Riga Sugar Company Ltd. के निदेशक की रिपोर्ट

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their Report and audited Accounts of the Company for the financial year ended 31 st March, 2015.

FINANCIAL & OPERATIONAL RESULTS

(Rs. in Lacs)

Financial Year Financial Year 31st March, 2015 31st March, 2014

FINANCIAL RESULTS

(a) Gross Turnover 18,949.35 16,472.34

(b) Operating Profit Before Finance 561.56 1,637.29 Cost &Depreciation

(c) Finance Cost 1,607.46 1,318.29

(d) Cash Accruals (1,045.90) 319.00

(e) Depreciation & Amortization 396.01 591.18

(f) Profit (Loss) before extraordinary (1,441.91) (272.18) items

(g) Extraordinary Item of Exp. - -

(h) Profit (Loss) Before Tax (1,441.91) (272.18)

(i) Provision for Tax

- Deferred Tax (401.82) 23.68

- Income Tax of earlier year - 0.02

(j) Profit (Loss) After Tax (1,040.09) (295.88)

(k) Balance Brought Forward from (897.11) (732.15) last year

(l) Transfer from General Reserve - 130.92

(m) Profit (Loss) Carried Forward to (1,937.20) (897.11) Balance Sheet

DIVIDEND:

In view of losses company is unable to pay Dividend.

OPERATIONAL RESULTS SUGAR UNIT

The comparative figures in regard to duration of season, cane crush, sugar recovery and production for the year ended 31 st March, 2015 vis -a-vis previous financial year ended 31 st March, 2014 in respect of the Sugar Factory of your Company are given below:-

Financial Year Financial Year 31st March, 2015 31st March, 2014

1. Duration of crushing (gross days) 131 110

2. Cane crushed (Lac Qtls.) 52.35 48.42

3. Recovery (%) 8.62 9.16

4. Production (Lac Qtls.) - 4.51 4.43

Your company has faced extensive damage and losses due to 2 consecutive years' of natural calamities. The Phailin Cyclone occurred in October' 2013 followed by Hudhud Cyclone in October'2014 which devastated the sugarcane quality in Riga area and reduced recovery in both years by about 0.5%. This resulted into estimated loss of Rs. 7 Crores for each financial year of 2013- 14 and 2014-15. The State government of Bihar constituted a committee and visited the affected area to asses losses, but till date no relief has been provided to affected sugar mills inspite of genuine demand.

The net sales of sugar unit increased from Rs.123 Cr. to Rs. 138 Cr. i.e. increase of 12%. The sales increased due to volume increase in sales quantity of sugar.

There has been five years of continuous surplus production of sugar in the country leading to glut in domestic market and price decline drastically. The closing stock of sugar during the year end was valued lower than cost of production, leading to substantial loss in sugar segment despite accounting for the financial assistance equivalent to of Rs. 26.75 per qtl. of sugarcane from state government of Bihar.

Throughout the year 2014-15 the sugar price remains subdued. After protected submission by the industry the government increased the import duty on sugar from 15% to 25% and then to 40%. But by then the unfettered import did irreparable damage to the domestic sugar industry. Moreover the import of raw sugar under advance license were allowed with exporting obligation of white sugar within 18 months. This also flooded the domestic market, which were already facing glut.

The FRP for the season 2014-15 were increased by Central Government from Rs. 210 per qtl. to Rs. 220 per qtl. linked with basic recovery of 9.5%. During last 5 years the FRP has been increased by 110% inspite of the facts that sugar price has not shown any increase during these period. The CACP while recommending FRP for 2014-15 had projected sugar price of Rs.3200 to Rs. 3400 per qtl. But actual realization is much lower than that. Further the State governments continued to interfere in determination of sugarcane price, which is much higher than FRP, disregarding the sugar price realization in the market. This sugarcane price forced on sugar factories by state government has no link with sugar price and is disproportionately very high.

Relief by Bihar Government

In Bihar the cane Price for the season 2014-15 was maintained at Rs. 255 per qtl. for normal varieties, Rs. 245 per qtl. for lower varieties and Rs. 265 for premium Varieties. Transport rebate on out center cane remains at Rs. 15 per qtls.

In a major boost the state government of Bihar has realized the problems being faced by the sugar industry and announced relief measures by way bonus on cane price of Rs. 5 per qtl. directly to the farmers and extend relief to sugar factories of Bihar equivalent to Rs. 27.50 per qtl. of sugarcane by way of reduction of purchase tax (Rs. 1.75 per qtl.), ZDC Commission ( Rs. 4.00 per qtl.) , increase in molasses price by Rs. 100 per qtl. (equivalent Rs. 5 per qtl of cane.) and subsidy in cash of Rs.16.75 per qtl. The above steps of state government has resulted into financial saving/benef it/ relief to the company to the extent of Rs. 13.18 Crores on cane crush of 47.94 Lacs Qtl. during the season 2014-15 in comparison to last year. However these relief proved insufficient in view of wide gap between lower sugar price realization in comparison to cost of production.

The molasses price in Bihar during the year were revised from Rs. 187.50 to Rs. 287.50 per qtl.

The continued higher interest rate during the year further impacted the profitability. Due to negative outlook of sugar industry the Bank downgraded the rating of sugar companies and thus cost of funds increased.

Therefore comparatively high cane price, lower sales realization and increase of interest burden impacted the profitability of the company and industry.

DISTILLERY UNIT

Financial Year Financial Year 31st March, 2015 31st March, 2014

1. Production of Industrial Alcohol 130.82 121.49 (Lac BL)

2. Sale of Industrial Alcohol/ for Transfer

Country Liquor (Lac BL) 111.73 111.34

3. Supply of Ethanol (Lac BL) 7.20 2.00

The Rectified Spirit price has been revised by Bihar Government from Rs. 28.80 to Rs. 35.80 wef 5.12.2014 per BL for Grade I, which the company is making.

ETHANOL

The company participated in Tender floated by Oil Marketing Companies (OMC) and got LOI for supply of ethanol to the depot of OMC in Bihar. The state government of Bihar during the year continued policy to allow only 5% of total molasses production in the state for manufacture of Ethanol by the state distilleries. As such our production of Ethanol during the year was 7.5 Lacs Litre . Now state government are considering to increase molasses allotment to 10% , which will definitely increase the Ethanol production.

The ethanol supply price were revised to Rs. 49 per BL within delivery of 100kms and Rs. 49.50 per BL within delivery beyond 100 kms. to the Depot of OMC all inclusive.

COUNTRY LIQUOR

The manufacturing and supply of Country Liquor in sachets performed well during the year. The company's distillery got exclusive License for manufacture and supply of Country Liquor in Pet Bottle to Bihar State Beverage Corporation Limited for a period of 5 years starting from 1 st April, 2014 in Muzzafarpur Zone. But due to delay in implementation by the state excise department in switching from sachet to pet bottle it started manufacturing in pet bottle from February, 2015.

SEGMENT-WISE PERFORMANCE:

During the reporting period sugar segment contributed 75 percent of net sales of the company whereas Distillery accounted for 25 percent. The company identified two business segments in line with the Accounting Standard on Segment Reporting, Segment- wise Revenue, Results and Capital Employed is stated in Note No.32 of financial statement enclosed with the Annual Report.

INDUSTRY STRUCTURE & POLICY

Structure

Sugar Industry, is seasonal in nature and directly dependent on monsoon for availability of adequate sugar cane. India is the largest consumer and second largest producer of sugar in the world, contributing over 15 percent of the world's sugar production through over 600 sugar factories situated in different parts of the country. The sugar Industry is the largest agro based industry in India. This industry also provides valuable by-products like bagasse, molasses and press mud. The availability of these by-products had led to setting up of Alcohol/Ethanol/co-generation of Power and Organic Manure plants. Over 5 Crore farmers, large number of agricultural labourer are involved in sugarcane cultivation and its harvesting operations. The growth of sugar industry has a powerful impact on the rural economy. Integrated Sugar Industry (comprising sugar, molasses, alcohol, power and bio-fertilizer) enjoys annual turnover of about Rs. 85,000 Crore and contribute about Rs.3,000 crore to the Central Government Exchequer by way of central excise duty every year beside state taxes on sugarcane and hefty taxes collected by state as excise and VAT on sale of spirit in the state which run an estimated Rs.10,000 crores annually. Since sugar industry is in loss income tax is not being paid present, but the cola and confectioneries, Biscuit, Ice-cream company are making huge profit due to lower cost of sugar and thus paying hjgher Income Tax. Sugar Industry accelerates rural development through farm employment as well as business opportunities in transport and communication.

Sugar has been declared as an 'essential commodity' under the Essential Commodities Act, 1955. Under Sugarcane (Control) Order, 1966, the Government of I ndia fixes cane price called Fair and Remunerative Price (FRP) for sugarcane every year based on the recommendations of the Commission on Agricultural Costs & Prices. However many state government fixes higher cane price for the sugar factories in their state which is about 25% higher than FRP.

Sugar Cycle

The Indian sugar industry is characterized by cycle of high and low sugar production. This cycle of 3-4 years is broadly of two types viz. Natural comprising climatic variation, water availability and pest attacks. The other is induced cyclicality which have sequence like -- higher sugar production and accumulation of stock -- decline in sugar prices & profitability -- higher sugarcane arrears -- decline in area under cultivation & Lower cane production -- lower sugar production -- lower sugar availability and stock and thus increase in sugar prices --- improved profitability & low cane arrears -- higher cane production --higher sugar production and so on. Every time the cyclicality reaches its low government have to step in to provide Fiscal support in the form of Export subsidy, Buffer Stock creation, Interest Free Loans etc. This cycle has broken and India is having higher production of sugar for last five consecutive years.

The fundamental problem of the Indian Sugar Industry is that there is no parity between the price of raw material i.e. sugarcane and its finished goods of sugar. Illogical intervention of state government cause wide economical distortation in sugar industry. In almost all major sugar producing countries of the world the price of cane paid to the farmers depends on realization from sugar.

Rangrajan Committee Report-Linkage of Raw Material Costs and Sugar Realization

The main recommendation of Rangrajan Committee report of the year 2012 regarding linkage of cane price with sugar price and its by products has not been implemented so far. The committee has suggested for revenue sharing model under which 70% of sugar value and each of its major three by-products would be paid to farmers. Rangrajan Committee has indicated a derived cane price formula. It indicates that cane price will not be an absolute but linked to another variable. Cane price will be linked to the price of sugar in the market place. The higher the sugar realizations, the greater will be the cane price. This is an internationally tested model. This ensures that any increase in sectors profitability is equitably shared between its manufactures and growers. The cane grower will not be treated outsider, but as partner of entire value chain. The Rangrajan committee has gone a step further in this proposed linkage; it has proposed a sharing percentage at a level higher than what is practiced abroad, which more than secures the interest of farmers.

Fixation of cane price at high level than the market price of sugar should be made illegal. Various committees and high-level committee like Rangarajan have said so. According to Rangrajan Commitee, "A sugar unit without any by-products' business will have to pay cane price of 70% of its revenue realisation, while it will have to spend 30% on its functioning. On the other hand, a sugar factory with by-products business will have to pay cane price of 75% of its revenue realization from sugar. The cane price to be fixed taking into account this formula."

Maharashtra and Karnataka Government have established Control Board to address market linked cane pricing over a period of time. But until these Board become fully effective and other key states also creates a similar mechanism for cane price , India will remain among the few major markets where the price of cane is not linked with market price of sugar. Consequently cost of production is often higher than the market price of sugar, creating losses to sugar mills and cane price arrears to the farmers.

Distillery & Ethanol

Movement and distribution of Molasses and its finished products Alcohol are governed entirely by the State Government. The ethanol blending program has suffered in most of the state as they are reluctant to allow permission for allocation of alcohol for production of ethanol. The state authority put hurdles on ethanol production due to perceptible fear of losing revenue and meeting state requirement for potable alcohol.

Co-Gen of Power

The Company has set-up co-generation Plant for producing additional 3 MW of Electricity. The Company has received all statutory approvals toward this, and Power Purchase Agreement (PPA) were signed on 1st September, 2014, but power could not be supplied during the season 2014-15 due to different hurdles at government department. The company is optimistic that co-gen will start selling power from season 2015-16. This forward integration will significantly contribute to the profitability of the company.

Pollution Control- Zero Discharge Company

The Sugar and Distillery factories of the company are Zero Discharge Plants as per norm of Central Pollution Control Board and Ministry of Forest and Environment. The company treat the entire solid waste generated from Sugar factory which is generated in the form of Press-mud and liquid generated from Distillery in the form of spent wash for production of Bio-Compost. For this the company has set-up Digesters, RO, Lagoon and Bio-compost facilities on 17 Acres of Land. The Digesters is capable of generating bio-gas which is replacement of fossil fuel.. The Bio-compost produced is rich in all organic nutrients required for fertility of the land. The said bio-compost is sold to farmers who supply sugarcane to company and also to other farmers and even used in Tea Gardens of Assam and Darjeeling. Further the water generated from RO is used in the plant for various purposes.

Thus the company is not only zero discharge company, but is also generating economic value from such waste products and rejuvenating the farm land through use of organic fertilizer. The company has been awarded ISO 14000: 2004 in recognition of the organization's Environmental Management System which comply with ISO: 14001:2004.

CANE & SUGAR POLICY

* The Fair and Remunerative Price (FRP) price of sugarcane for the season 2014-15 was fixed at Rs. 220 per qtl. (last year Rs.210) linked with basic recovery of 9.5% , subject to premium of Rs.2.32 per qtl. for every 0.1% increase.

* The central government announced a subsidy of Rs. 4,000 per MT on production and exports of raw sugar for 1.4 millions tons of raw sugar for the season 2014-15.

* The central government also hiked the import duty on sugar from 25% to 40%.

* The period of for discharging export obligation under the advance authorization scheme for sugar was reduced to six months.

* The central government replace the policy of procurement of ethanol for blending programme from Tender based to fixed Price.

* The 12.5% excise duty on ethanol for blending purposes removed from 1 st October, 2015.

OPPORTUNITIES AND THREATS

OPPORTUNITIES

Sugar

India is largest consumer and second largest producer of sugar in the world. Sugar is an essential item of mass consumption and with increase in income and spending power the consumption pattern of rural India is changing directly & indirectly. The consumption of sugar is on increasing trend and there are huge scope for further increase in demand as I ndia is still lagging behind from many advanced countries in respect of per capita consumption of sugar. Thus there are opportunity in production and consumption of higher quantity of sugar in coming period.

Distillery

The consistent increase of demand of Rectified Spirit /Ethyl Alcohol in varied segment and mandatory provision of ethanol doping of 5% and its proposed increase to 10% will have strong support for growth of sugar industry. Ethanol production improves oil security and contributes to environmental protection.

Power

Sugar Industry offer immense scope for renewal energy project on co-generation basis, which provide clean energy. Due to this the increased demand of surplus bagasse has added imputes to revenue generation.

Bio-Compost Fertiliser

The bio-compost and vermi-compost fertilizers being produced by the company has got immense scope of demand in all major agriculture cultivation as it not only preserve the soil from excessive use of chemical fertilizer but also increase its fertility. The company is using distillery effluent and press mud from sugar and other agricultural waste to produce bio-compost which is very cost efficient. Thus the company apart from treatment of effluent and zero discharge adding value and thus expect good cash flow in near future.

THREATS

* No linkage of Sugar Price with cane price

* Unreasonable increase in cane price in comparison to sugar selling price.

* The sugar sector is exposed to political intervention.

* Industry cyclicality.

FUTURE PROSPECTS/OUTLOOK

The Indian sugar industry has had five consecutive surplus sugar years between 2010-11 to 2014-15. Over and above the sugar year 2015-16 is also going to be surplus year. The sugar year 2014-15 opened with a stock of 75 lac M/T against 93 lac M/T in 2013-14. The production for the season 2014-15 expected at 283 Lac M/T against 244 lac MT during previous season. The domestic consumption of sugar for 2014-15 expected at 248 lac M/T against 241 Lac M/T last year. The export of sugar for 2014- 15 is expected at 8 Lac M/T against 22 Lacs MT last year , which is basically shipment against advance license import. The closing stock thus estimated at 102 Lac MT,is about 5 months domestic consumption.

The Government announced an export incentive off Rs. 4000 per MT to facilitates export of raw sugar from the country. Surplus production in Brazil alongwith depreciating Brazillian currency weighed heavily on global raw sugar prices, which decline from 17.04 US cents per pound to 12.70 US cents per pound effectively, shutting down the window for export from India despite the export incentive from the government .

Cane prices arrears mounted to an all time high of about Rs. 21,000 crores.

The central government replace the policy for procurement of ethanol for blending programme from tender based to fixed price. Government announced removal of 12.50% excise duty on ethanol effective from season 2015-16. These measure would not only save valuable foreign exchange for the government, but would go a long way in encouraging the sugar industry in getting improved price of ethanol realization on long term basis.

Prices of by-products such as bagasse and molasses continue to remain remunerative driven by healthy demand by consuming sectors such as power, paper, alcohol and ethanol. Higher realizations for Rectified Spirit and Fuel ethanol result in improved returns from by-products. Forward integration into distilleries, country liquor, power generation, bio-fertilisers gives value addition. A significant part of profitability of the integrated sugar mills comes from by-products. It is believed that forward integration will remain crucial for improving profitability and riding thorough the cyclicity of the sugar industry.

SUGAR POLICY- TRAVESTY OF JUSTICE

The Hon'ble Supreme Court in its landmark judgment dated 22nd Sept 1993 in the matter of Shri Malaprabha Cooperative Sugar Factory Limited vs Union of India stated that for the purpose of fixation of Levy Price under 3 (3-C) of the Essential Commodities Act, 1955 the Government must have regard to the four factors mentioned under section 3 (3-C) of the Act. Those factors are:-

(1) Minimum Price of Sugarcane;

(2) Manufacturing costs;

(3) Taxes and duties; and

(4) Reasonable return on the capital employed.

The above factors were used to be taken into consideration while fixing the price of 60% portion of sugar (Levy Quota) in those years and balance 40% was meant for sale in the open market at higher price than Levy Price, to mop-up the average realization and compensate the loss on levy portion. But irony is that now 100% sugar is free, but factories are not able to get even the price as calculated under section 3 (3-C) of ECA mentioned above. Under the circumstance how it is possible to meet the cost and reasonable return.

While fixing the Fair and Remunerative Price (FRP) of sugarcane, CACP have to keep in mind the following factors of different players:-

FARMERS

a. Cost of production of cane by farmers

b. Return to the Farmers from alternative crops and general agriculture prices

SUGARFACTORY

c. Cost of cane on production of sugar based on recovery %

d. Cost of conversion from cane to sugar by the millers including labour, lime, sulphur, repair, maintenance, chemicals, packing materials, administrative cost etc.

e. Interest and Return on capital employed by the factory

f. Sale price of sugar and by products

CONSUMER

g. The availability of sugar to consumer at a fair price

The sale price of sugar and by products must cover item (c), (d) and (e) above. But ironically even the item (c) above i .e. cost of cane (FRP) is not covered in sale price of sugar presently.

The CACP has taken a sugar price realization between Rs. 3,200 /- per Qtl. to Rs. 3,400/- per Qtl., while calculating FRP for cane of Rs. 220 per Qtl. for season 2014-15 , but realization is much less than that.

The result - Sugar Industry is Bleeding, Farmers are suffering, Bankers and Investors are tottering.

All this mess in the name of Politics. General Public hardly consume 30% of sugar sold in India and sugar is not their priority items, but they strive for staple food, vegetable, dal, edibile oils whose price is high skyrocketing. Even the packet of idodised salt is costlier than sugar. But nobody is bothered.

An upward movement from current price of sugar by Rs. 5 hardly affect a family of five as their monthly budget will go up by Rs. 25 only which is price of 1 litre mineral water, half kg vegetable, 250 gram of edible oil, 1 kg of salt, just 1 piece of Apple, half dozen of banana, 2 pieces of Mango, one day pocket money of class VI11 school going children. But this Rs. 5 will save 5 Crore sugarcane farmers and their family.

But it appears that government is under imminent pressure and is hell-bound to protect the interest of Institutional buyers of sugar like Cola, Beverage, Confectionery, Biscuits, Ice-cream, Sweet makers who consume 70% sugar. In this pursuit the government is :-

(a) destroying the life of 5 crore farmers,

(b) ruining the future of 600 plus sugar factories with Co-Gen, Alcohol, Bio-fertilizer and Power,

(c) sinking Investment of more than Rs. 2,00,000 Crore in Sugar Industry,

(d) hitting hard the banks because of growing NPA,

(e) destroying the wealth of millions of investors who have invested in listed companies which owns hundreds of sugar factories with distillery & co-gen and

(f) ultimately destroying the Rural economy.

Again question arises - in whose interest government is following the distorted policy?

Are we not helping the Brazil sugar industry on the cost of Indian farmers, by destroying our own sugar industry which has potential to become the prominent player in world in sugar export ?

A question arises when there is cane price arrears mounting every year, why the farmers are sowing the surplus cane for last 5 five consecutive years and breaking the sugar cycle? The answer lies in the fact that sugarcane price is still better than other crops where the payment is also statutorily guaranteed. But how long the said price will be guaranteed unless the sugar factories do not get corresponding price of sugar?

By this way the government is also violating the fundamental right as enshrined in Article 19(1) (g) of Constitution of India, which states that

"All citizen shall have the right to practice any profession, or to carry on any occupation, trade or business."

By distorted sugar policy the government is infringing and taking away the right of free and fair profession of Farmers and Business of sugar mills.

In a welfare state the policy is made for benefit of the people at large. But by current policy the government is not benefiting the mass but handful of people and destroying the lives of crore of hapless people and Industry.

Where is the Justice?

When the FRP is legally mandated to pay then the end product , ' sugar' should also be legally mandated to have corresponding Fair & Reasonable Price.

LONG TERM SOLUTION TO SAVE SUGAR INDUSTRY

The Central Government cannot reduce the FRP, all though which is exorbitantly high compared to sugar price realisation. As such only increase in the sugar prices can save cane growers and sugar Industry.

CACP in their recommendation while recommending FRP of Rs.230/- per Qtl for 2015-16 linked with basic recovery of 9.5% say as under:-

"A scientifically sound and economically fair methodology to determine prices of cane is to adopt hybrid approach i.e. prices of cane be determined by Revenue Sharing formula (RSF) or FRP, whichever is higher. Under the RSF the Total Revenue Pot (TRP)generated from the cane-sugar value chain, which is the value of sugar and its first stage by-products, be shared between the farmers and the millers in the ratio of their relative costs in producing cane at farm level and converting that cane into sugar and its by-products at factory level. This ratio works out to 75:25 at 10.31% recovery rate .However; arrangement under RSF needs to be aligned with FRP to protect the farmers in the event of any downward movement in prices of sugarcane. The FRP would serve as the floor price, which the farmers would receive even when sugar prices fall to a level, which leads to prices (as determined by RSF, say PRSF) lower than FRP. The Commission recommends that if price as determined by revenue sharing formula is less than FRP', the difference be financed by the Sugar Stabilization Fund to be created by the Government."

As such if CACP recom mendations are fully accepted then the Government have to create a fund which can finance the differences between RSF (Revenue sharing Formula) and FRP. On the basis of today's sugar prices the RSF of different region, on an average government have to finance Rs.80/- /quintal of cane crushed from the sugar stabilization fund. Taking the expected production of sugar of 280 Lac tonne next year, on 10% recovery the cane crush of 2,800 Lacs tonne. So requirement of fund will be @ of Rs. 800/- per qtl. of sugar will be Rs. 22,400 crorers. Under present economic scenario creating such a huge fund that too year after year will be very difficult for the government .

Thus, there is only one solution which can save all as mentioned below:-.

(a) The government should fix MSP for sugar on the basis of recommendation of CACP calculated under the Essential Commodity Act to safeguard the sugar cane growers interest and to minimize the losses incurred by the industry.

(b) It should be made legally binding that no sugar factories can sell, sugar below MSP as recommended by CACP.

(c) To reduce the domestic inventory, export of 20% sugar production should be made compulsory. These export should be shipped out of sugar factories situated near the port and coastal area of the country. However keeping in mind the depressed international market conditions there will be losses on such export. To mitigate this export loss on 15% sugar exported, it should be allocated to balance 85% sugar meant for domestic consumption to MSP as per CACP calculation. For example if the quantum of loss on export of 15% sugar work out at Rs. 150 per qtl. of sugar meant for domestic consumption of 85%, then for MSP should be increased from Rs. 3,200 to Rs.3,350 in Maharashtra and Karnataka and from Rs.3,400 to Rs. 3,550 in Northern India.

(d) Some people may say that it is in full control, but this is not in a full control, since factories are free to sell the sugar above MSP. There have to be restriction of selling maximum 8% of the sugar in one month including exports. Factories will be free within that 8% bar to take their own decision to sell any percentage upto 8% in any month.

Through above mechanism the Central Government will not have to bear any burden and industry will be able to pay to the cane growers. If this is done, this will solve the problems of coming years.

(e) To ward-off the Import the custom duty should be increased from 40% to 60%.

(f) For the cane dues of last years, Government should advise the banks to restructure the accounts of the sugar companies by converting at-least 50% working capital loan to working capital term loan for 7 years at reasonable interest with two years moratorium. This will enable the factories to clear old outstanding and farmers will get their cane dues in time.

This will be win-win situation for all. Sugar factories will realize the cane cost and conversion cost. Consumers will get sugar at a reasonable price i.e. 40/kg, which is prevailing in most part of the world and government will be saved from heavy burden of subsidy and Indian sugar trade will flourish in international market earning foreign exchange. Sugar machineries manufacturers will again start getting jobs and above all there will be no compelling circumstances to commit suicide by the poor farmers.

Committee of the Board

The details of composition of Audit Committee and other committees of the Board of Directors alongwith the attendance thereof is provided in the Corporate governance Report forming part hereof.

Audit Committee

The Audit Committee comprises Mr. Sharad Jha as its Chairman with Mr. Suyesh Borar and Mr. S.K.Goenka as members. All recommendations of the Audit Committee were accepted by the Board.

Information pursuant to Section 134 of the Companies Act, 2013

a. Extract of the annual return as provided under Section 92(3) of Companies Act, 2013 is enclosed -Annexure I

b. Eight meetings of the Board of Directors of the Company were held during the year on 25.05.2014, 29.05.2014, 12.08.2014, 26.09.2014, 08.11.2014, 14.02.2015, 17.03.2015 and 31.03.2015.

c. All the Independent Directors of the company have furnished declarations that they satisfy the requirement of Section 149 (6) of the Companies Act, 2013.

d. Relevant extracts of the Company's policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in section 178(3) of Companies Act, 2013 is enclosed - Annexure II. We affirm that the remuneration paid to the Directors is as per terms laid out in the Nomination and Remuneration Policy off the company.

e. There is no qualification, reservation or adverse remark or disclaimer made by the auditor in his report and by Company Secretary in practice in the secretarial audit report and hence no explanations or comments by the Board are required.

f. The details of Loans, Guarantees and Investment covered under the provisions of section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements and also enclosed as Annexure-III.

g. There has been no materially -significant related party transactions made by the company with the promoters, the directors, the key managerial personnel which may be in conflict with the interest of the company at large. The company has formulated a policy on related Party Transactions and also on dealing with Related Party Transactions. The policy is disclosed on the website of the company (www.rigasugar.com). All related party transactions as placed before the Audit Committee has also received approval from the Board. Your Directors draw attention of the members the Note No. 33 to the financial statement which set out Related Party Disclosures.

h. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed - Annexure IV

i. The company has laid down policy on risk assessment and minimization procedures and the same is periodically reviewed by the Board. The Policy facilitates in identification of risk at appropriate time and ensure necessary steps to be taken to mitigate the risk. Brief details of risks and concerns are given in this Board Report.

j. The corporate Social Responsibility Committee has formulated and recommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicating the activities of the company.

The Annual Report on CSR activities is not annexed herewith due to non- applicability of relevant provisions to the company due to losses.

k. In compliance with the Companies Act, 2013 and clause 49 of the Listing Agreement, during the year Board adopted a formal mechanism for evaluating its performance as well as that of its Committee and Individual directors, including the Chairman of the Board.

The evaluation of Independent was carried out by the entire Board and that of the chairman and Non-Independent directors were carried out by the I ndependent directors.

The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its committee with the company.

RISK AND CONCERN SUGAR

(a) Delay in evolving a rational Sugarcane Pricing Policy having link with sugar price is detrimental to growth of the industry.

(b) The output of sugar, an agro-based product, is influenced by climatic vagaries.

(c) Sugar Industry being cyclic in nature, the growth is hampered during downtrend.

DISTILLERY

(a) Lack of clear cut policy of the State Government and time consuming regulation of the movement, distribution and pricing of molasses and Industrial Alcohol are major concerns in respect of Distillery operations.

(b) Inconsistent policy of the State government in the implementation of the Ethanol Blending Programme is matter of concern.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has adequate systems and internal control procedures to safeguard the assets of the company and to ensure maintenance of proper accounting records. There is also an Internal Audit System in place which reviews the key business and controls and also test checks on routine transactions and reports deviations. Besides, an Audit Committee periodically reviews the functioning of the entire system.

CHANGE IN SHARE CAPITAL

The company during the year on 25.09.2014 allotted 18,00,000 equity share warrants of Rs.10/- each at a price of Rs.15.20 per warrant convertible into equity share of Rs. 10 and premium of Rs. 5.20 each on preferential allotment basis as per SEBI (ICDR) Regulations, 2009. The company received Rs. 68.40 Lacs as 25% allotment amount as advance toward said issue of share warrants. The allottee have option to convert the said warrants into equity shares within 18 months of allotment of warrants.

The company during last 6 years raised Rs. 13.56 Cr as equity

CREDIT RATING

CARE maintained credit rating for the company's Long-term and short-term debts at CARE B and CARE A4 respectively. FIXED DEPOSITS:

The company has neither accepted nor renewed any deposit from public within the meaning of section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposit) Rules, 2014 during the year under the review.

AUDITORS

(a) Statutory Auditors

The observation of Statutory Auditors in their report, read with the relevant notes to accounts are self explanatory and therefore, do not require any further explanation.

M/s. K.N. Gutgutia & Co., Chartered Accountants ( ICAI Registration No. 304153E) , Kolkata, Statutory Auditors of the Company, retire and being eligible offer themselves for re-appointment.

(b) Cost Auditors

The Board appointed M/s. Mani & Co., Cost Accountants (Firm Registration No 000004), Kolkata, to conduct cost audit of the company relating to sugar (including industrial alcohol) for the financial year ended 31st March, 2014 and 31st March, 2015 after receiving clarification from government . The remuneration payable to the Cost Auditors for the said years being placed for ratification by the Members at the forthcoming Annual General Meeting.

(c) Secretarial Auditor and Secretarial Audit Report

In pursuance of section 204 of the Companies Act, 2013 M/s H.M. Choraria & co., Company Secretaries were appointed as secretarial Auditors to carry out Secretarial Audit for the financial year 2014-15. Their report is annexed to this report ass Annexure-V.

DIRECTORS:

Mrs. Sulekha Dutta, was appointed as Additional Director of the company in the category of Independent Director by the Board in its meeting held on 31st March, 2015. She shall hold office upto the date of ensuing Annual General Meeting of the company and will be eligible for re-appointment as Independent Director.

All Independent Directors have given declaration that they meet the criteria of Independence as laid down under section 149 (6) of the Companies Act, 2013 and clause 49 of the Listing Agreement.

Mr. Pankaj Tibrawalla ceased to be Director of the company wef 25th March, 2015 due to resignation. The Board placed on its record its appreciation for the services and advice made by Mr. Tibrawalla during his tenure as Director.

DIRECTORS' REPONSIBILITY STATEMENT:

Your Directors state that:-

(i) in preparation of the annual accounts for the year ended 31st March, 2015 , the applicable accounting standards have been followed alongwith proper explanation relating to material departures, if any ;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company and of the loss of the company as 31st March, 2015;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Directors have prepared the annual accounts on 'going concern' basis;

(v) the Directors have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and are operating effectively; and

(vi) directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

PERSONNEL:

The particulars of employee are required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given as separate annexure attached hereto and forms part of this report as Annexure- VI.

CORPORATE GOVERNANCE:

The Corporate Governance form an integral part of this Report and are set out as Annexure- VII to this Report. The certificate from the Auditors of the company certifying compliance of condition of Corporate Governance stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges is also annexed to Report on Corporate Governance.

KEY MANAGERIAL PERSONNELS

In compliance of provisions of section 203 of the Companies Act, 2013 the following persons were the key managerial personnel of the company:

(i) Mr. O.P.Dhanuka, Chairman & Managing Director

(ii) Mr. S.Prasad, Company Secretary

(iii) Mr. R.N.Sharma, Chief Financial Officer

Code of conducts and ethics

The Board of company has adopted a Code of Conducts and ethics for the Directors and Senior Executives of the company. The code is available on the company's website at www.rigasugar.com.

Significant & material orders passed by the regulators

During the year under review, no significant and materials orders were passed by the Regulators or courts or Tribunals impacting the going concern status and the Company's operations.

Whistleblower Policy

The company has in place a whistleblower policy to deal with unethical behavior, victimizations, fraud and other grievances or concerns, if any. The Whistleblower policy can be accessed on the company's website www.rigasugar.com.

Material changes and commitments affecting the financial position of the company after 31st March, 2015

The sugar prices have further reduced after 31 st March, 2015.

LISTING OF EQUITY SHARES:

The Shares of the Company are listed on the Stock Exchanges of Calcutta and Mumbai. The Company has been regularly paying the Listing Fees to each Stock Exchanges.

ANNEXURES FORMING PART OF THIS REPORT OF THE DIRECTORS

The Annexure referred to in this report and other information which are required to be disclosed are annexed herewith and forms a part of this report of the Directors:-

Annexure Particulars

I Extract of the Annual Return as per Form MGT-9

II Policy on selection of Directors appointment and remuneration

III Details of Loan , Guarantees and Investment

IV Particulars of conservation of energy, Technology Absorption and Foreign Exchange earnings and outgo

V Secretarial Audit Report

VI Particu lars of Employees

VII Corporate Governance Report

APPRECIATION:

Your Directors express their appreciation for the support and contribution by Cane Growers, Bankers, Central and Bihar State Government, Suppliers, Customers and the valuable services rendered by the Employees at all levels.

For and on behalf of the Board,

Kolkata, O. P. Dhanuka

Dated : 29th May, 2015 Chairman & Managing Director

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Mar 31, 2014

THE SHAREHOLDERS

The Directors have pleasure in presenting their Report and audited Accounts of the Company for the financial year ended 31st March, 2014.

FINANCIAL & OPERATIONAL RESULTS

FINANCIAL RESULTS (Rs. in Lacs)

Financial Year Financial Year 31st March, 2014 31st March, 2013

(a) Gross Turnover 16,472.34 19,999.76

(b) Operating Profit Before Finance Cost & Depreciation 1,637.29 1979.14

(c) Finance Cost 1,318.29 1,559.36

(d) Cash Accruals 319.00 419.78

(e) Depreciation & Amortization 591.18 679.53

(f) Profit (Loss) before extraordinary items (272.18) (259.75)

(g) Extraordinary Item of Exp. — 90.83

(h) Profit (Loss) Before Tax (272.18) (350.58)

(i) Provision for Tax

- Deferred Tax 23.68 (29.25)

- Income Tax of earlier year 0.02 (0.42)

(j) Profit (Loss) After Tax (295.88) (320.91)

(k) Balance Brought Forward from last year (732.15) (411.24)

(l) Transfer from General Reserve 130.92 —

(m) Profit (Loss) Carried Forward to Balance Sheet (897.11) (732.15)

DIVIDEND :

In view of losses company is unable to pay Dividend.

OPERATIONAL RESULTS SUGAR UNIT

The comparative figures in regard to duration of season, cane crush, sugar recovery and production for the year ended 31st March, 2014 vis-a-vis previous financial year ended 31st March, 2013 in respect of the Sugar Factory of your Company are given below :-

Financial Year Financial Year 31st March, 2014 31st March, 2013

1. Duration of crushing (gross days) 110 115

2. Cane crushed (Lac Qtls.) 48.42 46.85

3. Recovery (%) 9.16 8.91

4. Production (Lac Qtls.) - From Sugarcane 4.43 4.17

5. Production from Raw sugar — 0.24

6. Total Production of Sugar 4.43 4.41

There was severe storm and heavy rainfall in the 3rd week of October, 2013 in certain areas of North Bihar due to effect of "Phailin Cyclone", which caused extensive damages of cane and standing crops in certain districts of Bihar like Sitamarhi, Sheohar and Muzaffarpur from where sugarcane is supplied to our factory by sugarcane growers. The strong wind hit the standing sugarcane crop, which fell down on the ground that retarded growth and sucrose formation in cane. Due to the severe impact of Phailin, our sugar factory got weak and sticky cane with low sucrose content and as a result recovery fell down. The magnitude of additional loss of sugar recovery was 0.30%. If this 0.30% loss is converted into money terms the estimated loss is valued at about Rs. 4.5 Crores. A team of State Cane Department visited our factory for assessment of the losses due to Phailin Cyclone but the relief is awaited.

The net sales of sugar unit decreased from Rs.158 Cr. to Rs. 123 Cr. i.e. decrease of 22%. The sales were down due to lower sales quantity of sugar and calculated decision of the management to hold sugar so as to sale the sugar in expected firming market ahead.

There has been three years of continuous surplus production of sugar in the country. Inspite of that import of sugar is continued. This has created glut in the domestic market, pushing sugar price down. Throughout the year 2013-14 the sugar price remains subdued. Inspite of surplus availability of sugar the government of India allowed import of sugar by reducing import duty progressively from 60% to 10%, which subsequently increased to 15%. Due to reduction of import duty raw and white sugar is being imported into the country which is further depressing the sugar price in the domestic market, much below cost of production. So far as per port data about 30 Lac MT of raw and white sugar has already been imported into the country.

During the year Global sugar prices were ranges bound with downward trend due to excess supply. World production of sugar in 2013-14 has been estimated by FAO at 180 Millions tones compared to 175.2 millions tones last year. Consequently international prices declines from USD 416/tonnes to USD 388/tones in first half of the year 2013, which prompted import of sugar by Indian Importer.

But sugar production in Brazil is expected to be lower in current season owning to prolong dry spell. This lower production and possible higher mix of ethanol with gasoline mandate could strengthen international sugar prices.

The FRP for the season 2013-14 were increased by Central Government from Rs. 170 per qtl. to Rs. 210 per qtl. linked with basic recovery of 9.5%. However State governments continued to interfere in determination of sugarcane price, which is much higher than FRP, disregarding the sugar price realization in the market. This sugarcane price forced on sugar factories by state government has no link with sugar price and is disproportionately very high.

In Bihar the cane Price for the season 2013-14 was maintained at Rs. 255 per qtl. for normal varieties, Rs. 245 per qtl. for lower varieties and Rs. 265 for premium Variety. Transport rebate on out center cane remains at Rs. 15 per qtls. The government of Bihar during the year provided some relief to sugar industry of Bihar like incentive of Rs. 5/- per qtl. on sugarcane, exemption of purchase tax on sugarcane for the season 2012-13 and 2013-14 and reduction of Zonal Development Commission on sugarcane from 1% to 0.20% for 2012-13 and 2013-14. However these relief proved insignificant in view of wide gap between lower sugar price realization in comparison to cost of production due to higher cane price.

The molasses price in Bihar during the year was fixed by the state government at 187.50 per qtls.

The continued higher interest rate during the year impacted the profitability. Due to negative outlook of sugar industry the Bank downgraded the rating of sugar companies and thus cost of funds increased.

Therefore higher cane price, lower sales realization and increase of interest burden impacted the profitability the company and industry. DISTILLERY UNIT : Financial Year Financial Year 31st March, 2014 31st March, 2013

1. Production of Industrial Alcohal (Lac BL) 121.49 129.87

2. Sale of Industrial Alcohal/ Transfer for Country Liquor (Lac BL) 111.34 140.47

3. Supply of Ethanol (Lac BL) 2.00 —

The Rectified Spirit price has been revised by Bihar Government from Rs. 24.55 to Rs. 28.00 per BL after a gap of four years.

ETHANOL:

The company participated in Tender floated by Oil Marketing Companies (OMC) and got LOI for supply of ethanol to the depot of OMC in Bihar. During the year the state government of Bihar made policy to allow 5% of total molasses production in the state for manufacture of Ethanol by the state distilleries, which can increase to 10% depends on availability of molasses and requirement of rectified spirit for production of country liquor in the state. Thus after gap of two years company has been able to supply Ethanol to Oil Marketing companies, although very little quantity in comparison to capacity of Ethanol.

The Basic ethanol supply price is Rs. 37 per BL. as per last tender.

COUNTRY LIQUOR :

The company has made foray in making and supplying country liquor made out of Rectified Spirit being produced by the company''s Distillery and hitherto supplied to other license holders. This is value addition to the company''s product and contributing to bottom line of the company.

The manufacturing and supply of Country Liquor in sachets performed well during the year.

The company''s distillery during the year got exclusive License for manufacture and supply of Country Liquor in Pet Bottle to Bihar State Beverage Corporation Limited for a period of 5 years starting from 1st April, 2014.

SEGMENT-WISE PERFORMANCE :

During the reporting period sugar segment contributed 77 percent of net sales of the company whereas Distillery accounted for 23 percent. The company identified two business segments in line with the Accounting Standard on Segment Reporting, Segment-wise Revenue, Results and Capital Employed is stated in Note No.32 of financial statement enclosed with the Annual Report.

INDUSTRY STRUCTURE & POLICY :

Structure :

Sugar Industry, is seasonal in nature and directly dependent on monsoon for availability of adequate sugar cane. India is the largest consumer and second largest producer of sugar in the world, contributing over 15 percent of the world''s sugar production through over 600 sugar factories situated in different parts of the country. The sugar Industry is the largest agro based industries in India. This industry also provides valuable by-products like bagasse, molasses and press mud. The availability of these by-products had led to setting up of Alcohol/Ethanol/co-generation of Power and Organic Manure plants. Over 5 Crore farmers, large number of agricultural labourer are involved in sugarcane cultivation and its harvesting operations. The growth of sugar industry has a powerful impact on the rural economy. Integrated Sugar Industry (comprising sugar, molasses, alcohol, power and bio-fertilizer) enjoys annual turnover of about Rs. 85,000 Crore and contribute about Rs.3,000 crore to the Central Government Exchequer by way of central excise duty every year beside state taxes on sugarcane and hefty taxes collected by state as excise and VAT on sale of spirit in the state which run an estimated Rs.10,000 crores annually. Beside the direct taxes by way of income tax is additional source of revenue to the government from sugar industry. Sugar Industry accelerates rural development through farm employment as well as business opportunities in transport and communication.

Sugar has been declared as an ''essential commodity'' under the Essential Commodities Act, 1955. Under Sugarcane (Control) Order, 1966, the Government of India fixes cane price called Fair and Remunerative Price (FRP) for sugarcane every year based on the recommendations of the Commission on Agricultural Costs & Prices.

However many state government fixes higher cane price for the sugar factories in their state which is about 25% higher than FRP.

Sugar Cycle :

The Indian sugar industry is characterized by cycle of high and low sugar production. This cycle of 3-4 years is broadly of two types viz. Natural comprising climatic variation, water availability and pest attacks. The other is induced cyclicality which have sequence like - higher sugar production and accumulation of stock - decline in sugar prices & profitability - higher sugarcane arrears - decline in area under cultivation & Lower cane production - lower sugar production - lower sugar availability and stock and thus increase in sugar prices - improved profitability & low cane arrears - higher cane production - higher sugar production and so on. Every time the cyclicality reaches its low government have to step in to provide Fiscal support in the form of Export subsidy, Buffer Stock creation, Interest Free Loans etc. This cycle has broken and India is having higher production of sugar for last four consecutive years.

The fundamental problem of the Indian Sugar Industry is that there is no parity between the price of raw material i.e. sugarcane and its finished goods i.e. Illogical intervention of state government cause wide economical distortation in sugar industry. In almost all major sugar producing countries of the world the price of cane paid to the farmers depends on realization from sugar.

Rangrajan Committee Report-Linkage of Raw Material Costs and Sugar Realization :

The main recommendation of Rangrajan Committee report of the year 2012 regarding linkage of cane price with sugar price and its by products has not been implemented so far. The committee has suggested for revenue sharing model under which 70% of sugar value and each of its major three by-products would be paid to farmers. Rangrajan Committee has indicated a derived cane price formula. It indicates that cane price will not be an absolute but linked to another variable. Cane price will be linked to the price of sugar in the market place. The higher the sugar realizations, the greater will be the cane price. This is an internationally tested model. This ensures that any increase in sectors profitability is equitably shared between its manufactures and growers. The cane grower will not be treated outsider, but as partner of entire value chain. The Rangrajan committee has gone a step further in this proposed linkage; it has proposed a sharing percentage at a level higher than what is practiced abroad, which more than secures the interest of farmers.

Maharastra and Karnataka Government have established Control Board to address market linked cane pricing over a period of time. But until these Board become fully operational and other key states also creates a similar mechanism for cane price , India will remain among the few major markets where the price of cane is not linked with market price of sugar. Consequently cost of production is often higher than the market price of sugar, creating losses to sugar mills and cane price arrears to the farmers.

Distillery & Ethanol :

Movement and distribution of Molasses and its finished products Alcohol are governed entirely by the State Government. The ethanol blending program has suffers in most of the state as they are reluctant to allow permission for allocation of alcohol for production of ethanol. The state authority put hurdles on ethanol production due to perceptible fear of losing revenue and meeting state requirement for potable.

Co-Gen of Power :

The Company has set-up co-generation Plant for producing additional 3 MW of Electricity. The Company has received all statutory approvals toward this, but Power Purchase Agreement (PPA) could not be signed during the season 2013-14. The power supply to grid will start from sugar season 2014-15. This forward integration will significantly contribute to the profitability of the company.

CANE & SUGAR POLICY :

- The Fair and Remunerative Price (FRP) price of sugarcane for the season 2013-14 was fixed at Rs. 210 per qtl. (last year Rs.170) linked with basic recovery of 9.5%, subject to premium of Rs.2.10 per qtl. for every 0.1% increase.

- The government announced subsidy for export of raw sugar up to 4 million tonnes during 2013-14 and 2014-15 marketing years (October-September) and accordingly fixed the subsidy at ! Rs.! 3,300 per tonne for February- March, 2014 and decided to review it every two months.

- The central government, with a view to improve liquidity position of sugar factories for enabling them to clear cane price arrears of previous seasons and timely settlement of cane price of current season, notified ''the scheme for extending financial assistance to sugar undertakings 2014," The Loan is equivalent to last three year central excise duty paid on sugar and is for total period of five years with 2 years moratorium. The central government will bear interest subvention to the extent of 12% over five years period.

OPPORTUNITIES AND THREATS :

OPPORTUNITIES :

Sugar:

India is largest consumer and second largest producer of sugar in world. Sugar is an essential item of mass consumption and with increase in income and spending power the consumption pattern of rural India is changing. The consumption of sugar is on increasing trend and there are huge scope for further increase in demand as India is still lagging behind from many advanced countries in respect of per capita consumption of sugar. Thus there are opportunity in production and consumption of higher quantity of sugar in coming period.

Distillery :

The consistent increase of demand of Rectified Spirit /Ethyl Alcohol in varied segment and mandatory provision of ethanol doping of 5% and its proposed increase to 10% will have strong support for growth of sugar industry. Ethanol production improves oil security and contributes to environmental protection. The increase in ethanol price to Rs. 37 per BL during the year and proposed parity price with petroleum will have positive impact on sugar sector.

Power :

Sugar Industry offer immense scope for renewal energy project on co-generation basis, which provide clean energy. Due to this the increased demand of surplus bagassee has added imputes to revenue generation.

Bio-Compost Fertiliser :

The bio-compost and vermi-compost fertilizers being produced by the company has got immense scope of demand in all major agriculture cultivation as it not only preserve the soil from excessive use of chemical fertilizer but also increase its fertility. The company is using distillery effluent and press mud from sugar and other agricultural waste to produce bio-compost which is very cost efficient. Thus the company apart from treatment of effluent and zero discharge adding value and thus expect good cash flow in near future.

THREATS :

- The sugar sector is exposed to political intervention.

- Unreasonable increase in cane price in comparison to sugar selling price.

- Industry cyclicality.

FUTURE PROSPECTS/OUTLOOK :

The Indian sugar industry has had three consecutive surplus sugar years between 2010-11 to 2012-13. Over and above the sugar year 2013-14 is also going to be surplus year. The sugar year 2013-14 opened with a stock of 93 lac M/T against 66 lac M/T in 2012-13. The production for the season 2013-14 expected at 243 Lac M/T against 251 lac MT during previous season. The domestic consumption of sugar for 2013-14 expected at 237 lac M/T against 228 Lac M/T last year. The export of sugar for 2013-14 expected at 22 Lac M/T, whereas import as per port data is whooping 30 Lac MT against 7 Lac MT last year. The closing stock thus estimated at 107 Lac MT, is more than 5 months domestic consumption.

Prices of by-products such as bagassee and molasses continue to remain remunerative driven by healthy demand by consuming sectors such as power, paper and alcohol. Higher realizations for fuel ethanol will result in improved returns from by-products. Forward integration into distilleries, country liquor, power generation, bio-fertilisers gives value addition. A significant part of profitability of the integrated sugar mills comes from by-products. It is believed that forward integration will remain crucial for improving profitability and riding thorough the cyclicity of the sugar industry.

RISK AND CONCERN :

SUGAR:

(a) Delay in evolving a rational Sugarcane Pricing Policy having link with sugar price is detrimental to growth of the industry.

(b) The output of sugar, an agro-based product, is influenced by climatic vagaries.

(c) Sugar Industry being cyclic in nature, the growth is hampered during downtrend.

DISTILLERY :

(a) Lack of clear cut policy of the State Government and time consuming regulation of the movement, distribution and pricing of molasses and Industrial Alcohol are major concerns in respect of Distillery operations.

(b) Inconsistent policy of the State government in the implementation of the Ethanol Blending Programme is matter of concern.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY :

Your Company has adequate systems and internal control procedures to safeguard the assets of the company and to ensure maintenance of proper accounting records. Computerized Information System is available to capture, present and analysis the data for management information and decision-making. The company has installed ERP system for entire factory operation including sugarcane, raw material, store, manpower, sales, accounting. The company has implemented GPS system for survey and measurement of cane area which gives authentic figures. The management and control of factory operation is also under computerization and automation. There is also an Internal Audit System in place which reviews the key business and controls and also test checks on routine transactions and reports deviations. Besides, an Audit Committee periodically reviews the functioning of the entire system. The company has surveillance systems at critical places to control.

CHANGE IN SHARE CAPITAL :

The company during the year allotted outstanding 14,50,000 equity share warrants of Rs.10/- each at a price of Rs. 17.20 per warrant convertible into equity share of Rs. 10/- and premium of Rs. 7.20 each on preferential allotment basis as per SEBI (ICDR) Regulations, 2009. The said amount were used for strengthen the financial parameter of the company.

The company during last 6 years brought Rs. 13.56 Cr. as equity FIXED DEPOSITS :

The company is complying with Fixed Deposit Rules. There is no overdue Fixed Deposit or interest thereon at the end of the year.

AUDITORS'' REPORT :

The Notes on the Financial Statement referred to in the Report of the Auditors have been suitably explained by way of ''Notes on Accounts''.

COST AUDIT :

Cost Audit of Accounts of the Company for the year ended 31st March, 2014 in respect of Sugar and Industrial Alcohol are being conducted by M/s. Mani & Co., Cost Accountants, Kolkata, and necessary Report will be submitted to the Ministry of Corporate Affairs, Government of India.

The cost audit report for the financial year ended 31st March, 2013 was filed by the cost auditors with respect to sugar unit of the company on 19.09.2013, which is well within stipulated time.

DIRECTORS :

Mr. Pankaj Tibrawalla , Director who retires by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment.

Mr. N. C. Majumdar, Mr. Suyash Borar, Mr. Sarad Jha and Mr. S. K. Goenka are the independent Directors, whose period of office is liable to determination by retirement of directors by rotation under the erstwhile applicable provisions of the Companies Act, 1956. In terms of Section 149 and other applicable provisions of the Companies Act, 2013,

Mr. N. C. Majumdar, Mr. Suyash Borar, Mr. Sarad Jha and Mr. S. K. Goenka are being eligible and offer themselves for appointment as Independent Directors for five consecutive years for term upto 38th Annual General Meeting of the company. The company received declaration from all the independent Directors of the company confirming that they meet the criteria of Independent as prescribed under section 149(6) of the Companies Act, 2013.

DIRECTORS'' REPONSIBILITY STATEMENT :

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, as amended, with respect to the Directors'' Responsibility Statement, it is hereby confirmed :

(i) That in preparation of accounts for the financial year ended 31st March, 2014 , the applicable accounting standards have been followed;

(ii) That the Directors of the Company have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the loss of the Company for the year ended 31st March, 2014.

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

(iv) That the Directors of the Company have prepared the accounts of the Company for the year ended 31st March, 2014 on ''going concern'' basis.

CORPORATE GOVERNANCE :

The Corporate Governance form an integral part of this Report and are set out as separate annexures to this Report. The certificate from the Auditors of the company certifying compliance of condition of Corporate Governance stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges is also annexed to Report on Corporate governance.

PERSONNEL :

There was no employee of the Company getting remuneration so as to attract the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended as on date.

LISTING OF SHARES :

The Shares of the Company are listed on the Stock Exchanges of Calcutta and Mumbai. The Company has been regularly paying the Listing Fees to each Stock Exchanges.

CONSERVATION OF ENERGY :

Particulars in respect of conservation of energy, technology absorption and Foreign Exchange earning and outgo as required under Section 217(1)(e) of the Companies Act, 1956 are given in a separate annexure hereto and forming part of this report.

AUDITORS :

M/s. K. N. Gutgutia & Co., Chartered Accountants, Kolkata, Auditors of the Company, retire and being eligible offer themselves for re-appointment.

APPRECIATION :

Your Directors express their appreciation for the support and contribution by Cane Growers, Bankers, Central and State Government, Suppliers, Customers and the valuable services rendered by the Employees at all levels.

For and on behalf of the Board,

Kolkata,

Dated : 29th May, 2014 O.P. Dhanuka

Chairman & Managing Director

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Mar 31, 2012

The Directors have pleasure in presenting their Report and audited Accounts of the Company for the financial year ended 31st March, 2012.

FINANCIAL & OPERATIONAL RESULTS

FINANCIAL RESULTS (Rs. in Lacs)

For 12 months For 18 months Financial Year Financial Year 31st March, 2012 31st March, 2011

(a) Operating Profit Before

Finance Cost & Depreciation 1,708.37 1,806.62

(b) Finance Cost 1,570.65 1,095.19

(c) Cash Accruals 137.72 711.43

(d) Depreciation & Amortization 662.18 597.11

(e) Profit (Loss) Before Tax (524.46) 114.32

(f) Provision for Tax - Current Tax - 11.13

- Deferred Tax (51.15) 52.85

- Income Taxes of earlier year (4.27) (0.50)

(g) Profit (Loss) After Tax (469.04) 50.84

(h) Balance brought forward from last year 57.80 6.96

(i) Profit (Loss) Carried Forward to Balance Sheet (411.24) 57.80

DIVIDEND :

In view of losses company is unable to pay Dividend.

OPERATIONAL RESULTS SUGAR UNIT

The comparative figures in regard to duration of season, cane crush and sugar recovery for the year ended 31st March, 2012 vis -a-vis previous reporting period of 18 months financial year ended 31st March, 2011 (1st October, 2009 to 31st March, 2011, comprising 2 seasons) in respect of the Sugar Factory of your Company are given below :-

12 Months Financial 18 Months Financial Year ended Year ended 31st March, 2012 31st March, 2011

1. Duration of crushing (gross days) 113 193

2. Cane crushed (Lac Qtls.) 46.54 70.21

3. Recovery (%) 9.31 9.13

4. Production (Lac Qtls.) - From Sugarcane 4.33 6.39

Season 2011-12

For whole season 2011-12 the sugar factory operated for 120 days with cane crush of 48.13 Lac Qtls. with recovery of 9.31% against 121 days operation and cane crush of 48.11 Lac qtls. last year with recovery of 9.16%. The sugar factory successfully achieved and ran at expanded crushing capacity of 5,500 TCD during the season 2011-12. It made substantial saving of bagassee due to better operational performance which has got good market apart from own requirement for power in off-season and in Distillery.

The cane Price for the season 2011-12 was increased from Rs. 205 to Rs. 225 per qtl. for normal varieties (about 25%), from Rs. 195 to Rs. 210 per qtl. for rejected varieties (about 65%) and from Rs. 210 to Rs. 230 for premium Variety (about 10%). The rejected category has increased because many varieties has been declared as discarded this year by the state government. On the other hand the Transport rebate on out center cane has been increased from Rs. 8.50 to Rs. 10.00 per qtls. Moreover the state government has exempted the purchase tax of Rs. 1.75 per qtls. for 2010-11 and 2011-12 and has reduced the ZDC commission from 1.8% to to 1%. The above factors have overall actual impact on cane price increased by about Rs. 10/- per qtl. The molasses price during the year increased from Rs. 175 to Rs. 190 per qtls.

The sugar price during the year continued to remain below cost of production and thus sugar industry as a whole incurred losses. Although there was surplus production in the country but the government kept check on export of sugar. It was only from April, 2011 onward the government allowed restricted export of sugar on quota basis, according to which the total intended quantity of export were divided amongst all the sugar factories of country in proportionate to their production during last three years and option were given to sell the quota to other factories who actually doing physical export. As the export market was higher than domestic price it fetched premium to sell the export quota. Your company also sold the quota of export during the year on premium. This system works very well as all the factories were given equal opportunity to participate in export directly or indirectly and share profit and loss. However from April, 2012 the government removed this system and now any factory can export any quantity of sugar subject to registration with DGFT. Consequently now only sugar factory in coastal areas can export as for interior factories the transportation cost put them at disadvantageous position.

Due to higher production during the year the factories had to maintain higher level of inventory. The losses incurred by the factory compel them to bring more borrowing to fill the gap. Thus overall the working capital requirement increased during the year. Moreover the interest rate also increased in general. For sugar industry also due to downgrading of rating the bank increased the interest rate. Thus the interest expenses during the year increased tremendously.

Therefore higher cane price, lower realization and increase of interest burden impacted the profitability of the company and industry.

Expansion of Sugar Plant Capacity & Incentives

The sugar plant of the company successfully achieved expanded capacity from 5,000 TCD to 5,500 TCD during season 2011- 12. The company has got Memorandum of acknowledgement from SIA, Ministry of Commerce and Industry, Government of India for expansion from 5,000 to 6,000 TCD. The company proposes to undertake expansion to 6,000 TCD in season 2012- 13 after addition of few equipments. The company has applied to Bihar State Investment Promotion Board for registration of our expansion project. After achieving expansion to 6,000 TCD the company will be entitled for benefit for further expansion of 1,000 TCD (i.e. 5,000 TCD to 6,000 TCD).

DISTILLERY UNIT

12 Months Financial 18 Months Financial Year ended Year ended 31st March, 2012 31st March, 2011

1. Production of Industrial Alcohal (Lac BL) 105.14 98.61

2. Sale of Industrial Alcohal (Lac BL) 119.66 68.93

The Distillery Unit of your company made record production and sales during the financial year 2011-12.

The Ethanol Plant supplied only 5.20 Lac BL against 0.20 Lac B.L. in previous year. The state control price of Rectified Spirit remained at Rs. 24.55 per BL, which is continuing since April, 2009. The industry is making representation to state government for increase of the same, which is under consideration.

ETHANOL

The provisional ethanol price since last two years is continued at Rs. 27.00 per BL. Recommendations of Expert Committee led by Dr Saumitra Chaudhuri on pricing of ethanol are still under consideration of the Government.

The company participated in Tender floated by Oil Marketing Companies (OMC) and got LOI for supply of ethanol to the depot of OMC in Bihar. However the state government of Bihar has no policy on Ethanol and thus not allowing sufficient transfer of Rectified Spirit, which is under state control, for manufacture of Ethanol. In absence of that the production and supply of Ethanol in the state of Bihar is negligible.

In the state of Bihar the ambitious Central Government Ethanol Blending scheme is failing, unlike other states where there are least restriction on Ethanol production.

SEGMENT-WISE PERFORMANCE :

During the reporting period sugar segment contributed 80 percent of net sales of the company whereas Distillery accounted for 20 percent. The company identified two business segments in line with the Accounting Standard on Segment Reporting, Segment-wise Revenue, Results and Capital Employed is stated in Note No.34 of financial statement enclosed with the Annual Report.

The company has got common excise registration of sugar and distillery unit. Thus on molasses transfer there is no applicability of excise duty, besides entitlement of utilization of accumulated cenvat credit lying in distillery for clearance of sugar also. Thus company's cash flow has been increased to that extent.

INDUSTRY STRUCTURE & POLICY

Structure

Sugar Industry, is seasonal in nature and directly dependent on monsoon for availability of adequate sugar cane. India is the largest consumer and second largest producer of sugar in the world, contributing over 15 percent of the world's sugar production through over 600 sugar factories situated in different parts of the country. The sugar Industry is the largest agro based industry in India. This industry also provides valuable by-products like bagasse, molasses and press mud. The availability of these by- products had led to setting up of Alcohol/Ethanol/co-generation of Power and Organic Manure plants. Over 5 Crore farmers, large number of agricultural labourer are involved in sugarcane cultivation and its harvesting operations. The growth of sugar industry has a powerful impact on the rural economy. Integrated Sugar Industry (comprising sugar, molasses, alcohol, power and bio-fertilizer) enjoys annual turnover of about Rs. 75,000 Crore and contribute about Rs.3,000 crore to the Central Government Exchequer by way of central excise duty every year beside state taxes on sugarcane and hefty taxes collected by state as excise and VAT on sale of spirit in the state which run an estimated Rs.10,000 crores annually. Beside the direct taxes by way of income is additional source of revenue to the government from sugar industry. Sugar Industry accelerates rural development through farm employment as well as business opportunities in transport and communication.

Sugar has been declared as an 'essential commodity' under the Essential Commodities Act, 1955. Under Sugarcane (Control) Order 1966. The Government of India fixes cane price called Fair and Remunerative Price (FRP) for sugarcane every year based on the recommendations of the Commission on Agricultural Costs & Prices.

10% of sugar production is earmarked as Levy sold under PDS to BPL families and balance as free which is regulated by government through monthly release.

Sugar Cycle

The Indian sugar industry is characterized by cycle of high and low sugar production. This cycle of 5-7 years is broadly of two types viz. Natural comprising climatic variation, water availability and pest attacks. The other is induced cyclicality which have sequence like - higher sugar production and accumulation of stock - decline in sugar prices & profitability - higher sugarcane arrears - decline in area under cultivation & Lower cane production - lower sugar production - lower sugar availability and stock and thus increase in sugar prices - improved profitability & low cane arrears - higher cane production - higher sugar production and so on. Every time the cyclicality reaches its low government have to step in to provide Fiscal support in the form of Export subsidy, Buffer Stock creation, Interest Free Loans etc.

The fundamental problem of the Indian Sugar Industry is that there is no parity between the price of raw material i.e. sugarcane and its finished goods i.e. Sugar. In some states cane price is fixed by the state government unreasonably high. Sugar Price are regulated by Union Government through varieties of measures including regulation of monthly release and control on international trade. Illogical intervention of state government cause wide economical distortation in sugar industry. In almost all major sugar producing countries of the world the price of cane paid to the farmers depends on realization from sugar. Government control on Sugar Industry

Every hook and corners of sugar industry are desperately controlled by Central and State Governments in a bit to show their supremacy but their steps are in contradictory track. State Governments have been entrusted for the development of sugarcane areas but they are fixing sugarcane price at their whims and fancies whereas sugar prices are subject matter of Central

Government. State has no regard for realization of sugar prices while fixing the cane price and at the same time Central Government does not pay any attention while capping/ controlling the sugar prices with regard to cane prices being actually paid.

Central Government has kept the levy price at lower level by fixing FRP at very low which even does not cover the cost of growing of sugarcane, whereas state announces SAP which is much higher than FRP and ultimately becomes unviable for sugar factories. FRP price announced by central government since its introduction has been neither fair nor remunerative from any angle. This year the industry was forced to pay cane price of Rs. 225 against governments FRP of Rs. 145. The FRP announced by Central Government has no basis, no comparison with other crops, no linkage to the cost of production to farmers, no relation with inflation rate and are far from realistic. This has been done with single objective of keeping Levy price of sugar at lower level, far below than cost of production. Sugarcane prices in India are highest in the world wherein sugar prices are lowest in the world which is clearly unviable economic due to deficiency of the Government's policy.

Both central and state government should work on well devised Bhargava Formula which state that whenever there is extra realization over and above the Base sugar price fixed on the basis of SMP (now FRP) the same should be shared equally between the farmers and factory.

This is the only private industry in India which has to bear the unwarranted burden of subsidy in PDS by giving levy sugar.

A number of studies have shown that only about 35% sugar is directly consumed by household and rest by the Institutional Buyers for commercial use like Beverage, Confectionery and sweet makers. Again majority amongst the direct consumers are high income group. Still the sugar has been kept under Essential Commodities Act. This has got no logic.

Government never allows the sugar industry to flourish, disregarding the facts that its orderly development will ultimately help the farmers and will attract investment in the sector.

Levy Sugar

The sugar industry is the only industry in the country which is made to bear the burden of food subsidy under which it is required to supply 10% of its production to the Government as levy sugar at a discounted price, which at present is about 2/3rd of the open market sugar price. The sizable quantity of levy sugar lifted by state government nominee is diverted by unscrupulous traders in the open market and not actually goes to concerned poor family. There is no other industry in the country which is required to supply any part of its production for the public distribution system. The Government procures other commodities from the market like wheat, paddy, kerosene, pulses etc. for the PDS. The Food subsidy bill of the Central Government is around Rs.1,00,000 crores. A rough calculation of the subsidy burden the Central Government will have to bear, if it procures sugar for its PDS directly from the market, indicates that the additional subsidy burden on account of sugar would be around Rs.2,500 crore only. But this burden of Rs. 2500 Crores on sugar industry is unbearable.

Export policy

The government's decision making process to allow export in case of surplus takes inordinate time, by which the opportunity are lost. Thus government needs to create a predictable export direction in case of sugar-surplus year making it possible to capitalize in ever changing global market of sugar.

Distillery & Ethanol

Movement and distribution of Molasses and Alcohol (co-products) are governed by the State Governments. Here also due to lack of clear cut cohesive policy, which varies from state to state, it take considerable time to even allot the sugar factory's own molasses to Distillery and allotment of finished goods Alcohol due to several bureaucratic hurdles. The ethanol blending program also suffer as states are reluctant to allow permission for allocation of alcohol for production of ethanol. The state authority put hurdles on ethanol production due to perceptible fear of losing revenue and meeting state requirement for potable. The final price of ethanol is still awaited although the Expert Committee headed by Dr. Soumitra Chaudhuri , Member of Planning Commission has submitted his report long back.

Decontrol of Sugar Sector

The proposal to de-regulate sugar sector was considered by the Government in 2008 which included - (a) Abolition of levy sugar obligation from sugar mills (b) Abolition of regulated monthly release mechanism (c) Provide stable export-import regime and (d) Include denatured alcohol in the list of goods of special importance for free manufacture and movement of ethanol.

The Planning Commission and Ministry of Commerce had given their consent to the proposal of Department of Food to deregulate the Industry with little modification. However, decision on the proposal was deferred by the Government in view of the parliamentary elections in 2009. The matter was again taken up for consideration by the Government in 2010 when the proposal included (a) Abolition of levy sugar obligation from sugar mills (b) Abolition of regulated monthly release mechanism (c) Cane area de-reservation and (d) Cane price linkage to sugar price.

The Prime Minister has constituted a Committee under the Chairmanship of Dr. Rangrajan, Chairman of PM's Economic Advisory Council (PMEAC) to study the matter relating to de-control of the sugar industry and make its recommendations thereon. Dr. Rangrajan Committee is in the process of consultation with all the stake holders and thereafter may recommend to the Government to de-regulate sugar sector.

Linkage of Sugarcane Price with Sugar Price

Presently, there is no relationship between sugarcane & sugar price in India. Major sugar producing nations like Brazil, Australia, Thailand, Mauritius, even Kenya and Tanzania have such a direct linkage. Nandakumar Committee recommended such a formula in the year 2010 which are yet to be implemented. The Prime Minister's Office has formed a Committee under the Chairmanship of Dr. Rangarajan to examine possibilities of such linkages in India also. The government has asked opinion from industry about sharing of sugar and by-product realization with the farmers by formulating a formula of sharing realization of about 60% and thereby fixing the most rational basis of cane price. On implementation this will be most positive steps by the government which will stabilize the sugar industry and will lessen the adverse effect of sugar cycle. The political consideration of fixing cane price will also be removed.

CANE & SUGAR POLICY

The ratio of levy for the season 2011-12 remained at 10%.

The Fair and Remunerative Price (FRP) price for the season 2011-12 was 145.00 (last year Rs. 139.12) linked with basic recovery of 9.5% subject to premium of Rs.1.37 per qtl. for every 0.1% .

The levy sugar price for the season 2011-12 was Rs. 2115.94 per qtl. against Rs. 2052.01 per qtl in previous season. The monthly release order of levy-free sugar has been made on quarterly basis with stipulation to sell between minimum 25% and maximum 50% per month of released quota of the quarter.

Government allowed export under OGL of 15 Lacs MT in tranches of 5 Lac MT each till September, 2011. Again during the season 2011-12 the government permitted export of 20 Lac MT of sugar in tranches of 10 Lac MT each under Open General License. Each sugar factory were allocated proportionate tradable license based on its average sugar production in the previous three seasons. From 14th May, 2012 the government made the sugar export free subject to registration with DGFT.

OPPORTUNITIES AND THREATS

OPPORTUNITIES

Sugar

India is largest consumer and second largest producer of sugar in world. Sugar is an essential item of mass consumption and with increase in income and spending power the consumption pattern of rural India is changing. The consumption of sugar is on increasing trend and there are huge scope for further increase in demand as India is still lagging behind from many advanced countries in respect of per capita consumption of sugar. Thus there are opportunity in production and consumption of higher quantity of sugar in coming period. Further there is no alternative to sugar as sweetener is having mass value which add weight to products.

Distillery

The consistent increase of demand of Rectified Spirit /Ethyl Alcohol in varied segment and mandatory provision of ethanol doping of 5% and its proposed increase to 10% will have strong support for growth of sugar industry.

Power

The freewheeling policy of export of power from co-generation will give further opportunity to sugar factories to start feasible bagasse based co-generation at much lower capital investment. Due to this the increased demand of surplus bagassee has added imputes to revenue generation.

Bio-Compost Fertiliser

The bio-compost and vermi-compost fertilizers being produced by the company has got immense scope of demand in all major agriculture cultivation as it not only preserve the soil from excessive use of chemical fertilizer but also increase its fertility. The company is using distillery effluent and press mud from sugar and other agricultural waste to produce bio-compost which is very cost efficient. Thus the company apart from treatment of effluent and zero discharge adding value and thus expect good cash flow in near future.

THREATS

The sugar sector is exposed to political intervention.

Unreasonable increase in cane price in comparison to sugar selling price.

Industry cyclicality.

FUTURE PROSPECTS/OUTLOOK

The sugar year 2011-12 opened with a stock of 68 lac M/T against 50 lac M/T in 2010-11. The production for the season 2011- 12 expected at 260 Lac M/T against 244 lac MT during previous season. The domestic consumption of sugar for 2011-12 expected at 215 lac M/T against 208 Lac M/T last year. The export of sugar for 2011-12 is expected at 36 Lac MT against 26 Lac M/T last year. The closing stock was thus will be 77 Lac MT, which is 9 lac MT more than last year and is more than 4 monlhs domestic consumption.

Company's Plan :

SUGAR

The company after achieving 5,500 TCD is planning to consolidate in forthcoming season by increasing sugarcane availability. The company plan to further expand its capacity after rationalizing of its existing facilities from 5,500 TCD to 6,000 TCD. The company also plans to enter into co-generation in small way by installing small turbine so as to use the existing surplus capacity of steam generation due to higher saving of bagassee. The surplus power will be sold under free wheeling. At later stage it may go for co-generation on large scale.

The bio-compost and krishi-labh jaivik khad has pick up the momentum and company is further strengthening its production facilities and marketing tie-up.

The company is also thinking of starting CO2 production from its distillery facility.

RISK AND CONCERN SUGAR

(a) Government's zeal to control every aspect of sugar industry, although all other industries has been decontrolled, hampering the growth of sugar sector.

(b) Delay in evolving a rational Sugarcane Pricing Policy having link with sugar price is detrimental to growth of the industry.

(c) The output of sugar, an agro-based product, is influenced by climatic vagaries.

(d) Sugar Industry being cyclic in nature, the growth is hampered during downtrend.

(e) Due to increase in interest rate the interest burden on sugar industry have increased as they are forced to maintain higher stock due to monthly release mechanism and so the higher working capital.

DISTILLERY

(a) Lack of clear cut policy of the State Government and time consuming regulation of the movement, distribution and pricing of molasses and Industrial Alcohol and pricing of are major concerns in respect of Distillery operations.

(b) Inconsistent policy of the Central and State government in the implementation of the Ethanol Blending Programme and its stringent pricing issue are matter of concern.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY :

Your Company has adequate systems and internal control procedures to safeguard the assets of the company and to ensure maintenance of proper accounting records. Computerized Information System is available to capture, present and analysis the data for management information and decision-making. The company has installed ERP system for entire factory operation including sugarcane, raw material, Store, manpower, sales, accounting. The company has also taken the services of satellite mapping and measurement of cane area which gives authentic figures. The management and control of factory operation is also under computerization and automation. There is also an Internal Audit System in place which reviews the key business and controls and also test checks on routine transactions and reports deviations. Besides, an Audit Committee periodically reviews the functioning of the entire system. The company has surveillance systems at critical places to control.

FIXED DEPOSITS :

The company is complying with Fixed Deposit Rules. There is no overdue Fixed Deposit or interest thereon at the end of the year.

AUDITORS' REPORT :

The Notes on the Financial Statement referred to in the Report of the Auditors have been suitably explained by way of 'Notes on Accounts'.

COST AUDIT :

Cost Audit of Accounts of the Company for the year ended 31st March, 2012 in respect of Sugar and Industrial Alcohol are being conducted by M/s. Mani & Co., Cost Accountants, Kolkata, and necessary Report will be submitted to the Ministry of Corporate Affairs, Government of India.

The cost audit report for the financial year ended 31st March, 2011 was filed by the cost auditors with respect to sugar unit of the company on 6th September 2012, which is well within the due date of 30th September, 2012.

DIRECTORS :

Mr. Rahul Pasari resigned from the Directorship of the company with effect from 26th May, 2011. The Board expresses its appreciation for the advices given by Mr. Rahul Pasari during tenure in office as Director.

Dr. Gora Ghosh resigned from the Directorship of the company with effect from 26th June, 2011. The Board expresses its appreciation for the advices given by Dr. Gora Ghosh during tenure in office as Director.

Dr. I.K.Saha passed away on 10th December, 2011. The Board record its profound condolence for the passing soul and also record its deep appreciation for the advises given by Dr. Saha during tenure of his directorship in the company.

Mr. N.C. Majumadar appointed as Additional Director with effect from 24th October, 2011. He will hold office till the ensuing Annual General Meeting. Notice has since been received from a member proposing the appointment of Mr. N.C. Majumadar as Director of the company.

Mr. Sarad Jha appointed as Additional Director with effect from 25th January, 2012. He will hold office till the ensuing Annual General Meeting. Notice has since been received from a member proposing the appointment of Mr. Sarad Jha as Director of the company.

Mr. Suyash Borar, Director who retires by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment.

Mr. S.K. Goenka, Director who retires by rotation at the ensuing Annual General Meeting and being eligible offer himself for re- appointment.

DIRECTORS' REPONSIBILITY STATEMENT :

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, as amended, with respect to the Directors' Responsibility Statement, it is hereby confirmed:

(i) That in preparation of accounts for the financial year ended 31st March, 2012 , the applicable accounting standards have been followed;

(ii) That the Directors of the Company have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the loss of the Company for the year ended 31st March, 2012.

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

(iv) That the Directors of the Company have prepared the accounts of the Company for the year ended 31st March, 2012 on 'going concern' basis.

CORPORATE GOVERNANCE :

The Corporate Governance form an integral part of this Report and are set out as separate annexures to this Report. The certificate from the Auditors of the company certifying compliance of condition of Corporate Governance stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges is also annexed to Report on Corporate governance. The voluntary guidelines on Corporate Governance issued by the Ministry of Corporate Affairs , Government of India , will be considered after the enactment of the new Companies Bill by the Government.

PERSONNEL :

There was no employee of the Company getting remuneration so as to attract the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended as on date.

LISTING OF SHARES :

The Shares of the Company are listed on the Stock Exchanges of Calcutta and Mumbai. The Company has been regularly paying the Listing Fees to each Stock Exchanges.

Change in Capital Structure :

During the year the company allotted 16,65,000 equity shares of Rs.10/- each at a price of Rs.18.50 per share (including a premium of Rs.8.50) for total amount of Rs. 308.03 Lacs on preferential allotment basis on 19th March, 2012 as per SEBI (ICDR) Regulations, 2009. The said issue amount strengthened the Company's financial parameters.

CONSERVATION OF ENERGY :

Particulars in respect of conservation of energy, technology absorption and Foreign Exchange earning and outgo as required under Section 217(1)(e) of the Companies Act, 1956 are given in a separate annexure hereto and forming part of this report.

AUDITORS :

M/s. K. N. Gutgutia & Co., Chartered Accountants, Kolkata, Auditors of the Company, retire and being eligible offer themselves for re-appointment.

APPRECIATION :

Your Directors express their appreciation for the support and contribution by Cane Growers, Bankers, Central and State Government, Suppliers, Customers and the valuable services rendered by the Employees at all levels.

For and on behalf of the Board,

Kolkata,

Dated : 30th May, 2012 O. P. Dhanuka

Chairman & Managing Director

---

Sep 30, 2009

The Directors have pleasure in presenting their Report and audited Accounts of the Company for the financial year ended 30th September, 2009.

FINANCIAL & OPERATIONAL RESULTS

FINANCIAL RESULTS (Rs. in Lacs)

For the Financial For the Financial Year ended Year ended 30th September, 2009 30th September, 2008

(a) Operating Profit(Loss) before Interest and Depreciation 1,831.56 1,298.13

(b) Interest 949.36 715.34

(c) Cash Accruals 882.20 582.79

(d) Depreciation 585.67 439.15

(e) Profit(Loss) before Tax 296.53 143.64

(f) Provision for Tax - Current Tax -- 5.95

- Deferred Tax 74.12 (53.63)

- Fringe Benefit Tax 4.00 6.50

- Income Taxes earlier year 6.94 --

(g) Net Profit(Loss) after Tax 211.47 184.82

(h) Balance brought forward from last year (136.26) (321.08)

(i) Profit(Loss) available for appropriation 75.21 (136.26)

(j) Appropriations :

Provision for Dividend 58.34 --

Tax on Proposed Dividend 9.91 --

(k) Balance Carried to Balance Sheet 6.96 (136.26)

DIVIDEND :

Your Directors recommend payment of dividend @ Re. 1 per equity share.

OPERATIONAL RESULTS :

SUGAR UNIT :

The comparative figures in regard to duration of season, cane crush and sugar recovery for the year/season 2008-09 and 2007-08 in respect of the Sugar Factory of your Company are given below :-

Financial Year Financial Year ended ended 30th September, 2009 30th September, 2008

1. Duration of crushing (gross days) 82 114

2. Cane crushed (Lac Qtls.) 25.58 36.75

3. Recovery (%) 8.92 9.00

4. Production (Lac Qtls.)

- From Sugarcane 2.28 3.30

For the season 2008-09 due to low cane availability relative to than the crushing capacity of the sugar plant, there was low rate of crushing and also intermittent stoppage. Thus there were higher losses of sugar in cane after harvesting and also during production process. These adversely affected recovery. Expansion of Sugar Plant Capacity

Though the expansion project of sugar factory from 3500 TCD to 5000 TCD has been completed, the installation of some balancing equipments have delayed due to funding problems. Next year we expect to achieve full crushing capacity of 5,000 TCD with improved cane availability.

DISTILLERY UNIT

The Distillery Unit of your company produced 54.98 lacs B.L. of Industrial Alcohol during the financial year 08-09 as against 71.09 Lac B.L. during the previous year. The lower production was due to lower availability of Molasses from our factory as well as from other sugar factories in the state due to short crushing season. Furthermore, the molasses produced in the state was not allotted proportionately amongst the distilleries of the state by the relevant authorities. During the year the state government revised the price of Rectified Spirit from Rs. 21.75 to 24.55 per B.L. However this increase in RS price was not commensurate with the increase in price of molasses and other input costs. The Industry is demanding a fair price of RS relative to the price of molasses, other costs of production, reasonable return on capital employed and price prevailing in other states.

During the year the Ethanol Plant supplied 4.72 Lacs B.L. (against previous year 11.16 Lac B.L.) of ethanol to Oil companies at different locations in Bihar and Jharkhand for admixing with Petrol at a fixed price of Rs.21.50 per Itr plus applicable central and state taxes. Ethanol production was reduced due to delay in receiving state government approval.

SEGMENT-WISE PERFORMANCE :

In 08-09, the Sugar segment contributed 85 percent of the net sales of the company whereas the Distillery segment accounted for 15 percent. The company identifies two business segments in line with the Accounting Standard on Segment Reporting. Segment-wise Revenue, Results and Capital Employed is stated in Note No.21 of Schedule 14 of the Audited Accounts enclosed with the Annual Report.

Companys Plan :

SUGAR

The expansion of the sugar factory to 5,000 TCD with sufficient sugarcane availability will ensure higher production by the company and an increase in recovery. This will also increase the production of molasses which in turn will help to produce more alcohol and ethanol and to reduce the dependence on molasses from external sources.

The company is planning and taking action to increase the cane availability to cater to the expanded capacity of the plant. To restore the productivity and fertility of soil which has been physically, chemically and biologically deteriorated, the company has established a Tissue Culture Laboratory, Soil Testing Laboratory and a Microoial Culture Laboratory. The Microbial Culture Laboratory produces four types of Microbes :-

i) Acetobactor for fixation and assimilation of atmospheric Nitrogen.

ii) Phosphorus solubilising bacteria for providing phosphorous to the plants.

iii) Potash mobilizing bacteria to provide potassium to the plants.

iv) Tricoderma virdae (Organic decomposer) as well as bio pesticide for higher yield.

v) Riga Zyme-growth hormones and regulator which increases yield.

There is tremendous commercial scope for the above mentioned products not only in our factory area but also in other market.

SUGAR SCENERIO

There has been a sharp decline in sugar production in the country from 284 lakh MT in 2006-07 to 263 lakh MT in 07-08 and 146 lakh MT in 2008-09. The roots of the current plight of the Sugar Industry go back to 2006-07, when the country produced 3555 lakh MT of sugarcane and 284 lakh MT of sugar - both sugarcane and sugar were much more than what could be properly handled. Consequently, the sugar prices plunged to such unprecedented low levels that the bottom lines of most of the sugar factories turned red and they were not able to pay even the cane price. Added to it, there was a sharp increase in the Minimum Support Price (MSP) of most agricultural commodities in 2007-08 and 2008-09. SMP on sugarcane had only a small minimum increase in 2007-08 and no increase in 2008-09. Consequently, the sugarcane farmers shifted to cultivation of other remunerative crops and the sugarcane production came down from 3,555 lakh MT in 2006-07 to 3482 lakh MT in 2007-08 and 2892 lakh MT in 2008-09. Although the fall in sugarcane production from 2006-07 was only 2% in 2007-08 and 17% in 2008-09, the fall in sugar production was 7% in 2007-08 and 44% in 2008-09. This fall accrues because the sugar Industry crushed only 50% of the total available sugarcane for production of sugar in 2008-09 as against 73% in 2007-08 and 79% in 2006-07. The remaining sugarcane was bought by Gur and Khandsari manufacturers at higher prices on whom there is no government control over price and distribution despite higher losses of sugar in processing of Gur and Khandsari. Sugar prices should also have an MSP so that based on the same the cane payment of sugar factories is insured. This timely payment of cane price will assure cane plantation and painful sugar cycle will not occur to the extent it is happening now. India has enough capacity in sugar production and it can produce for our home consumption as well as export regularly 20-40 lac tonnes annually thereby earning huge foreign exchanges for the country. And the Guru Mantra is that cane price should be

viable to the growers and sugar price to factories i.e. sugar price is directly linked to cane price paying capacity. No Industry can survive if raw materials cost are higher than finished goods prices. This is what has happened with sugar industry in the year 2006-07 & 2007-08. Even for the season 2008-09 due to lower production by 45% and lower recovery by 1.5% the average cost of production increased considerably to over Rs. 2100 per qtls. During 1st half of the current season the realization from sugar was lower than the cost, it was only from April, 09 that the sugar price started moving above cost of production and all India average realization for the whole year was Rs.2100 per qtls. which is marginally higher than cost and sugar factories were not able to make any profit from 08-09 sugar operation even after continuous huge losses since 06-07, 07-08.

SUGAR PRICE

There has been quite a hype about increasing sugar prices. This is a global phenomenon. The global average sugar prices moved up from USD 387 in October 2008 to USD 610 in October 2009 owing to adverse weather conditions in Brazil resulting lower production as well as continuous increased demand in India. The current International price of March, 2010 future has touched USD695 per MT. It can be seen that the prices of all agricultural and edible products including those which do not incur heavy processing cost like sugar, have gone sky rocketing. Commodities like wheat and rice are much more essential than sugar for the survival. The confectionary and beverages industries have been raising alarm about their profit margins going down. On the other hand most of the times sugar factories have been operating in loss and the Government had to bail out such factories with financial packages so that at least the factories clear their cane price arrears. As a matter of fact there is a wrong psychological notion continuing in the minds of consumer that sugar is a cheap commodity, which should continue to be made available to consumers at very low cost. The consumers have to realize that cost involved in cultivating sugarcane and processing has increased manifold.

Considering the increasing demand for sugar, on account of increasing population, increasing purchasing power of the people and increasing demand for sugar by confectionaries and beverages industries and other fast food items, the production of sugar will have to be enhanced substantially. This can be done only by increasing the yield and recovery from sugarcane and thereby increasing the per hectare production of sugar. Indias yield of sugarcane during the last 15 years has been varying between 67.0-71.2 tonnes per hectare. Compared to international standard this is very low. There is an urgent need to increase the average sugarcane yield to 100 tonnes per hectare. Likewise, the recovery rate of sugar from sugarcane in India during the last 15 years has been 9.42%-10.55% which is also very low as compared to the recovery rate achieved by other major sugarcane producing countries in the world. Our country also requires to increase the average sugar recovery rate substantially so as to meet the increasing demand for sugar.

AUDITORS REPORT :

The Notes on the Statement of Accounts referred to in the Report of the Auditors have been suitably explained by way of Notes on Accounts.

Auditors have qualification for non-provision of gratuity and leave liabilities for the year of Rs. 85.35 Lacs as estimated by actuaries as on 30th September, 2009 and thereby non-compliance of AS-15. Para 4 of the Notes on account in schedule 14 explains in details in this respect. The company is following the system of payment of Gratuity on cash basis from very beginning. To implement the AS-15 regarding Gratuity and Leave the company will have to debit the accumulated amount of past liabilities of Rs. 452.35 lacs, which will adversely affect the f inancials of the company. However the company is discharging its liabilities of gratuity payment to eligible employees as per Payment of Gratuity Act. By disclosure of the Gratuity liability amounts by way of Notes on Account as well as by Auditors the stakeholders of the company are being kept informed.

COST AUDIT :

Cost Audit of Accounts of the Company for the year ended 30th September, 2009 is being conducted by M/s. Mani &Co., Cost Accountants, Kolkata, and necessary Report will be submitted to the Department of Company Affairs, Government of India, well in time.

DIRECTORS :

Dr. I. K. Saha, Director retires by rotation at the ensuing Annual General Meeting and being eligible offer himself for re- appointment.

Mr. S. K. Goenka, Director who retires by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment.

DIRECTORS REPONSIBILITY STATEMENT :

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, as amended, with respect to the Directors Responsibility Statement, it is hereby confirmed:

(i) That in preparation of accounts for the year ended 30th September, 2009, the applicable accounting standards have been followed along with proper explanation relating to the material departures;

(ii) That the Directors of the Company have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 30th September, 2009 and of the profit of the Company for the year ended 30th September, 2009.

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

(iv) That the Directors of the Company have prepared the accounts of the Company for the year ended 30th September, 2009 on going concern basis.

CORPORATE GOVERNANCE :

The Corporate Governance form an integral part of this Report and are set out as separate annexures to this Report. The certificate from the Auditors of the company certifying compliance of condition of Corporate Governance stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges is also annexed to Report on Corporate governance.

PERSONNEL:

There was no employee of the Company getting remuneration so as to attract the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended as on date.

LISTING OF SHARES :

The Shares of the Company are listed on the Stock Exchanges of Calcutta and Mumbai. The Company has been regularly paying the Listing Fees to each Stock Exchanges.

CREDIT RATING

As per Basel-ll norms, in July, 2009 the company has been assigned BBBVStable rating by CRISIL on Credit facilities from Banks which means "Investible Grade". With the further expected strengthening of financial position the companys rating may improve.

Change in Capital Structure :

During the year, on 25th May, 2009 the outstanding warrants of 4,45,925 allotted last year on preferential allotment basis as per SEBI guidelines were converted into equity shares at Rs. 27 each.

The entire proceeds from such private placements has been utilized for strengthening the financial parameters of the company for bank finance.

CONSERVATION OF ENERGY :

Particulars in respect of conservation of energy, technology absorption and Foreign Exchange earning and outgo as required under Section 217(1 )(e) of the Companies Act, 1956 are given in a separate annexure hereto and forming part of this report.

AUDITORS :

M/s. K.N. Gutgutia & Co., Chartered Accountants, Kolkata, Auditors of the Company, retire and being eligible offer themselves for re-appointment.

APPRECIATION :

Your Directors express their appreciation for the support and contribution by Cane Growers, Bankers, Central and State Government, Suppliers, Customers and the valuable services rendered by the Employees at all levels.

For and on behalf of the Board, Kolkata, Dated : 30th December, 2009 O. P. Dhanuka

Chairman & Managing Director