Directors Report of Oudh Sugar Mills Ltd.

Mar 31, 2015

The Members,

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

Financial Results and Appropriations

Rs. in lacs

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

Revenue from Operations (Gross) 1,42,965.29 1,19,298.28

Profit before Finance Costs, Tax, Depreciation and Amortisation 4,569.59 9,049.66

Less: Depreciation & Amortisation Expenses 2,847.29 4,173.81

Finance Costs 12,887.11 15,734.40 13,198.47 17,372.28

Profit/(Loss) Before Tax (11,164.81) (8,322.62) Less: Provision for Tax:

Deferred Tax Charge/(Credit) (3,777.71) (2,862.64)

Profit/(Loss) After Tax (7,387.10) (5,459.98)

Operating Performance

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

Financial Performance 2014-15

The Company had recorded Total Revenue of Rs. 1,38,386.60 lacs (including other income aggregating to Rs. 173.11 lacs) during the financial year ended 31st March, 2015. The Revenue from Operations (Gross) of the Company for the year 2014-15 stood at Rs. 1,42,965.29 lacs.

The Profit before Finance Costs, Tax, Depreciation and Amortisation for the year under review stood at Rs. 4,569.59 lacs representing 3.30% of the total revenue. The decline in PBIDT of the Company during the period under review in mainly attributed to subdued sugar sales realisation.

There is no change in the nature of business of the Company. There were no significant or material orders

passed by regulators, courts or tribunals impacting the Company's operation in future. In view of continuing losses the Board does not propose to carry any amount to Reserves.

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

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

Research & Development

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

Dividend

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

Share Capital

During the year there were no changes in either the Equity Share capital of the Company or the Preference Share Capital of the Company, as the paid up Equity Share Capital as on 31st March 2015 stood at Rs. 2,604.43 lacs and whereas the paid up Preference Share Capital of the Company stood at Rs. 5,000.00 lacs. However, in terms of authorisation provided by the shareholders in their general meeting and subsequent to in - principle approval of both the Stock Exchanges, your Company has preferred an application for reduction of capital to the tune of Rs. 6,400/- only before the Hon'ble High Court at Allahabad, Lucknow Bench and the proceedings in the said application are pending.

Scheme of Arrangement

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

Corporate Governance

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

Directors

The Board of Directors comprises of seven Non-Executive Directors having experience in varied fields and a Chairman cum Managing Director. Out of seven Non-Executive Directors, four of them are Independent Directors.

Mr. Aniket Agarwal ceased to be the Director of the Company with effect from 30th January, 2015 due to his resignation on account his illness & increasing professional engagement. The Board of Directors record their appreciation for the services rendered by him during his tenure as a Director of the Company.

In order to fill up the casual vacancy caused in the office of Independent Director upon resignation of Mr. Aniket Agarwal, the name of Ms. Shashi Sharma as an Independent Director has been recommended both by the Nomination and Remuneration Committee and by the Board of Directors to ensure meeting compliances with the requirements of Section 149(1) of the Companies Act, 2013, read with rule 3(i) of the Companies (Appointment and Qualification of Directors) Rules, 2014, subject to the approval of the shareholders at the ensuing Annual General Meeting. She has given declaration that she fulfils and complies with all the conditions specified in the Companies Act 2013 making her eligible to be appointed as an Independent Director. The Board of Directors are also of the opinion that she fulfils all the conditions specified in the Companies Act, 2013 making her eligible for appointment as an Independent Director.

IDBI Bank had made substitution of their nominee Director Mr. Umesh Jain with Mr. Arun Kumar Aggarwal with effect from 13th March, 2015. The Board of Directors records the appreciation of the services rendered by Mr. Jain during his tenure as a Director of the Company.

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

Mr. Anand Ashvin Dalal, Mr. Rohit Kumar Dhoot, Mr. Yashwant Kumar Daga and Mr. Nirad Kant Bagla were severally appointed as Independent Directors at the Annual General Meeting (AGM) held on 8th September,

2014 pursuant to the provisions of Section 149 of the Companies Act 2013 for a period of 5 years w.e.f. date of AGM and they will not be liable to retire by rotation during their respective terms of 5 years.

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

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

Key Managerial Personnel

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

a. Mr. Chandra Shekhar Nopany, Chairman - cum - Managing Director

b. Mr. Dilip Patodia, President and Chief Financial Officer

c. Mr. Anand Sharma, Company Secretary

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

Board Evaluation

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

Audit Committee

The Audit Committee was constituted on 25.08.2000 and the Committee now comprises of Mr. Anand Ashvin Dalal, Mr. Chand Bihari Patodia, Mr. Yashwant Kumar Daga, Mr. Rohit Kumar Dhoot and Mr. Nirad Kant Bagla. The Company Secretary acts as the Secretary to the Committee and the Chief Financial Officer is a permanent invitee to the meetings. During the year there were no instances where Board has not accepted the recommendation of Audit Committee.

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

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

Stakeholders' Relationship Committee

The Investors Grievance Committee was constituted on 25.08.2000 and was renamed as Stakeholders' Relationship Committee w.e.f. 13.05.2014 to comply with the requirements of the Companies Act 2013 and the Listing Agreement. The Committee now comprises of Mr. Nirad Kant Bagla, Mr. Yashwant Kumar Daga and Ms. Shashi Sharma. The Company Secretary acts as the Secretary to the Committee. The details of the terms of reference, number and dates of meetings held, attendance of the Directors and remuneration paid to them are separately provided in the Corporate Governance Report.

Nomination And Remuneration Committee

The Remuneration Committee was constituted on 02.09.2002 and was renamed as Nomination and Remuneration Committee w.e.f. 13.05.2014 to comply with the requirements of the Companies Act 2013 and the Listing Agreement. The Committee now comprises of Mr. Rohit Kumar Dhoot, Mr. Anand Dalal and Mr. Chand Bihari Patodia. The Company Secretary acts as the Secretary to the Committee. The details of the terms of reference, number and dates of meetings held, attendance of the Directors and remuneration paid to them are separately provided in the Corporate Governance Report.

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee was constituted on 13.05.2014 and the Committee now comprises of Mr. Chandra Shekhar Nopany, Mr. Chand Bihari Patodia, and Mr. Yashwant Kumar Daga. The Company Secretary acts as the Secretary to the Committee. The details of the terms of reference, number and dates of meetings held, attendance of the Directors and remuneration paid to them are separately provided in the Corporate Governance Report.

Internal Complaints Committee

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

the criteria including its composition mentioned in the Act and relevant Rules. No complaint has been received by the Committee during the year under review.

Remuneration Policy

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

Corporate Social Responsibility Policy

The Company continues to spend to support local initiatives to improve infrastructure as well as support in other corporate social responsibilities. The disclosure requirement with respect to CSR spends are not applicable to the Company in view of inadequate profits/ losses during the three immediately preceding financial years. The CSR Policy as approved by the Board is available on Company's website at www.birla-sugar.com.

Meetings

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

The Independent Directors of the Company have had a separate meeting on January 29, 2015 to review the performance and evaluation of Independent Directors and Board as a whole and assess the quality, quantity and timeliness of flow of information from the Company management to the Directors.

Directors' Responsibility Statement

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

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

b. that such accounting policies as mentioned in Note 2.1 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the loss of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

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

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

Auditors, Audit Qualifications and Board's Explanations

Statutory Auditors

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

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

The remarks / observations made by the Statutory Auditors in their report are self explanatory and does not require any further clarifications/ explanation. However, the Statutory Auditors have commented upon recognition of Deferred Tax Asset (net) of Rs. 12,904.91 lacs (including Rs. 3,771.71 lacs for the year up to 31.03.2015) based on the future profitability projections. The Industry is in active discussions with Central and State Governments on the matter of pricing of Sugarcane and other incentives in order to make operations viable. The Company is hopeful of positive outcome of the discussions with the Govt. and expects to be in a position to generate positive cash flows and profitability and is certain that there would be sufficient taxable income in future to claim the above tax credit.

Cost Auditors

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

Secretarial Auditor

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

Subsidiary Companies and Consolidated Financial Statements

The Company has following wholly owned subsidiaries, one step down subsidiary and one joint venture company as per detail given below:

i. Hargaon Investment & Trading Company Limited

ii. Champaran Marketing Company Limited

iii. OSM Investment & Trading Company Limited

iv. Hargaon Properties Limited - step down subsidiary

v. Palash Securities Limited

vi. Allahabad Canning Limited

vii. Vaishali Sugar & Energy Limited

viii. Avadh Sugar & Energy Limited-AJoint Venture Company

During the year three wholly owned subsidiaries being no. (v), (vi) & (vii) and one joint venture company being no. (viii) have been set up to facilitate the proposed scheme of re-arrangement and the said companies are yet to commence business.

The Company has also formulated a policy for determining material subsidiaries in line with the requirement of Listing Agreement. The said Policy is being disclosed on the Company's website at www.birla-sugar.com.

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

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

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

Fixed Deposits

The Company has not accepted any deposits from the public and as such there are no outstanding fixed deposits in terms of Companies (Acceptance of Deposit Rules) 2014.

Investor Education and Protection Fund

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of Information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on the date of the last Annual General Meeting held on 8th September, 2014 on the website of the Company www.birla-sugar.com, as also on the website of the Ministry of Corporate Affairs www.mca.gov.in.

Internal Control

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

Loans, Guarantee and Investments

It is the Company's policy not to give any loans, directly or indirectly, to any person (other than to employees under contractual obligations) or to other body corporate or person. In compliance with section 186 of the Companies Act, 2013, loans to employees bear applicable interest rates. During the year under review, the Company has made investment in securities of other body corporate as disclosed for the purpose of proposed restructuring exercise.

The details of Investments, Loans and Guarantees covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes 13, 15 & 16 to the Standalone Financial Statements.

Related Party Contracts / Arrangements

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

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

Energy Conservation, Technology Absorption and Foreign Exchange Earnings & Outgo

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

Particulars of Employees

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

Extract of Annual Return

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

CEO/CFO Certification

Mr. Chandra Shekhar Nopany, the Chairman cum Managing Director and Mr. Dilip Patodia, President (Finance) & Chief Financial Officer have submitted certificates to the Board as contemplated in Clause 49 of the Listing Agreement.

Acknowledgement

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

For and on behalf of the Board

Mumbai Chandra Shekhar Nopany

Dated 7th May, 2015 Chairman-cum-Managing Director

---

Mar 31, 2013

To The Members,

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

2. FINANCIAL RESULTS AND APPROPRIATIONS

(Rs.in lacs)

Nine Months Period Year Ended Ended 31st March, 2013 30th June, 2012

Gross Sales 98,527.82 1,05,589.17

Profit before Exceptional Item, Finance 16,015.52 11,661.71

Costs, Depreciation& Amortisation and Tax

Less : Depreciation & Amortisation 3,185.61 4,248.54

Expenses

: Finance Costs 8,528.87 11,714.48 11,617.46 15,866.10

Profrt/(Loss) Before Exceptional Item and 4,301.04 (4,204.39)

Tax

Less : Loss on account of Exceptional 2,422.19

Item Less : Provision for Tax:

- Deferred Tax Charge/(Credit) 1,393.02 (2,133.97)

Profit/(Loss) After Tax 2,908,02 (4,492.61)

OPERATING PERFORMANCE

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

CHANGE OF FINANCIAL YEAR

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

FINANCIAL PERFORMANCE 2012-13

5. The Company had recorded a Net Revenue of Rs. 96,693.03 lacs (including other income aggregating to Rs. 1,104.83 lacs) for the nine month period ended 31 st March, 2013. The Gross Sales of the Company for the year 2012-13 stood at Rs. 98,527.82 lacs.

6. The Profit before Finance Costs, Depreciation & and Tax for the nine months period under review stood at Rs. 16,015.52 Jacs representing 16.56 % of the net revenue. The improvement of PBIDT of the Company during the period under review can be attributed to higher capacity utilisation due to availability of sufficient quantity of sugarcane and higher sales of all products.

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

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

9. The State Government of UP fixed an exorbitant price of Rs. 280/- per Quintal of sugarcane up from Rs. 240/- per Quintal of sugarcane for the immediately previous season on extraneous considerations and

without any economic justification. The sugar industry of Bihar in consultation with its State Government fixed a price of Rs. 255 per Quintal which was accepted by all the farmers and the State Government as a fair price. The high sugarcane price without a corresponding increase in sugar price crippled the industry in UP.

10. The performance of the Industrial Alcohol division and the renewable Power divisions of the Company improved during the year due to better availability of molasses and bagasse. The Central Government has made it mandatory for Oil Marketing Companies to achieve a minimum blending of 5% of the ethanol with Petrol by 30th June, 2013 leading to a better off take of Ethanol produced by the sugar industry per se. Effective 1st April, 2013 the Public Sector Oil Marketing Companies have increased the prices of ethanol to Rs. 34/- a litre from Rs. 27/- a litre. This increase in prices of ethanol and minimum blending of Ethanol with petrol will help sugar industry to improve its overall profit performance. Still higher price is expected by the ethanol manufacturers in view of the current landed cost of the imported ethanol being Rs. 50-55 per litre.

SUB-DIVISION OF QUARTER EQUITY SHARES AND REDUCTION OF SHARE CAPITAL OF THE COMPANY

11. The Company had subdivided 44 Quarter Equity Shares of Rs. 25/- into 110 Equity Shares of Rs. 10 each on 30th November, 2012. The National Stock Exchange (NSE) and The Bombay Stock Exchange (BSE) have given their In-Principle approval for listing of all these shares in their respective stock exchanges. Trading permission is awaited.

12. The Board and the shareholders has decided that, subject to the confirmation of the Allahabad High Court, the Bearer Equity Share Coupons of a face value of Rs. 25/- and Rs. 12.50 and having an aggregate realised capital of Rs. 6,400/- be cancelled and the Share Capital of the Company be reduced to that extent in terms of Section 100 of the Companies Act, 1956. Necessary Petitions to the Allahabad High Court in terms of Section 101 is in the process of being filed shortly.

RESEARCH AND DEVELOPMENT

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

A detailed note on the initiative taken by the Company towards Research and Development appears in the attachment marked as Annexure "B" to this Report.

DIVIDEND

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

CORPORATE GOVERNANCE

15. Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis, Statement in respect of Conservation of Energy, the Report on Corporate Governance, Declaration of Managing Director on Code of Conduct and Auditors'' Certificate on compliance of conditions of Corporate Governance are all attached to and form integral part of this Report and are annexed to this Report as Annexure "A", "B", "E", "F" and "G" respectively.

DIRECTORS

16. The Company has ten Non Executive Directors having experienceinvariedfieldsandaChairman-cum-Managing Director. Twodirectors Mrs MadhuVaderaJayakumarand Mr Jayant Narayan Godbole shall retire from the Board by rotation at the ensuing Annual General Meeting and they are eligible for re-appointment. However, Mr Jayant Narayan Godbole has not offered himself for re-appointment and accordingly shall cease to be a Director upon conclusion of the ensuing Annual General Meeting. Mr Godbole has served as a Director on the Board of the Company for six years and the Board places on record its deep appreciation for the services rendered by him during his tenure as a Director of the Company.

17. Mr Haigreve Khaitan ceased to be the Director of the Company with effect from 30th November, 2012. The Board places on record its deep appreciation for the services rendered by him during his tenure as a Director of the Company.

18. State Bank of India had replaced their nominee Director Mr Puskar Sahay with Mr Pradeep Kumar Sarkar with effect from 22nd September, 2012.

19. Pursuant to the provision of Section 260 of the Companies Act, 1956, Mr Aniket Agarwal and Mr Nirad Kant Bagla were appointed as Additional Directors on 31st January, 2013 and Mr Yashwant Daga was appointed as an Additional Director on 15th May, 2013 accordingly they would hold office up to the date of the ensuing Annual General Meeting. The Company has received three notices in writing under Section 257 of the Companies Act, 1956 from three different Members proposing the candidatures of Mr Aniket Agarwal, Mr Nirad Kant Bagla and Mr Yashwant Daga for the office of Director liable to retire by rotation.

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

DIRECTORS'' RESPONSIBILITY STATEMENT

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

i) That in the preparation of the annual accounts for the nine month period ended 31st March, 2013 all the applicable accounting standards had been followed along with proper explanation relating to material departures, if there be any;

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

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

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

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

AUDITORS, AUDIT QUALIFICATIONS AND BOARD''S EXPLANATIONS

22. The Auditors'' Report is self-explanatory. However, the Auditors have made an observation regarding recognition of Deferred Tax Liability amounting to f 1,393.02 lacs for the period. The recognition of Deferred Tax Asset (DTA) got reduced from Rs. 7531.98 lacs to Rs. 6138.96 lacs as at March 31, 2013 due to reversal of Rs. 1393.02 during the period ended 31 st March, 2013 on account of profit for the period. Further, in view of partial decontrol of sugar industry as well as strengthening of market prices of Company''s by products, the management is certain that there would be sufficient profit in future to claim the above deferred tax credit.

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

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

COST AUDITORS

25. In accordance with the directives of the Central Government under Section 233B of the Companies Act, 1956, M/s. D Radhakrishnan & Co., Cost Accountants, were appointed as the Cost Auditors to audit the Cost Accounting Records relating to the products viz. Sugar, Industrial Alcohol and Power.

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

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

27. The Company has three direct subsidiaries and one step down subsidiary as per detail given below:

i) Hargaon Investment & Trading Company Limited ii) Champaran Investment & Trading Company Limited iii) OSM Investment & Trading Company Limited iv) Hargaon Properties Limited - step down subsidiary

28. The Audited statement of Accounts alongwith the Report of the Board of Directors, and Auditors relating to the Company''s subsidiaries and step down subsidiary are not annexed as required under Section 212(8) of the Companies Act, 1956. However, the Consolidated Financial Statement conforming to the Accounting Standard 21, 23 and 27 and including inter alia the financial performance of the said subsidiaries forms an integral part of the annexed Audited Statement of Accounts. A statement pursuant to Section 212 of the Companies Act, 1956 is attached and marked as Annexure "D".

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

PARTICULARS OF EMPLOYEES

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

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

31. During the year under review, the Company has credited Rs. 1,86,153 lying in the unpaid/unclaimed dividend account, to the Investor Education and Protection Fund (IEPF) pursuant to Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001 for the financial year 2004-05.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

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

FIXED DEPOSITS

33. As on 31st March, 2013 your Company had 114 depositors with outstanding fixed deposits of Rs. 96.07 lacs the entirety of which shall fall due for repayment in the month of June/December, 2013. A cheque of an amount of Rs. 1,20,288 towards maturity proceeds of a fixed deposit of a principle amount of Rs. 99,551 has still not been encashed by the depositor concerned. The Company had been regular in refunding the deposits on maturity.

CEO/CFO CERTIFICATION

34. Mr Chandra Shekhar Nopany, the Chairman-cum- Managing Director and Mr Dilip Patodia, President (Finance) & CFO have submitted certificates to the Board as contemplated in Clause 49 of the Listing Agreement.

ACKNOWLEDGEMENTS

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

For and on behalf of the Board

Place: Kolkata Chandra Shekhar Nopany

Dated: 15th May, 2013 Chairman-cum-Managing Director

---

Jun 30, 2010

The Directors take pleasure in presenting their Report and the audited Accounts of the Company for the year ended 30th June, 2010.

2. Financial Results And Appropriations

(Rs. in Lakh) 2009-10 2008 - 09

Net Revenue 53833.63 55912.40

Gross Profit/(Loss) before Depreciation and Interest 1109.63 10578.35

Less : Interest 8105.81 4941.53

Depreciation 4077.30 12183.11 2632.03 7573.56

Profit/(Loss) Before Tax (11073.48) 3004.79

Less : Provision for Tax:

-Current 3.40 122.02

-Deferred Tax Charge/ (Credit) (3684.77) 1062.33

-MAT Credit (entitlement) / Reversal 836.59 (119.02)

-Income Tax provisions no longer required written back (3.62) (1.67)

-Fringe benefit Tax 2.82 (2845.58) 23.75 1087.41

Profit/(Loss) After Tax (8227.90) 1917.38

Add : Surplus brought forward 1511.40 78.69

Transfer from General Reserve 1725.12 3236.52 -- 78.69

Amount available for Appropriation (4991.38) 1996.07

APPROPRIATIONS

- Transfer to General Reserve -- 100.00

- Dividend -- 328.79

- Dividend Tax (Net) -- 55.88 484.67

Balance carried to Balance Sheet (4991.38) 1511.40

PERFORMANCE

3. The Company had recorded a Net Revenue of Rs. 53833.63 lakh (including other income and Agricultural Profit aggregating to Rs. 261.30 lakh) for the year ended 30th June, 2010. The Gross Sales(inclusive of Excise Duty) of the Company for the year 2009-10 declined by 4.82% to Rs. 55498.33 lakh from Rs. 58,309.13 lakh in the year 2008-09.

The earning before interest, depreciation, tax for the year under review stood at Rs. 1109.63 Lakh representing 2% of the Gross Sales of the year though it was lower by 89.51% over previous years Rs. 10578.35 Lakh.

Sugar sales decreased from Rs. 48973.09 Lakh to Rs. 43869.48 Lakh in 2009-10 ,showing a decline of 10.42% fuelled by lower sales. Sale of Industrial Alcohol based on Ethanol increased by 5.90% as a direct result of increased generation of molasses. Revenue from bagasse based power recorded an increase of 122.30 %.

The performance of sugar segment of the Company was marked with oscillating operations. While the fi rst half of the current year under review witnessed higher demand of sugar and lower availability of the principal raw material namely the sugarcane and at unprecedented high rate resulting in compressed production, the second half was affected by considerably lower realisation of sugar prices due to various measures taken by the Government of India. The profit performance of the Company was also impacted due to doubling of the quota of levy sugar and low recovery.

4. A detailed analysis of the Companys operations, future expectations and business environment has been given in the Management Discussion & Analysis, which is attached and is an integral part of this Report.

CONVERSION OF DETACHABLE WARRANTS INTO EQUITY SHARES.

5. During the year under review, the Company had raised funds by way of conversion of 39,98,240 Detachable Warrants into same number of Equity Shares at a conversion price of Rs. 42.63 per warrant determined in accordance with the formula suggested in the Letter of Offer dated 17th July, 2008.

EXPENDITURE ON CANE DEVELOPMENT

6. During the year under review the Company had incurred a sum of Rs. 192.52 lakhs on account of Research & Development to improve the recovery ratio and in educating the cane growers to cultivate improved variety of sugar cane.

DIVIDEND

7. The Board of Directors do not recommend any dividend for the year under review.

CORPORATE GOVERNANCE

8. Pursuant to Clause 49 of the Listing Agreement, Management Discussion & Analysis, Statement in respect of Conservation of Energy, the Report on Corporate Governance, Declaration of Managing Director on Code of Conduct and Auditors Certificate on compliance of conditions of Corporate Governance are all attached to and form integral part of this Report and are annexed to this Report as Annexure "A", "B", "E", "F" and "G" respectively.

DIRECTORS

9. The Company has seven Non Executive directors having experience in varied fi elds and a Chairman cum Managing

Director. Three directors Mr. J N Godbole, Mrs. Madhu Vadera Jayakumar and Mr. S V Muzumdar retire from the Board by rotation and are eligible for re-appointment.

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

DIRECTORS RESPONSIBILITY STATEMENT

11. Your Directors confi rm that -

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and there is no material departures;

ii) such accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profit of the Company for that year;

iii) proper and suffi cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

iv) the financial statements have been prepared on a going concern basis.

v) the annual accounts have been prepared on a going concern basis.

AUDITORS, AUDIT QUALIFICATIONS AND BOARDS EXPLANATIONS

12. The Auditors Report is self-explanatory. However, the Auditors have made an observation regarding recognition of Deferred Ta x Assets amounting to Rs. 3054.68 lakh for the year. The Companys projections are that there would be suffi cient taxable income in the future to claim credit of Deferred Ta x Assets.

13. The Auditors, Messrs S. R. Batliboi & Co, Chartered Accountants, retire and are eligible for re-appointment. According to the certifi cate submitted to the Company by the said fi rm of Auditors the said re-appointment, if made, will be in accordance with the provisions of Section 224(1B) of the Companies Act, 1956.

The Board, on the recommendation of the Audit Committee, has proposed that Messrs S. R. Batliboi & Co, Chartered Accountants, be re-appointed as the Statutory Auditors of the Company and to hold Office till the conclusion of the next Annual General Meeting of the Company.

COST AUDITORS

14. In accordance with the directives of the Central Government under Section 233 B of the Companies Act, 1956, M/s. D

Radhakrishnan & Co., Cost Accountant, has been appointed as Cost Auditor to audit the cost accounting records relating to Sugar and Industrial Alcohol units situated at Hargaon, Rosa, Narkatiaganj and Hata for the current year.

SUBSIDIARY COMPANIES

15. The audited accounts of Champaran Marketing Company Limited, OSM Investment & Trading Company Limited, Hargaon Investment & Trading Company Limited, subsidiaries of the Company and Hargaon Properties Limited, a subsidiary of Hargaon Investment & Trading Company Limited, for the year ended 31st March, 2010 are attached. In this regard, the Statement pursuant to Section 212 of the Companies Act, 1956 is attached and is marked as Annexure "D".

CONSOLIDATED FINANCIAL STATEMENTS

16. As required under the Listing Agreement with the Stock Exchanges, Consolidated Financial Statements, conforming to the Accounting Standard 21,23 and 27 are attached.

PARTICULARS OF EMPLOYEES

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

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

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

FIXED DEPOSITS

19. As on 30th June, 2010, your Company had 572 depositors with fi xed deposits of Rs. 453.64 lakh. The depositors are being advised at regular intervals to claim their deposits. Efforts are being made to contact all such depositors to facilitate the refund of the dues to them.

CEO/CFO CERTIFICATION

20. Mr Chandra Shekhar Nopany, the Chairman cum Managing Director and Mr. B M Agarwal, CFO have given a certifi cate to the Board as contemplated in Clause 49 of the Listing Agreement.

ACKNOWLEDGEMENTS

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

For and on behalf of the Board Place : Mumbai, Chandra Shekhar Nopany

Dated : 27th August, 2010 Chairman-cum-Managing Director