Notes to Accounts of Simbhaoli Sugars Ltd.

Mar 31, 2018

1. Background

Simbhaoli Sugars Limited (‘the Company’) (previously known as Simbhaoli Spirits Limited) having CIN No. L15122UP2011PLC044210 is a public limited company under the provisions of the Companies Act, 2013 incorporated and registered with Registrar of Companies, Kanpur Uttar Pradesh on April 04, 2011. Currently equity shares of the Company are listed at BSE and NSE. The Hon’ble High Court of Judicature at Allahabad has sanctioned the Scheme of Amalgamation of Erstwhile Simbhaoli Sugars Limited (ESSL), the Transferor Company with the Company, the Transferee Company w.e.f. April 01, 2015 (the Appointed Date) and consequent thereto, the entire business undertakings of ESSL, stands transferred to and vested in the Company, as a going concern with effect from the Appointed Date. The Company has now three sugar complexes - Simbhaoli (western Uttar Pradesh), Chilwaria (eastern Uttar Pradesh) and Brijnathpur (western Uttar Pradesh) having an aggregate crushing capacity of 19,500 TCD. The Company is technology driven with a business mix that spans from refined (sulphur less) sugar, specialty sugars, extra neutral alcohol (ENA), ethanol and bio-manure. The Company is engaged in sugar refining (Defeco Remelt Phosphotation and Ion Exchange technology), high value, niche products (specialty sugars) and clean energy (ethanol). The Company sells international standard refined, pharmaceutical grade and specialty sugars to the retail and bulk institutional consumer segments.

The Company is operating its different businesses through separate subsidiaries, the details are given below:

2.1 Basis of preparation and presentation

i) Statement of Compliance

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) read with the Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other relevant accounting principles generally accepted in India.

The financial statements up to year ended March 31, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). Previous year numbers in the financial statements have been restated in accordance with Ind AS. Reconciliations and descriptions of the effect of the transition have been summarized in Note No. 26.

These financial statements are the first financial statements of the Company under Ind AS. The date of transition to Ind AS is April 01, 2016. Refer Note No.26 for the details of first-time adoption (Ind AS 101) exemptions availed by the Company and an explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows.

ii) Basis of preparation

The financial statements have been prepared on the historical cost basis except for certain financial assets and liabilities (refer accounting policy regarding financial instruments) and assets for defined benefit plans that are measured at fair value and less cost of sale wherever require. The methods used to measure fair values are discussed further in notes to financial statements.

iii) Functional and presentation currency

These financial statements are presented in Indian rupees (INR), which is company functional currency. All amounts have been rounded off to nearest in lacs unless otherwise indicated.

iv) Operating Cycle

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Schedule III to the Companies , Act, 2013 based on the nature of services rendered and their realization in cash and cash equivalents.

2.2 Use of Estimates and management judgements

The preparation of financial statements in conformity with Indian Accounting Standards (Ind AS) requires management of the company to make judgments, estimates and assumptions that affect the reported amount of revenues, expenses, assets, liabilities and related disclosures concerning the items involved as well as contingent assets and liabilities at the balance sheet date.

The estimates and management’s judgments are based on previous experience and other factors considered reasonable and prudent in the circumstances. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

The areas involving critical judgement are as follows:

i) Material uncertainty about going concern:

In preparing financial statements, management has made an assessment of Company’s ability to continue as a going concern. Financial statement is prepared on a going concern basis. The management is aware, in making its assessments,of material uncertainties related to events or conditions that may cast significant doubt upon the company’s ability to continue as a going concern. Further details on going concern are disclosed in Note No. 4.

ii) Fair value measurements of financial instruments:

When the fair value of financial assets and liabilities recorded in the Balance sheet cannot be measured based on the quoted market price in the active markets, their fair value is measured using valuation technique. The input to these model is taken from the observable market where possible, but if this is not feasible, a review of judgment is requiring this establishing fair values.Changes in assumption relating to these assumptions could affect the fair value of financial instrument.

iii) Employee benefit plans:

The cost of the defined benefit plans and other long-term employee benefits and the present value of the obligation thereon are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition and mortality rates. Due to the complexities involved in the valuation and its longterm nature, obligation amount is highly sensitive to changes in these assumptions.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans, the management considers the interest rates of government bonds. Future salary increases are based on expected future inflation rates and expected salary trends in the industry. Attrition rates are considered based on past observable data on employees leaving the services of the Company. The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes.

iv) Recoverability of trade receivables:

The Company has a stringent policy of ascertaining impairments, if any, as result of detailed scrutiny of major cases and through determining expected credit losses. Despite best estimates and periodic credit appraisals of customers, the Company’s receivables are exposed to delinquency risks due to material adverse changes in business, financial or economic conditions that are expected to cause a significant change to the party’s ability to meet its obligations. All such parameters relating to impairment or potential impairment are reviewed at each reporting date.

v) Provision and contingencies:

The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Ind AS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change.

vi) Useful life and residual value of plant, property equipment and intangible assets:

The useful life and residual value of plant, property equipment and intangible assets are determined based on technical evaluation made by the management of the expected usage of the asset, the physical wear and tear and technical or commercial obsolescence of the asset. Due to the judgements involved in such estimations, the useful life and residual value are sensitive to the actual usage in future period.

Notes:

1. The finance cost on specific borrowings capitalized during the year amounted to ‘ Nil (Previous year ‘ Nil). However the Company has also capitalized borrowing cost on its general borrowing amounting to ‘ Nil (Previous year Rs.23.94 lacs) using weighted average capitalization rate of Nil % (Previous year- 12%) Per annum.

2. The company has availed loans from banks and other entities against securities of aforesaid assets. The details of charge created, security terms against borrowing are stated at Note No. 10.

3. Refer Note No.6 (iii) for information contractual commitments for acquisition of property,plant & equipment.

# First pari passu charge on pledge of 19,29,655 (March 31, 2017: 19,29,655; April 01, 2016: 19,29,655) equity shares of the Company in favour of bankers of Simbhaoli Power Private Limited.

(a) Due to continuous losses, Uniworld Sugars Private Limited (USPL), a joint venture of the Company, discontinued its operations and decided to dispose of its assets of Sugar Refinery business. The Company had made investments in the equity shares of USPL which were pledged (first pari passu charge) as on March 31, 2018: 2,90,11,770 (March 31, 2017: 2,90,11,770; April 01, 2016: 2,90,11,770) with the USPL term lenders as a security for USPL term loans. Out of total 2,90,11,770 equity shares pledged, one of the lender of USPL has invoked pledge in respect of 1,12,04,708 equity shares and transfer to its own account.

The Company has valued its investment in USPL as on March 31, 2018 at Rs.2,322.29 lacs on the basis of fair realisable value of assets of refinery business and inter-se arrangement with the co-venture. On the application of one of the vendors of the USPL, Corporate Insolvency Resolution Process (CIRP) has been initiated against USPL by the Hon’ble National Company Law Tribunal, Allahabad Bench by application no. (IB) 120/ALD of 2017 dated May 29, 2018. It is expected that the entire dues of the term lenders will be paid out of the liquidation of the assets of USPL, and consequently the aforesaid shares shall be restored back to the Company, Therefore, no adjustment has been made in the accounts in respect of revocation of part of pledged shares as at March, 31, 2018.

(b) Out of total summary of equity shares of USPL as mentioned here above, 10,00,000 (March 31, 2017: 10,00,000; April 01, 2016: 45,15,000) equity shares had been agreed to be transferred in favor of the Company by the Board of Directors of USPL in its meeting held on March 28, 2013, but due to shares being pledged with IDBI, the effect has not been taken into the records of the depository participant of the Company.

D) The Company has alloted 3,74,79,020 Equity shares of Rs.10 each aggregating Rs.3,747.90 lacs during the financial year 2015-16 on Amalgamation of Erstwhile Simbhaoli Sugars Limited without payment being received in cash..

E) The Company has allotted 18,00,000 equity shares of Rs.10/- each at a premium of Rs.22.10 per share on March 29, 2018 to the specified promoters and directors on conversion of 18,00,000 equity warrants.

On December 22, 2017, 50,00,000 equity warrants of face value of Rs.32.10 per warrant were allotted to specific promoters and directors of the Company, which are to be converted within 18 months of allotment into Equity Shares of Rs.10 each at a price of Rs.32.10 (including premium of Rs.22.10) per share. The Company, on the request of the specified promoters and directors, has appropriated the amount payable to them aggregating to Rs.789.92 lacs in form of outstanding unsecured loans (including interest thereon) as on the date of allotment toward the application money Rs.8.025 per warrant aggregating Rs.401.25 lacs.

The balance outstanding loan of Rs.388.67 lacs along with further receipt of Rs.44.68 lacs has been appropriated towards balance due of Rs.22.975 per warrant in respect of 18,00,000 warrants. The Company as further received Rs.268.97 lacs towards part payments of balance due on remaining warrants.

The break-up of paid up amount of remaining 32,00,000 Equity Warrants of face value of Rs.32.10 per warrant is as under:

3. The Indian sugar industry has been facing difficulties on account of highest ever sugar production in the country in the sugar year 2017-18 resulting in steep fall in sugar prices and significant value erosion in the market price of molasses. This along with increase in sugarcane prices and closure of distilleries of the Company as well as many other distilleries across the state by environmental agencies, has caused significant under recovery of cost of production. These factors have adversely affected the financial position of the sugar industry and of the Company as well. As a result, the company has incurred huge cash losses during the year resulting in increase in cane arrears and default in payment of interest and principal dues of the lenders. Further, consequent to the scrapping of all existing restructuring schemes by the Reserve Bank of India (RBI) vide their Notification No. 531 dated February 12,2018, the debt realignment proposal of the Company to realign the debts in accordance with the available future cash flow of the company, cannot be further deliberated upon by the lenders under Joint Lender Forum. The Company has approached its lenders for debt resolution of its outstanding debts in accordance with the available future cash flow of the Company for servicing its sustainable debt after waiver and remission of part of existing principal and unpaid interest, which is under consideration by the bankers.

To revive the sugar industry, the Central and State Governments have already initiated and are considering various favourable steps including specific support for liquidation of cane arrears, fixing obligation for export to reduce the sugar inventory, increase in the realization of ethanol price, linking of sugarcane price with sugar realization etc. All these measures are expected to turnaround operations of the sugar industry on sustainable basis. The Company has also initiated various steps for further de-risking its business and resumed distillery operations, after meeting all compliances, in the last quarter of fi nancial year. The company is also confident of receiving a significant amount through subsidy from State Government under the Erstwhile Sugar Promotion Policy, 2004, which had been earlier withheld by the State Government by scrapping the scheme, as recently Hon’ble Supreme Court has directed the State Government to pay the subsidy as per announced scheme to the eligible entities.

In view of the aforesaid internal and external measures, the management is confident that the Company will continue to operate all its manufacturing facilities at optimum levels and will earn sufficient cash flow from its business operation in future to serve the debts as per proposed resolution and to improve its liquidity. Accordingly, these financial statements have been prepared on a going concern basis which contemplates realization of assets and settlement of liabilities in the normal course of business.

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

Reconciliation of future minimum lease payments and gross investment in the lease and present value of minimum lease payments are as follows:

Disclosure in respect of Non-Cancellable Operating Lease:

The company has taken premises on operating lease for primary lease period of 6 years from the date of lease. The lease period may be further extended and lease rental levy modified as per mutual decision of the parties. Details of future minimum lease payments in accordance with terns agreed as at year end under non-cancellable operating lease are as follows:

The company has given premises on operating lease for primary lease period of 6 years from the date of lease. The lease period may be further extended and lease rental levy modified as per mutual decision of the parties. Details of future minimum lease income in accordance with terms agreed as at year end under non-cancellable operating lease are as follows:

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

The amount shown in Note No. 6 (i) above represent the best possible estimates arrived on the basis of demand raised by the claimant and does not include interest if any, payable thereon from the date of demand. The uncertainties and timing of the cash flows are dependent on the outcome of different legal processes which have been invoked by the company or the claimants, as the case may be and, therefore cannot be estimated accurately. The Company does not expect any reimbursement in respect of above contingent liabilities.

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the ground that there are fair chances of successful outcome of the appeals.

ii) Based on expert committee report, the State Government of Uttar Pradesh had waived interest on the delayed payment of cane price for the sugar seasons 2012-13, 2013-14 and 201415. The waiver was challenged by the Rashtriya Kisan Mazdoor Sangathan before the Hon’ble High Court Allahabad. The said Court has set aside the waiver and remanded back the matter to reconsider it after hearing all Stakeholders. The waiver of interest for the sugar season 2015-16 is also under consideration. However, notice for payment of interest on delayed payment of cane price for the sugar season 2016-17 has been issued against which the industry has made representation for waiver. Pending finalisation, no provision has been made in respect of above mentioned interest and the amount has not been ascertained. Based on the past practice, the management is confident that no interest liability will arise for above mentioned periods and also for the current sugar season.

iii) Capital and other commitment

Estimated value of contracts (net of advances) remaining to be execute on Capital account Rs.211.31 lacs (March 31, 2017: Rs.1,043.31 lacs, April 01, 2016: Rs.39.72 lacs). The Company has other commitments, for purchase / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits including union agreements in normal course of business. The Company does not have any other long-term commitments or material non-cancellable contractual commitments / contracts, which may have a material impact on the financial statements

5. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act,2006 (MSMED ACT, 2006).

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.

6. The Special Resolution for reclassification of promoters’ category was passed at 6th Annual General Meeting of the members of the Company. Thereafter, an application seeking reclassification of Mr. Gurpal Singh, Mr. Govind Singh Sandhu, Ms. Jai Inder Kaur, Mr. Angad Singh and M/s Pritam Singh Sandhu Associates Private Limited (Collectively referred to as ‘Sandhu Group/ Exiting Promoter’), from existing promoter group to the public category shareholders, in terms of provisions of regulation 31A (7) of SEBI (LODR) Regulations, 2015, was filed with SEBI/ Stock Exchanges. The approval from SEBI/Stock Exchanges is awaited.

7. ESSL has facilitated Agri loans from four commercial banks to its sugarcane farmers under the management and collection agreements and provided Corporate Guarantee and postdated cheques as security. These loans were distributed to the farmers against the payment to be made to them against supply of sugarcane in earlier years and ESSL facilitating the repayment of these loans along with interest to the banks. As per sanction of CDREG dated February 02, 2016 all the dues outstanding were proposed to be converted into term loans, subject to the consent of respective commercial banks. Two of the commercial banks have converted their dues into term loan in the financial year 2016-2017 and one of the commercial banks have converted their dues into term loan in financial year 2017-18.

Oriental Bank of Commerce (OBC), one of its bank, who has converted agri loan in to term loan as aforesaid in financial year 2016-17 arbitrarily classified its outstanding agriloan as “Suspected Fraud” liability in March 2015 but subsequently, after following due process, including but not limited to obtaining specific permission from the Reserve Bank of India (RBI), and in consultation with all other Consortium Lenders, it sanctioned and disbursed a term loan in February 2016 for liquidating the agri loans. In addition, in an application filed by OBC at the Debt Recovery Tribunal, OBC confirmed a simultaneous closure of the matter.

During current year, OBC has arbitrarily initiated recovery actions against the Company for the restructured term loan and also filed a criminal complaint with the investigating agency, again declaring the facilities as “Suspected Fraud”. The Company has denied any fraud on its part, provided adequate documentation for the same, while reiterating its commitment for repayment to all the lenders based on available future cash flows. The Company has sought legal advice in this matter and the legal advisors have opined that there have been various gross omissions and commissions at the banks’ end and that the company should take appropriate action at the relevant forums at the required time. Since the OBC has recalled the loan during the current year, their outstanding dues as at March 31, 2018 has been classified and shown under “Other Current Financial Liabilities”. The dues of OBC as at March 31, 2017 has been classified and shown under “Financial Liabilities - Borrowing under Non-Current Liabilities” according to restructured terms prevailing on that date.

The dues of other two banks have been classified as “Financial Liabilities - Borrowing under Non-Current Liabilities”. The principal and interest dues of one bank, who have not yet given its consents, are classified and shown under “Financial Liabilities - Unsecured Borrowing under Current Liabilities” and “Other Current Financial Liabilities” respectively.

8. The loans availed by the Company have been classified as Non-Performing Assets (NPA) by the lenders and interest thereon is not being charged to the loan accounts as per the applicable practices. As stated in Note No. 4, debt resolution proposal, submitted by the Company, for debts resolution of its outstanding debts in accordance with the available future cash flow of the Company for servicing its sustainable debt is under consideration by the lenders.The debt resolution proposal under consideration with lenders, includes waiver of un-paid interest by certain lenders. The Company is hopeful that un-paid interest on certain loan accounts will be waived to work out sustainable portion of debts. Accordingly, interest expense for the year ended March 31, 2018, amounting to Rs.11,971.59 lacs have not been recognized in the books of accounts. Un-paid interest, recognized in the books of accounts up to the end of March 31, 2017, will be reworked at the time of implementation of debt resolution plan. The terms of repayment, nature of security and overdue, if any, in accordance with existing agreements are as under.

9. Related Party disclosures under Accounting Standard 18

i) Name of related parties and description of relationship: Subsidiaries:

- Simbhaoli Global Commodities DMCC (DMCC)

- Integrated Casetech Consultants Private Limited (ICCPL)

- Simbhaoli Power Private Limited (SPPL)

- Simbhaoli Speciality Sugars Private Limited (SSSPL) Joint Venture:

- Uniworld Sugars Private Limited (USPL).

Co-venturer:

- Volcafe Pte Ltd. (Formerly known as ED & F Man Asia Holdings Pte Ltd.)

Key Management Personnel (KMP):

- Mr. G. M. S Mann - Chairman

- Mr. Gurpal Singh - Director

- Ms. Gursimran Kaur Mann - Director

- Mr. Sanjay Tapriya - Director

- Mr. S.N. Misra - Chief Operating Officer (w.e.f. September 18, 2017)

- Mr. Karan Singh- Whole Time Director (ceased to be key management personnel w.e.f. September 18, 2017)

- Mr. S.C. Kumar - Independent Director (ceased to be key management personnel w.e.f. August 02, 2017)

- Mr. S.K. Ganguli - Independent Director

- Mr. B.K. Goswami - Independent Director

- Mr. Sangeet Shukla - Independent Director (ceased to be key management personnel w.e.f. March 17, 2018)

- Mr. Dalbir Singh - Independent Director

- Mr. C.K. Mahajan - Independent Director

- Mr. J.M. Seth - Independent Director (was appointed on September 27, 2017 up to March 01,2018)

- Mr. D.C.Popli - Chief Financial officer

- Mr. Kamal Samtani - Company Secretary Relatives of Key management personnel:

- Mrs. Mamta Tapriya (wife of Mr. Sanjay Tapriya),

- Mr. Govind Singh Sandhu (brother of Mr. Gurpal Singh),

- Mr. G.M.S Mann (HUF)

Enterprise over which key management personnel exercise significant influence:

- Dholadhar Investments Private Limited, (enterprise over which Mr. G. M. S. Mann and Ms. Gursimran Kaur Mann exercise significant influence)

- Mahajan Law House (enterprise over which Mr. C.K. Mahajan exercise significant influence)

- Raghav & Co (enterprise over which Mr. J.M. Seth exercise significant influence)

Trusts:

- Simbhaoli Superannuation Trust

- Simbhaoli Gratuity Trust

- Simbhaoli Foundation Trust

iv) The Board has approved the appointment and remuneration of Ms. Gursimran Kaur Mann as Managing director and Mr. Sachchida Nand Misra as chief operating officer/ whole time directors in the Company for a period of three years, and the consent on terms of appointment has been accorded at 6th Annual General Meeting of the members of the Company held on September 18, 2017. These appointments are subject to approval by the Ministry of Corporate Affairs, Government of India under the provisions of the Companies Act, 2013.

10. Segment reporting

i) Operating segments:

The company’s operating segments are business segments, viz. sugar and alcohol, basis which chief operating decision maker (CODM) evaluates the company’s performance and allocates resources.

ii) Geographical segments:

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

iii) Segment accounting policies:

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

A) Segment revenue and expenses:

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

B) Segment assets and liabilities:

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

C) Inter segment sales:

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

iv) (d) Geographical information:

The Company operated only in India during the year ended March 31, 2018 and March 31, 2017.

iv) (e) Information about major customers:

No single customer contributed 10% or more of the total revenue of the Company for the year ended March 31, 2018 and March 31, 2017.

11 In view of history of continous losses, the company has recognised deferred tax assets only to the extent of deferred tax liability, which can legally be offset under tax laws.

Details of deferred tax assets recognised and not recognised and details of deferred tax liabilities are as under:

12. Exceptional items represent:

i) The company has entered into a one-time settlement agreement with one of its lenders in the F.Y. 2016-17. The settlement amount was to be paid in six structured instalments by November 14, 2017. The company has recognised Rs.970.79 lacs being remission of liability as exceptional item in previous year March 31, 2017. However, on the account of downturn in the sugar industry the company could not repay as per agreed settlement terms, the lender terminated the settlement agreement. Accordingly, the company has restated the liability as per original agreement during the current year by reversing the said exceptional gain recognized in previous year and shown it as an exceptional item.

ii) In previous year, March 31, 2017 a sum of Rs.543.74 lacs being society commission relating to sugar season 2015-16 for the period up to March 31, 2016 recoverable from the State Government of Uttar Pradesh, written off in pursuance of Government order dated December 28, 2016.

13. Employee Benefits

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

i) Defined Contribution Plan:

A) Provident fund

B) Superannuation fund

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

G. Risks related to defined benefit plans:

Valuations are performed on certain basic set of pre-determined assumptions and other regulatory framework which may vary overtime. Thus, the company is exposed to various risks in providing the above benefits which are as follows:

1) Interest rate risk: The plan exposes the company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in increase in the value of the liability.

2) Liquidity Risk: This is the risk that the Company is not able to meet the short-term gratuity pay-outs. This may arise due to non-availability of enough cash / cash equivalent to meet the liabilities or holding of its liquid assets not being sold in time.

3) Salary Escalation Risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

4) Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the liability.

5) Regulatory Risk: Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (e.g. Increase in the maximum limit on gratuity of Rs.20,00,000).

6) Asset Liability Mismatching or Market Risk: The duration of the liability is longer compared to duration of assets, exposing the Company to market risk for volatilities/fall in interest rate.

7) Investment Risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Note: The above is a standard list of risk exposures in providing the gratuity benefit. The Company is advised to carefully examine the above list and make suitable amendments (including adding more risks, if relevant) to the same before disclosing the above in its financial statements.

H. Method and Assumptions related terms:

1) Discount Rate: Discount rate is the rate which is used to discount future benefit cashflows to determine the present value of the defined benefit obligation at the valuation date. The rate is based on the prevailing market yields of high quality corporate bonds at the valuation date for the expected term of the obligation. In countries where there are no such bonds, the market yields at the valuation date on government bonds for the expected term is used.

2) Salary Escalation Rate: The rate at which salaries are expected to escalate in future. It is used to determine the benefit based on salary at the date of separation.

3) Attrition Rate: The reduction in staff/employees of a company through normal means, such as retirement and resignation. This is natural in any business and industry.

4) Mortality Rate: Mortality rate is a measure of the number of deaths (in general, or due to a specific cause) in a population, scaled to the size of that population, per unit of time.

5) Projected Unit credit Method: The Projected Unit Credit Method (sometimes known as the accrued benefit method pro-rated on service or as the benefit/years of service method) considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. The Projected Unit Credit Method requires an enterprise to attribute benefit to the current period (in order to determine current service cost) and the current and prior periods (in order to determine the present value of defined benefit obligations).

14. i) Following are the particulars of disputed dues on account of sales tax (trade tax), excise duty and service tax matters that have not been deposited by the Company as at March 31, 2018.

There are no dues in respect of income tax, customs duty, wealth tax and cess, which have not been deposited on account of any disputes except in respect of income tax demand of Rs.3.71 lacs arising on processing of TDS returns. The Company is in process of rectifying these returns and is confident that the demand will be substantially reduced.

15. Disclosure related to Government Grant

The Company is eligible to receive various grants announced by Central and U.P. State Government for Sugar Industry by way of production subsidy, reimbursement of society commission and interest subvention on certain term loan, loans at concessional rate etc. The Company is also eligible to receive grant announced by U.P State Government for promotion of industry in general under UPSIPP Scheme 2013. The Company has recognised these Government grants in the following manners:

i) The Central Government vide its Notification No. 1(10)/2015-SP-I dated September 18, 2015 announced Minimum Indicative Export Quota (MIEQ) under tradeable export scrip scheme in order to export surplus sugar inventory out of the country. Under the said scheme, the Company was allotted quota of 28,190 MT for export in respect of its all three sugar units. Further, the Central government vide its Notification No. 20(43)/2015-SP-I dated December 02, 2015 announced a scheme for extending production subsidy @ Rs.4.50 per quintal of actual cane crushed during sugar season 2015-16 or the proportionate cane crushed for average sugar production of the Company’s each unit in the last three sugar seasons, whichever is lower, for the sugar units who have fulfilled stipulated conditions including export obligations.

ii) Under Interest Subvention Scheme of Extending Financial Assistance to Sugar Undertaking 2014, the company is eligible for the reimbursement of interest payable on loan from banks taken against last three sugar season’s excise duty, cess and surcharge paid on sugar by the Company subject to fulfilment of certain conditions.

iii) The Company was eligible for government grant by way of reimbursement of Society Cane Commission @ Rs.3.00 per quintal of cane for the sugar season 2015-16 in accordance with the notification issued by the Government of Uttar Pradesh and accordingly the Company had accounted for cane commission receivable aggregating to Rs.543.74 lacs during the year ended March 31, 2016. However, during the year ended March 31, 2017 the Company has written off the said amount in accordance with the notification dated December 28, 2016 issued by the Government of Uttar Pradesh as the same is no more receivable.

The said write off of cane commission has been included under “Cane commission written off “under Note No. 3.33

- “Exceptional items”.

iv) The Company had availed government grant by way of reduction of cane society commission for sugar season 2012-13 to 2014-15 as per the notifications dated. June 12, 2015 and for the sugar season 2015-16 for retrospective effect. The Hon’ble Allahabad High Court vide Order dated

December 21, 2017 quashed the U.P. State Government notifications order for reduction in cane commission rate to societies from retrospective effect against which U.P State Government has preferred appeal before Supreme court. Pending final decision in the matter, the Company has not reversed the grant and not recognised it as liability.

v) The Company was eligible for various incentives under U.P Sugar Incentive Promotion Policy, 2004 (the scheme) which was subsequently scrapped by the State Government. The Company has filed writ petition before Hon’ble Allahabad High Court (Lucknow Bench) for enforcement of the scheme and settlement of incentive claims. As per the erstwhile scheme, the Company was eligible for capital subsidy @10% of the investments made and revenue subsidy for reimbursement of taxes and other charges upto the prescribed period for incentive. Pending finalisation in the matter, the Company has not recognised these grants.

16. Capital Management

The Company manages its capital to ensure that it will continue as going concern, while maximizing the return to stakeholders through the optimisation of debt and equity balance. The capital structure as at March 31,2018, March 31, 2017 and April 01,2016 was as follows.

Due to continuous losses, the Company has defaulted in payment of interest and principal dues to its lenders. The Company had approached for debt restructuring of its outstanding debts and had also raised additional capital during the year through preferential issue of warrant to the promoters to comply with the condition for infusion of capital imposed under sanctioned Debt Restructuring Scheme.

17. Financial risk management objectives

The Company’s principal financial liabilities comprise loans and borrowings, trade payables and other payables. The main purpose of the financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include loans, trade and other receivables and cash and bank balances that derive directly from its operations. The Company also holds investments in equity shares and debentures of its subsidiaries and joint ventures.

The Company’s activities expose it mainly to credit risk, liquidity risk and market risk. This note explains the sources of risks which the entity is exposed to and how it mitigates that risk.

i) Credit risk

A. Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. Company is exposed to credit risk from trade receivables and deposits with banks. To manage this, Company periodically assesses the financial reliability of customers, taking into account factors such as credit track record in the market and past dealings with the Company for extension of credit to customer. Company monitors the payment track record of the customers. Outstanding customer receivables are regularly monitored. Concentrations of credit risk are limited as a result of the Company’s large and diverse customer base. Company has also taken advances and security deposits from its customer / agents, which mitigate the credit risk to an extent. The ageing of the trade receivables is given below:

B. The impairment analysis is performed at each balance sheet date on individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company makes general provision for lifetime expected credit loss based on its previous experiences of provision/write off in the previous years. The movement in the provision for doubtful debts, advances to suppliers and security deposits is as under:

C. Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks with which term deposits are maintained. Generally, term deposits are maintained with banks with which Company has also availed borrowings.

ii) Liquidity risk

Liquidity risk is the risk that a company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled by delivering cash or other financial assets. Since the Company is making continuous losses, presently it monitors rolling forecasts of its liquidity requirements to ensure it has sufficient cash to meet operational needs. The table below provides undiscounted cash flows towards financial liabilities into relevant maturity based on the remaining period at the _balance sheet to the contractual maturity date._

iii) Market risk

The company is exposed to the risk of movements in interest rates, inventory price and foreign currency exchange rates that affects its assets, liabilities and future transactions. Market risks comprises of four types of risks such as:

A) Interest rate risks

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. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s borrowings obligations with floating interest rates.

B) Commodity 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 partly mitigated this risk adopting integrated business model by diversifying into distillation, for better price realisation of the byproducts.

C) Foreign exchange risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates.

The Company’s exposure to the risk of changes in foreign exchange rates is limited to the Company’s operating activities (when revenue or expense is denominated in a foreign currency), which are not material.

D) Regulatory risk

Sugar industry is regulated both by Central Government as well as State Government. Central and State Governments policies and regulations affect the sugar industry and the Company’s operations and profitability. Distillery business is also dependent on the Government policy.

ii) Fair Value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Following methods and assumptions used to estimate the fair values:

- Fair value of cash and cash equivalents and short term deposits, trade and other short term receivables, trade payables, short term borrowings and other current financial assets and liabilities carried at amortized cost is not materially different from its carrying cost, largely due to the short-term maturities of these financial assets and liabilities.

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

Level 2: Inputs other that quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). There is no transfer from one level to another level during the year.

18. Explanation of transition to Ind AS

These financial statements, for the year ended March 31, 2018, are the first financial statements, the Company has prepared in accordance with Ind AS.

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for year ended March 31, 2018, together with the comparative figures for the year ended March 31, 2017, as described in the summary of significant accounting policies [Refer Note No.2].

In preparing these financial statements, the Company’s opening balance sheet was prepared as at April 01, 2016, i.e. the date of transition to Ind AS.

This note explains the principal adjustments made by the Company and an explanation on how the transition from the previous GAAP to Ind AS has affected its financial statements, including the Balance Sheet as at April 01, 2016 and the financial statements for the year ended March 31, 2017.

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from the previous GAAP to Ind AS:

i) Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.The Company has elected to apply Ind AS 103 prospectively to business combinations occurring after the transition date. Business combinations occurring prior to the transition date have not been restated.

ii) The Company has elected to continue with carrying value of all Property, plant and equipment under the previous GAAP as deemed cost as at the transition date i.e. April 01, 2016. Under the previous GAAP, Property, plant and equipment were stated at their original cost (net of accumulated depreciation, amortization and impairment), and adjusted by revaluation of certain assets.

iii) The Company has elected to continue with the carrying value of capital work in progress as recognised under the previous GAAP as deemed cost as at the transition date.

iv) The Company has elected to continue with the carrying value for intangible assets (computer software) as recognised under the previous GAAP as deemed cost as at the transition date. Under the previous GAAP, computer software was stated as at its original cost, net of accumulated amortisation.

v) Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all the arrangements for embedded leases based on conditions in place as at the date of transition.

vi) When an entity prepares separate financial statements, Ind AS 27 requires it to account for its equity investments in subsidiaries and joint ventures either at cost or in accordance with Ind AS 109. A first-time adopter may choose either fair value, at the entity’s date of transition to Ind AS in its separate financial statements or Previous GAAP carrying amount at that date, to measure its equity investment in subsidiary or joint venture that it elects to measure using a deemed cost. Accordingly, the Company has elected to measure its equity investment in subsidiaries using the Previous GAAP carrying amount, as deemed cost.

vii) Under Ind AS 109, at initial recognition of a financial asset, an entity may make an irrevocable election to present subsequent changes in the fair value of an investment in an equity instrument of subsidiary in other comprehensive income. Ind AS 101 allows such designation of previously recognized financial assets, as ‘FVTOCI’ on the basis of the facts and circumstances that existed at the date of transition to Ind AS.Accordingly, the Company has designated its investments in equity instruments in (USPL) at fair value through other comprehensive income on the basis of the facts and circumstances that existed as at the date of transition to Ind AS.

viii) Under Indian GAAP, transaction costs incurred in connection with borrowings are amortized upfront and charged to profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method. Therefore, borrowings as at April 01, 2016 and March 31, 2017 have been reduced with corresponding adjustment in retained earnings.

ix) Under previous GAAP, interest income was accounted for on time proportionate basis. Under Ind AS, investments in debt instruments can be measured either at amortised cost or FVTOCI or FVTPL. The company has elected to use amortise cost as deemed cost as on the transition date for valuing investments in debt securities in one of the subsidiaries (SPPL).

x) The estimates as at April 01, 2016 and as at March 31, 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies).

xi) The Company has applied the requirements in Ind AS 109 and Ind AS 20 prospectively to government grants by way of concessional loan.

xii) Ind AS 101 requires the de-recognition requirements of Ind AS 109 to be applied prospectively to transactions occurring on or after the date of transition. Therefore, the Company has not recognized financial assets and liabilities under Ind AS which were derecognized under the previous GAAP as a result of a transaction that occurred before the date of transition.

Footnotes to the reconciliation as at April 01, 2016 and March 31, 2017 and statement of Profit and Loss for the year ended March 31, 2017:

a) Property, plant and equipment:

Under Ind AS, the company has elected to opt for cost model with respect to property, plant and equipment, capital work in progress and computer software.

b) Investments:

Under the previous GAAP, long term investments were carried at cost less provision for other than temporary diminution in the value of such investment. Under Ind AS, the Company has the option to designate such investments either as FVTOCI or FVTPL investments. Further, in case of a subsidiary and joint venture, the Company has the option to account for investment in shares either at cost/ deemed cost or FVTOCI or FVTPL as at the transition date.

i. Investment in equity instrument:

Under Ind AS, financial assets designated at fair value through other comprehensive income (FVTOCI) are fair valued at each reporting date with changes in fair value recognized directly in other comprehensive income. The Company has make an irrevocable election to measure its certain equity investments through OCI. Consequently, fair value of such equity instruments designated at FVTOCI has resulted in an decrease in other comprehensive income. Under Ind AS 101, The Company has an option to fair value its investments in joint venture and treated that fair value as deemed cost for measuring such investments in the opening Ind AS Balance Sheet. Accordingly, the Company has fair valued of joint venture. and treat that value as deemed cost for subsequent measurement.

ii. Investment in debt instrument:

The Company has invested Rs.4,892.94 lacs in compulsorily convertible debentures of one of its subsidiaries company at various dates. As per terms, interest is receivable @ 14.50 % for first four years and there after @ 16.00 % till date of conversion of debenture into equity shares. Under the previous GAAP, interest income was accounted for on time proportionate basis at predetermined rate. Under Ind AS, investments in debt instruments can be measured either at amortized cost or FVTOCI or FVTPL.The Company has designated them at amortized cost.

c) Retained earnings

Retained earnings as at the transition date has been adjusted consequent to the above Ind AS transitional adjustments.

d) Borrowings:

i) Ind AS 109 requires that the upfront/processing fees paid in respect of the borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. Under the previous GAAP, transaction costs incurred in connection with borrowings were accounted upfront and charged to Statement of Profit and Loss for the period in which such transaction costs were incurred.

ii) As at March 31, 2016, the Company has classified its outstanding, cash credit limits, term loans (including current maturities), agri loans and interest accrued on loans in accordance to Debt Realignment Scheme sanctioned by Corporate Debt Restructuring Empower Group vide sanction letter dated February 29, 2016 as the principal lenders have given their consents and majority of stipulated terms and conditions of restructuring have been complied with by the Company. The auditors of the Company has drawn “Emphasis Matter” on this matter in their audit report dated May 30, 2016. Since under Ind AS the aforesaid adjustment is not permissible, the Company has restated its dues to its lenders as per original terms. Resulting borrowing under the head “Non-Current Liabilities” has decreased and borrowing under the head “Current Financial Liabilities” and current maturity and interest accrued on borrowing under the head “Current Other Financial Liabilities” have increased.

e) Sale of goods

Under previous GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is presented as a part of other expenses in statement of profit and loss.

f) Interest Income

The previous GAAP required the recognition of revenue from interest on time proportion basis. However, Ind AS requires interest on financial assets to be recognized using the effective interest rate method.

g) Re-measurement of post-employment benefit obligations:

Under previous GAAP, actuarial gains and losses were recognised in the statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability/ asset which is recognised in other comprehensive income. Consequently, the tax effect of the same has also been recognised in other comprehensive income under Ind AS instead of the statement of profit and loss.

h) Total comprehensive income and other comprehensive income

Under the previous GAAP, the Company did not present total comprehensive income and other comprehensive income. Hence, it has reconciled the previous GAAP profit to profit as per Ind AS. Further, the previous GAAP profit is reconciled to other comprehensive income and total comprehensive income as per Ind AS.

i) Cash flow statement

The transition from the previous GAAP to Ind AS has not had a material impact on Cash Flow Statement.

19. Prior Period Error

During the current year, the company has detected error crept in the actuarial valuation of gratuity, done by actuarial valuer. The valuer has been incorrectly valuing liability of gratuity in respect of seasonal employees since long. This has been got corrected during the current year, accordingly differences up to March 31, 2016 has been adjusted in the equity as at April 01, 2016 and differences for the year ending March 31, 2017 has been adjusted by restating the derived Ind AS figures. The impact of the aforesaid prior period error is as under:

20. The Company is receiving supplies of steam and power from Simbhaoli Power Pvt. Ltd (SPPL), its subsidiary company, in terms of Bagasse Conversion Agreement(s) executed in earlier years. Taking into account the changes in commercial understanding after completion and stabilization of the power generation projects at SPPL, the Company and SPPL have agreed to amend the terms of these agreements effective from the Sugar season 2017-18. Pending finalization of the revised terms, the Company has accounted for the supply of conversion bagasse etc. to SPPL, and conversion charges payable thereon in accordance with the terms of old agreements. The adjustments if any, after finalization of revision in the terms of conversion, will be accounted for in the period, in which the terms of the revisions are agreed to by the Company and SPPL

21. Recent pronouncements

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:

On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 01, 2018. The Company is evaluating the effect of this on the financial statements.

Ind AS 115- Revenue from Contract with Customers:

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

The standard permits two possible methods of transition:

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

- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)

The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 01, 2018.

The Company will adopt the standard on April 01, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The Company is evaluating the effect on adoption of Ind AS 115.

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

23. The previous year’s including figures as on the date of transition I have been reworked, regrouped, rearranged and reclassified I wherever necessary. Amounts and other disclosures for the preceding year including figures as at the date of transition are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.

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Mar 31, 2016

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

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

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

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

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

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

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

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

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

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

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

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

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

3. i) Contingent liabilities not provided for:

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

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

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

iii) Capital and other commitment

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

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

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

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

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

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

7. Segment reporting

A. Business segments:

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

B. Geographical segments:

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

C. Segment accounting policies:

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

a) Segment revenue and expenses:

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

b) Segment assets and liabilities:

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

c) Inter segment sales:

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

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

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

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

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

10. Employee Benefits

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

A) Employee Plan:

a) Provident fund

b) Superannuation fund

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

B) Defined benefits plans

a) Gratuity

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

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

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

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

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

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

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

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