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Notes to Accounts of Simbhaoli Sugars Ltd.

Mar 31, 2016

D. The Company has alloted 3,74,79,020 (previous year Nil) Equity shares of Rs 10 each aggregating Rs. 3,747.90 lacs (previous year Rs. Nil) on Amalgamation of Erstwhile Simbhaoli Sugars Limited during the year without payment being received in cash. (refer note 4).

E Rights, preference and restriction attached to equity shares (Rs. 10 each):

i) Voting right shall be in same proportion as the capital paid upon such equity share.

ii) The dividend proposed by the Board of Directors which is subject to the approval of the shareholders in the Annual General Meeting shall be in the same proportion as the capital paid upon such equity share.

iii) In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company in proportion to capital paid upon such equity share.

#First pari passu charge on pledge of 19,29,655 (previous year Nil) equity shares of the Company in favour of bankers of Simbhaoli Power Private Limited.

! First pari passu charge on pledge of 2,90,11,770 (previous year Nil) equity shares of the Company in favour of bankers of Uniworld Sugars Private Limited.

Out of above, 45,15,000 equity shares have been transferred in favor of the Erstwhile Simbhaoli Sugars Limited (ESSL) and approved by the Board of Directors of Uniworld Sugars Private Limited in the meeting held on March 28, 2013. However, due to shares being in lock in period, the effect has not been taken into the records of the respective depository participants.

1. The Hon''ble High Court of Judicature at Allahabad has sanctioned the Scheme of Amalgamation of Erstwhile Simbhaoli Sugars Limited (ESSL), the Transferor Company with Simbhaoli Sugars Limited (SSL), previously known as Simbhaoli Spirits Limited (SISPL), the Transferee Company w.e.f. April 1, 2015 (the Appointed Date) and consequent thereto, the entire business undertakings of ESSL, stands transferred to and vested in the SISPL, as a going concern with effect from the Appointed Date. ESSL is engaged in manufacturing of standard refined, pharmaceutical grade, specialty sugars, extra neutral alcohol (ENA), ethanol and bio-manure. As per the Approved Scheme

a) the assets, liabilities, rights and obligations of ESSL has been vested with the Company with effect from 1st April 2015 and have been recorded at their respective fair value, under "The Purchase Method" being an amalgamation in the nature of purchases, as prescribed by the Accounting Standard - 14 " Accounting for Amalgamations" notified under Companies (Accounting Standard) Rules, 2006.

b) SSL has issued and allotted 3,74,79,020 Equity Shares of Rs. 10 each at a premium of Rs. 62 per share in discharge of the purchase consideration.

c) the difference in the fair value of net assets of ESSL as at April 01, 2015 duly adjusted for purchase consideration and cancellation of the equity share capital of SSL held by the ESSL, amount to Rs. 229.80 lacs has been credited to ''Capital Reserve''.

2. Under the scheme of amalgamation, the Company has acquired rights under finance lease arrangement with Simbhaoli Power Private Limited for one of the equipments at its Simbhaoli Sugar Division.

3. i) Contingent liabilities not provided for:

Claims against the Company not acknowledged as debts Rs. 1,793.21 lacs (previous year Rs. 9.83 lacs).

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

ii) The State Government has given various incentives to Utter Pradesh based sugar industry on regular basis particularly for the years when industry has been passing through economical stress. This also included waiver of interest on delayed cane price payment up to sugar season 2013-14. The management is confident that such as support to industry will continue for future, and no liability for interest on delayed cane price will arise for the sugar season 2014-15 and 2015-16. The incentives for 2015-16 and waiver of the interest for the previous sugar year (2014-15) are under consideration by the State Government and the amounts are not ascertained.

iii) Capital and other commitment

Estimated amount of contracts (net of advances) remaining to be execute on Capital account Rs. 39.72 lacs (previous year Rs. Nil). The Company has other commitments, for purchase / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments / contracts, which may have a material impact on the financial statements.

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

On the basis of supplier information available with the Company who have registered under the Micro Small and Medium.

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

5. ESSL has facilitated agri loans from certain commercial banks to its sugarcane farmers under the management and collection agreements and provided Corporate Guarantee and post dated cheques as security. These loans were distributed to the farmers against the payment to be made to them against supply of sugarcane in earlier years and ESSL facilitating the repayment of these loans along with interest to the banks. As per sanction of CDREG all the dues outstanding under these arrangements are proposed to be converted into term loans, subject to the consent of respective commercial banks. Two of the commercial banks has agreed for conversion and accordingly it''s dues has being classified as "Long Term Borrowings". The principal and interest dues of others banks, who have not yet given their consents, are classified and shown under "Unsecured Short Term Borrowings" and "Other Current Liabilities" respectively.

6. Corporate Debt Restructuring Empowered Group (CDREG) vide its Sanction letter dated February 29, 2016, has approved the Debt Realignment Scheme (Scheme) of the Company, which includes deferment of existing term loans, conversion of cash credit limit / agri loans facilitated to farmers into term loans and funding of 75% of interest on existing term loans / restructured cash credit limits for two years w.e.f. October 1, 2014 repayable in structured quarterly installment at interest rate from 0% to 12.50% p.a. The Company has complied with all the pre restructuring conditions and majority of bankers has already given their individual sanction for implementation of scheme. The management is confident that implementation of the scheme with the lenders will be completed within stipulated time. Accordingly, the Company has classified all its current liabilities in respect of short term borrowings of Rs. 32,513.37 Lacs, current maturities of term loans of Rs. 6,902.72 lacs and interest accrued of Rs. 5,105.72 Lacs, which was overdue as on 31.03.2016 under Long Term borrowings in accordance with the approved scheme in these financial statements. The terms of repayment, nature of security and overdue, if any, after implementation of CDR package is as under.

7. Segment reporting

A. Business segments:

Based on the guiding principles given in Accounting Standard AS-17 "Segment Reporting", the Company''s primary segments are business segments, viz. Sugar and Alcohol.

B. Geographical segments:

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

C. Segment accounting policies:

In addition to the significant accounting polices applicable to the business segments as set out in note 2 above the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include income taxes. While most of the assets/liabilities can be directly attributed to individual segments, the carrying amount of certain assets/liabilities pertaining to two or more segments is allocated to the segments on a reasonable basis.

c) Inter segment sales:

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

8. Exceptional item of Rs. 500 lacs in the previous year represents monetary penalty imposed by The Hon''ble National Green Tribunal, New Delhi (NGT) vide its order dated October 16, 2014 (the order), upheld the complaint alleging non-fulfillment of certain conditions on pollution and effluent discharge against the Company. The Company has taken requisite steps in this regard and after obtaining the consent from Uttar Pradesh Pollution Control Board, the operation at Simbhaoli distillery plant has been resumed in October 2015.

9. The Company follows Accounting Standard (AS-22) "Accounting for taxes on income", and in consideration of prudence, has recognized deferred tax asset on unabsorbed depreciation and brought forward business losses, as at March 31 2016 only to the extent of deferred tax liability on difference between book balance and tax balance of fixed assets out of total deferred tax assets.

There are no dues in respect of income tax, customs duty, wealth tax and cess, which have not been deposited on account of any disputes except in respect of income tax demand of Rs. 34.91 lacs arising on processing of TDS returns. The Company is in process of rectifying these returns and is confident that the demand will be substantially reduced.

Uniworld Sugars Private Limited is a 50:50 Jointly controlled entity either in own name or through its affiliates between Volcafe Pte Ltd. (Formerly known as E D & F Man Holdings BV) and the Company as per the terms set under the Share Subscription and Shareholders Agreement dated January 25, 2011 and subsequent amendments therein (collectively referred to as "Joint Venture Agreements" or "JVA"). The Joint Venture Company (JVC) has been incorporated to undertake the business of refining of sugar and molasses, the cogeneration of power and all other activities ancillary or identical thereto in India and trading of sugar and molasses both within the Indian and overseas markets.

10. Employee Benefits

The Company has classified the various benefits provided to employees as under:-

A) Employee Plan:

a) Provident fund

b) Superannuation fund

During the year, the Company has recognized the following amounts in the Statement of Profit and Loss:

B) Defined benefits plans

a) Gratuity

b) Compensated absences - Earned Leave/ Sick Leave/ Casual Leave

# Indian Assured Lives Mortality (2006-08) Ultimate.

* The plan assets are maintained with ICICI Prudential Life Insurance Company Ltd. The details of investments maintained by the ICICI Prudential Life Insurance Company Ltd have not been made available to the Company and have therefore not been disclosed.

Disclosure relating to present value of defined benefit obligation and fair value of plan assets and net actuarial gain/ loss:

11. Details of loan and advances given, investment made and securities provided as required to be disclosed as per provisions of Section 186 (4) of the Companies Act, 2013 have been disclosed in respective heads.

12. In the opinion of the management, Current Assets have value in realization in ordinary course of business at least equal to the amount at which they are stated.

13. Figures for the year ended March 31, 2015 are not comparable as it represents the financial figures of un-amalgamated entity having only one distillery operation.

14. Previous year figures have been regrouped / reclassified whenever necessary to correspond with the current year''s classification/ disclosure.

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