Notes to Accounts of Mawana Sugars Ltd.

Mar 31, 2018

1. Company Overview

Mawana Sugars Limited (‘the Company'') is a public limited Company domiciled and incorporated in India under the provisions of the Companies Act, 2013. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is situated at 5^th floor, Kirti Mahal, 19 Rajendra Place, New Delhi 110008. As at March 31, 2018, Mr. Siddharth Shriram (including shares held as trustee of Enterprise Trust) owns 63.49% of equity share capital of the Company.

The standalone financial statements were approved by the Board of Directors and authorised for issue on 23rd May 2018.

Notes :

1. Refer note 42

2. Refer note 13 for information on property, plant and equipment pledged as security.

3. The Company has reassessed and made downward revision in the useful life of certain plant and equipment of Sugar units of the Company, in view of this change, the depreciation for the year is higher by Rs 4.26 million. However there is no impact on the results of the Company since these assets have already been sold/are held for sale.

No trade or other receivables are due from directors of the Company.

Trade receivables except Mawana Foods Private Limited are non interest bearing during normal credit periods and are generally on terms of 30 days.

* The Company had changed its Authorised Share Capital from 175,000,000 Equity Shares of Rs. 10/- each to 100,000,000 Equity shares of Rs. 10/- each aggregating to Rs.1,000 million and 7,500,000 Preference Shares of Rs. 100/- each aggregating to Rs.750 million in AGM held on 13.06.2016.

b) Terms/ rights attached to equity shares:

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each share holder of equity shares is entitled to one vote per share except 1,192 equity shares held by Siel Infrastructure & Estate Developers Private Limited, a subsidiary which pursuant to second proviso of Section 19(1) of the Companies Act, 2013, has no right to vote at meeting of the Company. Each holder of equity shares have a right to receive per share dividend declared by the Company. In event of liquidation of the Company, holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.

During the year, no interim/ final dividend has been paid or proposed by the Company.

#a The Company has completely resolved the debts availed from all the lender banks, with the One Time Settlement (OTS) concluded with the last lender bank and paid entire OTS amount during the period. The Company has recognized reversal of loan and interest liabilities with net gain of Rs. 190.87 million under exceptional items in the Statement of Profit and Loss.

#b During the period ended March 2016, pursuant to an assignment of all rights, titles and interest in the financial assistance i.e Long term borrowings, Short term borrowing, cash credit, Funded Interest Term Loan and interest thereon outstanding with two term lenders assigned to an Asset Reconstruction Company, an amount of Rs. 2,210.00 million which was earlier restructured for repayment till March 2023 resulted in NPV gain of Rs. 1520.77 million, same was credited to retained earnings as on April 01,2016. This loan has been rescheduled for repayment till March 2021 in the previous year ended March 31, 2017 resulted in NPV loss of Rs. 287.60 million which has been reflected as a loss under exceptional item in the Statement of Profit and Loss.

The Company has resolved its debt liability with one more lender during the previous year ended March 31, 2017, by way of one time settlement (OTS), which resulted in the waiver of principal and interest amounting to Rs. 405.32 million and has been reflected as a gain under exceptional item in the Statement of Profit and Loss. In terms of the settlement, the OTS amount is payable till 30th June, 2018.

#c During the year ended March 31, 2017, The Company had effected one time settlement agreements with three lenders and paid the entire agreed amount, which resulted in the waiver of principal and interest amounting to Rs. 1028.23 million and has been reflected as a gain under exceptional item in the Statement of Profit and Loss.

B. Loans repayable on demand - Cash credit/overdrafts from banks

i. Cash credit / overdraft amounting to Nil (31 March, 2017 Nil; 1 April, 2016 Rs. 422.10 million) were secured by first pari-passu charge on the current assets of the Company and third pari-passu charge on the property, plant and equipments of sugar units of the Company. This limit was also secured by second pari-passu charge on the property, plant and equipments of chemical division of the Company. Further, these loans were also secured by corporate guarantee issued by Siel Industrial Estate Limited and equitable mortgage of its industrial estate land measuring 455.23 acres at Rajpura in the state of Punjab and personal guarantee of the erstwhile Chairman and Managing Director of the Company.

ii. Cash credit amounting to Nil (31 March, 2017 Nil, 1 April, 2016 Rs. 46.34 million) were secured by first pari-passu charge on the current assets of the Company and property, plant and equipments (other than cylinder on finance lease) of chemical division of the Company situated at Rajpura in the state of Punjab.

iii The outstanding amount of the cash credit facility availed from one of the lender bank which was assigned to an Asset Restructuring Company has been merged with the total restructured debt with them and in the case of other lender bank, the same is merged with the settled amount under One Time settlement as agreed with them.

1 For maturity profile of trade payable and other financial liabilities refer note 38.

2 For explanation on the Company''s credit risk management processes, Refer note 38

3 Including interest Rs. 0.10 million (March 31, 2017 : Rs. 8.60 million, April 01,2016: Rs. 11.98 million) interest outstanding due to Micro and Small enterprises.

2. Income Tax:

The major components of income tax expense for the years ended March 31, 2018 and March 31, 2017:

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

The Company has till date recognised Rs. 230.34 million (March 31, 2017 Rs. 137.79 million: April 01, 2016: Rs. Nil million) as Minimum Alternate Tax (MAT) credit entitlement which represents that portion of the MAT Liability, the credit of which would be available based on the provision of Section 115JAA of the Income Tax Act, 1961. The management based on the future profitability projections is confident that there would be sufficient taxable profits in future which will enable the Company to utilize the above MAT credit entitlement.

The Company has till date recognised Rs. 1944.04 million (March 31, 2017 Rs. 1790.03 million: April 01, 2016: Rs. 2845.47 million) as deferred tax assets on unabsorbed depreciation and carried forward tax loss, which the management based on the future profitability projections is confident that there would be sufficient taxable profits in future which will enable the Company to utilize the above deferred tax assets.

3. Earnings per share (EPS)

a) Basic and Diluted EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

b) The following reflects the income and share data used in the basic and diluted EPS computations:

4. Commitments and Contingencies

(a) Leases Operating Lease — as lessee

The Company has entered into the operating leases on properties with lease term upto one year. The Company has the option to renew the lease at the end of each year. There are no restrictions imposed by the lease arrangements. There are no subleases.

Finance Lease - as lessee

The Company has finance lease for chlorine cylinder. The Company''s obligation under finance leases are secured by the lessor ‘s title to the leased assets. Future minimum lease payments under finance leases with the present value of the net minimum lease payments are as follows.

* A sum of Rs. 30.28 million has been deposited with Income Tax Authorities and is appearing under income tax assets in the balance sheet.

# Period in respect of Income Tax represents Assessment Year

** the matter have been decided in favour of the Company but the department has preferred appeal at higher level.

(iv) The Company has provided bank guarantees aggregating Rs. 72.01 million (31 March, 2017 Rs. 72.01 million, 1 April, 2016 Rs. 72.01 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous period, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31, 1997, or prior to March 31, 1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 43.68 million (31 March, 2017 Rs. 43.68 million, 1 April, 2016 Rs. 43.68 million) have been received. These demands are presently under various stages of appeal.

(v) During the previous periods, the Company had given a counter indemnity/guarantee in favor of existing directors of Transiel India Limited to protect their interest against any loss/ future liabilities that may arise after the name of the said subsidiary that has been struck off under the Easy Exit Scheme, 2011.

5. Research and development costs

Research and development expenses included under relevant heads in the Statement of Profit and Loss amounting to Rs. 6.98 million (31 March, 2017 Rs. 6.00 million).

*provided for as doubtful advances

Siel Industrial Estate Limited (Siel IE) and erstwhile Chairman and Managing Director of the Company has given Corporate/personal Guarantees Rs. 5,243.00 million (March 31, 2017 Rs. 5,295.00 million, April 01, 2016 Rs. 5,295.00 million) as collateral security in favour of lenders of the Company on its behalf. Siel IE has mortgaged its industrial land measuring 455.23 acres (March 31, 2017 455.23 acres) as a collateral security in favour of lenders of the Company to secure the repayment of all debt due to Company''s lenders upto Rs. 7,869.85 million (March 31, 2017 Rs. 7,869.85 million).

6. Segment Information

A. Operating Segment

As per Ind AS 108 identification of segment is based on the manner in which the entity''s Chief Operating decision makers'' (CODM) review the business components regularly to make decisions about allocating resources to segment and in assessing its performance.

The Operating segments of the Company is identified to be sugar, power , chemicals and distillery as the Chief Operating decision maker reviews business performance of the Company on the basis of these segments.

B. Geographical Segment

Since the Company''s activities/operations are primarily within the country and considering the nature of products/ services 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 policies applicable to the business segments as set out in note 2 above, the accounting policies in relation to segment accounting are as under:

i) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to the segments.

ii) 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. While most of the assets/ liabilities can be directly attributed to individual segment, the carrying amount of certain assets/ liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.

iii) Inter segment revenues:

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

Set out below, is a comparison by class of the carrying amounts and fair value of the Company''s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values.

The management assessed that cash and cash equivalents, other bank balances, unbilled revenue, fixed deposits, trade receivables, trade payables and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

7. A. Fair Value Hierarchy

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is insignificant to the fair value measurements as a whole.

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: Valuation techniques for which the lowest level inputs that has a significant effect on the fair value measurement are observable, either directly or indirectly.

Level 3: Valuation techniques for which the lowest level input which has a significant effect on fair value measurement is not based on observable market data.

The Company''s principal financial liabilities comprise of trade payables, other payables, security deposits received, capital creditors and employee related payables. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include trade and other receivables, and cash and cash equivalent that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management is responsible to ensure that Company''s financial risk activities which are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of change in market price. Market risk comprise of interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. However, as the Company does not have any outstanding floating rate interest bearing long term and short term debts at the balance sheet date. Therefore, a change in interest rates on the reporting date would neither affect profit or loss nor affect equity.

Fair value sensitivity analysis for fixed rate instruments

The Company does not have any fixed rate financial assets and liabilities at fair value through profit and loss. Therefore, a change in interest rates at the reporting date would neither affect profit or loss not affect equity.

Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions primarily with respect to USD. Foreign exchange risk arises from future commercial transactions and recognised asset and liabilities denominated in a currency that is not the Company''s function currency. The Company imports certain materials which exposes it to foreign currency risk.

Commodity price risk

Sugar industry being cyclical in nature, realisations get adversely affected during downturn. Higher cane price or higher production than the demand ultimately affect profitability. The Company has mitigated this risk to some extant by well integrated business model by diversifying into co-generation and distillation, thereby utilizing the by-products. The Company also deals in Chlor Alkali products viz Caustic Soda, Chlorine etc, their prices are led by global as well as domestic demand and supply. The Company focuses on being amongst the lowest cost producers in these businesses.

Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.

(i) Trade receivables

Customer credit risk is managed as per the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored.

An impairment analysis is performed at each reporting date on an individual basis for major clients. The calculation is based on exchange losses historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed below. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low on the basis of past default rates of its customers.

Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.

(ii) Financial instruments and cash deposits

Credit risk from balances with banks is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company''s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Company''s finance committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

Liquidity risk

The Company manages its liquidity for working capital requirement to ensure smooth operation of the business. The Company also ensures the long term funds requirement like capex or otherwise are met through adequate availability of long term capital (debt/equity).

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.

In order to achieve this overall objective, the Company''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 immediately call loans and borrowings. There have been breach in the financial covenants (non payment of term loan installment) of one interest-bearing borrowing in the current year. However, the Company had made one time settlement with the said lender during the year. (Please refer note 13).

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018 and March 31, 2017.

8. The Company has applied to Central Government for approval of remuneration paid of Rs 54.20 millions to former Managing Director (MD)/Whole Time Director (WTD)/existing Whole Time Director. In respect of application of former MD/WTD, the department has declined the request of the Company, and therefore an application is being filed for reopening.

9. Pursuant to judgment dated 10.5.1996 passed by the Hon''ble Supreme Court of India in a public interest litigation the Company surrendered 46.58 acres of land to the Delhi Development Authority (‘DDA'') and dedicated it exclusively for the development of green belt and open spaces. Consequently, the Company is no longer in physical possession of 46.58 acres owned by it.

The Company had filed a Review Petition in the Hon''ble Supreme Court of India challenging the order of surrender of land to the DDA. During the pendency of this Review Petition, the DDA leased out some portion of the land surrendered by the Company to Delhi Metro Rail Corporation (‘DMRC''). The Company filed an application before the Hon''ble Supreme Court of India in the pending Review Petition against the leasing of land by DDA to DMRC as this was contrary to the purpose for which the Company has surrendered and dedicated the land.

Although the Hon''ble Supreme Court of India dismissed the aforesaid Review Petition by order dated 25.3.2010 but on the Company''s application against the leasing of land by DDA to DMRC, It has stated and directed as follows : “...the DDA which holds the surrendered and dedicated land in Trust cannot use it for any purpose other than as green belt or other spaces for the benefit of the community.In the event of any acquisition or development of surrendered land, the owner - dedicator will have the benefit of compensation on account of land ceasing to be ‘land dedicated to the community purpose of lung/open space.'' when such acquisition/alienation takes place, DDA and the land owner will be entitled to share the compensation at 50% each.”

In view of the aforesaid judgment, benefits earned by DDA from the surrendered land are to be shared equally with the Company.

Pending determination of the benefits amount, the credit thereof for the period from July 17 onwards has not been taken in these financial statements.

10. The Company executed a Business Transfer Agreement on November 18, 2016 with Indian Potash Limited (IPL) to sell off its Agreed Assets and Liabilities excluding contingent liabilities of Titawi Sugar Complex (unit) as a going concern on an ‘AS IS WHERE IS WHAT IS'' basis by way of a slump sale.The sale is governed by a Business Transfer Agreement (BTA) which stipulates completion of these activities within a certain time frame.

Accordingly, IPL had taken control of the Unit .The accounts for the year ended March 31,2017, reflected comprehensive sale of aforesaid assets/liabilities. The Company had recognised a net gain of Rs. 2347.04 million which had been reflected under exceptional item in the Statement of Profit and Loss for the previous year ended March 31,2017. During the current year, the Company has completed the above transaction of sale of Titawi Sugar Complex (TSC) Unit to IPL.Whilst effecting the final settlement, the Company had to bear an expenditure of Rs. 43.28 millions, thereby reducing the profit from said sale transaction envisaged in previous year. Accordingly, a loss of Rs. 43.28 millions is recognized under exceptional items in the Statement of Profit and Loss for the year ended March 31, 2018.

A sum of Rs. 20.00 million is recoverable from IPL, pending transfer of certain portion of freehold land in the name of IPL.

11. Dues to Micro, Small and Medium Enterprises

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

12. Earlier, the Company was having four PF Trusts for maintaining Provident Fund for its employees & workers. As per Clause 25 of Employees Provident Funds Scheme, 1952 “a Company reporting loss for three Consecutive Financial Years or erosion in their capital base shall have their exemption withdrawn from the first day of next / succeeding financial year.” The Company was incurring losses from the year 2010-11 to 2012-13 and net worth of the Company was also completely eroded during that period.

In terms of the above, it was obligatory on the Company to have its exemption withdrawn and transfer the PF accumulation balance to Employee Provident Fund Organisation (EPFO), Ministry of Labour, Govt. of India. Company has already transferred PF accumulations of two PF Trusts during the year 2015-16. However, accumulation of remaining PF Trusts i.e. SFFI Employees PF Trust and MSW Employees PF Trust are under transfer. Necessary approval in this respect has already been received from EPFO. These two trusts have been depositing Provident Fund dues with Regional Provident Fund Commissioner (RPFC) from January 2014 and October 2017 respectively. Hence no disclosure as required under Ind AS 19 employee benefits for provident fund trusts has been given.

13. During the year ended March 31, 2018, frauds pertaining to earlier years have been detected in Company''s sugar units at Mawana Sugar Works and Nanglamal Sugar Complex where some employees (who have already left the service of the Company) have embezzled aggregate sum of Rs.29.78 million by forging documents and wrongfully withdrawing payment. FIR has been filed against these persons and necessary legal action in this regard has been initiated to recover the money. No credit for the above amount has been taken in the books, which will be taken once amount is recovered.

14. In view of Allahabad High Court order dated 21.12.2017 for stay on the retrospective operation of orders of UP State Government on reduction in rate of society commission pertaining to earlier years, Company has provided differential amount of Rs. 285.46 million in the accounts during the current year.

Although the Company has received the order of Allahabad High Court before finalizing the last quarter''s results, however, the management was under discussion internally and with various sugar industry expert to get the waiver of above commission but could not get the success so far in the above matter. As a result, the amount has been provided during the current quarter. The major part of said liability was appearing under the contingent liability in last year''s accounts.

15. In view of oversupply of sugar in the country and crash in sugar prices, Government of India issued the notification No. 1(4)/2018-S.P.-1 dated 9th May 2018 with allocating mill-wise Minimum Indicative Export Quota (MIEQ) of 20 lakh tonne for sugar season 2017-18. The Company has been allocated MIEQ of 19088 MT of sugar. Presently the international prices of sugar are much lower than the domestic prices.

Further, it has also issued notification No. 1(5)/2018-S.P.-1 dated 9th May 2018 with the scheme for assistance to sugar mills for payment of cane price dues to farmers against sugar cane crushed during the season 2017-18 @ Rs 5.50/qtl to offset the cost of cane purchased.

As per one of the conditions of the notification, Company may find difficult to get cane subsidy. Without this, the export of sugar is not viable. Otherwise also, the cost of export obligation approximately offset with the amount of cane subsidy available under the scheme, hence Company has not given effect of above notifications in these accounts.

16. The Company at the year-end has an outstanding balance of Rs.150.27 million owed by a customer (Mawana Foods Private Limited), an erstwhile wholly owned subsidiary of the Company, towards supply of sugar . The Company is exploring the possibility for realizing the value of outstanding dues from the said customer in order to bring the level of outstanding amount at normal credit level.

17. The previous financial year ended March 31, 2017 includes the operations of Titawi Sugar Complex (Unit) upto October 31, 2016 after which it has been sold to IPL (refer note 42) . Therefore, the figures of the current financial year are not comparable with the figures of the previous year.

18. The comparative financial information of the Company for the year ended March 31, 2017 and the transition date opening balance sheet as at April 01, 2016 included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the accounting principles generally accepted in India, including the Companies (Accounting Standards) Rules, 2006 (as amended) specified under Section 133 of the Act, read with the Companies (Accounts) Rules, 2014 audited by the predecessor auditor, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by current auditor.

19. First-time adoption of Ind AS

These financial statements, for the year ended March 31, 2018, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 01, 2016, the Company''s date of transition to Ind AS. This note explains exemptions availed by the Company in restating its Previous GAAP financial statements, including the balance sheet as at April 01, 2016 and the financial statements as at and for the year ended March 31, 2017.

Exemptions applied:

1. Mandatory exemptions:

a) Estimates:

The estimates at April 01, 2016 and at March 31, 2017 are consistent with those made for the same dates in accordance with Previous GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Previous GAAP did not require estimation:

- Impairment of financial assets based on expected credit loss model

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 01, 2016, the date of transition to Ind AS and as of March 31, 2017.

b) Classification and measurement of financial assets: Financial Instruments: (Security deposits received and security deposits paid):

Financial assets like security deposits received and security deposits paid, has been classified and measured at amortised cost on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Since, it is impracticable for the Company to apply retrospectively the effective interest method in Ind AS 109, the fair value of the financial asset or the financial liability at the date of transition to Ind AS by applying amortised cost method, has been considered as the new gross carrying amount of that financial asset or the financial liability at the date of transition to Ind AS.

c) Impairment of financial assets: (Trade receivables and other financial assets)

At the date of transition to Ind AS, the Company has determined that there is no increase in credit risk since the initial recognition of a financial instrument.

d) Government loan at below market rate of interest - Government grant

Ind AS 101 requires a first-time adopter to apply the requirements of Ind AS 109, Financial instruments and Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance, prospectively to government loans at below market rate of interest obtained after the date of transition to Ind AS. However, Ind AS 101 allows a first time adopter to apply the requirements of Ind AS retrospectively to any government loan originated before the date of transition to Ind AS provided that the information needed to do so had been obtained at the time of initially accounting for that loan. Consequently, if the Company did not, under its previous GAAP, recognise and measure the government loan at below market rate of interest on a basis consistent with Ind AS requirements, it shall use its previous GAAP carrying amount of the loan at the date of transition to Ind AS as the carrying amount of the loan in the opening Ind AS balance sheet. Accordingly, the Company has applied the above requirement prospectively.

2. Optional exemptions :

Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

a) Deemed cost-Previous GAAP carrying amount: (Property, Plant and Equipment and Intangible)

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for De-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties. Since there is no change in functional currency, the Company has elected to measure all of its property, plant and equipment and intangible assets, as recognised in its previous GAAP financials as deemed cost at the transaction date.

b) Fair value measurement of financial assets or financial liabilities:

First-time adopters may apply Ind AS 109 to day one gain or loss provisions prospectively to transactions occurring on or after the date of transition to Ind AS. Therefore, unless a first-time adopter elects to apply Ind AS 109 retrospectively to day one gain or loss transactions, transactions that occurred prior to the date of transition to Ind AS do not need to be retrospectively restated.

Notes to the reconciliations:

1. Property, plant and equipment (PPE): Finance lease

The Company has taken chlorine cylinders on lease for the purposes of its business requirement at its chemical plant. Under Previous GAAP such lease was classified as a operating lease whereas under Ind AS the same has been classified as finance lease. As a result, PPE was increased by Rs. 22.98 million on transition date. Correspondingly the Company has recognised a lease liability amounting to Rs 26.79 million (Non current borrowings: Rs. 14.16 million and Current financial liability : Rs.12.63 million) on the date of transition. The rent paid for such cylinders has been classified as principal and interest payment. Accordingly there is reduction in rental expense by Rs. 14.81 million with corresponding increase in interest expense amounting to Rs 2.19 million during the year ended March 31, 2017. Depreciation for the year ended March 31, 2017 on such cylinders amounted to Rs 11.44 million.

2. Investments in equity and preference shares

Under Previous GAAP, investment in equity shares of unrelated companies is shown at the cost, whereas under Ind AS, the same are fair valued. Accordingly, investments has been decreased by Rs. 0.01 million on the date of transition. The Company has invested in preference shares of its subsidiary - Siel Industrial Estate Limited aggregating to Rs. 400 million. The cumulative preference shares are mandatorily redeemable at par within 10 years from respective dates of issue and dividend is payable at the rate of 5% p.a. Under previous GAAP, investment in redeemable preference shares has been recognised at cost. Since there is mandatory dividend, it is classified as financial liability from the perspective of the issuer under Ind AS. The liability component is to be recorded at amortised costs and residual portion is recorded as deemed investment by the holder of shares. Interest on liability component is accrued by using Expected Interest Rate method. The investment in preference shares is reduced by Rs. 11.48 million on transition date with an increase in deemed investment by Rs 12.21 million and corresponding increase in retained earnings by Rs 0.72 million. Interest accretion amounts to Rs. 2.29 million during the year ended March 31, 2017.

3. Employee benefits

Under previous GAAP, actuarial gains and losses were recognised in Statement of Profit and Loss. Under Ind AS, the actuarial gains and losses form part of re-measurement of the net benefit liability/asset which is recognised in other comprehensive income. Thus the employee benefit cost for the year ended March 31, 2017 is decreased by Rs. 27.81 million and re-measurement loss on defined benefit plan has been recognized in other comprehensive income.

4. Borrowings

The Company has taken term loans from banks, financial institutions and others. Under previous GAAP , the same is recognised at its transaction value. However, Ind AS requires such financial liabilities to be recognised on initial recognition at its fair value, as adjusted for the transaction cost. Further, interest is to be accredited on the fair value of the loan to reflect passage of time. This led to decrease in loan amount on the date of transition by Rs 1520.78 million (Non current borrowings : Rs. 703.40 million, Non current financial liability : Rs. 669.56 million and Current financial liability : Rs. 147.82 million) with a corresponding increase in equity. Further, loan amount has been increased on account of interest accretion by Rs.157.99 million during the year 2016-17 with a corresponding decrease in statement of profit and loss respectively. Under Ind AS, transaction cost incurred towards origination of borrowings needs to be deducted from the carrying value of borrowings. These costs are recognized in the Statement of Profit and Loss over the tenure of the borrowings as a part of interest expense by applying effective interest rate method. Under previous GAAP, the transaction cost was amortized to the Statement of Profit and Loss over the tenure of the borrowings. This led to decrease in loan amount on the date of transition by Rs. 0.65 million with a corresponding increase in retained earnings, which has been recognised as a finance cost amount to Rs. 0.52 million and Rs. 0.12 million as an exceptional item during the year ended March 31, 2017. The Company had loan outstanding to Edelweiss Asset Reconstruction Company (EARC) and Punjab National Bank (PNB) as on the date of transition. The terms of repayment of the loan were changed during the year ended March 31, 2017. Under Ind AS, debt instrument results in extinguishment of liability where the renegotiated terms are substantially different form the original terms. The renegotiated terms are substantially different where the present value of cash flow under the new terms are and discounted using the original effective interest rate is at least 10% different from the original liability. This resulted loss on extinguishment of EARC loan amounting to Rs 287.60 million and gain on extinguishment of PNB loan amounting to Rs 40.17 million and interest waiver of PNB loan amounting to Rs. 365.14 million had been recognized under exceptional items in the statement of Profit and Loss during the year ended March 31, 2017.

5. Deferred tax assets/Income tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12, “’’Income Taxes”” requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12, has resulted in recognition of deferred tax on new temporary differences, which was not required under Indian GAAP. In addition, the various transitional adjustments lead to additional temporary differences. According to the accounting policies, the Company has to account for such differences. Tax impact on Deferred tax adjustments are recognized in reserves for opening balance sheet and statement of profit and loss in subsequent years. As a result, the impact on deferred tax asset as on the date of transition is higher by Rs. 2072.05 million with a corresponding impact on retained earnings as on that date. (31 March 2017: reduction in deferred tax asset by Rs. 832.49 million with a corresponding decrease in Statement of Profit and loss).

Further, the Company has created additional provision for minimum alternate tax (including interest of Rs. 3.00 million) of Rs. 139.79 million, which was not made in last year.

6. Presentation of excise duty

Under previous GAAP, revenue from sales of goods was presented net off excise duty under revenue from operations. Whereas, under Ind AS, revenue from sales of goods include excise duty. The corresponding excise duty expense is presented separately on the face of profit & loss. Thus sale of goods under Ind AS has increased by Rs. 768.54 million with a corresponding increase in expense for the year ended March 31, 2017.

7. Commission to indenting and ordering agent

Under previous GAAP, commission to indenting and ordering agent amounting to Rs 22.69 million has been adjusted with revenue . The same has been regrouped as part of other expenses under Ind AS during the year ended March 31, 2017.

8. Other comprehensive income

Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income, expense, gains, or losses are required to be presented in other comprehensive income.

9. Statement of cash flows

The transition from previous GAAP to Ind AS has not had a material impact on the statement of cash flows.

10. Prior Period Adjustments

Under Ind AS, the adjustments for prior period events needs to be made in the year to which they actually pertains. Therefore REC sale amounting to Rs. 6.25 million, interest received from Punjab State Power Corporation Limited (PSPCL) amounting to Rs. 8.24 million and share of rent received from DMRC (excess recognised in previous year) amounted to Rs. 88.09 million has been taken in the financial statements for the year ended March 31, 2017. Moreover Interest received from PSPCL pertaining to period prior to date of transition amounting to Rs. 10 million has been taken into retained earnings.

11. Molasses storage fund

Under previous GAAP, allocation towards molasses storage fund was charged in statement of profit & loss and shown as liabilities under non current liabilities. Under Ind AS such allocation is treated as appropriation of reserve and to be part of other equity. As a result, other expenses in statement of profit & loss is reduced by Rs. 0.31 million.

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Mar 31, 2017

1. (B) The Indian sugar industry, particularly in the State of Uttar Pradesh, had faced difficulties on account of increased sugar cane prices and corresponding lower than expected recovery of sugar from cane, lower sugar prices and consequential under recovery of cost of production in recent times. These factors adversely affected the Company''s operations and financial performance, resulting into eroded net worth, cash losses, mounting cane dues arrears due to which its current liabilities exceeded its current assets and defaults in debt obligations.

The Company got registered with the Board for Industrial and Financial Reconstruction (BIFR) on 10th September

2013 as sick industrial company (in terms of Section 3(1)(o)) under the provisions of Section 15 (1) of the Sick Industrial Companies (Special Provisions), Act, 1985 (SICA). Meanwhile, the Ministry of Finance issued Notifications S.O. 3568 (E ) & S.O. 3569 (E ) dated 25 November, 2016 to the effect that SICA has been repealed with effect from 1 December, 2016 and all the references or inquiry pending before the BIFR shall stand abated. With this Notification BIFR ceased to exist.

Since the previous sugar season, the industry has witnessed a steady increase in sugar prices and improved cane recoveries. This has resulted in the Company generating profits during the last financial period as well as in current year ended March 31, 2017.

The Company has taken the following steps to improve its financial position through a business and financial restructuring as indicated below:

* Executed a Business Transfer Agreement (BTA) on November 18, 2016 with Indian Potash Limited (IPL) to sell off its Agreed Assets and Liabilities excluding contingent liabilities of Titawi Sugar Complex (unit) as a going concern on an ‘AS IS WHERE IS WHAT IS'' basis by way of a slump sale. Such sale is on certain terms and conditions, part of which have been fulfilled and the rest are under process. The sale is governed by the BTA which stipulates completion of these activities within a certain time frame as mutually agreed between the parties.

Accordingly, IPL has taken control of the unit and these accounts reflect comprehensive sale of aforesaid assets/ liabilities. The Company has recognized a net gain of Rs. 2347.04 million which has been reflected under exceptional item in the Statement of Profit and Loss.

* Effected one time settlement agreements with three lenders, which resulted in the waiver of principal and interest amounting to Rs. 1028.23 million which has been reflected as a gain under exceptional item in the Statement of Profit and Loss.

* Pursuant to the assignment of all rights, titles and interests in the financial assistance granted by two other lenders to the Company with an asset reconstruction company, a major portion of the outstanding debts has been restructured for repayment till 2021.

* The Company has resolved its debt liability with one more lender during the current year by way of one time settlement (OTS). In terms of the settlement, the OTS amount is payable till 30th June, 2018.

The above measures have resulted in positive new worth of the Company as on 31st March 2017.

In view of the above, the Management of the Company is confident that the Company would be in a position to realize its assets and discharge its liabilities successfully in the normal course of its business. Accordingly, these financial statements have been prepared on a going concern basis.

(i) There are no changes in issue, subscribed and fully paid up capital during the year and in the previous period.

(ii) The Company has changed its Authorized Share Capital from 175,000,000 Equity Shares of Rs. 10/- each to 100,000,000 Equity shares of Rs. 10/- each aggregating to Rs.1,000 million and 7,500,000 Preference Shares of Rs. 100/- each aggregating to Rs.750 million in AGM held on 13.06.2016. Each holder of equity shares is entitled to one vote per share except 1,192 equity shares held by Siel Infrastructure & Estate Developers Private Limited, a subsidiary which pursuant to second proviso of section 19(1) of the Companies Act, 2013, has no right to vote at the meetings of the Company. Each holder of equity shares have a right to receive per share dividend declared by the Company. In event of liquidation of the Company, holder of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.

¹ Includes Rs. 991.46 million (previous period Rs. 991.46 million) representing the extinguishment of the debts of erstwhile Mawana Sugars Limited (MSL), which got discharged pursuant to the surplus arising on sale of shares of Shivajimarg Properties Limited.

# a) During the previous period, pursuant to an assignment of all rights, titles and interest in the financial assistance i.e Long term borrowings, Short term borrowing, cash credit and Funded Interest Term Loan granted by two term lenders to the Company with an Asset Reconstruction Company, Rs. 2210 million which was earlier restructured for repayment till 2023 has been rescheduled for repayment till 2021 in the current year*.

b) The Company has resolved its debt liability with one more lender during the current year by way of one time settlement (OTS). In terms of the settlement, the OTS amount is payable till 30th June, 2018*.

* Accordingly such Long term borrowings, Short term borrowings, cash credits and Funded Interest Term Loans which hither to were classified under Long term borrowings, Short term borrowings and other current liabilities have now been reflected under Long term borrowings and Other current liabilities in Note 4 and 9 respectively.

c) Effected one time settlement agreements with three lenders, which resulted in the waiver of principal and interest amounting to Rs. 1028.23 million which has been reflected as a gain under exceptional item in the Statement of Profit and Loss.

A i) Cash credit / overdraft amounting to Nil (previous period Rs. 422.10 million) are secured by first pari-passu charge on the current assets of the Company and third pari-passu charge on the fixed assets of sugar units of the Company. This limit is also secured by second pari-passu charge on the fixed assets of chemical division of the Company. Further, these loans are also secured by corporate guarantee issued by Siel Industrial Estate Limited and equitable mortgage of its industrial estate land measuring 455.23 acres at Rajpura in the state of Punjab and personal guarantee of the former Chairman and Managing Director of the Company.

ii) Cash credit amounting to Nil (previous period Rs. 46.34 million) are secured by first pari-passu charge on the current assets of the Company and fixed assets of chemical division of the Company situated at Rajpura in the state of Punjab.

iii) Refer note 4 (#b)

B The period and amount of continuing default in repayment of borrowings as at the year/period end:

c) The Company has provided bank guarantees aggregating Rs. 72.01 million (Previous period Rs. 72.01 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous period, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31, 1997, or prior to March 31, 1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 43.68 million (Previous period Rs. 43.68 million) have been received. These demands are presently under various stages of appeal.

d) During the previous periods, the Company had given a counter indemnity/guarantee in favour of existing directors of Transiel India Limited to protect their interest against any loss/ future liabilities that may arise after the name of the said subsidiary has been struck off under the Easy Exit Scheme, 2011.

2 Research and development expenses included under relevant heads in the Statement of Profit and Loss amounting to Rs. 6.00 million (previous period Rs. 4.21 million).

3 Accounting for taxes on income:-

In accordance with the Accounting Standard (AS) 22 ‘Accounting for Taxes on Income'' specified under Section 133 of the Companies Act, 2013,deferred tax assets have been recognized only to the extent of deferred tax liabilities, the details of which are as under:

4 Sales are net of commission of Rs. 21.37 million (previous period Rs. 37.21 million).

@ Rs. 74.75 million (Previous period Rs. 99.92 million) has not been funded

# The plan assets are maintained with Life Insurance Corporation of India (LIC) Gratuity Scheme. The details of investments maintained by LIC are not made available to the Company and therefore has not been disclosed.

5 Segment reporting

A. Business Segment

Based on the guiding principles given in Accounting Standard (AS) 17 “Segment Reporting” specified under Section 133 of the Companies Act, 2013, the Company''s Business segments include Sugar, Power, Chemical and Distillery.

B. Geographical Segment

Since the Company''s activities/operations are primarily within the country and considering the nature of products/ services 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 policies applicable to the business segments as set out in note 1(A) above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

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.

c) Inter segment revenues:

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

6 Related party disclosures under Accounting Standard 18

Name of related party and nature of related party relationship

Promoter:

Mr. Siddharth Shriram Subsidiaries:

Siel Financial Services Limited,

Siel Industrial Estate Limited,

Siel Infrastructure & Estate Developers Private Limited Key Management Personnel(KMP):

Mr. Dharam Pal Sharma - Whole Time Director (w.e.f. August 13, 2015)

Dr. Anil Arora - Chief Financial Officer (w.e.f. November 05, 2015)

Mr. Ashok Kumar Shukla - Company Secretary (w.e.f. July 04, 2015)*

Mr. Ritesh Jain - Company Secretary (resigned w.e.f. March 10, 2015)*

Enterprises over which key management personnel/Promoter have significant influence:

Usha International Limited

Mawana Foods Private Limited (Formerly known as Mawana Foods Limited) (subsidiary company of Usha International Limited).

7 Operating lease:

The Company has taken properties on cancellable and non-cancellable operating lease and has recognized rent of Rs. 33.72 Million (Previous period Rs. 52.66 Million) during the year in the Statement of Profit and Loss.

8. i) The Central Government had approved the erstwhile Chairman and Managing Director''s remuneration (w.e.f. October

15, 2012) vide letter dated April 21, 2014 at an amount lower than that approved by the shareholders in their general meeting. Consequent thereto, the Company had made a representation to the Central Government on November 5, 2014 for waiver of excess remuneration paid to Chairman and Managing Director (ceased to be Managing Director w.e.f. July 31, 2014). Pending outcome thereof, refund of excess remuneration amounting to Rs. 7.04 million paid in terms of shareholders'' approval has not been obtained by the Company.

ii) The Central Government had approved the former Whole time Director (WTD) remuneration (w.e.f. February 01, 2014) vide letter dated June 30, 2015 at an amount lower than that approved by the shareholders in their general meeting. Consequent thereto, the Company had made a representation to the Central Government on July 21, 2015 for waiver of excess remuneration paid to the former Whole Time Director (ceased to be WTD w.e.f. December 31, 2014). Pending outcome thereof, refund of excess remuneration amounting to Rs. 6.61 million paid in terms of shareholders'' approval has not been obtained by the Company.

iii) The remuneration amounting to Rs 2.89 million (previous period Rs. 1.08 Million) paid to Whole Time Director (WTD)(w.e.f. August 13, 2015) up to March 31, 2017 is subject to the approval of the Central Government under the provisions of the Companies Act, 2013.

9 During the previous period ended March 31, 2016, pursuant to an Order of Hon''ble High Court of Punjab & Haryana , the Company''s 100% subsidiary viz. Siel Industrial Estate Limited (Siel IE) was ordered to pay additional compensation to the farmers from whom the Land had been acquired. Having regard to the fact that Siel IE has no business activity/ income of its own, the Company paid Rs. 40.00 million to Siel IE by way of subscription to the Right Issue of 4,000,000 5 % Redeemable Cumulative Preference Shares of Rs 10 each fully paid.

10 In the previous period ended March 31, 2016, pursuant to Companies Act, 2013 (‘the Act'') being effective from January 1, 2015, the company had revised depreciation rates on fixed assets as per the useful life specified in Part ‘C'' of schedule II of the Act. As a result of this change, the depreciation charged for the period ended March 31, 2016 was lower by Rs. 243.53 Million. In respect of the assets whose useful life was already exhausted as at December 31, 2014, depreciation of Rs. 49.13 million had been adjusted in the Statement of Profit and Loss for the period ended March 31, 2016 in accordance with the requirement of the Schedule II of the Act.

11 Pursuant to judgment dated 10.5.1996 passed by the Hon''ble Supreme Court of India in a public interest litigation the Company surrendered 46.58 acres of land to the Delhi Development Authority (‘DDA'') and dedicated it exclusively for the development of green belt and open spaces. Consequently, the Company is no longer in physical possession of 46.58 acres owned by it.

The Company had filed a Review Petition in the Hon''ble Supreme Court of India challenging the order of surrender of land to the DDA. During the pendency of this Review Petition, the DDA leased out some portion of the land surrendered by the Company to Delhi Metro Rail Corporation (‘DMRC''). The Company filed an application before the Hon''ble Supreme Court of India in the pending Review Petition against the leasing of land by DDA to DMRC as this was contrary to the purpose for which the Company has surrendered and dedicated the land.

Although the Hon''ble Supreme Court of India dismissed the aforesaid Review Petition by order dated 25.3.2010 but on the Company''s application against the leasing of land by DDA to DMRC stated and directed as follows : “...the DDA which holds the surrendered and dedicated land in Trust cannot use it for any purpose other than as green belt or other spaces for the benefit of the community. In the event of any acquisition or development of surrendered land, the owner - dedicator will have the benefit of compensation on account of land ceasing to be ‘land dedicated to the community purpose of lung/open space.'' when such acquisition/alienation takes place, DDA and the land owner will be entitled to share the compensation at 50% each.”

In view of the aforesaid judgment, benefits earned by DDA from the surrendered land are to be shared equally with the Company.

12 In the previous period ended March 31, 2016, the Government of Uttar Pradesh had announced subsidy on sugar cane purchased during the sugar season 2014-15 linked to average selling price of sugar and its by-products during the period 1st October, 2014 to 31st May, 2015. As such, the Company had recognized the full subsidy of Rs. 28.60 per qtl. aggregating to Rs. 766.2 million which has been netted off from the cost of material consumed for period ended March 31, 2016.

13 The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

14 There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company

15 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 Enterprise Development Act, 2006 (MSMED Act, 2006), the following are the details.

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.

16 Consequent upon restructuring of debts of the Company, a part of the principal amount of the term loan amounting to Rs

640.78 million, that was availed in the past for acquisition of capital assets, has been written back and credited as an exceptional item in the Statement of Profit and Loss of the Company for the year. Based upon decision of Income Tax Appellate Tribunal in respect of such matter rendered in another case and legal opinions obtained from expert tax consultants, this amount is treated as capital receipt and not included in book profit for the purposes of calculation of tax under section 115 JB of the Income Tax Act 1961.

The statutory auditors have expressed qualification in respect of the matter referred to in Note 48 above.

17 Previous period''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosures.

18 The current financial year is for a period of 12 months and includes the operations of Titawi Sugar Complex (Unit) up to October 31, 2016 after which it has been sold to Indian Potash Limited (refer note 1(B)) whereas the previous financial period is for 15 months and includes the operations of Titawi Sugar Complex (Unit) for the full period. As such, the figures of the current financial year are not comparable with the figures of the previous period.

''Includes 49.29% (Previous year 49.29%) held by Siel Infrastructure & Estate Developers Private Limited. (SIEL-IED), a wholly owned subsidiary.

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Dec 31, 2014

1. The Company over the last few years has been incurring cash losses due to which its net worth has been completely eroded and its current liabilities are far in excess of its current assets. The Indian sugar industry, particularly in the State of Uttar Pradesh, has faced difficulties on account of increasing sugar cane prices and corresponding lower than expected recovery of sugar from cane, lower sugar prices and consequential under recovery of cost of production. These factors have adversely affected the Company''s operations and financial performance. Higher finance costs have also added to the cash losses.

The Company got registered with the BIFR on 10th September 2013 under the provisions of Section 15(1) of the Sick Industrial Companies (Special Provisions), Act, 1985 (SICA). The process for revival/rehabilitation of the Company is under way in line with the prescribed procedure and rules under SICA.

The State and Central Government have initiated various steps to support the sugar industry like decontrol of free sale of sugar release mechanism, doing away with levy quota system and also considering linking the sugar cane price with sugar price. All the aforesaid measures are expected to support the industry and also the operations of the Company in the near future. The Company has also initiated various steps including cane developement activities, enhancing plant efficiencies, costs reduction etc. to improve the performance of the Company.

As such, the Company is confident that BIFR will approve a rehabilitation scheme which would entail part sale of its surplus/non-core assets to discharge some of its financial obligations and improve cash flow, reschedulement of the outstanding debt/payables (including overdue debt/payables), and other requisite financial restructuring in consultation with various stakeholders to improve its financial position including net worth. Based on an internal assessment and valuation done by an independent valuer, the Management is confident that the current fair market value of the aforesaid assets it proposes to dispose as part of the rehabilitation scheme would be sufficient to discharge its financial obligations as envisaged in the scheme.

In view of the above, the Board of Directors of the Company is confident that the Company would be in a position to realize its assets and discharge its liabilities by successfully implementing the rehabilitation scheme and in the normal course of its business. Accordingly, these financial statements have been prepared on a going concern basis."

(i) The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share except 1,192 equity shares held by Siel Infrastructure & Estate Developers Private Limited, a subsidiary which pursuant to second provision of section 19(1) of the Companies Act, 2013, has no right to vote at meeting of the Company. Each holder of equity shares have a right to receive per share dividend declared by the Company. In event of liquidation of the Company, holder of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.

1. Cash credit / overdraft amounting to Rs. 1909.97 million (previous year Rs. 2006.75 million) are secured by first pari- passu charge on the current assets of the Company and third pari-passu charge on the fixed assets of sugar units of the Company. This limit is also secured by second pari-passu charge on the fixed assets of chemical division of the Company. Further, these loans are also secured by corporate guarantee issued by Siel Industrial Estate Limited and equitable mortgage of its industrial estate land measuring 455.23 acres at Rajpura in the state of Punjab and personal guarantee of the erstwhile Chairman and Managing Director of the Company.

2. Cash credit amounting to Rs. 51.35 (previous year Rs. 84.68 million) are secured by first pari-passu charge on the current assets of the Company and fixed assets of chemical division of the Company situated at Rajpura in the state of Punjab.

3. Cash credit / overdraft amounting to Rs. Nil (previous year Rs. 1627.13 million) are secured by pledge of sugar stocks with U.P. Co-operative Bank and District Co-operative Banks in the State of Uttar Pradesh.

4. The Company has provided bank guarantees aggregating Rs. 72.01 million (Previous year Rs. 78.18 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous year, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31, 1997, or prior to March 31, 1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 43.68 million (Previous year Rs. 44.53 million) have been received. These demands are presently under various stages of appeal.

5. During a previous period, the Company had given a counter indemnity/guarantee in favour of existing directors of Transiel India Limited to protect their interest against any loss/ future liabilities that may arise after the name of the said subsidiary has been struck off under the Easy Exit Scheme, 2011.

I. Research and development expenses included under relevant heads in the Statement of Profit and Loss amounting to Rs. 4.09 million (previous year Rs. 2.99 million).

II. Accounting for taxes on income:-

In accordance with the Accounting Standard (AS) 22 ''Accounting for Taxes on Income'' notified in the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") read with rule 7 of the Companies (Accounts) Rules, 2014) deferred tax assets and liabilities have been recognized on the basis of projections after considering unabsorbed depreciation and timing differences which will be reversed against future taxes in accordance with AS-22. Accordingly, deferred tax assets have been recognized only to the extent of deferred tax liability, the details of which are as under:

III. Sales are net of commission of Rs. 29.30 million (previous year Rs. 36.60 million).

IV. Employee Benefits:

Disclosures required under Accounting Standard (AS) - 15 "Employees Benefits" notified in the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") read with rule 7 of the Companies (Accounts) rules, 2014):

V. Segment reporting

A. Business Segment

Based on the guiding principles given in Accounting Standard (AS) 17 "Segment Reporting" notified in the Companies (Accounting Standards) Rules, 2006 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts) rules, 2014), - the Company''s business Segment includes Sugar, Power, Chemical and Distillery.

B. Geographical Segment

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

C. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note 1(A) above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

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.

c) Inter segment revenues:

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

VI. Related party disclosures under Accounting Standard 18 Name of related party and nature of related party relationship

Promoter:

Mr. Siddharth Shriram- (Chairman and Managing Director Upto July 31,2014)

Subsidiaries:

Siel Financial Services Limited,

Siel Industrial Estate Limited,

Siel Infrastructure & Estate Developers Private Limited Key Management Personnel:

Mr. Siddharth Shriram - Chairman and Managing Director (resigned w.e.f. August 01,2014)

Mr. Rajendra Khanna - Whole Time Director (resigned w.e.f. December 31,2014)

Mr. A. K. Mehra - Whole Time Director (resigned w.e.f. July 31,2014)

Mr. Sunil Kakria - Managing Director (resigned w.e.f. August 01,2013)

Enterprises over which key management personnel have significant influence:

Usha International Limited (holding company upto June 20, 2013)

Mawana Foods Private Limited (Formerly known as Mawana Foods Limited) (subsidiary company upto June 28, 2013) Details of Related Party Transactions:

VI. In the previous year, prior period adjustment represents elimination of profit from the value of the investments held by the Company in Siel Infrastructure and Estate Developers Private Limited to give effect to the Statutory Auditor''s qualification on the Company''s financial statements for the period ended September 30, 2012.

VII. In the previous year, exceptional items represent profit on sale of investment in Mawana Foods Private Limited (MFPL) (Formerly known as Mawana Foods Limited) and Ceratizit India Private Limited (CIPL) of Rs. 50.10 million and Rs. 137.36 million respectively.

VIII. The Central Government had approved the Chairman and Managing Director remuneration (w.e.f. October 15, 2012) vide letter dated April 21,2014 at an amount lower than that approved by the shareholders in their general meeting. Consequent thereto, the Company had made a representation to the Central Government on November 5, 2014 for waiver of excess remuneration paid to Chairman & Managing Director (cease to be managing director w.e.f. August 01, 2014). Pending outcome thereof, refund of excess remuneration amounting to Rs. 70.40 lacs paid in terms of shareholders approval has not been obtained by the Company.

IX. Pursuant to judgment dated 10.5.1996 passed by the Hon''ble Supreme Court of India in a public interest litigation the Company surrendered 46.58 acres of land to the Delhi Development Authority (''DDA'') and dedicated it exclusively for the development of green belt and open spaces. Consequently, the Company is no longer in physical possession of 46.58 acres owned by it.

The Company had filed a Review Petition in the Hon''ble Supreme Court of India challenging the order of surrender of land to the DDA. During the pendency of this Review Petition, the DDA leased out some portion of the land surrendered by the Company to Delhi Metro Rail Corporation (''DMRC''). The Company filed an application before the Hon''ble Supreme Court of India in the pending Review Petition against the leasing of land by DDA to DMRC as this was contrary to the purpose for which the Company has surrendered and dedicated the land.

Although the Hon''ble Supreme Court of India dismissed the aforesaid Review Petition by order dated 25.3.2010 but on the Company''s application against the leasing of land by DDA to DMRC stated and directed as follows : "...the DDA which holds the surrendered and dedicated land in Trust cannot use it for any purpose other than as green belt or other spaces for the benefit of the community.In the event of any acquisition or development of surrendered land, the owner - dedicator will have the benefit of compensation on account of land ceasing to be ''land dedicated to the community purpose of lung/ open space.'' when such acquisition/alienation takes place, DDA and the land owner will be entitled to share the compensation at 50% each."

In view of the aforesaid judgment, benefits earned by DDA from the surrendered land are to be shared equally with the Company.

X. The current financial year is for a period of fifteen months from October 01, 2013 to December 31, 2014 whereas the corresponding previous year figures were for a period of twelve months from October 01,2012 to September 30, 2013. Therefore, the corresponding figures of previous year are not directly comparable with those of current period.

XI. Previous period''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosures.

---

Sep 30, 2013

1. Pursuant to the Scheme of Arrangement for Amalgamation (the "Scheme") of the erstwhile Mawana Sugars Limited (MSL) with the Company under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon''ble High Court of Delhi vide its Order dated September 11, 2007 which became effective on October 15, 2007 on fling of the certifed copy of the Order of the High Court in the Offce of Registrar of Companies, NCT Delhi & Haryana, all the properties, assets, both movable and immovable, liabilities including contingent liabilities and reserves of erstwhile MSL have without further act or deed, been transferred to and vested in the Company at their book values, as a going concern with effect from the appointed date i.e. October 1, 2006. Subsequently, the name of the Company has been changed to Mawana Sugars Limited w.e.f. January 4, 2008.

2. Contingent liabilities:

a) Claims against the Company not acknowledged as debt in respect of:

- Income tax 336.70 336.70

- Sales tax 81.03 80.98

- Excise Duty/Service tax 221.69 176.55

- Others 357.74 235.48

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

b) Guarantee given to bank for repayment of fnancial facilities 70.00 70.00 provided to Mawana Foods Limited

Dues outstanding 33.61 34.51

c) The Company has provided bank guarantees aggregating Rs. 78.18 million (Previous period Rs. 78.18 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous year, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31, 1997, or prior to March 31, 1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 44.53 million (Previous period Rs. 44.53 million) have been received. These demands are presently under various stages of appeal.

d) During a previous period, the Company had given a counter indemnity/guarantee in favour of existing directors of Transiel India Limited to protect their interest against any loss/ future liabilities that may arise after the name of the said subsidiary has been struck off under the Easy Exit Scheme, 2011.

3. Research and development expenses included under relevant heads in the Statement of Proft and Loss amounting to Rs. 2.99 million (previous period Rs. 3.44 million).

4. Accounting for taxes on income:- In accordance with the Accounting Standard (AS) 22 ''Accounting for Taxes on Income'' notifed in the Companies (Accounting Standards) Rules, 2006, deferred tax assets and liabilities have been recognized on the basis of projections after considering unabsorbed depreciation and timing differences which will be reversed against future taxes in accordance with AS-22. Accordingly, deferred tax assets have been recognized only to the extent of deferred tax liability, the details of which are as under:

5. Sales are net of commission of Rs. 36.60 million (previous period Rs. 39.54 million).

6. The Company had imported plant and machinery in previous years under EPCG scheme. An export obligation (''EO'') amounting to USD 91.68 million was placed on the Company which was to be fulflled in a period of 8 years starting from April 1997. Subsequently, the said EO was refxed at USD 73.74 million and the EO period was extended to 30.03.2007 in terms of the Foreign Trade Policy Handbook of procedure (HBP) 2002-2007.

By letter dated May 4, 2011 the DGFT had extended the EO period by 765 days w.e.f. April 19, 2011.

The Company has fulflled the entire EO. The application for redemption of EPCG license was fled and had been redeemed by the licensing authority.

7. Employee Benefts:

Disclosures required under Accounting Standard (AS) - 15 "Employees Benefts" notifed in the Companies (Accounting Standards) Rules, 2006 (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), are as under:

i) Defned Contribution Plan and amount recognized in the Statement of Proft and Loss.

8. Segment reporting

A. Business Segment

Based on the guiding principles given in Accounting Standard (AS) 17 "Segment Reporting" notifed in the Companies (Accounting Standards) Rules, 2006 (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), - the Company''s business Segment includes Sugar, Power, Chemical and Distillery.

B. Geographical Segment

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

C. Segment accounting policies:

In addition to the signifcant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

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 fxed 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.

c) Inter segment revenues:

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

9. There are various issues relating to sales tax, income tax etc. arisen / arising out of the reorganisation arrangement of DCM Limited which will be settled and accounted for in terms of the Scheme of Arrangement of DCM Limited and memorandum of understanding between all the companies involved as and when the liabilities/benefts are fully determined.

In the opinion of the management, having regard to the current status of the assessment proceedings at various stages and since no demand has been received by the Company on this account, the effect of these matters on the fnancial statements, though not determinable at this stage, are not expected to be signifcant.

10. Related party disclosures under Accounting Standard 18

Name of related party and nature of related party relationship

Subsidiaries:

Siel Financial Services Limited,

Siel Industrial Estate Limited,

Siel Infrastructure & Estate Developers Private Limited (Formerly known as Avro Sales Private Limited) (w.e.f. September

13, 2012)

Key Management Personnel:

Mr. Siddharth Shriram – Chairman and Managing Director

Mr. K.P. Singh – Whole Time Director (deceased on April 20, 2011)

Mr. A. K. Mehra – Whole Time Director

Mr. Sunil Kakria – Managing Director (resigned w.e.f. August 1, 2013)

Enterprises over which key management personnel have signifcant infuence:

Usha International Limited (holding company upto June 20, 2013) Mawana Foods Limited (subsidiary company upto June 28, 2013)

11. The Company has facilitated Agri loans from Punjab National Bank (Bank) to the farmers who supply sugarcane to the Company. These loans were distributed to the farmers through an Escrow Account operated by the Company. The Company has facilitated repayment of loans by the farmers to the Bank against the payments to be made to them against supply of sugarcane to the Company. A sum of Rs. Nil and Rs. 57.54 million has been lying in Escrow Account as on September 30, 2013 and September 30, 2012 respectively.

12. (a) The Company had in an earlier year accounted for cane purchases for crushing season 2007-08 at a price of Rs. 110 per quintal in terms of the interim order passed by the Hon''ble Supreme Court as against the State Advised Price of Rs. 125 per quintal. Pursuant to Hon''ble Supreme Court''s order dated January 17, 2012 the differential cane liabilities of Rs. 465.53 million has been accounted for during the previous period as an exceptional item and the same have been paid on April 16, 2012.

(b)(i) A Memorandum of Understanding (MOU) was signed between the Company and Government of Punjab in 1993 for setting up an Industrial Estate in Punjab. Siel Industrial Estate Limited (Siel – IE) was incorporated in an earlier year as a wholly owned subsidiary of the Company for setting up the Industrial Estate. The clear and un-encumbered title and possession of the land for the aforesaid Industrial Estate came to Siel IE in October, 2011 and now Siel – IE holds approximately 455 acres of land at Rajpura, Punjab.

The Company, Siel - IE and Siel Infrastructure and Estate Developers Private Limited (Siel - IED), which was acquired, and consequently, became a wholly owned subsidiary of the Company during the fnancial year 2011-12, had entered into a Joint Development Agreement for the development of the Industrial Estate. During the fnancial year 2011-12, the Company had sold 13,475,000 equity shares of Rs. 10/- each of Siel – IE to Siel - IED for a consideration aggregating to Rs. 1350.20 million, as determined through an independent valuation of Siel – IE. The consideration was received by the Company in the form of 13,501,950 equity shares of Rs. 100/- each fully paid up of Siel - IED. Accordingly, the Company had recognized a proft of Rs. 1215.45 million in the Statement of Proft and Loss as an exceptional item. In the Auditors'' report on the Company''s fnancial statements for the period ended September 30, 2012, the Auditors'' had qualifed their report regarding the recognition of a proft of Rs. 1215.45 million by the Company on the non-monetary transfer of shares held in Siel - IE on the grounds that the proft represents surplus arising out of recognition of the fair value of Siel – IE shares exchanged for the additional shares acquired in Siel - IED without dilution in the Company''s control over Siel – IE, as both entities were under common control of the Company.

During the current year ended September 30, 2013, in order to give effect to the Statutory Auditors'' qualifcation as stated above, the proft of Rs. 1215.45 million has been eliminated from the value of the investments held by the Company in Siel-IED and the corresponding loss of Rs. 1215.45 million has been charged as a prior period adjustment in the Statement of Proft and Loss.

(b)(ii) During the current year the Company has sold 31,30,000 equity shares of Rs. 10/- fully paid up (65.03% of paid up capital) held by it in Mawana Foods Limited (MFL), a subsidiary of the Company at a price of Rs. 26.12 per share to Usha International Limited (UIL) for a total consideration of Rs. 81.76 million. Consequently, MFL ceased to be subsidiary of the Company w.e.f. June 29, 2013 and the Company has recognized a proft of Rs. 50.46 million. The Company has also sold its entire investments in Ceratizit India Private Limited (CIPL) i.e. 2,300,000 equity shares of Rs. 5 /- each for a total consideration of Rs. 160 million and the Company has recognised a proft of Rs.137.00 million.

13. The Company had been legally advised that the "Capital reserve" to the extent of Rs. 991.46 million, as depicted under Note 3 - Reserves and Surplus, pertaining to the profts earned by formerly Siel Limited from sale of shares of Shivajimarg Properties Limited during the year ended March 31, 2006 which formed part of capital reserve in the books of account of the erstwhile Mawana Sugars Limited and subsequently, became a part of capital reserve in the books of the Company, pursuant to merger of erstwhile Mawana Sugars Limited with the Company, is to be considered as part of "free reserves" for the purposes of computing "net worth" under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA ").

14. Pursuant to judgment dated 10.5.1996 passed by the Hon''ble Supreme Court of India in a public interest litigation the Company surrendered 46.58 acres of land to the Delhi Development Authority (''DDA'') and dedicated it exclusively for the development of green belt and open spaces. Consequently, the Company is no longer in physical possession of 46.58 acres owned by it.

The Company had fled a Review Petition in the Hon''ble Supreme Court of India challenging the order of surrender of land to the DDA. During the pendency of this Review Petition, the DDA leased out some portion of the land surrendered by the Company to Delhi Metro Rail Corporation (''DMRC''). The Company fled an application before the Hon''ble Supreme Court of India in the pending Review Petition against the leasing of land by DDA to DMRC as this was contrary to the purpose for which the Company has surrendered and dedicated the land.

Although the Hon''ble Supreme Court of India dismissed the aforesaid Review Petition by order dated 25.3.2010 but on the Company''s application against the leasing of land by DDA to DMRC stated and directed as follows : "…the DDA which holds the surrendered and dedicated land in Trust cannot use it for any purpose other than as green belt or other spaces for the beneft of the community…In the event of any acquisition or development of surrendered land, the owner – dedicator will have the beneft of compensation on account of land ceasing to be ''land dedicated to the community purpose of lung/open space…'' when such acquisition/ alienation takes place, DDA and the land owner will be entitled to share the compensation at 50% each."

In view of the aforesaid judgment, benefts earned by DDA from the surrendered land are to be shared equally with the Company.

15. During the year ended on September 30, 2013, there has been an inter-se transfer of equity shares, wherein Usha International Limited (UIL) has transferred 2,59,77,735 equity shares of Rs. 10 each (66.41% of the paid up capital) at a price of Rs. 10 per share to Mr. Siddharth Shriram, promoter of the Company. Consequently the Company ceased to be the subsidiary of UIL w.e.f. June 20, 2013.

The Board of Directors in its meeting held on August 13, 2013 has taken cognizance that UIL ceased to be a Promoter of the Company.

16. The current fnancial year is for a period of twelve months from October 01, 2012 to September 30, 2013 whereas the corresponding previous period fgures were for a period of eighteen months from April 01, 2011 to September 30, 2012.

Therefore, the corresponding fgures of previous period are not directly comparable with those of current year.

17. Previous period''s fgures have been regrouped / reclassifed wherever necessary to correspond with the current year''s classifcation / disclosures.

---

Mar 31, 2011

1. Pursuant to the Scheme of Arrangement for Amalgamation (the "Scheme") of the erstwhile Mawana Sugars Limited (MSL) with the Company under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon'ble High Court of Delhi vide its Order dated September 11,2007 which became effective on October 15, 2007 on filing of the certified copy of the Order of the High Court in the Office of Registrar of Companies, NCT Delhi & Haryana, all the properties, assets, both movable and immovable, liabilities including contingent liabilities and reserves of erstwhile MSL have without further act or deed, been transferred to and vested in the Company at their book values, as a going concern with effect from the appointed date i.e. October 1, 2006. Subsequently, the name of the Company has been changed to Mawana Sugars Limited w.e.f. January 4,2008.

2. Contingent liabilities: (Rs. in million) As at As at March 31,2011 September 30, 2009

a) Claims against the Company not acknowledged as debts in respect of*:- - Income Tax 629.22 149.40

- Sales Tax 78.24 81.04

- Excise Duty/ Service Tax 99.01 64.88

License fee for railway siding - 60.68

- Others 69.27 70.84

*AII 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 the results of the operations or financial position of the Companv.

c) The Company has provided bank guarantees aggregating Rs. 78.18 million (Previous year Rs. 78.18 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous year, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31,1997, or prior to March 31,1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 52.32 million (Previous year Rs. 52.32 million) have been received. These demands are presently under various stages of appeal.

d) During the period, the Company has given a counter indemnity/guarantee in favour of existing directors of Transiel India Limited to protect their interest against any loss/ future liabilities that may arise after the name of the said subsidiary has been struck off under the Easy Exit Scheme, 2011.

3. The Company had contracted for import of 60000 MT of Raw Sugar. Due to adverse international and domestic market conditions and resultant falling prices, the Company has exited from these contracts in July, 2010 incurring a loss of Rs. 223.82 million (previous year Rs. NIL).

4. Research and development expenses amounting to Rs. 11.57 million (previous year Rs. 14.22 million) have been charged to the respective revenue accounts.

5. Sales are net of commission of Rs. 48.12 million (previous year Rs. 31.90 million).

6. The Company had imported plant and machinery in previous years under EPCG Scheme. An export obligation ('EO') amounting to USD 91.68 million was placed on the Company which was to be fulfilled in a period of 8 years starting from April 1997. Subsequently, the said EO was refixed at USD 73.74 million and the EO period was extended to 30.3.2007 in terms of the Foreign Trade Policy Handbook of Procedure (HBP) 2002-2007. The balance unfulfilled EO as at March 31,2011 is USD 7.84 million. The said EO period was further extended upto 30.3.2009 on payment of 50% duty payable in proportionate to unfulfilled export obligation amounting to Rs. 16.68 million and the EPCG License has been duly endorsed by Director General of foreign Trade (DGFT) extending the EO fulfillment period upto 30.3.2009.

To fulfill the remaining EO, the Company applied to obtain a release order from Directorate of Sugar to export sugar. Directorate of Sugar vide its letter dated 20.3.2009 has informed the Company that it is not possible to issue release orders for export of sugar and the request of the Company will be considered when the sugar situation improves in the country.

By letter dated 29.9.2009 the DGFT has informed the Company that having regard to the provision of Public Notice No.26 dated 3.6.2008 the extension in export obligation period equivalent to the duration of ban is automatic without composition fee in respect of EPCG authorization issued prior to imposition of ban on such product.

By letter dated May 5,2011 the DGFT has extended the EO period 765 days w.e.f. April 19,2011.

Subsequent to March 31,2011, the Company has received the release orders for export of 5922.5 MT sugar on April 26,2011.

The Company is in process of export of sugar to meet the unfulfilled export obligation.

7. Directors' Remuneration *

The Company has sought approval of the Central Government for excess remuneration paid to the Managing Director/ Whole Time Director amounting to Rs. 6.72 million which had been declined by the Central Government.

Pursuant thereto, the Company has made a fresh application seeking approval of the Central Government for the aforesaid remuneration and additional remuneration amounting to Rs. 6.72 million and Rs. 3.42 million respectively. Pending approvals of the Central Government, the excess remuneration paid has been shown under Schedule 6 - Loans and Advances.

Further Rs. 3.42 million is also subject to approval of the shareholders in the general meeting.

8. Segment reporting

A. Business Segment

Based on the guiding principles given in Accounting Standard (AS) 17 "Segment Reporting" notified in the Companies (Accounting Standards) Rules, 2006, - the Company's business Segment includes Sugar, Power, Chemical and Other (Distillery).

B. Geographical Segment

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

C. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses: 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.

c) Inter segment revenues: Inter segment revenues between operating segments are accounted for at market price. These transactions are eliminated in consolidation.

9. Based on the information available with the Company, the principle amount and interest due to Micro and Small Enterprise as defined under "The Micro, Small and Medium Enterprises Development Act, 2006 (Act) is Rs. 3.68 million (previous year Rs. 2.20 million) and Rs. 0.27 million (previous year Rs. 0.27) respectively.

10. There are various issues relating to sales tax, income tax etc. arisen / arising out of the reorganisation arrangement of DCM Limited which will be settled and accounted for in terms of the Scheme of Arrangement of DCM Limited and memorandum of understanding between all the companies involved as and when the liabilities/benefits are fully determined.

In the opinion of the management, having regard to the current status of the assessment proceedings at various stages the effect of these matters on the accounts could not be determined at this stage.

11. Related party disclosures under Accounting Standard 18 Name of related party and nature of related party relationship

Holding Company:

Usha International Limited w.e.f. July 26,2010 (Enterprises over which key management personnel have significant influence up to July 25, 2010)

Subsidiaries:

Siel Financial Services Limited, Transiel India Limited (up to January 27,2011), Siel Industrial Estate Limited, Siel Edible Oils Limited, SFSL Investments Limited (up to January 31,2011)

Key Management Personnel:

Mr. Siddharth Shriram - Chairman and Managing Director Mr. K.P. Singh - Whole Time Director (deceased on April 20,2011) Mr. A. K. Mehra - Whole Time Director Mr. Sunil Kakria - Managing Director

12. The accounts for the period ended March 31,2011 have been prepared after considering sugar cane purchase price @ Rs. 110 per quintal as an interim measure for paying the price of sugar cane to sugar cane grower in accordance with the Order of Hon'ble Supreme Court dated September 8,2008 in case No. 18681 of 2008 for sugar season 2007-08 filed by the Company. Necessary adjustments will be made by the Company in accordance with the final order of the Hon'ble Court in this matter.

13. The current financial period is for a period of eighteen months from October 1,2009 to March 31,2011 whereas the corresponding previous year figures are for a period of twelve months from October 1,2008 to September 30,2009.

Therefore, the corresponding figures of previous year are not directly comparable with those of current period.

14. The Company has facilitated Agri loans from Punjab National Bank (Bank) to the farmers who supply sugarcane to the Company. These loans were distributed to the farmers through an Escrow Account operated by the Company. The Company had facilitated repayment of loans by the farmers to the Bank against the payments to be made to them against supply of sugarcane to the Company. A sum of Rs. Nil and Rs. 1.04 million has been lying in Escrow Account as on March 31,2011 and September 30, 2009 respectively.

15. The Company has been legally advised that the "capital reserve" to the extent of Rs. 991.46 million, as depicted under Schedule 2- Reserve and Surplus, pertaining to the profits earned by formerly Siel Limited from sale of shares of Shivajimarg Properties Limited during the year ended 31st March, 2006, which formed part of capital reserve in the books of the erstwhile Mawana Sugars Limited and subsequently, became a part of capital reserve in the books of the Company, pursuant to merger of erstwhile Mawana Sugars Limited with the Company, is to be considered as part of "free reserves" for the purposes of computing "net worth" under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA").

16. Previous year figures have been regrouped wherever necessary.

---

Sep 30, 2009

1. Pursuant to the Scheme of Arrangement for Amalgamation (the "Scheme") of the erstwhile Mawana Sugars Limited (MSL) with the Company under Sections 391 to 394 of the Companies Act, 1956 approved by the Honble High Court of Delhi vide its Order dated September 11,2007 which became effective on October 15, 2007 on filing of the certified copy of the Order of the High Court in the Office of Registrar of Companies, NCT Delhi & Haryana, all the properties, assets, both movable and immovable, liabilities including contingent liabilities and reserves of erstwhile MSL have without further act or deed, been transferred to and vested in the Company at their book values, as a going concern with effect from the appointed date i.e. October 1, 2006. Subsequently, the name of the Company has been changed to Mawana Sugars Limited w.e.f. January 4, 2008.

For giving effect to the amalgamation in the nature of merger the pooling of interests method as prescribed by the Accounting Standard -14 "Accounting for amalgamations" notified in the Companies (Accounting Standards) Rules, 2006, was followed in the previous period wherein, the assets and liabilities including contingent liabilities as at October 1, 2006 and the transactions including income and expenses for the period October 1, 2006 to March 31, 2007 of erstwhile MSL (being the period when pending effectuation of the Scheme, the business and activities of erstwhile MSL were being run and managed in trust for the Company) for the six months period ended March 31, 2007 were incorporated in the accounts of the previous period.

(Rs. in million) As at As at September 30, 2009 September 30, 2008

2. Contingent liabilities :

a) Claims against the Company not acknowledged as debts in respect of*:-

- Income Tax 149.40 223.13

- Sales Tax 81.04 84.89

- Excise Duty/Service Tax 64.88 62.20

- License fee for railway siding 60.68 60.68

- Others 70.84 65.53

*AII 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 the results of the operations or financial position of the Company.

c) The Company has provided bank guarantees aggregating Rs. 78.18 million (Previous period Rs. 126 million) to Tecumseh Products India Limited (TPIL), to whom it had sold the compressor business in a previous year, for any loss, damage, claim, action, suit etc., arising from various representations /breach of representations including for contingent liabilities existing as at March 31,1997, or prior to March 31,1997, which TPIL may eventually be liable to pay, against which demands in respect of sales tax, income tax and central excise matters aggregating Rs. 52.32 million (Previous period Rs. 89.45 million) have been received. These demands are presently under various stages of appeal.

3. The Company had surrendered on October 23, 2003 possession of 46.58 acres of its land at 15, Shivaji Marg, New Delhi to the Delhi Development Authority (DDA) pursuant to the order of Honble Supreme Court. The matter regarding validity of this surrender is sub-judice before Honble Supreme Court under a review petition.

4. Research and development expenses amounting to Rs. 14.22 million (previous period Rs.4.36 million) have been charged to the respective revenue accounts.

5. Accounting for taxes on income in accordance with the Accounting Standard (AS) 22 Accounting for Taxes on Income, notified in the Companies (Accounting Standards) Rules, 2006.

6. Sales are net of commission of Rs. 31.90 million (previous period Rs. 24.95 million).

7. The Company had imported plant and machinery in previous years under EPCG Scheme. An export obligation (EO) amounting to USD 91.68 million was placed on the Company which was to be fulfilled in a period of 8 years starting from April 1997. Subsequently, the said EO was refixed at USD 73.74 million and the EO period was extended to 30.3.2007 in terms of the Foreign Trade Policy Handbook of Procedure (HBP) 2002-2007.

The balance unfulfilled EO as at September 30, 2009 is USD 7.92 million.

The said EO period was further extended upto 30.3.2009 on payment of 50% duty payable in proportionate to unfulfilled export obligation amounting to Rs. 16.68 million and the EPCG License has been duly endorsed by Director General of Foreign Trade (DGFT) extending the EO fulfillment period upto 30.3.2009.

To fulfill the remaining EO, the Company applied to obtain a release order from Directorate of Sugar to export sugar. Directorate of Sugar vide its letter dated 20.3.2009 has informed the Company that it is not possible to issue release orders for export of sugar and the request of the Company will be considered when the sugar situation improves in the country.

By letter dated 29.9.2009 the DGFT has informed the Company that having regard to the provision of Public Notice No.26 dated 3.6.2008 the extension in export obligation period equivalent to the duration of ban is automatic without composition fee in respect of EPCG authorization issued prior to imposition of ban on such product.

At this stage, the Company is awaiting the release orders for export of sugar to fulfill the aforesaid EO.

8. Segment reporting

A. Business Segment

Based on the guiding principles given in Accounting Standard (AS) 17 "Segment Reporting" notified in the Companies (Accounting Standards) Rules, 2006, - the Companys business Segment includes Sugar, Power, Chemical and Other (Distillery).

B. Geographical Segment

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

C. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

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.

c) Inter segment revenues:

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

9. Used on the information available with the Company, the principle amount and interest due to Micro and Small Enterprise as defined under The Micro, Small and Medium Enterprises Development Act, 2006 (Act) is Rs. 2.20 million (previous period Rs. 7.01 million) and Rs. 0.27 million (previous period Rs. Nil) respectively.

10. There are various issues relating to sales tax, income tax etc. arisen / arising out of the reorganisation arrangement of DCM Limited which will be settled and accounted for in terms of the Scheme of Arrangement of DCM Limited and memorandum of understanding between all the companies involved as and when the liabilities/benefits are fully determined.

In the opinion of the management, having regard to the current status of the assessment proceedings at various stages the effect of these matters on the accounts could not be determined at this stage.

11. The Company has an investment of Rs.150 million, comprising Rs.100 million in preference shares and Rs.50 million in equity shares of Transiel India Limited (Transiel), a wholly owned subsidiary. As per the latest audited balance sheet, Transiel has accumulated losses of Rs.140.84 million upto March 31, 2009. The Company, as a measure of prudence, has made a total provision of Rs. 140 million for the estimated diminution in the value of investment on the basis of its own assessment of the erosion of the net worth of the subsidiary. The management has confirmed to auditors that the provision made is adequate and the remaining balance of investment is good and fully recoverable.

12. Consequent to import of 16385.73 metric tonnes of raw sugar, the Company has an obligation to export 15605.52 metric tonnes of white sugar by December 31, 2009. Against this export obligation, 6415.80 metric tonnes of white sugar has been exported upto the year ended September 30, 2009.

13. Related party disclosures under Accounting Standard 18 Name of related party and nature of related party relationship Subsidiaries: SFSL Investments Limited, Siel Financial Services Limited, Transiel India Limited , Siel Industrial Estate Limited and Siel Edible Oils Limited. Enterprises over which key management personnel have significant influence:

Greenfields Commercial Private Limited.

Usha International Limited

Key Management Personnel and their relatives:

Mr. Siddharth Shriram

Mr. K,P. Singh

Mr. A. K. Mehra (w.e.f.October 15,2007)

Mr. Sunil Kakria (w.e.f. January 7,2008)

14. The accounts for the year ended September 30,2009 have been prepared after considering sugar cane purchase price @ Rs. 110 per quintal as an interim measure for paying the price of sugar cane to sugar cane grower in accordance with the Order of Honble Supreme Court dated September 8,2008 in case No. 18681 of 2008 for sugar season 2007-08 filed by the Company. Necessary adjustments will be made by the Company in accordance with the final order of the Honble Court in this matter.

15. The debts of erstwhile Mawana Sugars Limited have been restructured under a package approved by Corporate Debt Restructuring (CDR) Empowered Group in its meeting held on September 26, 2007. In terms of the CDR package, the Company has issued 43,83,561 equity shares of Rs. 10 each fully paid up at a premium of Rs. 26.50 per share to a promoter of the Company on preferential basis on September 26, 2009 and the proceeds aggregating to Rs. 160.00 million have been utilized as per the CDR package.

16. The current financial year is for a period of twelve months from October 1,2008 to September 30,2009 whereas the corresponding previous period figures were for a period of eighteen months from April 1,2007 to September 30, 2008.

Therefore, the corresponding figures of previous period are not directly comparable with those of current year.

17. The Company has facilitated Agri loan from Punjab National Bank to the farmers who supply sugar cane to the Company. Such loan has to be distributed to such farmers through an Escrow Account to be operated by the Company and the Company has to facilitate repayment of loan by the farmers to the Bank against the payment to be made to them against supply of sugar cane to the Company. A sum of Rs. 1.04 million and Rs. 401.68 million has been lying in Escrow Account as on 30.09.2009 and 30.09.2008 respectively

18. Previous year figures have been regrouped wherever necessary.