in the year 1991, the Company commenced its operations in 1990-2000 with capacities of 3125 TCD and increase to 8000 TCD.

a) Terms/rights attached to Equity Shares

Company has only one class of equity shares having a par value of Rs.10/-. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

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 will be in proportion to the number of equity shares held by the shareholders.

Note 2 : Commitment

2.1 Capital Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. Nil (P.Y. Nil)

2.2 : Other Commitments: Rs. Nil (P.Y. Nil)

Note 3: Segment Reporting

The Company is a single location single product company and hence the requirement of Ind As-108 on segment reporting is not required.

Note 4: Outstanding dues to micro, small and medium Enterprises :

The disclosure of dues details relating to enterprises covered under micro, small and medium enterprises Development Act 2006, to the extent the information are available with the company, are as under :

Note 5: Financial Instruments

a) Financial risk management

The Company''s activities expose it to a variety of financial risks which includes market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company''s focus is to ensure liquidity which is sufficient to meet the Company''s operational requirements. The Company monitors and manages key financial risks so as to minimize potential adverse effects on its financial performance. The Company has a risk management policy which covers the risks associated with the financial assets and liabilities. The details for managing each of these risks are summarized ahead.

b) Market risk

Market risk is the risk that the expected cash flows or fair value of a financial instrument could change owing to changes in market prices. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

c) Credit risk management

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. The Company''s exposure to credit risk primarily arises from trade receivables, balances with banks, investments and security deposits. The credit risk on bank balances is limited because the counter parties are banks with good credit ratings.

d) Trade Receivables

Credit risk is managed through credit approvals, establishing credit limits, continuous monitoring of creditworthiness of customers to which the company grants credit terms in the normal course of business. The Company also assesses the financial reliability of customers taking into account the financial condition, current economic trends and historical bad debts and ageing of accounts receivables.

e) Investments

The Company limits its exposure to credit risk by generally investing with counter parties that have a good credit rating. The Company has funded de-fined-benefit gratuity plans. The funded status of these plans is influenced by movements in financial market. A negative performance of the financial markets could have a material impact on cash funding requirements.

f) Cash & cash equivalents

With respect to credit risk arising from financial assets which comprise of cash and cash equivalents, the Company s risk exposure arises from the default of the counter party, with a maximum exposure equal to the carrying amount of these financial assets at the reporting date. Since the counter party involved is a bank, Company considers the risks of non-performance by the counter party as non-material.

g) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s net liquidity position through rolling forecasts on the basis of expected cash flows.

h) Maturity profile of financial liabilities

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.

i) The Company manages its capital to ensure that the entities in the Company will be able to continue as going concern while maximizing the return to shareholders and also complying with the ratios stipulated in the loan agreements through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (borrowings as detailed in note 14 offset by cash and bank balances as detailed in note 8 & 10) and total equity of the Company.

The Company is not subject to any externally imposed capital requirements. j) Gearing ratio

The gearing ratio at the end of the reporting period was as follows:

Note:

i. Debt is defined as long and short-term borrowings (excluding derivative, financial guarantee contracts), as described in notes 14 and 18.

ii. In order to achieve this overall objective, the Group''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to call loans and borrowings or charge some penal interest. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the current years and previous years.

Note 6. Other Disclosures

During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 was signed between the Company, Punjab National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28th September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs. 2,810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs. 3,351.21 lacs to PNB. As per expert legal opinion, during the year interest amounting to Rs. 417.63lacs (previous year Rs. 417.63 lacs for the period from 22nd January, 2007 to 31st March, 2012) has been allocated to the cost of “Debt Assignment” acquired by the company from PNB, since in the opinion of the management the borrowing of the company were raised to pay for Debt Assignment.

PNB thereafter executed a “Deed of Assignment” on 15th May, 2012(an event occurring after the date of the Balance Sheet) in favour of the company by which PNB assigned all its claim together with all securities and charges created by MIL in its favour to the company.

The company thereafter executed a “Deed of Assignment” on 31st December, 2012 in favour of its subsidiary M/s SBEC Bioenergy Limited by which the company assigned all its claim together with all securities and charges created by MIL in its favour for a consideration of Rs. 12,500.00 Lacs. A sum of Rs. 4,200.00 lacs has been paid simultaneously with the execution of this deed and the remaining sum of Rs. 8,300.00 lacs shall be payable as per the mutually agreed installments within a period of five years from the date of execution of this deed.

Note: 7.Recent Accounting Pronouncements

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company is evaluating the effect of this on the financial statements.

Ind AS 115- Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers.

The standard permits two possible methods of transition:

- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors

- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application(Cumulative catch - up approach) The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.

The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The company is evaluating the effect on adoption of Ind AS 115.

Note: 8.

The financial statements were approved for issue by the Board of Directors, at its meeting held on May 29, 2018.

Previous Year Figures have been recast/restated.

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Mar 31, 2016

1. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on ''Segment Reporting'' are not relevant.

2. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

(e) Relatives of Key Management Personnel & their Enterprises

(i) Mr. Umesh Kumar Modi

(ii) Mrs. Kumkum Modi*

(iii) Mrs. Nandini Modi

(iv) Mr. Jayesh Modi

(v) Mrs. Shreepriya Modi

(vi) Ms. Meghna Modi*

(vii) Mr. Glenn Yue Mang Wong

(viii) Mrs. Himani Modi Agarwal*

(ix) Mr. Priyank Kumar Agarwal*

(x) Bimla Bajoria

(xi) Raj Kumari agarwal

(xii) RekhaMody

(xiii) Promila Sharoff

(xiv) Rajesh Gupta

(xv) Urmila Kanoria

(xvi) R.K. Sharoff

(xvii) Pushap Kumar Gupta

(xviii) Kailash Kanoria

(xix) A to Z Holding Pvt.Ltd

(xx) Arvind Continental Pvt. Ltd

(xxi) Bihar Sponge Iron Ltd

(xxii) M First Trding Pvt Ltd

(xxiii) First Move Management Services Pvt. Ltd*

(xxiv) H. M. Tubes & Containers Pvt. Ltd*

(xxv) Jai Abhishek Investments Pvt. Ltd*

(xxvi) Jayesh Tradex Pvt. Ltd

(xxvii) Kamakhya Cosmetics & Pharmaceuticals Pvt. Ltd*

(xxviii) Longwell Investment Pvt. Ltd

(xxix) M.G. Mobiles India Pvt. Ltd

(xxx) MeghnaAutoworks Private Ltd*

(xxxi) Modi Arts Pvt. Ltd*

(xxxii) Modi Diagnostics Pvt. Ltd*

(xxxiii) Modi Goods and Retail Services Pvt. Ltd*

(formally known as Modi Groceries Pvt. Ltd.)

(xxxiv) Modi Illva India Pvt. Ltd*

(xxxv) Modi Industries Ltd

(xxxvi) Modi Motors Pvt. Ltd

(xxxvii) Modi Mundipharma Pvt. Ltd*

(xxxviii) Modi Mundi Pharma Healthcare Pvt. Ltd*( formerly Known as Modi Omega pharma ( India) Pvt Ltd) (xxxix) Modi Revlon Pvt. Ltd

(xl) Modi Senator (India) Pvt. Ltd*

(xli) Modiline Travel Service Pvt. Ltd

(xlii) Modi Hitech India Ltd (Formaly Known as Morgardshammer India Ltd)

(xliii) SBEC Systems (India) Ltd*

(xliv) Swasth Investment Pvt. Ltd*

(xlv) Umesh Modi Corp. Pvt. Ltd*

(xlvi) Win Medicare Pvt. Ltd.

- Indicates that during the year, there is no transaction with these enterprises

- Guarantee given to SBEC Bioenergy Ltd. Rs.1100.00 lacs (Previous year Rs. 1600 lacs).

3. Lease (AS-19)

Operating Lease

The company has entered into operating leases for its office and for employee''s residence that are renewable on a periodic basis and cancellable at Company''s option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases.

4. Deferred Taxation (AS-22)

Deferred taxes arise because of difference in treatment between financial accounting and tax accounting, known as "Timing differences". The tax effect of these timing differences is recorded as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which the company has received a tax deduction, but has not yet been recorded in the statement of income).

5. The company in terms of Board of Director''s resolution dated 6th July 2013 has filled a reference with the Board for Industrial and financial Reconstruction (BIFR) U/S 15(1) of the Sick Industrial companies (Special provisions) Act 1985 (SICA) vide its letter dated 24th July 2013 and as per communication received from BIFR vide its letter No. 3/(S-22)/BC/2013 dated 21st August 2013, The said reference has been registered by BIFR as case No. 58/2013. The BIFR has declared the company as Sick u/s 3(1)(0) of SICA and appointed IDBI as operating agency u/s 17(3) of the Act. in its hearing held on dated 04.02.2014 & the Draft Rehabilitation Scheme is under compilation. Since the Company has continued its normal manufacturing operations during the season 2015-16 therefore the accounts are prepared on a "Going Concern Basis".

6. Additional information pursuant to provisions of Part II of Schedule III to the Companies Act, 2013.

b) Defined Benefit Plan

The employees'' gratuity fund scheme is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation of Leave Encashment for period ended 31st March, 2016 and 31st March, 2015 pertain to only Seasonal Wage-board grade employees, therefore there is difference in expense recognized in statement of profit & Loss and amount as mentioned in Actuarial certificate. However the expenses have been provided on Accrual Basis.

7. Inventories, loans & advances, trade receivables and other current / non-current assets are reviewed annually and in the opinion of the Management do not have a value on realization in the ordinary course of business, less than the amount at which they are stated in the Balance Sheet.

8.HYPERLINK "file:///C:/Users/user/Desktop/S/AR02M1O.htm" Details of loans given, investments made and guarantee given covered u/s 186(4) of the companies act, 2013 Loan Given NIL

Guarantee Given NIL

Investment Made NIL

9. Considering the adverse economic/sector conditions and current financial instability the Management of the company vide their resolution dated 05th March, 2013 has decided to dispose-off its Chandil Power Plant (under implementation). The company has formed a committee to negotiate with potential buyers. The management expects that the assets will be realized to the extent as stated & does not call for any provision as on the date of the Balance Sheet. Therefore, the Capital Work in Progress, Capital Advances and other related accounts of the Chandil Power Project have been shown as assets held for disposal.

10. The State Government of Uttar Pradesh has, as per PNCM Cabinet Decision dated 18th January 2016, inter alia, announced cash subsidy up to Rs. 23.30 per Qtl of cane purchased for the sugar industry, linked to the average selling price of sugar and it''s by products. During the period 1st October 2015 to 31st March 2016, the prices being remained below the threshold limit provided in the notification. Since the Management is virtually certain regarding realization of subsidy, the Company has accounted for cash subsidy of Rs. 23.30 per Qtl of cane purchased by it aggregating to Rs. 2,167.11 lacs

11. Previous year figures have been regrouped/ rearranged wherever considered necessary.

Previous year figures are given in the bracket wherever applicable.

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Mar 31, 2015

Note:1. BASIS OF PREPARATION

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP).The financial statements have been prepared to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended and as applicable from time to time) and the relevant provisions of the Companies Act 2013& Companies Act 1956 as applicable as on the date. The financial statements have been prepared on an accrual basis and under the historical cost convention on going concern basis.

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

2. During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 was signed between the Company, Punjab National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28th September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs. 2,810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs. 3,351.21 lacs to PNB. As per expert legal opinion, during the year interest amounting to Rs. 417.63lacs (previous year Rs. 417.63 lacs for the period from 22nd January, 2007 to 31st March, 2012) has been allocated to the cost of "Debt Assignment" acquired by the company from PNB, since in the opinion of the management the borrowing of the company were raised to pay for Debt Assignment. PNB thereafter executed a "Deed of Assignment" on 15th May, 2012(an event occurring after the date of the Balance Sheet) in favour of the company by which PNB assigned all its claim together with all securities and charges created by MIL in its favour to the company. The company thereafter executed a "Deed of Assignment" on 31st December, 2012 in favour of its subsidiary M/s SBEC Bioenergy Limited by which the company assigned all its claim together with all securities and charges created by MIL in its favour for a consideration of Rs. 12,500.00 Lacs. A sum of Rs. 4,200.00 lacs has been paid simultaneously with the execution of this deed and the remaining sum of Rs. 8,300.00 lacs shall be payable as per the mutually agreed instalments within a period of five years from the date of execution of this deed.

3. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on 'Segment Reporting' are not relevant.

4. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

5. Lease (AS-19)

Operating Lease

The company has entered into operating leases for its Office and for employee's residence that are renewable on a periodic basis and cancellable at Company's option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases.

6. Deferred Taxation (AS-22)

Deferred taxes arise because of difference in treatment between financial accounting and tax accounting, known as "Timing differences". The tax effect of these timing differences is recorded as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which the company has received a tax deduction, but has not yet been recorded in the statement of income).

7. The company in terms of Board of Director's resolution dated 6th July 2013 has flled a reference with the Board for Industrial and financial Reconstruction (BIFR) U/S 15(1) of the Sick Industrial companies (Special provisions) Act 1985 (SICA) vide its letter dated 24th July 2013 and as per communication received from BIFR vide its letter No. 3/(S-22)/BC/2013 dated 21st August 2013, The said reference has been registered by BIFR as case No. 58/2013. The BIFR has declared the company as Sick u/s 3(1)(0) of SICA and appointed IDBI as operating agency u/s 17(3) of the Act. in its hearing held on dated 04.02.2014& the Draft Rehabilitation Scheme is under compilation. Since the Company has continued its normal manufacturing operations during the season 2014-15 therefore the accounts are prepared on a "Going Concern Basis".

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation of Leave Encashment for period ended 31st March, 2015 and 31st March, 2014 pertain to only Seasonal Wage-board grade employees, therefore there is difference in expense recognized in statement of Profit & Loss and amount as mentioned in Actuarial certificate. However the expenses have been provided on Accrual Basis.

8. Considering the adverse economic/sector conditions and current financial instability the Management of the company vide their resolution dated 05th March, 2013 has decided to dispose-off its Chandil Power Plant (under implementation). The company has formed a committee to negotiate with potential buyers. The management expects that the assets will be realized to the extent as stated & does not call for any provision as on the date of the Balance Sheet. Therefore, the Capital Work in Progress, Capital Advances and other related accounts of the Chandil Power Project have been shown as assets held for disposal.

9. The State Government of Utter Pradesh has, as per PNCM Cabinet Decision dated 12th November 2014, inter alia, announced cash subsidy upto Rs. 28.60 per Qtl of cane purchased for the sugar industry, linked to the average selling price of sugar and it's by products. During the period 1st October 2014 to 31st March2015,the prices being remained below the threshold limit provided in the notification. Since the Management is virtually certain regarding realisation of subsidy, the Company has accounted for cash subsidy of Rs. 28.60 per Qtl of cane purchased by it aggregating to Rs. 25,66,05,990.

10. Previous year figures have been regrouped/ rearranged wherever considered necessary. Previous year figures are given in the bracket wherever applicable.

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Mar 31, 2014

Note:1. BASIS OF PREPARATION

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP).The financial statements have been prepared to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended and which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs) 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 on going concern basis.

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

2. a) Terms/rights attached to Equity Shares

Company has only one class of equity shares having a par value of Rs.10/-. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if any,proposed by the Board of Directors is subject to approval of shareholders, in the ensuing Annual General Meeting.

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 will be in proportion to the number of equity shares held by the shareholders.

3. Sundry Creditors for goods and expenses include dues to Small Scale Industrial Undertakings aggregating to Rs. NIL (previous period Rs. 4.78 lacs).

4. Followings are the relevant disclosures as required under the Micro, Small and Medium Enterprises Development Act, 2006:

a) Sundry creditors include a sum aggregating Rs.1.12 Lacs (Previous Year Rs. 1.46), due to Micro and Small Enterprises.

b) The amount of interest paid by the Company in terms of Section 16, along with the amount of payments made to the Micro and Small Enterprise beyond the appointed date during the year - Nil (Previous Year Rs. Nil)

c) The amount of interest accrued and remaining unpaid Rs.0.10 Lacs (Previous Year Rs. 0.04 Lac)

The above mentioned outstanding are in normal course of business and the information regarding Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company.

5. Contingent Liabilities not provided for in respect of: (Rs. in lacs)

Particulars As at As at 31.03.2014 31.03.2013 i) Corporate Guarantee given to Government of Jharkhand against Soft loan 6,301.45 5,834.67 (incl. interest) given to Bihar Sponge Iron Ltd.

ii) Outstanding against Guarantee given on behalf of SBEC Bio-energy Ltd. 2,000.00 2,660.95

iii) Duties and Tax liabilities disputed by the Company 1,679.00 361.11

iv) Interest and R C Charges on cane arrear payment as recovered by DCO, Baghpat, 35.99 35.99 case is pending with Alahabad High Court.

iv) Interest and R C Charges on cane arrear from the season 2012-13 3,193.92 Nil

6. During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 was signed between the Company, Punjab National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28th September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs. 2,810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs. 3,351.21 lacs to PNB. As per expert legal opinion, during the year interest amounting to Rs. 417.63lacs (previous year Rs. 2,148.47 lacs for the period from 22nd January, 2007 to 31st March, 2012) has been allocated to the cost of "Debt Assignment" acquired by the company from PNB, since in the opinion of the management the borrowing of the company were raised to pay for Debt Assignment.

PNB thereafter executed a "Deed of Assignment" on 15th May, 2012(an event occurring after the date of the Balance Sheet) in favour of the company by which PNB assigned all its claim together with all securities and charges created by MIL in its favour to the company.

The company thereafter executed a "Deed of Assignment" on 31st December, 2012 in favour of its subsidiary M/s SBEC Bioenergy Limited by which the company assigned all its claim together with all securities and charges created by MIL in its favour for a consideration of Rs. 12,500.00 Lacs. A sum of Rs. 4,200.00 lacs has been paid simultaneously with the execution of this deed and the remaining sum of Rs. 8,300.00 lacs shall be payable as per the mutually agreed installments within a period of five years from the date of execution of this deed.

7. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on ''Segment Reporting'' are not relevant.

8. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

9. Lease (AS-19)

Operating Lease

The company has entered into operating leases for its office and for employee''s residence that are renewable on a periodic basis and cancellable at Company''s option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases.

10. Deferred Taxation (AS-22)

Deferred taxes arise because of difference in treatment between financial accounting and tax accounting, known as "Timing differences". The tax effect of these timing differences is recorded as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which the company has received a tax deduction, but has not yet been recorded in the statement of income).

11. The company in terms of Board of Director''s resolution dated 6th July 2013 has filled a reference with the Board for Industrial and financial Reconstruction (BIFR) U/S 15(1) of the Sick Industrial companies (Special provisions) Act 1985 (SICA) vide its letter dated 24th July 2013 and as per communication received from BIFR vide its letter No. 3/(S-22)/BC/2013 dated 21st August 2013, The said reference has been registered by BIFR as case No. 58/2013. The BIFR has declared the company as Sick u/s 3(1)(0) of SICA and appointed IDBI as operating agency u/s 17(3) of the Act. in its hearing held on dated 04.02.2014. Since the Company has continued its normal manufacturing operations during the season 2013-14 therefore the accounts are prepared on a "Going Concern Basis".

12. Defined Benefit Plan

The employees'' gratuity fund scheme is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation of Leave Encashment for period ended 31st March, 2014 and 31st March, 2013 pertain to only Seasonal Wage-board grade employees, therefore there is difference in expense recognized in statement of profit & Loss and amount as mentioned in Actuarial certificate. However the expenses have been provided on Accrual Basis.

13. Considering the adverse economic/sector conditions and current financial instability the Management of the company vide their resolution dated 05th March, 2013 has decided to dispose-off its Chandil Power Plant (under implementation). The company has formed a committee to negotiate with potential buyers. The management expects that the assets will be realized to the extent as stated & does not call for any provision as on the date of the Balance Sheet. Therefore, the Capital Work in Progress, Capital Advances and other related accounts of the Chandil Power Project have been shown as assets held for disposal.

14. Previous year figures have been regrouped/ rearranged wherever considered necessary.

Previous year figures are given in the bracket wherever applicable

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Mar 31, 2013

Note : 1. BASIS OF PREPARATION

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP).The financial statements have been prepared to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended and as applicable from time to time) 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 on going concern basis. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2 (a) Contingent Liabilities not provided for in respect of:

(Rs. in lacs)

Particulars As at 31.03.2013 As at 31.03.2012

i) Corporate Guarantee given to Government of Jharkhand against Soft loan

(incl. interest) given to Bihar Sponge Iron Ltd. 5,834.67 5,402.47

ii) Outstanding against Guarantee given on behalf of SBEC Bio- energy Ltd. 2,660.95 3,320.41

iv) Duties and Tax liabilities disputed by the Company 361.11 1,360.26

v) Interest and R C Charges on cane arrear payment as recovered by DCO, Baghpat, case is pending with Allahabad High Court. 35.99 35.99

2(b) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances is Rs Nil lacs (Previous Year Rs.132.23 lacs).

3. During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 was signed between the Company, Punjab National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28th September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs. 2,810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs. 3,351.21 lacs to PNB. As per expert legal opinion, during the year interest amounting to Rs. 417.63lacs (previous year Rs. 2,148.47 lacs for the period from 22nd January, 2007 to 31st March, 2012) has been allocated to the cost of "Debt Assignment" acquired by the company from PNB, since in the opinion of the management the borrowing of the company were raised to pay for Debt Assignment.

PNB thereafter executed a "Deed of Assignment" on 15th May, 2012(an event occurring after the date of the Balance Sheet) in favour of the company by which PNB assigned all its claim together with all securities and charges created by MIL in its favour to the company. The company thereafter executed a "Deed of Assignment" on 31st December, 2012 in favour of its subsidiary M/s SBEC Bioenergy Limited by which the company assigned all its claim together with all securities and charges created by MIL in its favour for a consideration of Rs. 12,500.00 Lacs. A sum of Rs. 4,200.00 lacs has been paid simultaneously with the execution of this deed and the remaining sum of Rs. 8,300.00 lacs shall be payable as per the mutually agreed installments within a period of five years from the date of execution of this deed.

4. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on ''Segment Reporting'' are not relevant.

5. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

6. Lease (AS-19)

Operating Lease

The company has entered into operating leases for its office and for employee''s residence that are renewable on a periodic basis and cancellable at Company''s option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases.

7. Deferred Taxation (AS-22)

Deferred taxes arise because of difference in treatment between financial accounting and tax accounting, known as "Timing differences". The tax effect of these timing differences is recorded as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which the company has received a tax deduction, but has not yet been recorded in the statement of income).

8. In accordance with the company policy a sum of Rs.19.69 lacs (previous year Rs.19.69 lacs) has been shown as MAT Credit entitlement under other non-current assets.

9. As on 31st March 2013 accumulated losses exceed the paid-up capital and free reserves and since total erosion of net worth has taken place the company has become a ''Sick Industrial Company'' within the meaning of Section 3(1)(0) of the Sick Industrial Companies (Special Provisions) Act, 1985 ("The Act") as provided by Section 15 of ''The Act'' a reference to the Board for Industrial and Financial Reconstruction will be made by the Company within the stipulated period for determination of measures which may be adopted. Since the Company has continued it''s normal manufacturing operations during the season 2012-13 therefore the accounts are prepared on a "Going Concern Basis".

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation of Leave Encashment for period ended 31st March, 2013 and 31st March, 2012 pertain to only Seasonal Wage- board grade employees, therefore there is difference in expense recognized in statement of profit & Loss and amount as mentioned in Actuarial certificate. However the expenses have been provided on Accrual Basis.

10. Considering the adverse economic/sector conditions and current financial instability the Management of the company vide their resolution dated 05th March, 2013 has decided to dispose-off its Chandil Power Plant (under implementation). The company has formed a committee to negotiate with potential buyers. The management expects that the assets will be realized to the extent as stated & does not call for any provision as on the date of the Balance Sheet. Therefore, the Capital Work in Progress, Capital Advances and other related accounts of the Chandil Power Project have been shown as assets held for disposal.

11. Previous year figures have been regrouped/ rearranged wherever considered necessary. Previous year figures are given in the bracket wherever applicable

---

Mar 31, 2012

A) Terms/rights attached to Equity Shares

Company has only one class of equity shares having a par value of Rs.10/-. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if any,proposed by the Board of Directors is subject to approval of shareholders.

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 will be in proportion to the number of equity shares held by the shareholders.

1. Amounts payable against vehicle loans are secured against the hypothecation of specific assets acquired.

2. Excise Loan from The Shamrao Vittal Co-operative Bank Ltd. was secured by residual charge on Fixed Assets, since adjusted.

3. Vehicle loan from HDFC Bank Ltd., Kotak Mahindra Prime Ltd., and ICICI Bank Ltd. carry interest @ 10.00-12.00% and Hire Purchase from First Leasing company of India Ltd carry interest @ 17.92%

4. Fixed Deposits carry interest @10.50-11.00 % and repayable within one to three Years from the date of Deposits.

1 Sundry Creditors for goods and expenses include dues to Small Scale Industrial Undertakings aggregating to Rs. NIL (previous period Rs. 4.78 lacs).

2 Followings are the relevant disclosures as required under the Micro, Small and Medium Enterprises Development Act, 2006:

a) Sundry creditors include a sum aggregating Nil, due to Micro and Small Enterprises.

b) The amount of interest paid by the Company in terms of Section 16, along with the amount of payments made to the Micro and Small Enterprise beyond the appointed date during the year - Nil

c) The amount of interest due and payable For the Year of delay in making payment which have been paid but beyond the appointed day during the year but without adding the interest specified under this Act. - Nil.

d) The amount of interest accrued and remaining unpaid - Nil.

e) Amount of further interest remaining due and payable even in succeeding years - Nil

The above mentioned outstanding are in normal course of business and the information regarding Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company.

1(A) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs.132.23 lacs (Previous Year Rs. 415.71 lacs).

2. During the year, Hon''ble Supreme Court has rejected the Special Leave Petition, filed by the company for differential cane price for the crushing season 2007-08 vide its order dated 17th January, 2012.

In compliance with the above order, Company has accounted for Rs. 1483.32 lacs during the year and shown as exceptional items in the Statement of Profit and Loss.

3. During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 has been signed between the Company, Punjab National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28th September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs. 2810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs. 3351.21 lacs to PNB. As per expert legal opinion, during the year interest amounting to Rs. 370.64 lacs (previous year Rs. 1777.83 lacs for the period from 22nd January, 2007 to 31st March, 2011) has been allocated to the cost of "Debt Assignment" acquired by the company from PNB, since in the opinion of the management the borrowing of the company were raised to pay for Debt Assignment. The company has shown the total amount paid for Debt Assignment and interest thereon of Rs. 5499.68 lacs under the head "Other Non-Current Assets".

PNB thereafter executed a "Deed of Assignment" on 15th May, 2012(an event occurring after the date of the Balance Sheet) in favour of the company by which PNB assigned all its claim together with all securities and charges created by MIL in its favour to the company. The registrar of the company has registered the modification to the charges in the favour of the company. In view of the above, the said secured debt is now payable by MIL to the company.

4. The management has decided to value stocks of free sugar at cost price in lieu of the average market price for the season 2011-12, in view of continuous increase in market price thereafter.

5. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on ''Segment Reporting'' are not relevant.

6. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

7. Related Parties Disclosers (AS-18)

{A} Name of related parties and description of relationship:

1. Subsidiaries

(i) SBEC Bioenergy Limited.

(ii) SBEC Stockholding & Investment Limited.*

(iii) Modi Gourmet Limited.*

2. Associates — Nil

3. Follow Subsidiaries — Nil

4. Key Management Personnel

Mr. Abhishek Modi - Executive Director

Mr. Santosh Chand Gupta- Whole Time Director

5. Relatives of Key Management Personnel & their Enterprises:

Mr. Umesh K. Modi, Mrs. Kumkum Modi*,Mr. Jayesh Modi*, Ms. Meghna Modi*, Mrs. Himani Modi Agarwal*, Mr. Priyank Kumar Agarwal*, Mrs Suman Lata Gupta*, Modi Arts Pvt. Ltd.*, Modi Goods and Retail Services Pvt. Ltd.* (formally known as Modi Groceries Pvt. Ltd.), SBEC Systems (India) Ltd.*, Jai Abhishek Investments Pvt. Ltd.*, Kamakhya Cosmetics & Pharmaceuticals Pvt. Ltd.*, Modi Diagnostics Pvt. Ltd.*, Modi Revlon Pvt. Ltd.*, Modi Senator (India) Pvt. Ltd.*, First Move Management Services Pvt. Ltd.*, Revlon Lanka Pvt. Ltd.*, Swasth Investment Pvt. Ltd.*, Umesh Modi Corp. Pvt. Ltd., Modi Omega Pharma (India) Pvt. Ltd.*, Modi Illva India Pvt. Ltd.*, A to Z Holding Pvt.Ltd.*, Longwell Investment Pvt. Ltd., Bihar Sponge Iron Ltd., Modi Mundipharma Pvt. Ltd.*, Modiline Travel Service Pvt. Ltd., Modi Industries Ltd., Morgardshammer India Ltd., Win Medicare Pvt. Ltd, H. M. Tubes & Containers Pvt. Ltd., Modi Motors Pvt. Ltd., M.G. Mobiles India Pvt. Ltd.*, Chandil Power Limited*, Revlon Trading Bangladesh Private Limited*, Meghna Autoworks Private Limited*, Jayesh Tradex Pvt. Ltd. , Arvind Continental Pvt. Ltd.

* Indicates that during the year, there is no transaction with these enterprises.

8. Lease (AS-19)

a) Finance Lease

Followings are the details of lease transaction for the year:

The company leased boiler under finance lease for a period of four years.

b) Operating Lease

The company has entered into operating leases for its office and for employee''s residence that are renewable on a periodic basis and cancellable at Company''s option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases.

9. Deferred Taxation (AS-22)

Deferred taxes arise because of difference in treatment between financial accounting and tax accounting, known as "Timing differences". The tax effect of these timing differences is recorded as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which the company has received a tax deduction, but has not yet been recorded in the statement of income).

Deferred tax Assets are recognized and carried forward only to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In view of continue operating losses the company has not recognized any incremental deferred tax.

''Limited to the extent Deffered Tax Asset recognized during the last year.

10. The company has diluted its investment in one of the Subsidiary company from 100 % to 70% in December, 2011 and further reduced it to 55% in March, 2012. The profit on sale of such investments has been shown in other income.

11. In accordance with the company policy a sum of Rs. 19.69 lacs (previous period Rs.19.69 lacs) including for the year Rs. NIL (previous period Rs. 6.81 lacs) has been shown as MAT Credit entitlement under other non-current assets.

12. During the year company has incurred substantial losses, resulting into substantial erosion of its net worth. The major factors for the loss during the year are

a) Additional payment of sugarcane price amounting to Rs. 1483.32 lacs for the season 2007-08 as per order of Hon''ble Supreme Court.

To enhance the profitability in the crushing season 2012-13, the management has undertaken certain steps including technical improvement in the plant, which is likely to improve the recovery by 1% in comparison to season 2011-12 and reduction in cost of production.

b) Defined Benefit Plan

The employees'' gratuity fund scheme is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation for period ended 31st March, 2012 and 31st March, 2011 pertain to only Seasonal Wage-board grade employees, therefore there is difference in expense recognized in P&L statement and amount as mentioned in Actuarial certificate. However the expenses have been provided on Accrual Basis.

13. Previous year figures have been regrouped/ rearranged wherever considered necessary.

Previous year figures are given in brackets, wherever applicable.

---

Mar 31, 2011

1(a) Previous period accounts were for nine months whereas current period accounts are for a period of twelve month. Therefore, the figures are not strictly comparable.

1(b) Previous period figures have been regrouped/ rearranged wherever considered necessary. Previous period figures are given in brackets, wherever applicable.

2. Contingent Liabilities not provided for in respect of : (Rs. in lacs)

S.No Particulars As at As at 31.03.2011 31.03.2010

i) Corporate Guarantee given to 5002.38 4632.00 Government of Jharkhand against Soft loan (incl. interest) given to Bihar Sponge Iron Ltd.

ii) Outstanding against Guarantee 2500.00 133.33 given on behalf of SBEC Bioenergy Ltd.

iii) Bond executed in favour of 475.00 475.00 Custom Authorities under EPCG Scheme for differential amount of Custom Duty.

iv) Duties and Tax liabilities disputed by the Company 366.82 312.40 v) Interest and R C Charges on cane arrear payment as recovered by DCO, 35.99 35.99 Baghpat, case is pending with Allahabad High Court.

vi) Differential liablity of sugar 1483.32 1483.32 cane price for the crushing season 2007-2008 (Refer note no. 4 of schedule 14B).

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 415.71 lacs (Previous period Rs. 2.30 lacs).

4. The Company, in compliance of the Interim Order of the Lucknow Bench of Allahabad High Court dated 15th November, 2007 and subsequently upheld by Hon'ble Supreme Court vide its order dated 15th May, 2008, has paid Cane Price of Rs. 110/- per quintal for the crushing season 2007-2008 and has accordingly accounted for the liability. The Lucknow Bench of Hon'ble Allahabad High Court, by a subsequent order dated 7th July 2008, upheld the validity of State Advised Price (Rs.130/- per quintal for Early Variety and Rs.125/- per quintal for General Variety) fixed by State Government.

Aggrieved by the said order, the Company has already filed Special Leave Petition with Hon'ble Supreme Court on 13th August 2008. Differential liability of the sugar cane price of Rs. 1483.32 lacs up to 31st March, 2011 (Previous Period Rs. 1,483.32 lacs), if so ordered, will be accounted for in the books at time of final disposal of the matter by the Hon'ble Supreme Court.

5. During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 has been signed between the Company, Punjab National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28th September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs. 2810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs. 3351.21 lacs to PNB. Pending the execution of ‘Deed of Assignment' by PNB in its favour,as per expert legal opinion, during the year interest amounting to Rs. 1777.83 lacs for the period from 22nd January, 2007 to 31st March, 2011 has been allocated to the cost of "Debt Assignment" acquired by the company from PNB, since in the opinion of the management the borrowings of the company were raised to pay for Debt Assignment. Since this treatment has been made with retrospective effect for the period above mentioned, the amount of Rs. 1312.21 lacs being interest on such borrowings for the period upto March 2010 has been shown as an exceptional item, and current year amount of Rs. 465.62 lacs has been adjusted against interest cost, the Company has shown the total amount paid for Debt assignment and interest thereon of Rs. 5129.04 lacs under the head ‘Loans & Advances'.

6. The entire stock of free sugar available as on 31.03.2011 was valued at average market price prevailing during season 2010-11.The management has decided to value such stocks on market price so as to reflect realistic profits of this period deviating from the policy of the company for valuation of stocks which is lower of cost or net realizable value. This has resulted in overstatement of (i) Stock by Rs. 696.96 lacs & (ii) Profit for the year by Rs. 696.96 lacs. Further as per the past practice the company was taking the levy liabilities on the basic of order issued, during the current year the company has not considered the levy order of 5,275 quintals resulting in overstatement of (i) Stock by Rs. 55.23 lacs & (ii) Profit for the year by Rs. 55.23 lacs.

7. (a) Sundry Creditors for goods and expenses include dues to Small Scale Industrial Undertakings aggregating to Rs. 4.78 lacs (previous period Rs. 7.01 lacs).

(b) Followings are the relevant disclosures as required under the Micro, Small and Medium Enterprises Development Act, 2006:

i. Sundry creditors include a sum aggregating Nil, due to Micro and Small Enterprises.

ii. The amount of interest paid by the Company in terms of Section 16, along with the amount of payments made to the Micro and Small Enterprise beyond the appointed date during the year - Nil.

iii. The amount of interest due and payable for the period of delay in making payment which have been paid but beyond the appointed day during the year but without adding the interest specified under this Act. - Nil.

iv. The amount of interest accrued and remaining unpaid - Nil.

v. The amount of further interest remaining due and payable even in succeeding years - Nil.

The above mentioned outstanding are in normal course of business and the information regarding Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company.

8. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on ‘Segment Reporting' are not relevant.

9. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

10. Related Parties Disclosers (AS-18)

(A) Name of related parties and description of relationship:

1. Subsidiaries

(i) SBEC Bioenergy Limited

(ii) SBEC Stockholding & Investment Limited

(iii) Modi Gourmet Limited.

2. Associates Nil

3. Fellow Subsidiaries Nil

4. Key Management Personnel

Mr. Abhishek Modi - Executive Director

Mr. Santosh Chand Gupta- Whole Time Director

5. Relatives of Key Management Personnel & their Enterprises:

Mr. Umesh K. Modi, Mrs. Kumkum Modi*,Mr. Jayesh Modi*, Mrs Suman Lata Gupta*, Modi Arts Pvt. Ltd.*, Modi Goods and Retail Services Pvt. Ltd.* (formally known as Modi Groceries Pvt. Ltd.), SBEC Systems (India) Ltd.*, Jai Abhishek Investments Pvt. Ltd.*, Kamakhya Cosmetics & Pharmaceuticals Pvt. Ltd.*, Modi Diagnostics Pvt. Ltd.*, Modi Revlon Pvt. Ltd.*, Modi Senator (India) Pvt. Ltd.*, First Move Management Services Pvt. Ltd.*, Revlon Lanka Pvt. Ltd.*, Swasth Investment Pvt. Ltd.*, Umesh Modi Corp. Pvt. Ltd., Modi Omega Pharma (India) Pvt. Ltd.*, Modi Illva India Pvt. Ltd.*, A to Z Holding Pvt.Ltd., Longwell Investment Pvt. Ltd., Bihar Sponge Iron Ltd., Modi Mundipharma Pvt. Ltd, Modiline Travel Service Pvt. Ltd., Modi Industries Ltd., Morgardshammer India Ltd., Win Medicare Pvt. Ltd, H. M. Tubes & Containers Pvt. Ltd.*, Modi Motors Pvt. Ltd., M.G. Mobiles India Pvt. Ltd.*, Chandil Power Limited*, Revlon Trading Bangladesh Private Limited*, Meghna Autoworks Private Limited*, Jayesh Tradex Pvt. Ltd. * Indicates that during the period, there is no transaction with these enterprises.

11. Lease (AS-19)

b) Operating Lease

The company has entered into operating leases for its office and for employee's residence that are renewable on a periodic basis and cancellable at Company's option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases.

12. Deferred Taxation (AS-22)

Deferred taxes arise because of difference in treatment between financial accounting and tax accounting, known as "Timing differences". The tax effect of these timing differences is recorded as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which the company has received a tax deduction, but has not yet been recorded in the statement of income).

13. In accordance with the company policy a sum of Rs. 19, 69,138 (previous period Rs.12,88,272) including for the year Rs. 6,80,866 (previous period Rs. 12,88,272 ) has been shown as MAT Credit entitlement under loans and advances.

14. EMPLOYEE BENEFITS (AS-15)

As per Accounting Standard 15 "Employee Benefit" the disclosure of Employee Benefit as defined in Accounting Standard are given below: -

b) Defined Benefit Plan

The employees' gratuity fund scheme is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

2. Principal Actuarial Assumptions

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation for period ended 31st March, 2011 and 31st March, 2010 pertain to only Seasonal Wage-board grade employees, therefore there is difference in expense recognized in P&L statement and amount as mentioned in Actuarial certificate. However the expenses have been provided on Accrual Basis.

---

Mar 31, 2010

1(a) Previous period accounts were for fifteen month whereas current period accounts are for a period of nine month. Therefore, the figures are not strictly comparable.

1 (b) Previous period figures have been regrouped/ rearranged wherever considered necessary. Previous period figures are given in brackets, wherever applicable.

2. Contingent Liabilities not provided for in respect of : (Rs. in lacs)

S.No Particulars As at 31.03.2010 As at 30.06.2009

i) Corporate Guarantee given to Government of Jharkhand against Soft loan (incl. interest) given to Bihar Sponge Iron Ltd. 4632.00 4289.00

ii) Outstanding against Guarantee given on behalf of SBEC Bioenergy Ltd. 133.33 400.00

iii] Bond executed in favour of Custom Authorities under EPCG Scheme for differential amount of Custom Duty. 475.00 475.00

iv) Duties and Tax liabilities disputed by the Company 312.40 308.23

v) Guarantee given in favour of PNB against OTS of

Modi Industries Ltd. along with interest. NIL 468.88

vi)Interest and R C Charges on cane arrear payment as recovered by DCO, Baghpat, case is pending with Allahabad High Court. 35.99 35.99

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs 2.30 lacs (Previous period Rs 13.70 lacs).

4. The Company, in compliance of the Interim Order of the Lucknow Bench of Honble Allahabad High Court dated 15th November, 2007 and subsequently upheld by Honble Supreme Court vide its order dated 15th May, 2008, has paid Cane Price of Rs. 110/- per quintal for the crushing season 2007-2008 and has accordingly accounted for the liability. The Lucknow Bench of Honble Allahabad High Court, by a subsequent order dated 7,n July 2008, upheld the validity of State Advised Price (Rs. 130/- per quintal for Early Variety and Rs. 125/- per quintal for General Variety) fixed by State Government.

Aggrieved by the said order, the Company has already filed Special Leave Petition with Honble Supreme Court on 13lh August 2008. Differential liability of the sugar cane price of Rs 1,483.32 lacs up to 31st March, 2010 (Previous Period Rs 1,483.32 lacs), if so ordered, will be accounted for in the books at time of final disposal of the matter by the Honble Supreme Court.

5. (i) During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 has been signed between the Company, Punjab

National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28m September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs.2810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs.3351.21 lacs to PNB. Pending the execution of Deed of Assignment by PNB in its favour, the Company has shown the amount under the head Loans & Advances.

(ii) Pursuant to an agreement with its wholly owned subsidiary, SBEC Bioenergy Limited (SBL), the Company has agreed to transfer all its rights, interest and charges in favour of SBL on execution of Deed of Assignment by PNB in its favour against the Steel Section of MIL. In consideration of the same, the Company has received net advance of Rs.710.49 lacs from SBL.

6. Amounts due to certain sundry creditors/debtors are subject to confirmation and reconciliation. However, in the opinion of the management the differences arising on such reconciliation, if any, are not likely to be material.

9. (a)Sundry Creditors for goods and expenses include dues to Small Scale Industrial Undertakings aggregating to Rs. 7.01 lacs (previous period Rs. 12.09 lacs).

(b)Followings are the relevant disclosures as required under the Micro, Small and Medium Enterprises Development Act, 2006:

i. Sundry creditors include a sum aggregating Nil, due to Micro and Small Enterprises.

ii. The amount of interest paid by the Company in terms of Section 16, alongwith the amount of payments made to the Micro and Small Enterprise beyond the appointed date during the period - Nil.

iii. The amount of interest due and payable for the period of delay in making payment which have been paid but beyond the appointed day during the year but without adding the interest specified under this Act. - Nil.

iv. The amount of interest accrued and remaining unpaid - Nil.

v. The amount of further interest remaining due and payable even in succeeding years - Nil.

The above mentioned outstanding are in normal course of business and the information regarding Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company.

10. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on Segment Reporting are not relevant.

11. During the year Company has negotiated and reached to a settlement regarding the Lease of boiler to M/s Modi Sugar Mills & considered the same as Finance Lease retrospectively from June 2007. Consequently the lease income accounted, during the period June 2007 to June 2009, amounting to Rs.128.39 lacs has since been reversed, bifurcated & adjusted towards principal & interest. This has also resulted into write back of previous years.income (net of interest income) amounting to Rs. 83.62 lacs.

12. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

14. Based on the expert legal opinion obtained during the period, the refund of VAT on molasses & bagasse for the period from 1s January, 2008 till 31st March, 2010 amounting Rs. 282.55 lacs which was hitherto accounted as liability has since been taken to excess provision written back, under Schedule 9 - Other Income.

15. Related Parties Disclosers (AS-18)

(A) Name of related parties and description of relationship:

1. Subsidiaries

(i) SBEC Bioenergy Limited

(ii) SBEC Stockholding & Investment Limited

(iii) Modi Gourmet Limited.

2. Associates — Nil

3. Fellow Subsidiaries — Nil

4. Key Management Personnel

Mr. Abhishek Modi - Executive Director

5. Relatives of Key Management Personnel & their Enterprises:

Mr. Umesh K. Modi, Mrs. Kumkum Modi*, Modi Arts Pvt. Ltd.*, Modi Goods and Retail Services Pvt. Ltd. (formally known as Modi Groceries Pvt. Ltd.), SBEC Systems (India) Ltd , Jai Abhishek Investments Pvt. Ltd.*, Kamakhya Cosmetics & Pharmaceuticals Pvt. Ltd.*, Modi Diagnostics Pvt. Ltd.*, Modi Revlon Pvt. Ltd.*, Modi Senator (India) Pvt. Ltd.*, First Move Management Services Pvt. Ltd.*, Revlon Lanka Pvt. Ltd.*, Swasth Investment Pvt. Ltd.*, Umesh Modi Corp. Pvt. Ltd.*, Modi Omega Pharma (India) Pvt. Ltd.*, Modi lllva India Pvt. Ltd., A to Z Holding Pvt.Ltd., Longwell Investment Pvt. Ltd., Bihar Sponge Iron Ltd., Modi Mundipharma Pvt. Ltd, Modiline Travel Service Pvt. Ltd., Modi Industries Ltd., Morgardshammer India Ltd., Win Medicare Pvt. Ltd, H. M. Tubes & Containers Pvt. Ltd., Modi Motors Pvt. Ltd., M.G. Mobiles India Pvt. Ltd., Chandil Power Limited, Revlon Trading Bangladesh Private Limited*, Meghna Autoworks Private Limited*.

* Indicates that during the period, there is no transaction with these enterprises.

19. EMPLOYEE BENEFITS (AS-15)

As per Accounting Standard 15 "Employee Benefit" the disclosure of Employee Benefit as defined in Accounting Standard are given below: -

b) Defined Benefit Plan

The employees gratuity fund scheme is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation for period ended 31st March, 2010 pertain to only Seasonal Wage-Board grade employees, therefore there is difference in expense recognized in P&L statement and amount as mentioned in Actuarial certificate.

Disclosure in respect of previous three annual periods, as required by Revised Accounting Standard - 15 Employee Benefits is not presented as the management considers it impracticable in the absence of requisite information.