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Directors Report of Upper Ganges Sugar & Industries Ltd.

Mar 31, 2015

Dear Members,

The Directors take pleasure in submitting their report as part of 83rd Annual Report alongwith the audited annual accounts of the Company for the financial year ended 31st March, 2015.

Financial Resuits and Appropriations

Rs. in lacs

Year ended Year ended 31st March, 2015 31st March, 2014

Revenue from Operations (Gross) 88,618.97 81,849.73

Profit before Finance Costs, Tax, Depreciation and Amortisation (333.49) 6,373.89

Less: Depreciation & Amortisation Expenses 1,702.23 2,741.37

Finance Costs 6,467.27 8,169.50 6,733.18 9,474.55

Profit/(Loss) Before Tax (8,502.99) (3,100.66)

Less: Provision for Tax:

Current Tax 85.76 98.80

Deferred Tax Charge/(Credit)(3,051.62) (2,965.86) (1,260.08) 1,161.28

Profit/(Loss) After Tax (5,537.13) (1,939.38)

Operating Performance

In face of overall subdued market conditions, your Company has delivered top line growth and performed ahead of underlying sugar season 2014-15 which is mainly due to having supply of good cane quality resulting into higher recoveries and sales being expedited. A detailed analysis of the Company's operations, future expectations and business environment has been given in the Management Discussion & Analysis Report which is made an integral part of this Report and marked as Annexure "A".

Financial Performance 2014-15

The Company had recorded Total Revenue of Rs. 85,566.36 lacs (including other income aggregating to Rs. 282.16 lacs) during the financial year ended 31st March, 2015. The Revenue from Operations (Gross) of the Company for the year 2014-15 stood at Rs. 88,618.97 lacs.

The Loss before Finance Costs, Tax, Depreciation and Amortisation for the year under review stood at Rs. 333.49 lacs. The decline in PBIDT of the Company during the period under review is mainly attributed to subdued sugar sales realisation and high cane prices.

There is no change in the nature of business of the Company. There were no significant or material orders passed by regulators, courts or tribunals impacting the going concern status and company's operation in future.

In view of continuing losses the Board does not propose to carry any amount to Reserves.

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year i.e. 31st March 2015 and date of this report.

There is a continuous process to identify, evaluate and manage significant risk faced though a risk management process designed to identify key risks facing each business. During the year risk analysis and assessment were conducted.

Research & Development

During the year under review the Company has undertaken Research & Development initiatives with an intention to improve the sugar recovery ratio and to educate the cane growers to cultivate improved variety of sugarcane and to otherwise increase the sucrose contents in their produce.

Dividend

In view of the losses the Board of Directors do not recommend any dividend for the year under review.

Share Capita!

During the year the Authorised Share Capital of the Company was increased to Rs. 50 crore by creation of 18,00,000 Preference Shares of Rs. 100/- each from Rs. 32 crore. The paid up Equity Share Capital as on 31st March 2015 stood at 1,155.73 lacs and the paid up Preference Share Capital of the Company stood at 3,000.00 lacs. During the year under review, the Company has carried out issue and allotment of 30,00,000 Non Convertible Cumulative Redeemable Preference Shares of Rs. 100/- each.

Scheme of Arrangement

The Board of Directors at its meeting held on March 13, 2015 consented to the Composite Scheme of Arrangement subject to approval of Shareholders, Hon'ble High Court, SEBI, CCI and other regulatory authorities in order to restructure its business activities to achieve the Business alignment as per market dynamics and variant capital needs of each business as well as its ability to recognise the true value of assets in the books which have significantly appreciated over time and thereby improving the financial position and key ratios of the businesses.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, Management Discussion & Analysis Report, the Report on Corporate Governance, Declaration of Whole-time Director on Code of Conduct and Auditors' Certificate on compliance of conditions of Corporate Governance form an integral part of this Report and are annexed to this Report as Annexure "A", "B", "C" and "D" respectively.

Directors

The Board of Directors comprises of seven Non-Executive Directors having experience in varied fields and a Whole- time Director. Out of seven Non-Executive Directors, five of them are Independent Directors.

Shri Chandra Shekhar Nopany will retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment as Director of the Company. He is proposed to be re-appointed as Director and will be liable to retire by rotation.

Mr. Padam Kumar Khaitan, Mr. Ishwari Prosad Singh Roy, Mr. Pradeep Kumar Singhi, Mr. Gaurav Swarup and Mr. Sunil Kanoria were severally appointed as an Independent Directors at the Annual General Meeting (AGM) held on 18th September 2014 pursuant to the provisions of Section 149 of the Companies Act 2013 for a period of 5 years w.e.f. date of AGM and they will not be liable to retire by rotation during their respective terms of 5 years.

The Independent Directors have confirmed and declared that they are not disqualified to act as Independent Directors in compliance with the provisions of Section 149 of the Companies Act 2013 read with Listing Agreement and the Board is also of the opinion that Independent Directors fulfil all the conditions specified in the Companies Act, 2013 read with Listing Agreement to making them eligible to act as Independent Directors.

Other information on the Directors including required particulars of Directors retiring by rotation is provided in the Report of Corporate Governance annexed to this Report as Annexure "B".

Key Managerial Personnel

The following three persons were formally appointed as Key Managerial Personnel of the Company in compliance with Section 203 of the Companies Act 2013 viz:

a. Mr. Bal Kishore Malpani, Whole-time Director

b. Mr. Shiv Kumar Maheshwari, Chief Financial Officer

c. Mr. Santosh Kumar Poddar, Company Secretary

All Directors, Key Managerial Personnel and Senior Management of the Company have confirmed compliance with the Code of Conduct & Ethics applicable to Directors & employees of the Company and a declaration to the said effect by the Whole-time Director is made part of Corporate Governance Report which forms part of this report. The Code is available on the Company's website at www.birla-sugar.com. All Directors have confirmed compliance with the provisions of Section 164 of the Companies Act, 2013.

Board Evaiuation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Audit Committee

The Audit Committee was constituted on 11.09.2000 and the Committee now comprises of Mr. Ishwari Prosad Singh Roy, Mr. Pradeep Kumar Singhi and Mr. Bal Kishore

Malpani. The Company Secretary acts as the Secretary to the Committee and the Chief Financial Officer is an invitee to the meetings. During the year there were no instances where Board has not accepted the recommendation of Audit Committee.

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

The details of the terms of reference, number and dates of meetings held, attendance of the Directors and remuneration paid to them are separately provided in the Corporate Governance Report.

Stakeholders' Relationship Committee

The Investors Grievance Committee was constituted on 11.09.2000 and was renamed as Stakeholders Relationship Committee w.e.f. 15.05.2014 to comply with the requirements of the Companies Act 2013 and the Listing Agreement. The Committee now comprises of Shri Chandra Shekhar Nopany, Shri Ishwari Prosad Singh Roy, Shri Gaurav Swarup and Shri Bal Kishore Malpani. The Company Secretary acts as the Secretary to the Committee. The details of the terms of reference, number and dates of meetings held, attendance of the Directors and remuneration paid to them are separately provided in the Corporate Governance Report.

Nomination And Remuneration Committee

The Remuneration Committee was constituted on 30.07.2002 and was renamed as Nomination and Remuneration Committee w.e.f. 15.05.2014 to comply with the requirements of the Companies Act 2013 and the Listing Agreement. The Committee now comprises of Mr. Ishwari Prosad Singh Roy, Mr. Padam Kumar Khaitan, Mr. Gaurav Swarup and Mr. Bal Kishore Malpani. The Company Secretary acts as the Secretary to the Committee. The details of the terms of reference, number and dates of meetings held, attendance of the Directors and remuneration paid to them are separately provided in the Corporate Governance Report.

Internal Complaints Committee

An Internal Complaints Committee was constituted by the Company in terms of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)

Act, 2013. The Act aims at protecting women's right to gender equality, life and liberty at workplace to encourage women participation at work. The Committee meets all the criteria including its composition mentioned in the Act and relevant Rules. No complaint has been received by the Committee during the year under review.

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy as adopted by the Board of Directors is attached as Annexure "E" to this Report. The Committee has also framed criteria for performance evaluation of every Director and accordingly has carried out the performance evaluation.

Meetings

A calendar of Meetings is prepared and circulated in advance to the Directors. During the year under review six Board Meetings, five Audit Committee Meetings, four Stakeholders Relationship Committee Meetings and three Nomination & Remuneration Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

The Independent Directors of the Company have had a separate meeting on March 30, 2015 to review the performance and evaluation of Non-Independent Directors, Chairperson and Board as a whole and assess the quality, quantity and timeliness of flow of information from the Company management to the Directors.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a. that in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies as mentioned in Note 2.1 of the Notes to the Financial Statements

have been selected and applied consistently and judgement and estimates have been made 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;

c. that proper and sufficient care has been taken 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;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Auditors, Audit Quaiifications and Board's Explanations Statutory Auditors

Messrs S R Batliboi & Co LLP, Chartered Accountants, hold office as Auditors of the Company till the conclusion of ensuing Annual General Meeting and being eligible, offered themselves for re-appointment. According to the certificate submitted to the Company by the said firm of Auditors the said re-appointment, if made by the Shareholders, will be well within the limits prescribed in Section 141 of the Companies Act, 2013.

The Board, on the recommendation of the Audit Committee, proposed that Messrs S R Batliboi & Co LLP, Chartered Accountants, be re-appointed as the Statutory Auditors of the Company for a period beginning the conclusion of the ensuing Annual General Meeting of the Company and ending on the conclusion of the Annual General Meeting to be held next thereafter. The remarks/observations made by the Statutory Auditors in their report are self explanatory and does not require any further clarification/explanation. However, the Statutory Auditors have commented upon recognition of Deferred Tax Asset (net) of (DTA) (net) of Rs. 7,217.36 lacs (including Rs. 3,051.62 lacs for the year) up to 31st March, 2015, based on the future profitability projections. The Industry is in active discussions with Central and State Governments on the matter of pricing of Sugarcane and other incentives in order to make operations viable. The Company is hopeful of positive outcome of the discussions with the Govt. and expects to be in a position to generate positive cash flows and profitability and is certain that there would be sufficient taxable income in future to claim the above tax credit.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its Sugar activity is required to be audited. Your Directors have, on the recommendation of the Audit Committee, appointed Mr. Somnath Mukherjee, Cost Accountant as the Cost Auditor to audit the cost accounts of the Company for the financial year 2015-16. As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a general meeting for their ratification.

Secretaria! Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had appointed Messrs Vinod Kothari & Co., Practising Company Secretaries to undertake the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report is annexed herewith as "Annexure F" and which is self explanatory.

Subsidiary Companies and Consoiidated Financiai Statements

The Company has M/s Uttar Pradesh Trading Company Limited as its wholly owned subsidiary company. During the year under review three more wholly owned subsidiaries being Magadh Sugar & Energy Limited, Ganges Securities Limited and Cinnatolliah Tea Limited and one joint venture company being M/s Avadh Sugar & Energy Limited have been set up to facilitate the proposed restructuring of the business and the said companies are yet to commence business.

The Company has also formulated a policy for determining material subsidiaries in line with the requirement of

Listing Agreement. The said Policy is being disclosed on the Company's website at www.birla-sugar.com.

The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23 and AS 27 issued by the Institute of Chartered Accountants of India form part of this Annual Report.

The salient features of the financial statement of its subsidiaries are also provided in a separate statement being "Annexure G" and made part of this Report.

The Annual Accounts of the subsidiary companies will be made available for inspection by any shareholder at the Registered Office of the Company and would also be available on the Company's website at www.birla- sugar.com. Furthermore, a hard copy of the detailed accounts of the subsidiaries would be furnished to any shareholder on demand at any point of time.

Fixed Deposits

The Company had discontinued acceptance of fixed deposit after coming into effect of the Companies Act 2013. The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. As on 31st March, 2015 the Company had fixed deposits of Rs. 433.20 lacs

Investor Education and Protection Fund

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of Information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on the date of the last Annual General Meeting held on 18th September, 2014 on the website of the Company www.birla-sugar.com, as also on the website of the Ministry of Corporate Affairs www.mca.gov.in.

Internal Control

The Company has in place an established internal control system designed to ensure proper recording of financial and operational information and compliances of various internal controls and other regulatory and statutory compliances, commensurate with the size, scale and complexity of its operations. The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal auditors function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. The Committee review the effectiveness of internal controls and compliance controls, financial and operational risks, and related party transactions. Self certification exercises are conducted by which senior management certifies effectiveness of internal control system, their adherence to the Company's code and policies for which they are responsible.

Loans, Guarantee and Investments

It is the Company's policy not to give any loans, directly or indirectly, to any person (other than to employees under contractual obligations) or to other body corporate or person. In compliance with Section 186 of the Companies Act, 2013, loans to employees bear applicable interest rates. During the year under review, the Company has made investment in securities of other body corporate as disclosed for the purpose of proposed restructuring exercise. However, Corporate Guarantees were issued to the Lenders to the tune of Rs. 125 crore in order to facilitate availment of loan by the sugarcane farmers in the command area of the Company, a normal business practice prevalent in Sugar Industry.

The details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Related Party Contracts / Arrangements

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Accordingly, no transaction are being reported in Form AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The Company has developed a Related Party Transactions Policy for purpose of identification and monitoring of such transactions.

Energy Conservation, Technology Absorption And Foreign Exchange Earnings & Outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure H".

Particulars of Employees

The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is attached as Annexure ")" and forms an integral part of this Report.

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure J".

CEO/CFO Certification

Mr. Bal Kishore Malpani, the Whole-time Director and Mr. Shiv Kumar Maheshwari, Chief Financial Officer have submitted certificates to the Board as contemplated in Clause 49 of the Listing Agreement.

Acknowledgement

Your Directors take this opportunity of recording their appreciation of the shareholders, financial institutions, bankers, suppliers and cane growers for extending their support to the Company. Your Directors are also grateful to various ministries in the Central Government and State Governments of Uttar Pradesh and Bihar, the Sugar Directorate and the Sugar Development Fund for their continued support to the Company. The Directors also recognise the valuable contribution made by the employees at all levels towards Company's progress.

For and on behalf of the Board

Kolkata Nandini Nopany

Dated 12th May, 2015 Chairperson




Mar 31, 2014

The Members,

The Directors take pleasure in presenting their report as a part of the 82nd Annual Report and the audited accounts of the Company for the financial year ended 31st March, 2014.

2. FINANCIAL RESULTS AND APPROPRIATIONS

(Rs.in lacs) Year Ended Nine Months Period 31st March, 2014 Ended 31st March 2013

Gross Sales 81,849.73 53,196.15

Profit before Finance Costs, Tax and Depreciation & 6,373.89 8,810.35 Amortisation Expenses

Less: Depreciation and Amortisation

Expenses 2,741.37 1,998.47

Finance Costs 6,733.18 9474.55 4,556.56 6,555.03

Profit/(Loss) Before Tax (3,100.66) 2,255.32

Less: Provision for Tax:

Current Tax 98.80 460.82

Deferred Tax Charge/ (Credit) (1,260.08) (1,161.28) 529.64 990.46

Profit/(Loss) After Tax (1,939.38) 1,264.86



OPERATING PERFORMANCE

3. A detailed analysis of the Company''s operations, future expectations and business environment has been given in the Management Discussion & Analysis which is made an integral part of this Report and marked as Annexure "A".

FinAnCiAL PeRFoRMAnCe 2013-14

4. The Company had recorded Net Revenue of Rs. 78896.52 lacs (including other income aggregating to Rs. 521.96 lacs) for the financial ended 31st March, 2014The Gross Sales of the Company for the year 2013-14 stood at Rs. 81849.73 lacs.

5. The Profit before Finance Costs, Depreciation & and Tax (PBIDT) for the year under review stood at Rs. 6373.89 lacs representing 8.08% of the net revenue. The decline in PBIDT of the Company during the period under review is mainly attributed to lower sales realisation on free sugar coupled with higher cane prices.

6. During the period under review Sugar production was ower as sugarcane crushing operations were delayed in Uttar Pradesh by a month due to a stalemate between the industry and the State Government on cane pricing.

7. The Government of India raised the Fair and Remunerative Price (FRP) of sugarcane to Rs. 210/- per quintal up from Rs. 170/- per quintal of sugarcane for the immediately previous season.

8. In Uttar Pradesh the State Advised Price has not changed and remained the same as per last year i.e. Rs. 280/- per quintal. Millers were allowed to pay the Cane Price in two installments. Rs. 260/- to be paid in 1st installment and balance Rs. 20/- to be paid after closure of the Crushing Season. State Government has also provided Subsidy of Rs. 11.03 per quintal of cane on account of Purchase Tax, Society Commission and Entry Tax on Sugar. State Government has also assured to provide Rs. 8.97 p. per quintal of cane for which a Committee has also been constituted which will give their recommendation as to how much amount out of Rs. 8.97 p. shall be paid by the State Government. The sugar industry of Bihar in consultation with its State Government fixed a price ofRs. 255 per quintal similar to the last year. To maintain ast year''s cane price State Government of Bihar has also provided subsidy of Rs. 10.83 per quintal of cane including cash Subsidy of Rs. 5/- per quintal, Rs. 1.75 p. per quintal for cane tax and Rs. 4.08 per quintal for ZDC.

9. The performance of the Industrial Alcohol division and the renewable Power divisions of the Company improved during the year due to better availability of molasses and bagasse. Supply of Ethanol to Oil Marketing Companies has helped to improve the profitability of Distillery.

10. The performance of Tea segment continued to be strong during the year under review due to better realisation.

RESEARCH & DEVELOPMENT

11. During the year under review the Company has undertaken Research & Development initiatives with an intention to improve the sugar recovery ratio and to educate the cane growers to cultivate improved variety of sugarcane and to otherwise improve the sucrose contents of their produce.

DIVIDEND

12. The Board of Directors does not recommend any dividend for the year under review in view of the losses.

CORPORATE GOVERNANCE

13. Pursuant to Clause 49 of the Listing Agreement, Management Discussion & Analysis, Statement in respect of Conservation of Energy, the Report on Corporate Governance, Declaration of Whole-time Director on Code of Conduct and Auditors'' Certificate on compliance of conditions of Corporate Governance form an integral part of this Report and are attached to this Report as Annexure "A", "B", "D", "E" and "F" respectively.

DIRECTORS

14. The Company has eight Non-Executive Directors having experience in varied fields and a Whole-time Director.

15. During the year under review the term of Mrs Nandini Nopany, as Managing Director expired of 30th September, 2013 and she continued to be a Non-Executive Director with effect from 1st October, 2013. The Board of Directors at their meeting held on 1st November, 2013 appointed Mrs Nopany as the Chairperson of the Company with effect from that date. Mrs Nandini Nopany retires from the Board by rotation and is eligible for re-appointment. Mr Ba Kishore Malpani, was appointed as the Whole-time Director of the Company for a period of three years with effect from 1st November, 2013, subject to the approval of the shareholders at the ensuing Annua General Meeting.

16. Pursuant to the provisions of Section 149 of the Companies Act, 2013 the Board of Directors at its meeting held on 15th May, 2014, designated Mr Ishwari Prosad Singh Roy, Mr Gaurav Swarup, Mr Sunil Kanoria, Mr Padam Kumar Khaitan and Mr Pradeep Kumar Singhi as Independent Directors and recommended to the shareholders for their appointment for a period of five consecutive years with effect from the date of the ensuing Annua General Meeting.

17. Other information on the Directors including the required particulars of Directors retiring by rotation and being reappointed are given in the Annexure to the Notice, under the head Information Pursuant to Clause 49 of the Listing Agreement.

COMMITTEES OF DIRECTORS

18. The Board of Directors have aligned the existing Committees of the Board with the provisions of Companies Act, 2013 (Act). Accordingly, the Company has renamed its existing Remuneration Committee as Nomination and Remuneration Committee and have delegated to it powers as required under Section 178 of the Act. The existing Investors'' Grievance Committee has been renamed as "Stakeholders'' Relationship Committee".

The scope of Audit Committee has also been widened so as to bring it in accordance with the requirement of the Section 177 of the Companies Act, 2013.

INTERNAL COMPLAINTS COMMITTEE (iCC)

19. An Internal Complaints Committee was constituted by the Company in terms of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 which had come into force from December, 2013. The Act aims at protecting women''s right to gender equality, life and liberty at workplace to encourage women''s participation in work.

The Committee meets all the criteria including its composition as mentioned in the Act and its relevant rules. No complaint has been received by the Committee during the year.

DiReCToRS'' ReSPonSiBiLiTy STATeMenT

20. Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors state as follows:

i. That in the preparation of the annual accounts for the for the financial year ended 31st March, 2014 all the applicable accounting standards had been followed along with proper explanation 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 profit or loss of the Company for that period;

iii. That proper and sufficient care was taken 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.

To ensure this, the Company has established internal control systems, consistent with its size and nature of operations, in weighing the assurance provided by any such system of internal controls and in recognising its inherent imitations. These systems are reviewed and updated on an ongoing basis. Periodic interna audits are conducted to provide reasonable assurance of compliance with these systems. The Audit Committee meets at regular intervals to review the internal audit functions;

iv. That the Directors had prepared the annua accounts on a ''going concern'' basis.

AUDITORS'' AADIT QUALIFICATIONS AND BOARD''S EXPLANATIONS

21. The Auditors'' Report is self-explanatory. However, the Auditors have made an observation regarding recognition of Deferred Tax Assets ofRs. 4,036.85 lacs (including Rs. 1,260.08 lacs for the year) up to 31st March, 2014. In view of partial decontrol of sugar industry as well as strengthening of market prices of Company''s by products, the Company is certain that there would be sufficient profit to claim the above deferred tax credit.

22. The Auditors, Messrs S.R. Batliboi & Co. LLP, Chartered Accountants, retire at the forthcoming Annua General Meeting and are eligible for re-appointment. According to the certificate submitted to the Company by the said firm of Auditors the said appointment, if made by the Shareholders, will be well within the limits prescribed under the Companies Act, 2013.

23. The Board, on the recommendation of the Audit Committee, proposed that Messrs S.R. Batliboi & Co. LLP, Chartered Accountants, be appointed as the Statutory Auditors of the Company for the period beginning the conclusion of the ensuing Annua General Meeting of the Company and ending on the conclusion of the Annual General Meeting to be held next thereafter.

COST AUDITORS

24. In accordance with the provisions of Section 148 of the Companies Act, 2013, the Board of Directors, on the recommendation of the Audit Committee, appointed Mr Som Nath Mukherjee, Cost Accountant, as the Cost Auditors of the Company for the financial year 2014-15. In terms of Section 148 of the Companies Act, 2013, read with the Rules thereof, the remuneration payable to the Cost Auditor for the year ending 31st March, 2015 is being placed for ratification by the shareholders at the ensuing Annual General Meeting.

25. Cost Audit Reports for all the applicable products for the nine months period ended 31st March, 2013 were filed on 27th September, 2013 with cost audit cell of Ministry of Corporate Affairs department within specified due dates.

SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS

26. The Company has a wholly owned Indian Subsidiary viz., Uttar Pradesh Trading Company Limited. In compliance with General Circular No. 2/2011 of Government of India, Ministry of Corporate Affairs and the Board Resolution passed by the Board of Directors, the Company has opted to avail the exemption provided under Section 212(8) of the Companies Act, 1956 and accordingly the Audited statement of Accounts along with the report of the Board of Directors and Auditor relating to the Company''s subsidiary is not annexed as required u/s 212(8) of the Companies Act, 1956. However, the Consolidated Financial Statements conforming to the Accounting Standard 21, 23 and 27 and including inter alia the financial performance of the said subsidiary forms an integral part of the annexed Audited statement of Accounts. A statement pursuant to Section 212 of the Companies Act, 1956 is attached.

27. The Annual Accounts of the subsidiary company will be available for inspection by any shareholder at the Registered Office of the Company and will also be available on the website www.birla-sugar.com. Furthermore, a hard copy of the detailed account of the subsidiary will be furnished to any shareholder on demand at any point of time.

PARTICULARS OF EMPLOYEES

28. Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956 is attached as a separate Annexure "C" and forms an integral part of this Report.

TRANSFER OF UNPAID/UNCLAIMED DIVIDEND AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

29. During the year under review, the Company has credited Rs. 2,75,600 lying in the unpaid / unclaimed dividend account, to the Investor Education and Protection Fund (IEPF) pursuant to Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001 for the financial year 2005-06.

ENERGY CONSERVATINO, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

30. Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1) (e) of the Companies Act, 1956 are attached as per Annexure "B" and form part of this Report.

FIXED DEPOSITS

31. As on 31st March, 2014, your Company had 1276 depositors with fixed deposits ofRs. 1084.01 lacs.

CEO/CFO CERTIFICATION

32. Mr Bal Kishore Malpani, the Whole-time Director and Mr Shiv Kumar Maheshwari, CFO have submitted a certificate to the Board as contemplated in Clause 49 of the Listing Agreement.

ACKNOWLEDGEMENTS

33. Your Directors take this opportunity of recording their appreciation for the support extended to the Company by the shareholders, financial institutions, bankers, suppliers and cane growers. Your Directors are also grateful to various ministries in the Centra Government and State Governments of Uttar Pradesh, Bihar and Assam, the Sugar Directorate and the Sugar Development Fund for their continued support to the Company. The Directors also recognise the valuable contribution made by the employees at various levels to the Company''s progress.

For and on behalf of the Board

Nandini Nopany Chairperson

Place : Kolkata Dated : 15th May, 2014


Mar 31, 2013

To The Members,

The Directors take pleasure in presenting their report as a part of the 81 st Annual Report and the audited accounts of the Company for the nine month financial year ended 31 st March, 2013

2. FINANCIAL RESULTS AND APPROPRIATIONS

(Rs.in lacs) Nine Months Period Year Ended Ended 31st March, 2013 30th June, 2012

Gross Sales 52,939.23 73,716.30

Profit before Exceptional Item, Finance Costs, 8,810.35 7,178.45

Depreciation & Amortisation Expenses and Tax

Less: Depreciation and Amortisation expenses 1,998.47 2,654.93

Finance Costs 4,556.56 6,555.03 6,187.14 8,842.07

Profit/(Loss) Before Exceptional Item and Tax 2,255.32 (1,663.62)

Less: Loss on account of Exceptional Item 1,891.58

Less: Tax Expense:

-Current Tax 460.82 87.60

-Deferred Tax Charge/(Credit) 529.64 990.46 (1,317.84) (1,230.24)

Profit/(Loss) after tax 1,264.86 (2,324.96)

OPERATING PERFORMANCE

3. A detailed analysis of the Company''s operations, future expectations and business environment has been given in the Management Discussion and Analysis which is made an integral part of this Report and marked as Annexure "A".

CHANGE OF FINANCIAL YEAR

4. The Board of Directors had approved the change of the Financial Year from 1 st July to 30th June of every year to 1 st April to 31 st March of every year. Accordingly, the above financial results are of nine months for the period 1 st July, 2012 to 31 st March, 2013 and are not comparable with the results of the Financial Year 2011-12.

FINANCIAL PERFORMANCE 2012-13

5. The Company had recorded Net Revenue of Rs. 52,256.67 lacs (including other incomeaggregating to Rs. 1,042.75 lacs) for the nine month period ended 31 st March, 2013. The Gross Sales of the Company for the year 2012-13 stood at Rs. 52,939.23 lacs.

6. The Profit before Finance Costs, Depreciation and Tax for the year under review stood at Rs. 8,810.35 lacs representing 16.86 % of the net revenue. The improvement of PBIDT of the Company during the period under review is attributed to higher capacity utilisation due to availability of sufficient quantity of sugarcane and better realisation of by-products of the Company.

7. During the period under review the sugar industry per se could have performed better had the State Government of UP adopted a pragmatic policy based on business considerations in so far fixation of State Administered Price (SAP) of sugarcane was concerned. Prices of sugar though were firm during August, 2012 to November, 2012 they started softening once the crushing operations for the Sugar Season 2012-13 commenced and the pressure of cane payment forced the millers to liquidate their finished goods stock.

8. The Cabinet Committee on Economic Affairs (CCEA) on 4th April, 2013 decided to do away with the regulated release mechanism and the obligation of levy quota on sugar mills effective the Sugar Season 2012-13, still leaving the right with state governments to take call on cane area reservation, minimum distance criteria and adoption of the cane price fixation formula. .

9. The State Government of UP fixed an exorbitant price of Rs. 280 per Quintal of sugarcane up from Rs. 240 per Quintal on extraneous considerations without any economic justification. The sugar industry of Bihar in consultation with its State Government fixed a price of Rs. 255 per Quintal which was accepted by all the farmers and the State Government as a fair price. The high sugarcane price without a corresponding increase in sugar price crippled the industry in UP.

10. The performance of the Industrial Alcohol division and the renewable Power divisions of the Company improved during the year due to better availability of molasses and bagasse. The Central Government has made it mandatory to blend 5% of the ethanol with Petrol leading to a better off take of Ethanol produced by the sugar industry per se. Effective 1st April, 2013 the Public Sector Oil Marketing Companies have increased the prices of ethanol to Rs. 34/- a litre from Rs. 27/- a litre. This increase in prices of ethanol will help sugar industry to improve its overall profit performance. Still higher price is expected by the ethanol manufacturers in view of the current landed cost of the imported ethanol beingRs. 50-55 per litre.

11. The performance of Tea segment continued to be strong during the year under review due to better realisation. The production of Tea decreased from

13.00 lac kgs in the year 2011 -12 to 11.59 lac kgs in the year under review.

RESEARCH AND DEVELOPMENT

12. During the year under review the Company has undertaken Research and Development initiatives with an intention to improve the sugar recovery ratio and to educate the cane growers to cultivate improved variety of sugarcane and to otherwise improve the sucrose contents of their produce.

DIVIDEND

13. The Board of Directors does not recommend any dividend for the year under review in view of the accumulated losses.

CORPORATE GOVERNANCE

14. Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis Report, the Report on Corporate Governance, Declaration of Managing Director on Code of Conduct and Auditors'' Certificate on compliance of conditions of Corporate Governance form an integral part of this Report and are attached to this Report as Annexure "A", "D", "E" and "F" respectively.

DIRECTORS

15. The Company has eight Non-Executive Directors having experience in varied fields and a Chairperson-Cum-Managing Director. Mr Ram Kishore Choudhary had not offered himself for re-appointment at the last Annual General Meeting of the Company held on 29th November, 2011 and had accordingly ceased to be a Director of the Company. Mr Choudhary had served as Director on the Board of the Company for about 33 years and the Board places on record its deep appreciation for the services rendered by him during his tenure as a Director of the Company.

15. During the year under review, two Directors, Mr Chandra Shekhar Nopany and Mr Gaurav Swarup retire from the Board by rotation and are eligible for re-appointment.

17. Other information on the Directors including the required particulars of Directors retiring by rotation and being reappointed is provided in the Report of Corporate Governance annexed to this Report as Annexure "D".

DIRECTORS'' RESPONSIBILITY STATEMENT

18. Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors state as follows:

i) That in the preparation of the annual accounts for the nine month period ended 31st March, 2013 all the applicable accounting standards had been followed along with proper explanation 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 profit or loss of the Company for that period;

iii) That proper and sufficient care was taken 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.

To ensure this, the Company has established internal control systems, consistent with its size and nature of operations, in weighing the assurance provided by any such system of internal controls and in recognising its inherent limitations. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The Audit Committee meets at regular intervals to review the internal audit functions;

iv) That the Directors had prepared the annual accounts on a ''going concern'' basis.

AUDITORS'' AUDIT QUALIFICATIONS AND BOARD''S EXPLANATIONS

19. The Auditors'' Report is self-explanatory. However, the Auditors have made an observation regarding recognition of Deferred Tax liability amounting to Rs. 529.64 lacs for the period. The recognition of Deferred Tax Asset (DTA) got reduced from Rs. 3306.41 lacs to Rs. 2776.77 lacs as at March 31,2013 due to reversal of Rs. 529.64 during the period ended 31 st March, 2013 on account of profit for the period. Further, in view of partial decontrol of sugar industry as well as strengthening of market prices of Company''s by products, the management is certain that there would be sufficient profit in future to claim the above deferred tax credit.

20. The Auditors, Messrs S. R. Batliboi & Co. LLP, Chartered Accountants, retire at the forthcoming Annual General Meeting and are eligible for re- appointment. According to the certificate submitted to the Company by the said firm of Auditors the said re-appointment, if made by the Shareholders, will be well within the limits prescribed in Section 224(1 B) of the Companies Act, 1956.

21. The Board, on the recommendation of the Audit Committee, proposed that Messrs S. R. Batliboi & Co. LLP, Chartered Accountants, be re-appointed as the Statutory Auditors of the Company for the period beginning the conclusion of the ensuing Annual General Meeting of the Company and ending on the conclusion of the Annual General Meeting to be held next thereafter.

COST AUDITORS

22. In accordance with the directives of the Central Government under Section 233B of the Companies Act, 1956, Mr Som Nath Mukherjee, Cost Accountant, was appointed as Cost Auditor to audit the Cost Accounting Records relating to the all products viz. Sugar, Industrial Alcohol, Power and Tea for the year 2013-14.

23. Cost Audit Reports for all the applicable products for which cost audit is mandatory for the year ended 30th June, 2012 were filed on 25th February, 2013 with cost audit cell of Ministry of Corporate Affairs department within specified due dates.

SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS

24. The Company has an Indian Subsidiary viz., Uttar Pradesh Trading Company Limited. In compliance with General Circular No. 2/2011 of Government of India, Ministry of Corporate Affairs and the Board Resolution passed by the Board of Directors, the Company has opted to avail the exemption provided under Section 212(8) of the Companies Act, 1956 and accordingly the Audited statement of Accounts along with the report of the Board of Directors and Auditor relating to the Company''s subsidiary is not annexed as required under Section 212(8) of the Companies Act, 1956. However, the Consolidated

Financial Statements conforming to the Accounting Standard 21, 23 and 27 and including inter alia the financial performance of the said subsidiary forms an integral part of the annexed Audited statement of Accounts.

25. The Annual Accounts of the subsidiary Company will be available for inspection by any shareholder at the Registered Office of the Company and will also be available on the website www.birla-sugar. com. Furthermore, a hard copy of the detailed account of the subsidiary will be furnished to any shareholder on demand at any point of time.

PARTICULARS OF EMPLOYEES

26. Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956 is attached as a separate Annexure "C" and forms an integral part of this Report.

TRANSFER OF UNPAID/UNCLAIMED DIVIDEND AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

27. During the year under review, the Company has credited Rs. 8,19,271 lying in the unpaid/unclaimed dividend account, to the Investor Education and Protection Fund (IEPF) pursuant to Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001 for the year 20.04-05.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

28. Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1) (e) of the Companies Act, 1956 are attached as per Annexure "B" and form part of this Report.

FIXED DEPOSITS

29. As on 31 st March, 2013, your Company had 1,499 depositors with fixed deposits of Rs. 1271.87 lacs. Two depositors have not claimed their matured fixed deposit amount of Rs. 0.50 lacs as on that date. In terms of requirements of Investor Protection and Education Fund (uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012 the Company shall upload the information on the website of Ministry of Corporate Affairs as well as on its own website www.birla-sugar.com . This will be with in such time as is prescribed under the said Rules and will contain the detail of all such fixed deposit holders who till the date of the ensuing Annual General Meeting shall not have claimed their matured fixed deposit proceeds. The Company had been regular in refunding the claimed deposits on maturity.

CEO/CFO CERTIFICATION

30. Mrs Nandini Nopany, the Chairperson-cum- Managing Director and Mr Shiv Kumar Maheshwari, CFO have submitted a certificate to the Board as contemplated in Clause 49 of the Listing Agreement.

ACKNOWLEDGEMENTS

31. Your Directors take this opportunity of recording their appreciation for the support extended to the Company by the shareholders, financial institutions, bankers, suppliers and cane growers. Your Directors are also grateful to various ministries in the Central Government and State Governments of Uttar Pradesh, Bihar and Assam, the Sugar Directorate and the Sugar Development Fund for their continued support to the Company. The Directors also recognise the valuable contribution made by the employees at various levels to the Company''s progress.

For and on behalf of the Board

Nandini Nopany

Chairperson-cum-Managing Director

Place: Kolkata

Dated: 15th May, 2013

 
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