India Sugars & Refineries Ltd. के अकाउंट के लिये नोट

Sep 30, 2013

1 ADDITIONAL INFORMATION ( Rs. In Lacs)

1.1 The balances of certain debtors/advances and creditors as at Septemeber 30,2013 are subject to confirmation / reconciliation and the impact on the results for the period, if any, is not ascertainable

1.2 The company has obtained a Valuation Report by an Independant Valuer for its immovable property which indicates that there is no impairment in value of ''asset''(cash generating unit) in terms of paragraph 6 of mandatory Accounting Standard 28 Impairment of Assets (AS-28).

1.3 Remuneration to directors - (i) Managing director, Joint Managing director and Wholetime directors (1) Salary Rs.51.90 (2011-12 Rs.52.80);

(2) Perquisites Rs.12.01 (2011-12 Rs. 9.84); (ii) Sitting Fees to directors Rs.1.00 (2011-12 Rs.1.00). (iii) The approval of the Central Government is pending / being obtained for (a) increase in remuneration to erstwhile Managing Director and wholetime Directors with effect from April 1, 2006 to October 17, 2008, comprising salary of Rs.5.10 and perquisite Rs.0.81 and (b)for remuneration payable to the Managing Director and Joint Managing Director with effect from July 1,2013 to Septemeber 30,2013 comprising salary of Rs. 10.80 and perquisite Rs.6.16 in terms of their appointment at the Annual General meeting held on March 28,2013.

1.4 Other expenses - Note 26 (a) Repairs and upkeep - machinery include amortisation of expenditure on planned replacement of parts of plant and machinery Rs.Nil (2011 -12 Rs. 58.68) (b) Miscellaneous expenses include (i) Research and development expenses Rs. 21.58 (2011-12 Rs.21.62) comprising Cane Research and Development expenses Rs. 2.34 (2011-12 Rs.4.22) and salaries and wages Rs.19.24 (2011-12 Rs.17.40).

1.5 The Banks have confirmed the principal dues by the Company as at September 30,2013 but have not confirmed the interest and other dues by the Company. In the absence of such confirmation, the Company has estimated and provided for the interest dues for the year at the State Bank Advance rate'' (SBAR).

1.6 Going concern assumption

The Company has incurred losses in the past and has a net capital deficiency as on September 30, 2013. Further, the company is involved in legal suits interalia with regard to Sugarcane price payable for certain years (detailed in Note 28.7 infra) and claims made against the Government of Karnataka and Government of India which could have an effect on the viability of operations and its ability to continue its operations and settle its obligations as and when they fall due. However, the financial statements have been prepared on a going concern basis as the Board for Industrial & Financial Restructuring (BIFR) has framed a scheme for rehabilitaion of the company which is under implementation and further steps have been undertaken to resolve cane price disputes.

1.7 (i)Disputed cane price:

Disputes are pending in various forums regarding the price payable for the Sugar Cane suppliers.

(a) For the sugar season 2002-03, the case filed earlier by the India Sugar Mills Association (ISMA) and South Indian Sugar Mills Association (SISMA)on behalf of member- factories including the company before the Honorable Supreme Court against Bilateral fixation of cane price by the Central Government involving a liability of Rs. 190.57 lakhs was dismissed. The matter has been taken up further by the Company and is pending before the Honorable High Court of Karnataka. However, in view of the agreement with farmers dated 21.11.12 (refer clause (d) below), this liability is considered Contingent..

(b) For the season 2003-04, the dispute involves the additional cane price fixed by the Government of India entailing an additional liability for the company of Rs.74.16 lakhs. The Honorable High Court of Karnataka,which earlier stayed the order of the Government, has since dismissed the appeal filed by the Company.The matter has been taken up further by the Company and is pending before the Honorable High Court of Karnataka. However, in view of the agreement with farmers dated 21.11.12 (refer clause (d) below), this liability is considered Contingent..

(c) For the sugar season 2006-07, the company had initially entered into an agreement dated 12.12.2010 with association of Cane growers for payment of cane price of Rs.1,130 per ton (i.e Rs.631.18 lakhs) subject to fulfillment of certain conditions. On the failure of the farmers to fulfill all the obligations under the said agreement dated12.12.2010, the same was not fully implemented.

(d) A fresh comprehensive agreement dated 21.11.12 has been entered into for the sugar season 2012-13 by the company with an association of farmers which also deals with a full and final settlement of all alleged arrears for the season 2002-03,2003-04 and 2006-07 upon fulfillment of certain conditions including supply of all sugarcane in ''reserved'' area to the Company without diversion. Based on this agreement, and to the extent of fulfillment of conditions by the association of farmers in terms of quantity supplied, the Company has paid/ provided a sum of Rs.152.65 lakhs (2011-12 Rs.211.29 lakhs) as liability for the sugar season 2006-07. The validity and enforcement of this agreement including modifications thereof is pending adjudication before the Honorable High Court of Karnataka.

(e) For the season 2007-08, the dispute involves the exemption from Purchase tax of Rs.60 per MT granted by the Government of Karnataka(GOK). GOK has since directed sugar factories including the company to pass on this sum of Purchase tax subsidy to the farmers entailing an additional liability for the company of Rs.150.94 lakhs. The appeal filed by South Indian Sugar Mills Association (SISMA) on behalf of member-factories including the company before the Honorable High Court of Karnataka was dismissed but the Honorable Supreme Court has granted stay of operation of the judgement of the High Court.

(f) A number of disputes including the power of parties to enter into agreements bilaterally especially in lieu of statutory minimum price have been filed and are pending.

(ii)The Government of Karnataka (GOK) vide its G.O.No.CI 04 BIF 2009, Bangalore dated 17.1.2013 had sanctioned certain reliefs and concession to the Company following the directions of the BIFR. These dealt with arrears of Purchase tax on Sugarcane, Sales tax, interest on delayed payment of aforesaid dues and penalty. These had been appropriately considered in the financial statement for the year ended September 30,2012 by recognising a net liability of Rs.22.20 lakhs in the statement of Profit and Loss relatable to earlier year. The BIFR in its order dated November 29,2013 has allowed the Company to pay Principal dues of Purchase tax as at September 30,2013 over a period of five years, after a moratorium period of five years alongwith interest thereon. Accordingly, the company has, during the year, reversed a sum of Rs.3.80 out of the sum of Rs.22.20 lakhs provided in earlier year. Further, the liability of the company towards purchase tax/sales tax are as per the data filed by the Commercial Tax Department of GOK before the BIFR and the interest on overdues accordingly recognised.

1.8 Contingent liability - (i) Liability pertaining to the decree obtained by a bank against the firm in which the company was a partner - amount not determinable; (ii) Guarantees issued to bankers and financial institutions on behalf of a firm in which the company was a partner Rs.13.00 (30.09.12 Rs.13.00)(iii) Interest, Penalty/damages under Provident Fund Act Rs.160.36 lakhs (30.9.12 Rs.96.42 lakhs) (iv) Cane price dispute for sugar season 2002-03,2003-04,2006-07 & 2007-08Refer Note 28.7 (i)(a) to(c) (v) Other claims against the company not acknowledged as debt Rs.18.07 lakhs (30.09.2012 Rs.18.07 lakhs).

28.9 Estimated capital commitments (net of advances) Rs.5.65 (30.09.2012 Rs.10.79).

1.10 The Company has considered the effect of the order of the Board for Industrial & Financial Restructuring (BIFR) dated 29.11.2013 directing grant of certain reliefs and concessions with respect to Purchase tax due by the company as an event that has occurred subsequent to the end of the year in preparation and presentation of the financial statements of the current year:

1.11 The company has made a claim on 29th September 2011 against the Secretary, Government of Karnataka, the Commissioner of Cane Development and the Director of Sugar in Karnataka and Deputy Commissioner, Bellary District for the loss of profit sustained by the company pertaining to the sugar seasons 2008-09,2009-10 and 2010-11 arising as a result of the alleged inaction on the part of the State Government of Karnataka to prevent the illegal transportation of sugarcane from the area reserved for the company, the total of the claim amounts to Rs. 3501.65 lakhs,. The matter is pending disposal by the concerned authorities. In view of this the claim amount has not been accrued as income.

1.12 The Company''s primary segment is identified as business segment based on nature of products, risks, returns and the internal business reporting system as per Accounting Standard 17. Accordingly.the Company is principally engaged in a single business segment viz..sugar,

1.13 the Company has reclassified / regrouped/ amended the previous year figures wherever, necessary.

---

Sep 30, 2012

1.1 The company has not received any information from the "suppliers" regarding their status under Micro,Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any relating to the amount unpaid as at the end of the year together with interest paid/payable if any under the said Act have not furnished.

2 Company Overview

THE INDIA SUGARS & REFINERIES LIMITED (the "Company") is engaged In Manufacture of Sugar at Its factory located at Chitwadgi, Hospet In the State of Karnataka. It deals with Sugar and attendant byproducts like Molasses and Bagasse.

3.1 The balances of certain debtors/advances and creators as at September 30.2012 are subject to confirmation / reconciliation and the impact on the resiits for the period, if any, is not ascertainable

3.2 The company has obtained a Valuation Report by an Independant Valuer for its immovable property wtilch indicates that there Is noimpairmert in value of asset''(cash generating unit) in terms of paragraph6 of mandatory Accounting Standard 28 Impairment of Assets (AS-28).

3.3 (a) Remuneration to directors - (0 Managing director, Joint Managing director and Wholetime directors (1) Salary Rs.52.80 (2010-11 Rs.53.70):

(2) Perquisles Rs.9.84 (2010-11 Rs. 9.39); (if) Sitting Fees to directors Rs.1.00 (2010-11 Rs.0.50). The Increase in remunaration to Managing Director and Joint Managing Director with effect from July 01, 2010 amounting to Rs.5.70 was provided in the financial year 2010-11. The Increase In remunaration to erstvtfiie Managing Director and wholeliem Directors wth effect from April 1,2006 to October 17,2008 comprising salary of Rs.5.10 and perquisite Rs.0.81 is subject to the approval of the Central Government.

3.4 Mamftcturlng and other expenses - Note—(a) Repairs and upkeep - machinery include amortisation of expendHure on plamed replacement of parts of plant and machinery Rs.58.68 (2010-11 Rs. 54.37) (b) Miscellaneous expenses include (I) Research and development expenses Rs. 21.62 (2010- 11 Rs.18.S0) comprising Cane Research and Development expenses Rs.4.22 (2010- 11 Rs.0.76) and salaries and wages Rs.17.40 (2010-11 Rs.17.74) (ii) Loss on saledtecard of assets Rs. Ni (2010-11 Rs.0.04)

3.5 The company had been treating the expenditure on planned replacement of parts of machinery as ‘Deferred Revenue Expendiure'' and amortising the same over the crusting seasons diring which the benefit from the said replacement vrill accrue or the useful life of the said parts whichever Is less. Accordingly, a sum of Rs. 58.68 (2011-12) had been amortised In the Statement of Profit and loss for the year. However, it has been decided to change the method of accoirting during the year to recognise such expendiure in the Statement of Protl and Loss at the time of incixrence. The said change in method does not in any way affect the resul of the operations in the year.

3.6 Going concern assumption

The Company has incured losses in the past and has a net capital deficiency as on September 30, 2012. Further, the company is involved In legal suits hteralla wth regard to Sugarcane price payable for certain years and delays h remltance of commercial taxes(detailed in Note 28.7) vrtiich could have an effect on the viabilty of operations and its abilty to continue Is operations and settle its obligations as and vtfien they fall due. However, the financial statements have been prepared on a going concern basis as the Board for Industrial & Fhandai Restructuring (BIFR) has framed a scheme for rehablltaion of the company irttich is under implementation and further steps hare been undertaken to resolve cane price disputes.

3.7 (l)Disputed cane price:

Disputes are pending in various forums regardhg the price payable for the Sugar Cane supplers.

(a) For the sugar season 2002-03, the dispiie Is pending before the Honorable Supreme Court in a case fled by the India Sugar Mils Association (ISKW) and South Indian Sugar Mils Association (SISMA)on behalf of member-factories including the company,against trilateral fixation of cane price by the Central Government Involving a liabilty of Rs.190.57 lakhs.

(b) For the season 2003-04, the dispute Involves the additional cane price fixed by the Government of India entailing an addiional liabilty for the bcompany of Rs.74.16 lakhs. The Honorable High Court of Karnataka has stayed the order passed by the State Government.

(c) For the sugar season 2006-07, the company had initially entered Into an agreement dated 12.12.2010 wlh association of Cane growers for payment of cane of a price of Rs.1,130 per ton (i.e Rs.631.18 lakhs) subject to fulfilment of certain conditions. On the failure of the fanners to fitfil al the obligations under the said agreement daled12.12.2010. the same was not Mly Implemented.

(d) A fresh comprehensive agreement dated 21.11.12 has been entered into for the sugar season 2012-13 by the company wlh an assoddion of farmers wtiich also deals wlh a full and final settlement of all alleged arrears for the season 2002-03,2003-04 and 2006-07 upon ftiHlknent of certain conditions Including supply of all sugarcane in reserved'' area to the Company vrfthoii diversion. Based on this agreement, and to the extent of information avalable wth the company about possible fUfilmenl of condttions by the association of fanners, the Company has paid/ provided a sun of Rs .211.29 as iabilly for the sugar season 2006-07 and also recongnlsed the liabilty due for the season 2012-13.

(e) A number of dspiies indudng the power of parties to enter Into agreemerts bilaterally especially In lieu of statutory mirimim price have been filed and are pending.

(l)The Government of Kami aka vide Is G.O.No.CI 04 BIF 2009, Bangalore dated 17.1.2013 has sanctioned certain reiefs and concession to the Company following the directions of the BIFR. These deal wlh arrears of Purchase tax on Sugarcane, Sales tax, interest on delayed payment of aforesaid dues and penaly. These have been appropriately considered in the financial statement for the year ended September 30, 2012 by recognising a net liability of Rs.22.20 lakhs in the statement of Profit and Loss reliable to earlier year.

3.8 Contingent liabilty- (i) Liabilty pertaining to the decree obtained by a bank against the ftm in which the company was a partner - amount not determinable: (I) Guarantees issued to bankers and financial instlutions on behalf of a firm in which the company was a partner Rs.13.00 (30.09.11 Rs.13.00) (Ii) Liabilty in respect of interest under the Karnataka Sales Tat Act, 1957 for the delay in the payment of Purchase Tax and penalty Rs. Nil(refer Note 25.7(H)) (30.09.2011 Rs.236.49) (iv) Cane price dispiie for sugar season 2002-03,2003- 04 & 2006-07 Refer Note 25.7 (i)(a) to(c). Claims against the company not acknowledged as debt Rs.114.24 (30.09.2011 Rs.116.72).

3.9 Estimated capital commitments (net of advances) Rs.10.79 (30.09.2011 Rs.4.50).

3.10 The Company has considered the effect of the folowng events that have occurred subsequent to the end of the year in preparation and presentation of the financial statements of the current year:(i)the order of the Board for Industrial & Financial Restructuring (BIFR) dated 7.1.2013 directing grant of certain reliefs and concessions wth respect to commercial taxes due by the company® The Government of Karnataka vide its G.O.No. Cl 04 BIF 2009, Bangalore dated 17.1.2013 following the aforesaid directions of BIFR and (ii) the agreement dated 21.11.2012 with an association of farmers regarding cane price arrears for various years.

3.11 The company has made a claim on 29th September 2011 against the Secretary, Government of Karnataka, the Commissioner of Cane Development and the Director of Sugar in Karnataka and Deputy Commissioner, Bellary District for the loss of profit sustained by the company pertaining to the sugar seasons 2008-09, 2009-10 and 2010-11 arising as a resul of the aleged inaction on the part of the Stale Government of Karnataka to prevent the (legal transportation of sugarcane from the area reserved for the company, the total of the claim amounts to Rs. 3501.65 lakhs. The matter is pending disposal by the concerned authortles. In view of this the claim amount has not been accrued as income.

3.12 During the year ended 30 September 2012, the revised Schedde Vi notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of Is Financial Statements. Accordingly, the Company has reclassified / regrouped/ amended the previous year figures in accordance wflh the requrements applicable in the current year.

---

Sep 30, 2011

1.1 Capital - Schedule 11 - Subscribed capital includes 1,027,428 (30.09.2010 ; 1,027,428) Equity shares allotted as fully paid up by way of bonus shares by capitalisation of reserves and surplus.

1.2 Reserves and surplus -Schedule 1.2 - Capita! Reserve of Rs 7.21 (30.09.2010 Rs.7.21) represents unclaimed amount due on redemption of preference shares.

1.3 Secured loans - Schedule 1.3 - Security and other Information (I) Term loans from banks Rs.945.22 (2010 Rs. 1163.00) is secured by a charge over the movable and immovable properties of the company, (ii) Term loan from Government of India is secured by way of exclusive second charge on the whole of the movable properties, '(iii) Cash credit from banks is secured by a charge over the stock of raw materials, semi finished and finished goods, consumables stores and book debts pari passu with the loans stated in (I) supra; (iv) Loans stated in(i), and (III) supra are guaranteed by the two whotetime directors of the company, Loans include interest accrued and due thereon,

1.4 Unsecured loans - Schedule 1 4 Loans and advances from directors and limited companies represent the subordinate interest free loan as promoters' contribution under the Scheme of Rehabilitation sanctioned by the Board for Industrial & Financial Reconstruction (BIFR).

1.5 Deferred liability represents hire purchase liability in respect of motor vehicle acquired by the company under finance lease at a cost of Rs.8.77 (30.09.2010 Rs 8.77) [(written down value Rs.6.69 (30.09.2010 Rs 7.53)] but standing in the name of a Director. The© liability is secured by a charge on specific asset acquired out of the said loan. The amount due for less than one year is Rs. 0.79 (30.09.2D10 Rs. 2.21) and that due later than one year but less than five years is Rs.Nil (30.09.2010 Rs 0.79).

1.6 Sundry debtors - Schedule 1.8 - (i) All debts are unsecured and considered good unless otherwise stated and (ii) Debts considered doubtful Rs.522.50 (30.09 2010 Rs.522.50).

1.7 Loans and advances - Schedule 1.11 - All advances are unsecured and considered good unless otherwise stated; Advances considered doubtful Rs. 61.20 (30.09.2010 Rs.61.20).

1.8 Liabilities - Schedule 1.12 - (i) Amounts due to Small Scale industrial undertakings are not ascertainable, (ii) The company has not received any information from "suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act. 2006 and hence disclosures, if any relating to the amounts unpaid as at the end of the year together with interest paid / payable under the said Act have not been furnished.

1.9 Confirmation of balances for certain unsecured loans, sundry creditors, other liabilities, sundry debtors, other current assets and loans and advances are yet to be obtained.

1.10 (a) Remuneration to directors - (i) Managing director, Joint Managing director and Wholetime directors (1) Salary Rs.53.70 (2009-10 Rs.24.00):

(2) Perquisites Rs.9.39 (2009-10 Rs. 5.73); (ii) Sitting Fees to directors Rs.0.50 (2009-10 Rs.0.10). The increase in remuneration to Managing Director and Joint Managing Director with effect from July 01, 2010 amounting to Rs.5.70 pertains to previous year and has been provided in the current year based on the approval of the members at the Annual General Meeting held on March 30, 2011. The increase in remuneration to erstwhile Managing Director and whole time Directors with effect from April 1, 2006 to October 17, 2008 comprising salary of Rs,5.10 and perquisite Rs.0.81 is subject to the approval of the Central Government.

1.11 Manufacturing and other expenses - Schedule 2,4 -(a) Repairs and upkeep - machinery include amortization of expenditure on planned replacement of parts of plant and machinery Rs.54.37 (2009-10 Rs. 23.16) (b) Miscellaneous expenses include Fees to auditors - (1) For statutory audit Rs.0.75 (2009- 10 Rs.0.75); (2) For cost audit Rs. 0.20 (2009- 10 Rs.0.20); (3) For taxation matters Rs 0.30 (2009-10 Rs.0.30); (4) For other matters Rs 0.03 (2009- 10 Rs.0.03) and (5) Reimbursement of expenses to auditors Rs.0.59 (2009- 10 Rs.0.06). (iii) Loss on safe discard of assets Rs.0.04 (2009-10 Rs,0.76) (C) Research and development expenses Rs. 18.50 (2009- 10 Rs.23.53) comprises Cane Research and Development expenses Rs. 0.76 (2009- 10 Rs.1.15)under Miscellaneous expenses and salaries and wages Rs. 17.74 (2009- 10 Rs.22.38) under Human Resources.

1.12 Disputed cane price - Disputes are pending in various forums regarding the price payable for the sugar cane supplies during the following sugar seasons: for the season 2002-03, dispute is pending before the Hon'ble Supreme Court of India involving Rs. 190.57 For the season 2003-04 dispute is pending before the Hon'ble High Court of Karnataka at Bangalore, which has also stayed the order passed by the Government of Karnataka amounting to Rs.74.16. For the sugar season 2006-07, the company had entered into an agreement with association of cane growers for payment of alleged cane dues aggregating Rs.631.18 subject to fulfillment of certain conditions by both parties. Accordingly , the Honourable High Court of Karnataka had during the year observed (on a petition filed earlier by the company) that the petition had became in fructuous in view of the agreement. However, in the light of non-fulfillment of conditions by the association of cane growers, the company is not obliged to pay / recognise the liability of alleged arrears under the said Agreement. The same is therefore, treated as contingent liability

1.13 Contingent liability - (i) Liability pertaining to the decree obtained by a bank against the firm in which the company was a partner - amount not determinable ; (ii) Guarantees issued to bankers and financial institutions on behalf of a firm in which the company was a partner Rs. 13.00 (30.09.10 Rs. 13.00) (iii) Liability in respect of interest under the Karnataka Sales Tax Act, 1957 for the delay in the payment of Purchase Tax and penalty Rs. 301.72 (30.09.2010 Rs.236.49) (iv) Cane price dispute for sugar season 2002-03, 2003-04 & 2006-07 Refer Note 3.13. (iv) Claims against the company not acknowledged as debt Rs. 116.72 (30.09.2010 Rs. 286.28).

1.14 Estimated capital commitments (net of advances) Rs.4.50 (30.09.2010 Rs.43.90).

1.15 The company has made a claim on 29th September 2011 against the Secretary, Government of Karnataka, the Commissioner of Cane Development and the Director of Sugar in Karnataka and Deputy Commissioner, Belfary District for the loss of profit sustained by the company pertaining to the sugar seasons 2008- 09, 2009-10 and 2010-11 arising as a result of the alleged inaction on the part of the State Government of Karnataka to prevent the illegal transportation of sugarcane from the area reserved for the company. The total of the claim amounts to Rs. 3501.65 lakhs. The matter is pending disposal by the concerned authorities. In view of this, the claim amount has not been accrued as income.

1.16 The Company's primary segment is identified as business segment based on nature of products, risks returns and internal business reporting system viz. sugar. The secondary segment is identified based on the geographical location of the customers as per Accounting Standard-17.

1.17 Related Party disclosure - (i) Reiated parties with whom transactions have taken place during the year - Key management personnel - Sri.Siddharth R. Morarka. Managing Director and Sri Rahul R. Morarka, Joint Managing Director, ; (ii) Relatives of Key management personnel having transaction with the Company - Nil. (iii) Transactions with Key management personnel are as under:

1.18 Prior year adjustment disclosed in earlier year in Schedule 2.2 comprises (i) reversal of rent provided in earlier year Rs.9.00 and (ii) interest on commercial tax dues provided in earlier year written back Rs. 174.64.

1.19 Figures for the prior year have been regrouped wherever necessary to conform to current year's classification.

---

Sep 30, 2010

1.0 Capital - Schedule 1.1 - Subscribed capital includes 1,027,428 (30.09.2009 ; 1,027,428) Equity shares allotted as fully paid up by way of bonus shares by capitalisation of reserves and surplus.

1.1 Reserves and surplus -Schedule 1.2 - Capital Reserve of Rs 7.21 (30.09.2009 Rs.7.21) represents amount due on redemption of preference shares and remaining unclaimed.

1.2 Secured loans - Schedule 1.3 - Security and other information (i) Term loans from banks (1) Rs.1163.00 (2009 Rs. 1258.96) is secured by a charge over the movable and immovable properties of the company. (2) Rs. 2.98 (2009 Rs 9.90 ) is secured by a charge on specific asset acquired out of the said loan, (ii) Term loan from Government of India is secured by way of exclusive second charge on the whole of the movable properties, (iii) Cash credit from banks is secured by a charge over the stock of raw materials, semi finished and finished goods, consumables stores and book debts pari passu with the loans stated in (i) supra; (iv) Loans stated in(i), and (iii) supra are guaranteed by the two wholetime directors of the company. Loans include interest accrued and due thereon.

1.3 Unsecured loans - Schedule 1.4 - Loans and advances from directors and limited companies represent the subordinate interest free loan as promoters contribution under the scheme of rehabilitation sanctioned by the Board for Industrial & Financial Reconstruction (BIFR).

1.4 Deferred liability represents hire purchase liability in respect of motor vehicle acquired by the company under finance lease at a cost of Rs.3.22 (30.09.2009 Rs 9.26) [(written down value Rs15.40 (30.09.2009 Rs 16.00)] but standing in the name of a Director. The amount due for less than one year is Rs. 2.19 (30.09.2009 Rs. 4.98) and that due later than one year but less than five years is Rs.0.76 (30.09.2009 Rs 2.95).

1.5 Sundry debtors - Schedule 1.8 - (i) All debts are unsecured and considered good unless otherwise stated and (ii) Debts considered doubtful Rs.522.50 (30.09.2009 Rs.522.50).

1.6 Loans and advances - Schedule 1.11 - All advances are unsecured and considered good unless otherwise stated; Advances considered doubtful Rs. 61.20 (30.09.2009 Rs.61.20).

1.7 Liabilities - Schedule 1.12 - (i) Amounts due to Small Scale Industrial undertakings are not ascertainable, (ii) The company has not received any information from "supliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any relating to the amounts unpaid as at the end of the year together with interest paid / payable under the said Act have not been furnished.

1.8 Confirmation of balances for certain unsecured loans, sundry creditors, other liabilities, sundry debtors, other current assets and loans and advances are yet to be obtained.

1.9 Remuneration to directors - (i) Managing director, Joint Managing director and Wholetime directors (1) Salary Rs.24.00 (2008-09 Rs.22.90) ; (2) Perquisites Rs.5.73 (2008-09 Rs. 5.68) ; (ii) Sitting Fees to directors Rs.0.10 (2008-09 Rs.0.60); The increase in remunaration to Managing Director and Joint Managing Director with effect from July 1, 2010 has not been provided in the accounts.

1.10 Manufacturing and other expenses - Schedule 2.4 -(a) Repairs and upkeep - machinery include amortisation of expenditure on planned replacement of parts of plant and machinery Rs.33.16 (2008-09 Rs. 46.83) (b) Miscellaneous expenses include (i) Research and development expenses Rs. 24.00 (2008- 09 Rs.24.61) comprising Cane Research and Development expenses Rs. 1.15 (2008- 09 Rs.4.10) and salaries and wages Rs.22.38 (2008- 09 Rs.20.51) (ii) Fees to auditors - (1) For statutory audit Rs.0.75 (2008- 09 Rs.0.75) ; (2) For cost audit Rs. 0.20 (2008- 09 Rs.0.20) ; (3) For taxation matters Rs.0.30 (2008- 09 Rs.0.30); (4) For other matters Rs. 0.03 (2008- 09 Rs.0.30) and (5) Reimbursement of expenses to auditors Rs.0.06 (2008- 09 Rs.0.05). (iii) Loss on sale discard of assets Rs.0.76 (2008-09 Rs.1.96)

1.11 Disputed cane price - Disputes are pending in various forums regarding the price payable for the sugar cane supplies during the following sugar seasons: for the season 2002-03, dispute is pending before the Honble Supreme Court of India involving Rs. 190.57. For the season 2003-04 dispute is pending before the Honble High Court of Karnataka at Bangalore, which has also stayed the order passed by the Government of Karnataka amounting to Rs.74.16. For the season 2006-07 while the dispute is before the Honble High Court of Karnataka at Bangalore, amounting to Rs.631.18 which has also stayed the order passed by the Government of Karnataka.

1.12 Contingent liability - (i) Liability pertaining to the decree obtained by a bank against the firm in which the company was a partner - amount not determinable ; (ii) Guarantees issued to bankers and financial institutions on behalf of a firm in which the company was a partner Rs.13.00 (30.09.09 Rs.13.00) (iii) Liability in respect of interest under the Karnataka Sales Tax Act, 1957 for the delay in the payment of Purchase Tax and penalty Rs.236.49 (30.09.2009 Rs.174.64) (iv) Cane price dispute for sugar season 2002-03, 2003-04 & 2006-07 Refer Note 3.13. (iv) Claims against the company not acknowledged as debt Rs. 286.28 (30.09.2009 Rs. 164.41).

1.13 Estimated capital commitments (net of advances) Rs.43.90 (30.09.2009 Rs.22.50).

1.14 The Company operates in one business segment viz sugar.

1.15 Prior year adjustment disclosed in Schedule 2.2 comprises (i) reversal of rent provided in earlier year Rs.9.00 and (ii) interest on commercial tax dues provided in earlier year written back Rs. 174.64.

1.16 The company has been treating the expenditure on planned replacement of parts of machinery as Deferred Revenue Expenditure and amortising the same over the crushing seasons during which the benefit from the said replacement will accrue or the useful life of the said parts whichever is less. In the earlier year the said expenditure was disclosed under fixed assets. Since, by such replacement, the capacity of the sugar plant does not exceed beyond its previously assessed capacity, it has been decided to regroup the same under the head Deferred Revenue Expenditure". The above stated change in the method of accounting does not in any way affect the result of the operations in the year.

1.17 Figures for the prior year have been regrouped wherever necessary to conform to this years classification.

---

Sep 30, 2009

1 Capital - Schedule 1.1 - Subscribed capital includes 1,027,428 (30.09.2008 ; 1,027,428) Equity shares allotted as fully paid up by way of bonus shares by capitalisation of reserves and surplus.

2 Reserves and surplus -Schedule 1.2 - Capital Reserve of Rs 7.21 (30.09.2008 Rs.7.21) represents amount due on redemption of preference shares and remaining unclaimed and hence to this reserve .

3 Secured loans - Schedule 1.3 - Security and other information (i)Term loans from banks (1) Rs. 1249.06 (2008 Rs. 1439.23) is secured by a charge over the movable and immovable properties of the company. (2) Rs. 9.90 (2008 Rs 12.10 ) is secured by a charge on specific asset acquired out of the said loan, (ii) Term loan from Government of India is secured by way of exclusive second charge on the whole of the movable properties.{iii) Cash credit from banks is secured by a charge over the stock of raw materials, semi finished and finished goods, consumables stores and book debts pari passu with the loans stated in (i) supra; (iv) Loans stated in(i), and (iii) supra are guaranteed by the two wholetime directors of the company. Loans include interest accrued and due thereon.

4 Unsecured loans - Schedule 1.4 - Loans and advances from directors and limited companies represent the subordinate interest free loan as promoters contribution under the scheme of rehabilitation sanctioned by the Board for Industrial & Financial Reconstruction (BIFR).

5 Deffered liability represents hire purchase liability in respect of motor vehicle acquired by the company under finance lease at a cost of Rs.9.26 (30.09.2008 Rs 9.99) (written down value Rs16.00 (30.09.2008 Rs 8.64) but standing in the name of a Director. The amount due for less than one year is Rs. 4.98 (30.09.2008 Rs. 3.24) and that due later than one year but less than five years is Rs.2.95 (30.09.2008 Rs 1.83)

6 Sundry debtors - Schedule 1.8 - (i) All debts are unsecured and considered good unless otherwise stated and (ii) Debts considered doubtful Rs.522.50 (30.09.2008 Rs.522.50).

7 Loans and advances - Schedule 1.11 - All advances are unsecured and considered good unless otherwise stated; Advances considered doubtful Rs. 61.20 (30.09.2008 Rs.61.20).

8 Liabilities - Schedule 1.12 - (i) Amounts due to Small Scale Industrial undertakings are not ascertainable, (ii) The company has not received any information from "supliers" regarding their status under the Micro, Smaii and Medium Enterprises Development Act, 2006 and hence disclosures, if any relating to the amounts unpaid as at the end of the year together with interest paid / payable under the said Act have not been furnished.

9 Confirmation of balances for certain unsecured loans, sundry creditors, other liabilities, sundry debtors, other current assets and loans and advances are yet to be obtained.

10 Remuneration to directors - (i) Managing director and Wholetime directors (1) Salary Rs.22.90 (2007-08 Rs.31.16) ; (2) Perquisites Rs.5.68 (2007-08 Rs.10.07) ; (ii) Sitting Fees to directors Rs.0.60 (2007-08 Rs.0.20); The increase in remunaration to erstwhile Managing director and Wholetime directors with effect from April 1,2006 comprising salary of Rs.5.10 and Perquisite Rs.0.81 is subject to the approval of the Central Government. Salary in (i) above of current year includes Rs.Nil (2007-08 Rs.3.00) pertaining to the year ended 30.09.2007.

11 Manufacturing and other expenses - Schedule 2.4 -(a) Repairs and upkeep machinery includes amortisation of expenditure on planned replacement of parts of plant and machinery Rs.46.83 (2007-08 Rs. Nil) (b) Miscellaneous expenses include (i) Research and development expenses Rs.24.61 (2008- 09 Rs.12.54) comprising Cane Research and Development expenses Rs.4.10 (2007-08 Rs. 1.00) and salaries and wages Rs.20.51 (2007-08 Rs.11.54) (ii) Fees to auditors -(1) For financial audit Rs.0.75 (2007- 08 Rs.0.60) ; (2) For cost audit Rs. 0.15 (2007- 08 Rs.0.15) ; (3) For taxation matters Rs.0.30 (2007- 08 Rs.0.25); (4) For other matters Rs. 0.30 (2007-08 Rs.0.15) and (5) Reimbursement of expenses to auditors Rs.0.05 (2007-08 Rs.0.08). (iii) Loss on sale of assets Rs.1.96 (2007-08 Rs.Nil)

12 Materials - Schedule 2.3 - Raw materials consumed sugarcane is net of cane subsidy received from Government of Karnataka Rs. Nil (2007-08 Rs.178.88) for 2007- 08 season.

13 Disputed cane price - Disputes are pending in various forums regarding the price payable for the sugar cane supplies during the following sugar seasons: for the season 2002-03, dispute is pending before the Honble Supreme Court of India involving Rs.190.57. For the season 2003-04 dispute is pending before the Honble High Court of Karnataka at Bangalore, which has also stayed the order passed by the Government of Karnataka. For the season 2006-07 the dispute is before the Honble High Court of Karnataka at Bangalore, which has also stayed the order passed by the Government of Karnataka.

14 Contingent liability - (i) Liability pertaining to the decree obtained by a bank against the firm in which the company was a partner - amount not determinable ; (ii) Guarantees issued to bankers and financial institutions on behalf of a firm in which the company was a partner Rs.13.00 (30.09.08 Rs.13.00) (iii) Claims against the company not acknowledged as debt Rs. 164.41 (30.09.2008 Rs. 164.41); (iv) cane price dispute for sugar season 2002-03 -Refer Note 13.

15 Estimated capital commitments (net of advances) Rs.22.50 (30.09.2008 Rs.Nil).

16 The company amortises the expenditure on planned replacement of parts of plant and machinery over a period being lower of the sugarcane season during which the benefit will enure or the life of the plant. This period is different from the useful life derived from the rates specified in Schedule XIV to the Companies Act, 1956.

17 Figures for the prior year have been regrouped wherever necessary to conform to this years classification.