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Balrampur Chini Mills LimitedAnnual Report 2007-08

Need of the hour

Balrampur Chini Mills LimitedRegistered office: FMC Fortuna, 2nd Floor

234/3A, Acharya Jagdish Chandra Bose Road, Kolkata 700 020

Website: www.chini.com

A PRODUCT

[email protected]

Forward-looking statement Statements in this report that describe the company’s objectives, projections, estimates, expectations or

predictions of the future may be ‘forward-looking statements’ within the meaning of the applicable

securities laws and regulations. The company cautions that such statements involve risks and

uncertainty and that actual results could differ materially from those expressed or implied. Important

factors that could cause differences include raw materials’ cost or availability, cyclical demand and

pricing in the company’s principal markets, changes in government regulations, economic

developments within the countries in which the company conducts business, and other factors relating

to the company’s operations, such as litigation, labour negotiations and fiscal regimes.

ContentsOur performance in 2007-08 2

Our strengths 13

MD’s review 14

Five-year operational summary 16

Five-year financial summary 17

Financial Ratios 18

How we enhanced shareholder value 20

Report of the Board of Directors 22

Corporate Governance Report 33

Management Discussion and Analysis 48

Auditor’s Report 57

Balance Sheet 60

Profit and Loss Account 61

Cash Flow Statement 62

Schedules forming part of the accounts 64

Consolidated Accounts 91

Subsidiary Accounts 120

In this annual communication to ourshareholders, it would be needlessemphasising some of the corporaterealities that you already know.

For instance, the fact that we are the second largestintegrated sugar company in India today.

The fact that we have nine sugar mills across UttarPradesh with an aggregate crushing capacity of73,500 tonnes of cane per day.

The fact that we cater to India’s growing fuel andenergy demand through the manufacture of ethanolin our distilleries (cumulative capacity of 320KLPD), power cogeneration in our bagasse-basedunits (cumulative capacity of 179.85 MW) andorganic manure (cumulative capacity of 58000 MT).

Instead, this annual report focuses on how India’ssugar industry needs to be strengthened, so that itcan play its rightful role as an economy driver inthe regions of its presence.

For the benefit of consumers,companies, industry and the country.

2 | Balrampur Chini Mills Limited

We are pleased to report an improved performance in 2007-08

following a net loss in 2006-07.

This is how we performed in 2007-08 • We produced 8.19 lac tonnes of sugar in the current year,

compared with 9.15 lac tonnes in previous year. The average

realisation was Rs. 14.97 per kg in current year, compared to

Rs. 14.56 per kg in the previous year.

• We manufactured 17433 KL of ethanol. The average

realisation was Rs. 21.97 per litre for ethanol; the Company’s

distilleries generated revenues of Rs. 168.26 crores against

Rs. 122.57 crores in 2006-07. The EBIDTA reported by our

distilleries increased 29.36% from Rs. 56.58 crores in 2006-07 to

Rs. 73.20 crores in 2007-08.

• We generated 7906.88 lac units of power, of which 5735.35

lac units were marketed to the state power grid for an average

realisation of Rs. 3.03 per unit. This increased the revenues of

the power division to Rs. 175.52 crores, a 20.23% growth over

2006-07, contributing 11.91% to our aggregate revenues.

Balrampur Chini Mills Limited | 3

Our Capacities

Units Sugar Crushing Capacity Distillery Cogeneration Organic Manure

(in TCD) (KLPD) (MW) (MT)

Balrampur 12,000 160 24.55 30,000

Babhnan 10,000 60 3.00 18,000

Tulsipur 7,000 – – –

Haidergarh 5,000 – 23.25 –

Akbarpur 7,500 – 18.00 –

Rauzagaon 8,000 – 25.75 –

Mankapur 8,000 100 34.00 10,000

Kumbhi 8,000 – 20.00 –

Gularia 8,000 – 31.30 –

Total 73,500 320 179.85 58,000


Interestingly, the cyclicality of this nature-

dependent industry was completely man-

made. More specifically, the rise and

decline in industry fortunes were the result

of erratic government policies. Despite playing a

crucial role in the country’s economy and being an

effective employment generator supporting over 50

million farmers and their families, India’s sugar

industry continues to be hostaged by adverse

government policies.

One of the principal reasons behind this cyclicality

was the government’s arbitrary determination of raw

material pricing. A sustained non-alignment of cane

costs on the one hand and sugar prices on the other,

got reflected in an overriding reality: high cane costs

and low sugar realisations leading to cane arrears,

industry defaults, farmer misery, bank illiquidity and

general industry gloom.

There are a number of institutionalised government

interventions that affected industry viability over the

last several years, affecting the interests of all industry

stakeholders.

• The sugar manufacturers must allocate 10% of their

produce to the government at low levy prices that are

generally unremunerative for manufacturers.

• Sugar sale is regulated by the government every

month, affecting the free interplay of marketplace

economics.

• There is a need to prevent government intervention

in raw material pricing mechanics, with the objective

to align cane and sugar prices in line with other major

sugar-producing geographies of Brazil, Thailand and

Australia.

The government, cyclicality and the consumer Over the last few decades, the terms – government, cyclicality and the consumer –have become increasingly inter-linked. The synonymity has transpired for someimportant reasons: despite relative monsoonal predictability, the Indian sugar industryhas seen more crests and troughs than most other nature-based sectors in India. Inturn, this has impacted industry viability, consumer pricing and farmer incomeconsistency.


Price differentialInspite of a predominantly unfettered industrial scenario, the country’s sugar industrycontinues to be regulated. For instance, the raw material purchase policy of theIndian sugar industry is characterised by the Statutory Minimum Price (SMP), wherethe cane prices payable by the industry to farmers are determined by the CentralGovernment.

There are two aberrations at this point:

• Going beyond the SMP, the respective

state governments also fix a State Advised

Price (SAP), that is usually higher than the

SMP and payable to cane farmers in respective states.

• The cane prices fixed by the state government are

not linked with downstream sugar realisations, and are

therefore fixed more in line with the prevailing

political climate than economical considerations.

These consistently higher cane prices benefit farmers

during industry upturns. However, when sugar

manufacture itself becomes unviable, these farmers

suffer extensively, despite higher affixed prices, for the

simple reason that millers are unable to pay on time

and in full proportion. This one-sided policy in letter

turns out to be no-sided in reality; it induces a sharp

cyclicality, marked by arrears, a need for government-

support packages and irregular industry revenues.

This is precisely what transpired in 2006-07. UP-based

mills were mandated to pay Rs. 125 per quintal of cane

in line with the SAP declared by the UP government,

13.64% higher than the previous year. This may have

been justified and reasonable in an environment of

rising sugar prices, making it possible for millers to

cover their costs. However, sugar prices declined to

one of the lowest points in a decade, making it

impossible for mill owners to even recover the cane

cost and leading to large arrears in farmer payment.

The sugar industry sought legal redress in response to

this arbitrary pricing. The Uttar Pradesh Sugar Mills

Association and a few other private sugar mills

challenged the government’s unfairly high SAP for

2007-08. Eventually, the Supreme Court in its interim

order dated 8th September, 2008, fixed the price of

cane at Rs. 110 per quintal in the sugarcane arrears

case, subject to further detailed scrutiny.

In the opinion of the sugar manufacturers, an arbitrary

increase in cane price without factoring the recovery

and sugar price variations aggravated the industry

inequity. In view of this, the sugar industry highlighted

the immediate need for a cane-pricing system that

would be fair to all industry stakeholders, which


would be essentially linked to the sugar price and be

uniform across the country.

For equitable industry treatment, sugar manufacturers

requested the government for the following:

• A formula-based pricing system wherein the cane

price would be linked to the realisations of sugar and

primary by-products (molasses and surplus bagasse)

on the one hand and average recovery on the other

• Prices to be determined using a fixed formula based

on region-specific variations

• Incentives to be given for varieties with high sucrose

content and for early and late maturing varieties

In the opinion of the Indian sugar industry, these are

not unreasonable demands. They are in line with the

best international industry practices and, if

implemented, will enhance the country’s

competitiveness among sugar-manufacturing nations.


Government impetusIndia is a net petroleum importer; its average daily energy consumption is around24,50,000 bbl and is growing 3.6% annually. Needless to say, a large amount ofIndia’s forex is expended in international crude purchases, which aggravates thecountry’s forex position in times of currency depreciation.


It is with this perspective that the industry’s

manufacture of ethanol must be appraised

– relatively insulating the country from a

direct exposure to a volatile hydrocarbons

industry and protecting its foreign exchange position.

The government supported the industry’s case through

a mandated 5% blending of ethanol with petroleum. At

5% ethanol blending, India can easily meet its demand

for 55-60 crores litres annually.

In 2007, the Indian government also approved an

increase in the blending of ethanol with petrol to the

extent of 10%, with effect from October 2008

(temporarily on hold with a pilot project study using

10% ethanol blended petrol proposed for Maharashtra

and Uttar Pradesh). This occurred despite the fact that

the Bureau of Indian Standards specified 10% ethanol-

blended petrol, clearing the way for increasing the

blending percentage. It would be interesting to note

that countries like Brazil have permitted blending to as

much as 25%, without modifying automotive engines

or suspensions. This trailblazing instance holds out a

significant scope for enhancing the proportion of

ethanol in petrol in India over the coming years.

ChallengesDespite its economic attractiveness, the E5 programme

could not be implemented in toto due to various

factors. The government-fixed ethanol price (Rs. 21.50

per litre) – at which oil marketers would buy from

millers – is not economically viable to meet the cost of

ethanol manufacture, considering the high cane prices

paid by the sugar industry.

The reality is that in line with the three-year tender for

the purchase of ethanol, its price was kept constant at

Rs. 21.50 basic per litre. The result is that oil

companies benefit by blending ethanol at the expense

of the country’s sugar industry.

The regulatory environment will need to facilitate the

transition to a higher blending programme through

necessary changes to the Sugarcane Control Order.

Higher levels of blending will also require sugar

manufacturers to possess the flexibility of shifting from

the manufacture of sugar to ethanol, based on the

prevailing market scenario.

Brazil’s successful experience in managing this

dynamic ethanol-blending environment serves as an

inspiration that the same is indeed possible in India.


Global trade

Interestingly, the country’s sugar industry is

attractively placed to carve out a global

market share. Its proximity to the Middle

East, a large sugar-consuming region, over

Brazil and Thailand, makes it competitively placed to

become a stable and dependable supplier.

The global sugar environment provides another

opportunity. In view of the recommendation of a

global level laying field, the European Union will

gradually reduce its exports by 4.5 million MT a year,

creating a significant opportunity for India to capture

this vacated market. However, an increasing incidence

of refineries is incentivising the import of raw sugar

from countries with relatively low competitiveness, as

against markets with a higher share of white sugar

import. The Indian sugar industry is responding to this

opportunity through refinery capacity creation for

enhanced raw sugar export.

Over the last couple of years, the industry reality was

a decline in realisations, with India producing more

sugar than consumption. To correct this imbalance, the

government permitted sugar exports with export

incentives - Rs. 1,350 per tonne to mills located in

coastal areas and Rs. 1,450 per tonne to mills located

in the interiors - to stabilise sugar prices.

Consequently, the country exported a record five

million tonnes during the season ending September

2008, comprising white sugar and raw sugar. As it

turned out, India, which had never exported more

than two million tonnes annually, exported more sugar

in 2007-08 than Australia, one of the most dominant

sugar exporters. This export performance by India was

indicative of its true potential, following central

government encouragement.

Inspite of the potential to command a greater

international share and earn precious foreign

exchange, India’s prevailing cost structure remains

uncompetitive for exports. One of the contributors to

the higher operational costs is the low productivity,

manifested in a low sugar recovery of around 10-11%,

compared with 12-13% in Brazil and other major

global sugar-exporting countries.

Brazil remains the lowest cost and biggest global sugar

producer, enjoying attractive returns in sugar and

ethanol production over other competitive crops.

Brazilian sugar producers benefited from the available

cultivable land, technological advancements, capacity

expansions and stable government policies,

encouraging the growth of a vibrant ethanol industry.

India needs to leverage the emerging export

opportunity through productivity improvements,

It is an interesting irony that even as India is the second largest global sugarproducer, it suffers from a dismal share in international trade. Currently, thegovernment determines the timing of when sugar can be exported, as well as thecorresponding quantity. As things stand, import and export of sugar are not leveragedto enhance India’s position as a stable global supplier.


favourable policies and alignment of cane and sugar

prices in the domestic market. To enhance its

international competitiveness, it needs to produce raw

and refined sugar, benchmarked with international

quality standards on the one hand, and enhance its

export infrastructure like loading rates and port drafts

on the other. There is also room for the Indian sugar

industry to explore the collective sharing of export

losses to reduce national inventories.

A KPMG report suggests that the sector has the

potential to improve yields by 10% and recovery by 50

basis points by 2017. Should this become a reality, the

sector could produce an additional 4.1 million tonnes

of sugar through higher drawal rates and increase in

farm productivity, without any corresponding increase

in cane acreage.

From a long-term perspective, the Indian sugar

industry can enhance competitiveness through

enhanced mill efficiency, farm quality improvement,

stronger farmer-miller relationships, higher R&D

investments in seed varieties and the adoption of

sophisticated farm practices for enhanced productivity.

When these realities converge, India will not just have

enough sugar for its people, but also enough for the

world. In doing so, it will not only make profits for its

millers but will also be able to remunerate its farmers

better, strengthening the country’s forex position.


Energy securityIndia is the sixth largest powerconsumer in the world; it isalso the third largest powergenerator in Asia after Japanand China. The country’sinstalled power capacity(around 1,45,587.97 MW) wasinadequate in the face of risingdemand to the extent of 14%(peak) and 9% (non-peak) in2007-08. This powerrequirement is expected toincrease to 306 GW by 2016-17 [Source: KPMG].

Conventionally, the country’s thermal

power sector has generally provided for

increasing electricity supply. However, over

the last decade, the country’s renewable

energy sector has emerged as a growing energy

provider. The sugar industry is playing an important

role within this renewable energy landscape. Bagasse

– a sugar industry by-product - and other renewable

biomass can substitute fossil fuels in power generation,

while reducing greenhouse gas emissions. According

to KPMG, the cogeneration facility can add 9,700 MW

of power, addressing around 6% of the country’s

cumulative power requirement with the potential to

earn around 48 million carbon credits.

On the other hand, these mills can use some of the

power that they generate and reduce power cost.

Besides, these mills can leverage uninterrupted power

supply and enhance asset utilisation. What the industry

requires is regulatory support and financial policies

like mill-grid coordination and fair prices, to

encourage cogeneration and accelerate investment

payback.

When these transpire, the beneficiary will not merely

be the industry; but millions of homes across the

country.


Our strengths

Credibility: Sound

governance, reflected in

timely financial closures,

conservative financial

policies and promoter

contribution during industry

downtrend.

Recession-proof: The

Company produces sugar

which is experiencing an

escalating demand. It

converts byproducts into

products enjoying stable

demand like ethanol, power

and organic manure.

Financial health: The

Company maintained a

gearing of 1 in 2007-08

across a total employed

capital of Rs. 2374.96

crores. An interest cover of

3.68 reflected adequate

comfort in servicing debt.

Strategy: The Company

is focusing on business

consolidation. Accruals will

be used to repay debt,

reduce interest and enhance

returns on equity.

Receivables: The

Company enjoys an

attractively low debtors’

cycle of 12 days of turnover

equivalent.

Recovery: The

Company’s average

recovery of 10.16% in 2007-

08 was nearly 20 bps higher

than the recovery average

in eastern Uttar Pradesh.

Turnaround: The

Company has established

asset turnaround

capabilities. It turned

around the losing Babhnan

and Tulsipur plants in the

Nineties and the Rauzagaon

plant in 2006.

Location: The Company

enjoys a presence in Uttar

Pradesh, benefiting from

its reputation in sourcing

cane and employing

professionals.

Growing stability:The proportion of revenues

from power (stable power

purchase agreements with

state agency) increased

from 5.1% in 2005-06 to

14.6% in 2007-08. Revenues

from alcohol and power

increased from 6.8% to

10.3% across the period.

Integrated: The

integration of cane with

sugar, ethanol and power

has relatively protected the

downside during industry

downtrends and accelerated

the profit rebound during

industry recovery.

Scale benefits: The

Company is the second

largest manufacturer of

sugar in India, reducing

costs and strengthening

margins.

Farmer relationships:The Company enjoys robust

relationships with more

than 0.5 mn farmers.

The Company had a challenging 2006-07 whenit reported a net loss for the first time indecades. How would you summarise theperformance in 2007-08?The year under review was considerably better than 2006-07.

We reported a net profit of Rs. 97.03 crores and a swing-back

of Rs. 138.87 crores over the previous year. The integrated

business model strategy adopted by the Company years back

has paid rich dividends during the year under review.

Our alcohol and cogeneration business contributed

significantly to the bottomline during the year under review.

Sugar segment, however, continued to incur losses during

the year. Relatively better sugar price realisation during the

second half of the financial year and an interim price of

Rs. 110 per quintal fixed by the Supreme Court minimised

losses in the sugar segment.

Do you see this trend sustaining, consideringthe present economic meltdown?I expect the industry rebound to sustain for at least two

years, the global economic slowdown notwithstanding.

There is a basis for my optimism: even as there is a global

demand contraction, food consumption will probably be the

least affected; within the food segment, sugar will probably

be among the most insulated. There are some good reasons

for this: sugar accounts for a nominal part of a household’s

expenditure even as it is integral to our diet. As a result, we

feel that sugar consumption will remain largely unaffected;

in fact, we see India’s sugar consumption increasing in 2008-

09 over the previous year to around 22.5 mn tonnes.

On the other hand, we expect India’s sugar production to

fall below 20 mn tonnes over the next two years, following

declining cane acreage and production in two major

sugarcane producing states -- Maharashtra (9 mn tonnes in

2007-08 to 6 mn tonnes in 2008-09) and Uttar Pradesh (6.2

mn tonnes in 2008-09, a 15% drop against 2007-08) –

following adverse climatic and economic conditions.

The net effect of this phenomenon: decline in production

and increase in consumption, leading to a declining sugar

inventory and a corresponding increase in realisations. It

would be pertinent to remember that India’s sugar inventory

was depleted by export of 5 mn tonnes, which means at no

point in 2008-09 will inventory be more than three months

of the country’s consumption average. At Balrampur, we see

this inventory contraction as healthy from the perspective of

providing millers with an encouraging return on their

investments.

How do you expect the global sugar industryto perform during this period? I expect global sugar prices to be steady for some good

reasons. Brazil (world’s largest sugarcane producer) is

projected to record flat production in 2008-09. On account

of the ongoing economic slowdown, I do not expect any

further capacity creation, especially with cash flow

availability in countries like Brazil at a premium. In the


Mr Vivek Saraogi reviews the Company’s performance andshares his industry outlook.

MD’s review

“The sugar industry is proving tobe counter-cyclical to the broadglobal economic trend for animportant reason: our products –sugar, ethanol and power – do notsuffer from demand destruction.”

European Union, subsidy withdrawal has already resulted in

declining production. Our neighbouring sugar-producing

countries like Pakistan, Sri Lanka and Bangladesh are

expected to be sugar deficit over the coming year. India,

which contributed to the global market through the export

of 5 mn tonnes, is now expected to eat into the global

inventory. The result is a widening demand-supply gap in

the global sugar market, leading to robust realisations across

one and a half to two years.

What is your perspective on raw material costsin an election sugar season, which have alwaysbeen the subject of controversy? Unfortunately, raw material costs continue to remain a

matter of concern. There is still no clarity about how cane

prices are fixed by the state government arbitrarily, leaving

the industry burdened with numerous litigations. Despite the

Supreme Court’s interim order directing the industry to pay

lower rates than the SAP declared by the UP Government --

Rs. 118 per quintal for 2006-07 and Rs. 110 per quintal for

2007-08 as against an SAP of Rs. 125 for both years – the

state government went ahead and announced a higher SAP

of Rs. 140 per quintal for the 2008-09 sugar season. This was

challenged by the industry and the matter is currently

pending in the High Court. In the final order, we expect the

Supreme Court to remove the arbitrariness with respect to

2006-07 and 2007-08.

What was the Company’s biggest strength thathelped it post a vigorous turnaround?The biggest strength was our governance. For one, we

focused on building long-term value as against a short-term

one. Besides, we preferred to be conservative. As mentioned

above, the Company utilised the byproduct strategy for

value-addition to insulate against sugar cyclicality.

Our conservatism is reflected in the manner in which we

managed our foreign exchange exposures when the rupee

was appreciating vis-à-vis the dollar. We had Rs. 802.91

crores of External Commercial Borrowings on our books and

rather than playing the market through an open position, we

hedged our exposure through the conversion of ECBs into

rupee loans. This protected the Company when the rupee

depreciated.

There is another point that needs to be emphasised:

in 2006-07, when reporting the first-ever loss in our history,

our promoters invested Rs. 76 crore in the Company’s equity

capital at Rs. 92 per share. This singular commitment

reinforced the confidence of all our stakeholders –

shareholders, bankers and farmers.

What are the challenges that the Company islikely to face in 2008-09?With cane acreage and production expected to decline, the

major challenge will be in sugarcane procurement. Although

we always enjoyed excellent farmer relations, cane pricing

litigations have created a certain hesitation within the farmer

community. We expect this to reverse once the Supreme

Court clarifies cane pricing issues once and for all.

The Company will now focus on capacity consolidation

rather than new capital investments in the near future. We

shall concentrate on operationally stabilising the Rauzagaon

plant acquired two years ago and improving efficiency. We

can generate more exportable electricity by augmenting

efficiencies. We shall also endeavour to reinforce farmer

relationships through timely payment and positive

interventions, wherever required.

What is your outlook for the industry and theCompany in this global economic slowdown? Interestingly, the sugar industry is proving to be counter-

cyclical to the broad global economic trend for an important

reason: our products – sugar, ethanol and power - do not

suffer from demand destruction. Sugar is relatively high in

the food priority for families, India is a power-deficit country

with a market for exportable power and the ethanol

programme will continue as fuel-blending benefits are

significant for a country like India. The result will be stable

revenues and improving profitability during 2008-09 and

after.



Five-year operational summary Cane Crushed (in lac tonnes)

Units 2003-04 2004-05 2005-06* 2006-07 2007-08

Balrampur 23.79 15.34 22.78 21.50 16.50

Bhabnan 17.24 10.41 15.65 16.60 11.08

Tulsipur 11.57 7.71 8.74 12.06 9.94

Haidergarh 3.38 5.18 6.53 7.90 4.72

Akbarpur – – 7.56 11.37 7.24

Rauzagaon – – 8.85 9.75 6.77

Mankapur – – – 12.75 9.84

Kumbhi – – – 0.38 7.46

Gularia – – – – 7.03

Total 55.98 38.64 70.11 92.31 80.58

Sugar Production (in lac tonnes)

Units 2003-04 2004-05 2005-06* 2006-07 2007-08

Balrampur 2.30 1.57 2.34 2.10 1.66

Bhabnan 1.71 1.09 1.62 1.64 1.14

Tulsipur 1.08 0.73 0.87 1.14 0.97

Haidergarh 0.33 0.53 0.65 0.78 0.48

Akbarpur – – 0.87 1.15 0.74

Rauzagaoan – – 0.91 1.00 0.69

Mankapur – – – 1.31 1.02

Kumbhi – – – 0.03 0.78

Gularia – – – – 0.71

Total 5.42 3.92 7.26 9.15 8.19

Power Generation (in lac units)

2003-04 2004-05 2005-06* 2006-07 2007-08

Company as a whole 1,820.71 2,080.81 4,398.50 6,768.06 7,906.88

Alcohol Production (in kilo litre)

2003-04 2004-05 2005-06* 2006-07 2007-08

Company as a whole 30,900 37,735 57,279 65,292 91,089

* 18 months period; year ended on 30th September, 2006


Five-year financial summaryFinancials (Rs. in crores)

Parameters 2003-04 2004-05 2005-06* 2006-07 2007-08

Sales 802.29 929.61 1,989.77 1,476.32 1,552.50

Other income 5.98 2.94 6.81 11.13 14.13

Total income 808.27 932.55 1,996.58 1,487.45 1,566.63

Stock adjustments (109.70) (37.66) 281.23 (213.60) (123.66)

Raw materials 549.45 471.76 940.47 1,281.50 1014.16

Excise duty 102.91 116.88 91.35 84.61 88.96

Gross profit 265.61 381.57 683.53 334.94 587.17

Overheads and all other expenditure 136.22 139.14 217.04 235.67 257.67

PBDIT 129.39 242.43 466.49 99.27 329.50

Interest 19.80 18.93 34.51 54.42 89.65

PBDT 109.59 223.50 431.98 44.85 239.85

Depreciation & Amortisation 30.23 37.26 67.09 80.22 117.21

Profit before tax and extraordinary items 79.36 186.24 364.89 (35.37) 122.64

Extraordinary items - 22.33 - - -

Pre-tax profits 79.36 163.91 364.89 (35.37) 122.64

Tax 18.88 38.85 73.30 6.48 25.61

Post-tax profit 60.48 125.06 291.59 (41.85) 97.03

Equity capital 18.97 23.18 24.82 24.82 25.55

Reserves (excluding revaluation reserves) 256.36 468.60 880.83 839.17 989.35

Value-Added Statement (Rs. in crores)

Parameters 2003-04 2004-05 2005-06* 2006-07 2007-08

Income from production 809.07 828.05 1,617.19 1,605.32 1,587.20

Add: Other income 5.98 2.94 6.81 11.11 14.07

Corporate output 815.05 830.99 1,624.00 1,616.43 1,601.27

Less: Cost of raw materials 549.45 471.76 940.47 1,281.50 1014.16

Less: Other manufacturing expenses 101.08 104.15 150.44 163.74 175.65

Equals gross value-added 164.52 255.08 533.09 171.19 411.46

Less: Depreciation 30.23 37.26 67.09 80.22 117.21

Equals net value-added 134.29 217.82 466.00 90.97 294.25

Allocation of net value-added

To personnel 35.14 34.98 66.60 71.91 81.96

To taxes 18.88 38.85 73.30 6.48 27.78

To creditors (via interest) 19.80 18.93 34.51 54.42 89.65

To investors (via dividend) 21.40 42.34 99.04 Nil 12.78

To the Company (retained earnings) 39.07 82.72 192.55 (41.84) 82.08



Financial RatiosKey Financial Ratios

2003-04 2004-05 2005-06* 2006-07 2007-08

Overheads/ Total income (%) 16.85 14.92 10.87 15.84 16.45

PBDIT/ Total income (%) 16.00 26.00 23.36 6.67 21.03

Interest/ Total income (%) 2.45 2.03 1.73 3.66 5.72

Interest cover (times) 6.53 12.81 13.52 1.82 3.68

PBDT/ Total income (%) 13.55 23.97 21.64 3.02 15.31

Net profit/ Total income (%) 7.47 13.41 14.6 (2.81) 6.19

Cash profit/ Total income (%) 11.21 17.41 17.96 2.58 13.68

Balance Sheet Ratios 2003-04 2004-05 2005-06* 2006-07 2007-08

Debt-equity ratio 0.78 0.41 0.39 1.10 1.00

Inventory cycle (days) 178 167 25 95 123

Current ratio 1.51 1.49 1.10 1.07 1.64

Quick ratio 0.31 0.38 0.79 0.54 0.72

Asset turnover (total revenue/total assets) 0.78 0.79 1.11 0.55 0.55

Growth Ratios 2003-04 2004-05 2005-06* 2006-07 2007-08

Growth in turnover (%) 20.18 15.38 114.10 (25.50) 5.32

Growth in PBDIT (%) 79.09 87.51 92.42 (78.72) 231.92

Growth in PAT (%) 104.96 107.12 133.16 (114.35) – #

Growth in cash profit (%) 78.61 79.14 120.97 (89.30) 458.35

# Loss to Profit



Per Share Data 2003-04 2004-05 2005-06* 2006-07 2007-08

EPS (Rs.) 31.57 6.16 12.19 (1.69) 3.83

CEPS (Rs.) 47.34 7.99 15.00 1.55 8.38

Dividend (Rs.) 10.00 1.60 3.50 Nil 0.50

Book Value (Rs.) 145.00** 21.15 36.31 34.69 39.65

Price/Earnings (times) 9.63 11.27 8.32 – 21.16

Net Indebtedness (Rs.) 113.34 8.63 14.28 38.32 39.95

PBDT/ Total income (%) Cash profit/ Total income (%)

Book value (Rs.)

03-04 04-05 05-06 06-07 07-08

13.55

23.9721.64

3.02

15.31

03-04 04-05 05-06 06-07 07-08

11.21

17.4117.96

2.58

13.68

Debt-equity ratio

03-04 04-05 05-06 06-07 07-08

0.78

0.41 0.39

1.10

1.00

03-04 04-05 05-06 06-07 07-08

145**

21.15

36.31 34.6939.65

The face value of equity shares has been reduced from Rs. 10 to Re. 1 with effect from 31st March, 2005


** The face value of equity shares Rs. 10

Market CapitalisationThe Company’s market capitalisation increased to

Rs. 2,071.12 crores as on 30th September, 2008,

against Rs. 1,874.81 crores on 30th September,

2007, driven by an increase in profit despite a stock

valuations meltdown across companies. However,

there was a relative change in the Company’s

market capitalisation with the sugar industry. The

Company finished the year under review as one of

the highest listed companies, an index of its

derisking and governance practices. Besides, when

seen from a four-year perspective, the Company

enhanced value for its shareholders across one of

the most challenging periods in its history.


How we enhancedshareholder value

31st March, 31st March, 30th September, 30th September, 30th September,

2004 2005 2006 2007 2008

Market Capitalisation (Rs. in crores) 576.66 1,608.71 2,516.29 1,874.81 2,071.12


Total Shareholders’ Return (TSR)Total Shareholders’ Return (TSR) signifies the gain for shareholders -- directly through receiving dividends and indirectly

through capital appreciation during the financial year under review.

2003-04 2004-05 2005-06* 2006-07 2007-08

Closing Market Price Per Share (Rs.) 303.95 69.40 101.40 75.55 81.05

Dividend Paid (Rs.) 5.50 1.00 3.60 1.50 –

TSR (%) 178.91 131.38 51.30 (24.01) 7.28

Economic Value-AddedDespite an increase in EVA, Balrampur reported a negative

EVA of Rs. 59.13 crores for the financial year 2007-08,

against a negative EVA of Rs. 223.82 crores in 2006-07. The

EVA, formulated by Stern Stewart & Company, captures the

value addition to shareholders’ wealth during the year,

derived through a customised formula.

• The market-driven cost of equity is considered instead of

actual outgo towards shareholders (dividend etc.) to

calculate the cost of shareholders’ fund.

• The cost of equity was derived by using the beta-factor

for the Company scrip. The risk-free return (6% in 2007-08)

was considered; to this, the product of beta factor and the

stock market risk premium was added.

• The stock market risk premium is the return expected by

the investors from the market over the risk-free return of the

economy.

• The product of risk premium and beta factor was what

investors expect to earn from the Balrampur scrip (over 6%

risk-free return) in the year under review. This is considered

appropriate for calculating the cost of equity fund. The beta

factor for the scrip was calculated at 0.80.

• Beta of 0.80 was multiplied by the risk premium of 11%,

calculated for the Company and the product was added to

the risk-free return to arrive at the cost of equity.

• The base for calculating the rupee cost of equity is the

market capitalisation at a particular date, as the EVA uses a

stock market-driven set of variables for calculating the cost

of equity.

• For deriving the cost of debt, the post-tax marginal cost of

borrowing based on the average debt of the year and the

actual outflow of interest and tax were used. The cost of

debt for the Company during the year stood at 6.80%.

• The weighted average cost of capital for the Company

was derived at 11.54%.

EVA summary (Rs. in crores)

PBIT 212.29

Tax 5.62

Adjusted tax 10.53

NOPAT (net operating profit after tax) 201.76

WACC (weighted average cost of capital) 11.54%

Average capital 2,259.89

Cost of capital 260.89

EVA (59.13)


Dividend Your Directors are pleased to recommend payment of

Dividend for consideration of the Shareholders on

25,55,36,310 Equity Shares of Re. 1/- each @ 50%, i.e.

Re.0.50 per share.

Padma Bhushan to Shri Suresh Neotia The Board of Directors are pleased to inform that Shri

Suresh Neotia, Chairman of the Company has received the

prestigious "Padma Bhushan Award" at the hands of the

Hon’ble President of India in the year 2008 for his

contribution to trade and industry.

Report of the Board of Directors For the year ended 30th September, 2008


Your Directors have pleasure in presenting their 33rd Annual Report along with the auditedaccounts of the Company for the year ended 30th September, 2008.

Operating and Financial Review [Rupees in Lac]

Financial Results 2007-08 2006-07

Gross Turnover 155250.21 147632.44

Operating Profit Before Interest, Depreciation and Tax 32949.44 9927.53

Interest and Other Financial Charges (Net) 8965.11 5441.73

Depreciation & Amortisation 11720.50 8022.54

Provision for Taxation 2560.90 23246.51 647.68 14111.95

Net Profit/(Loss) 9702.93 (4184.42)

Add : Balance brought forward from previous year (3608.43) 575.99

Profit/(Loss) Available for Appropriation 6094.50 (3608.43)

Appropriations :

Proposed Dividend on Equity Shares 1277.68 –

Corporate Tax on Dividend 217.14 _

General Reserve 3000.00 _

Leaving a balance to be carried forward to next year’s account 1599.68 (3608.43)

6094.50 (3608.43)

Performance 2007-08Your Company, across its various segments, collectively

recorded a profit after tax of Rs. 9702.93 lac during the year

under review, compared with a loss of Rs. 4184.42 lac in the

previous year. The sugar segment, however, continued to

incur loss during the year. Relatively better sugar price

realisation in the second half of the year and payment of

Rs. 110 per qntl of sugarcane price to the farmers as against

the State Advised Price of Rs. 125 per qntl in accordance

with the direction of the Supreme Court during the year

under review helped in minimisation of losses in the sugar

segment. Sugar price realisation during the year was

Rs. 1497 per qntl, compared with Rs. 1456 per qntl last year.

The Company accounted for the sugarcane price at Rs. 110

per qntl as per the interim direction of the Hon’ble Supreme

Court for the season 2007-08. The by-products divisions

namely cogeneration and alcohol achieved positive results

during the year under review.

Crushing of sugarcane and production of sugar in season

2007-08 was 805.81 lac qntls and 81.85 lac qntls as against

923.10 lac qntls and 91.50 lac qntls, respectively in the

preceding year. Recovery was higher at 10.16% as against

9.91% in the previous season. Reduced crushing was

owing to lower availability of sugarcane due to various

reasons such as lower areas under sugarcane crop as well

as decline in yield.

During the year under review, the country exported a record

50 lac [approximately] tonnes of sugar. A higher quantum of

export was possible due to the export of raw sugar allowed

by the Government last year. The reimbursement of internal

freight transport subsidy on the export of sugar, coupled

with improved international sugar prices helped in achieving

the best-ever quantum of exports. Large exports of sugar

supported the eviction of excess sugar inventory in the

country.

Sugar price in the beginning of the year was weak. Prices

gained some strength in the second half of the financial year

under review. The improvement in price is attributable to

the export of a large quantity of sugar as mentioned above

and forecast of lower sugar production for season 2008-09.

During the year under review, costs of other inputs like

manpower, chemicals, etc. also increased significantly. Credit

squeeze in the financial market towards the second half of

the financial year caused increase in interest cost.

The Government of India created two buffer stocks of 20 lac


OperationsThe operational data for the last two years are as follows :

Season 2007-08

(2006-07) Balrampur Babhnan Tulsipur Haidergarh Akbarpur Rauzagaon Mankapur Kumbhi Gularia Total

Crushing 12000 10000 7000 5000 7500 8000 8000 8000 8000 73500

Capacity (TCD) (12000) (10000) (7000) (5000) (7500) (7500) (8000) (8000) (–) (65000)

Start of 29.11.07 29.11.07 29.11.07 30.11.07 29.11.07 29.11.07 29.11.07 29.11.07 04.12.07 –

Crushing Season (16.11.06) (08.11.06) (18.11.06) (12.11.06) (16.11.06) (21.11.06) (16.11.06) (27.04.07) (–) (–)

Closing of 01.05.08 10.04.08 18.05.08 18.03.08 20.03.08 26.03.08 21.04.08 21.03.08 26.03.08 –

Crushing Season (29.05.07) (19.05.07) (13.06.07) (29.04.07) (03.05.07) (03.05.07) (17.05.07) (13.05.07) (–) (–)

Duration (Days) 155 134 172 109 112 119 145 114 114 –

(194) (192) (208) (168) (169) (164) (183) (16) (–) (–)

Sugar Cane Crushed 164.98 110.81 99.45 47.23 72.44 67.67 98.35 74.62 70.26 805.81

(In lac Quintals) (214.95) (165.99) (120.62) (78.98) (113.71) (97.54) (127.50) (3.81) (–) (923.10)

Recovery (%) 10.05 10.26 9.74 10.25 10.16 10.28 10.33 10.52 10.08 10.16

(9.78) (9.89) (9.42) (9.87) (10.15) (10.29) (10.25) (7.69) (–) (9.91)

Sugar Produced 16.57 11.37 9.68 4.84 7.36 6.95 10.15 7.85 7.08 81.85

(In lac Quintals) (21.00) (16.41) (11.37) (7.80) (11.54 ) (10.03) (13.06) (0.29) (–) (91.50)

tonnes and 30 lac tonnes during the year to ease the cash

flow position of sugar companies to help them to liquidate

cane arrears. Under the buffer stock scheme, the carrying

cost of sugar is reimbursed to the companies. However,

both these buffer stocks have since been dismantled.

Sugar companies in India passed through an unprecedented

cash flow crunch during the past two years. Sluggish sugar

price and continuous losses resulted in massive cane arrears

across all states. After great persuasion by the sugar mills,

the Government came out with the excise loan scheme, in

order to help liquidate cane dues at the earliest. Interest-free

loans have been granted to the sugar companies by

commercial banks, based on the excise payment made

during 2006-07 and an estimated excise duty payable during

2007-08. Your Company has received Rs. 121.53 crores loans

under the scheme. This loan will be repaid in 24 monthly

installments after a moratorium of two years from the date

of disbursement.

Power During the year under review, the total power generated by

cogeneration plants was 7906.88 lac units, as against 6768.06

lac units in the previous year. The increase was on account

of commencement of the new cogeneration plants at

Kumbhi and Gularia. Consequently, the export to UPPCL

was higher at 5735.35 lac units, as against 4926.17 lac units

in the previous year. Accordingly, the total value of power

exported to the grid was also higher at Rs. 17393.55 lacs, as

against Rs. 14491.29 lacs in the previous year.

Distillery The distillery has performed exceedingly well. It produced

663.62 lac BL industrial alcohol, 174.33 lac BL ethanol and

72.94 lac BL ENA, as against 438.98 lac BL, 101.78 lac BL

and 112.16 lac BL, respectively during the previous year.

The average realisation per BL of industrial alcohol, ethanol

and ENA was Rs. 19.62 in 2007-08 as against Rs. 19.60 in

2006-07.

The UP Government continues its Molasses Policy, under

which 25% molasses are to be reserved by sugar mills for

producing country liquor.

Organic manure During the year, the name of the division was changed from

Bio-Compost to Organic Manure. The performance of

Organic Manure was satisfactory.

Greenfield Sugar Complex at Gularia andcapital expenditureAs reported in the last Directors’ Report, the greenfield

integrated complex at Gularia having 8000-TCD sugar unit,

commenced its operation on 4th December, 2007. The sugar

unit crushed 70.26 lac qntl in season 2007-08 with a

recovery of 10.08%. The 31.3-MW cogeneration power plant

commissioned and performed exceedingly well during the

year under review and supplied power to UPPCL under the

Power Purchase Agreement.

The Company has completed all its expansions at various

locations.

Subsidiary CompanyThe audited consolidated financial statements of the

Company as required under the Listing Agreement and the

Annual Report of the subsidiaries as required under Section

212(1) of the Companies Act, 1956 are annexed. The

statement under Section 212(3) of the Companies Act, 1956

in respect of the subsidiary companies is separately annexed.

During the season 2007-08, the sugar unit of the Indo Gulf

Industries Limited (IGIL), a subsidiary of the Company, has

crushed 29.71 lac quintal of sugarcane and produced 2.86

lac quintal of sugar at a recovery of 9.63%. The Gross

Turnover of IGIL during the year ended 30th September,

2008 is Rs. 3151.22 lacs and reported a Net loss of

Rs.1465.92 lacs. The Board of Industrial & Financial

Reconstruction (BIFR) on 23rd October, 2008 has declared

IGIL as a sick company in terms of Section 3(1)(o) of the

Sick Industrial Companies (Special Provisions) Act, 1985

(SICA), and the State Bank of India was appointed as

the Operating Agency under Section 17(3) of SICA to

examine the viability of IGIL and formulate the

Rehabilitation Scheme, based on IGIL’s proposal for

revival.

Balrampur Overseas Private Limited (BOPL), a wholly

owned subsidiary of the Company, incorporated with the

purpose of trading activities, has reported a net loss of

HongKong $ 454,473 for the period ended 30th September,

2008.


Cane and Sugar PolicyThe salient features of the sugar policy for 2007-08 were as

follows:

• The ratio of levy and free sale sugar remained unchanged

at 10 : 90.

• The price of levy sugar for the season 2007-08 was not

revised and supplies continued at Rs.1383.41 per qntl. The

said price was not revised for the last four years.

• The Statutory Minimum Price (SMP) of sugarcane was

fixed at Rs. 81.18 per qntl. as against Rs. 80.25 per qntl in

the previous year linked to a basic recovery of 9%, with a

premium for higher recovery.

• The U.P. Government fixed a State Advised Price (SAP) of

Rs.125 per qntl. of sugarcane for the season 2007-08, being

the same as fixed for season 2006-07.

• Ethanol price has been fixed at Rs. 21.50 per litre ex-

factory same as the last year, as agreed by the Industry with

the Government.

• The Government of India has discontinued the transport

subsidy on exports since 30th September, 2008.

• Two buffer stocks of 50 lac tonnes created by the Central

Government have since been dismantled.

Legal cases related to cane priceSugar Season 2006-07

The State Government vide order dated 26th December,

2006, fixed a State Advised Price for the season 2006-07 at

Rs.122.50, Rs. 125, and Rs. 130 per qntl for rejected, normal

and early varieties respectively. The Hon’ble Allahabad High

Court vide order dated 19th December, 2007 quashed the

State Advised Price. Special Leave Petitions [SLP] were filed

against this order by the State Government and cane growers

before the Hon’ble Supreme Court, which are pending. The

Hon’ble Supreme Court vide order dated 27th February,

2008, fixed an interim price of sugarcane at Rs. 115, Rs. 118

and Rs. 123 per qntl for rejected, normal and early varieties,

respectively for the season 2006-07.

Sugar Season 2007-08

The State Government vide its order dated 30th October,

2007, fixed a State Advised Cane Price [SAP] of Rs.125 per

qntl. for the season 2007-08, being the same as fixed for

the season 2006-07. This cane price was again challenged by

the sugar industry before the Allahabad Bench and Lucknow

Bench of the Hon’ble Allahabad High Court. The Lucknow

Bench vide order dated 7th July, 2008 upheld the State

Advised Price for the season 2007-08, and the Allahabad

Bench quashed the SAP. Both these orders were challenged

by the respectively aggrieved parties in the Hon’ble Supreme

Court through Special Leave Petitions. The Hon’ble Supreme

Court vide order dated 8th September, 2008 fixed an interim

price of sugarcane at Rs.110 per qntl for the season 2007-

08. The SLPs are pending in the Hon’ble Supreme Court.

Sugar Season 2008-09

The State Government vide order dated 18th October, 2008

has fixed a SAP for the crushing season 2008-09 at

Rs.137.50, Rs.140 and Rs.145 per qntl for rejected, normal

and early varieties respectively. The sugar factories have

challenged the State Government’s Order dated 18th

October, 2008 in the Hon’ble Allahabad High Court,

Allahabad Bench, on the ground that the State Advised Price

for the season 2008-09 has been fixed arbitrarily, without

following any guidelines, criteria and mechanism. The writ

petition is being heard in the High Court on a day-to-day

basis. The High Court is likely to give judgement very soon.

Sugar Industry Promotion Policy 2004After the withdrawal of the policy of incentives on 4th June,

2007, the State Government authorities raised a demand of

purchase tax and administrative tax on Molasses, entry tax

on sugar, society commission and VAT, in spite of the

exemptions granted under the Sugar Industries Promotion

Policy. Notices were also issued for the recovery of entry

tax, society commission, VAT and purchase tax. Therefore,

we have filed writ petitions in the Hon’ble Allahabad High

Court, Lucknow Bench. The Hon’ble High Court has granted

us interim relief and directed the State Government not to

take coercive steps to realise the aforesaid taxes. The

abovementioned writ petitions are pending and the final

hearing continues.

OutlookSugar production in the country during the season 2007-08

was at 263 lac tonnes as against 283 lac tonnes during the

previous season. The sugar production forecast for the

season 2008-09 is at 200 lac tonnes approximately

Reason for the lower production estimate for season 2008-09


may be attributed to the lower area under sugarcane

cultivation, as well as the lower yield of cane crop. This

phenomena is visible across all parts of the country. Cane

price arrears over the last couple of years caused by losses

incurred by the industry as well as uncertainty in the

scenario owing to the legal cases, has led to the diversion of

area under cane to alternative crops.

India exported a record quantity of 50 lac tonnes of sugar

during the year under review. The major part of sugar

export was raw sugar. Raw sugar export will be of great

assistance to the sugar industry in times of excess

production.

The International Sugar Organisation has forecast the global

production to fall by 7.4 million tonnes to 161.6 million

tonnes in 2008-09. The world sugar deficit will be 3.90

million tonnes in 2008-09 against a surplus of 7.25 million

tonnes in 2007-08.

Sugar price in the domestic market is expected to remain

firm as the excess inventory shall be absorbed in the system

because of estimated lower sugar production in the country.

The Government of India has increased the level of

blending of ethanol from 5% to 10% effective from October

2008. However, the complete blending upto 5% is yet to be

achieved in the country.

In view of the persistent power shortage in the country, the

Government of India has set the target growth rate of 10%

in the power sector during the Eleventh Plan period. In

order to achieve this target, the Government has opened up

the power sector to attract investments, resulting into more

sugar companies setting up cogeneration power projects.

Listing of Equity SharesYour Company’s equity shares are listed on the Calcutta,

Bombay and National Stock Exchanges. Application has

been made for delisting of the shares from Calcutta Stock

Exchange which is pending. Your Company has paid the

annual listing fees to each of these stock exchanges. The

GDRs are listed on the Luxembourg Stock Exchange.

Corporate GovernanceAs per Clause 49 of the Listing Agreement with the stock

exchanges, Management’s Discussion and Analysis, a report

on Corporate Governance together with the Auditors’

Certificate on the compliance of conditions of Corporate

Governance form part of the Annual Report.

Credit RatingThe credit rating of A1+ for short-term debts enjoyed by

your Company for a long time has since been revised to A1

by ICRA for a sum of Rs. 500 crores. The downgrading was

done by ICRA in view of the tight cash flow position and

unprecedented cash crisis suffered by the industry.

Change in Capital Structure Your Company issued and allotted 73,00,000 Equity Shares

of Re.1/- each at a premium of Rs. 91 per share on

preferential basis to the Promoter Group of the Company on

4th January, 2008. The Company also allotted to the

Promoter Group on the same date 1,00,00,000 (one crore)

convertible warrants to be convertible at the option of the

warrant holder in one or more tranches, within 18 months

from its allotment date into 1 fully paid equity share of

Re. 1/- each per warrant, at a premium of Rs. 91 per share.

The Company has also received a sum of Rs. 9.20 per

warrant, being 10% of the subscription price. The entire

proceeds from the private placement of Rs. 76.36 crores

were utilised for general corporate purpose.

The Company also issued and allotted 81,650 Equity Shares

of Re. 1/- each at a premium of Rs. 73.60 per share upon the

exercise of 81,650 options under the "Employee Stock

Option Scheme".

Employee Stock Option Scheme Your Company has formulated and implemented an

Employee Stock Option Scheme in accordance with the

guidelines issued by the SEBI. Pursuant to the scheme on

27th November, 2007, 9,95,500 stock options were granted

to the eligible employees, including the Wholetime Director.

The details of options granted and outstanding as on 30th

September, 2008 along with other particulars as required by

Clause 12 of the SEBI (Employee Stock Option Scheme and

Employee Stock Purchase Scheme) Guidelines, 1999 and the

Auditor’s Certificate required to be placed at the forthcoming

AGM, pursuant to Clause 14 of the said guidelines, are set

out in the Annexure to the report.


DirectorsShri R.N Misra has resigned from the Wholetime Directorship

of the Company .

The Board placed on record its high appreciation for the

valuable services rendered by Shri R.N. Misra during his

tenure as a Director of the Company.

Dr. Arvind Krishna Saxena was appointed as an Additional

Director of the Company by the Board in its meeting held

on 31st July, 2008 and designated as a Wholetime Director

for a period of three years with effect from 1st August, 2008.

He will hold office of the Director up to the date of the

ensuing Annual General Meeting and the Company has

received a notice under Section 257 of the Companies Act,

1956 from a member proposing Dr. Saxena as a Director of

the Company.

Shri Suresh Neotia and Shri Sudhir Jalan, Directors of your

Company, retire from the Board by rotation and are eligible

for re-election.

Directors’ Responsibility StatementAs required under Section 217 (2AA) of the Companies Act,

1956 your Directors confirm that –

i. In preparation of the annual accounts, the applicable

accounting standards have been followed.

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 your Company

at the end of the financial year, and of the profit of your

Company for that period.

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,

1956, for safeguarding the assets of your Company and

for preventing and detecting fraud and other

irregularities, and

iv. The Directors have prepared the annual accounts on a

‘going concern’ basis.

Particulars of EmployeesParticulars of employees as required under Section 217(2A)

of the Companies Act, 1956, are given in a separate

annexure attached hereto and forms part of this report.

Conservation of Energy, etc.Particulars in respect of conservation of energy, technology

absorption and foreign exchange earnings and outgo as

required under Section 217 (1) (e) of the Companies Act,

1956, are given in a separate annexure attached hereto and

form a part of this report.

Fixed DepositsThe Company has not accepted any deposits under section

58A of the Companies Act, 1956 during the year.

AuditorsM/s. G.P. Agrawal & Co., Chartered Accountants, Auditors of

your Company, retire and being eligible, offers themselves

for re-appointment.

Cost Auditors Pursuant to the directives of the Central Government under

the provisions of Section 233B of the Companies Act, 1956,

M/s. N. Radhakrishnan & Co, Cost Accountants, have been

appointed to conduct cost audits relating to sugar.

Auditors’ ReportThe observations made in the Annexure to Auditors’ Report

are self-explanatory and do not require further explanations/

comments.

AppreciationYour Board of Directors take this opportunity to express

their grateful appreciation for the excellent assistance and

co-operation received from the Financial Institutions, Central

Government, Government of U.P, the State Bank of India,

other bankers, shareholders, employees and customers for

the growth of the organisation.

For and on behalf of the Board of Directors

Kishor Shah Vivek Saraogi

Director cum Chief Financial Officer Managing Director

Kolkata

25th November, 2008.


A. Conservation of Energya) Your Company continues to give high priority to the

conservation of energy on an ongoing basis. Some of the

significant measures taken are:

i) Installation of high-efficiency spreader stocker type,

travelling grates, high pressure boilers.

ii) Installation of bigger size, constant ratio mill with

variable speed, DC motor drive having full auto-control,

hydraulic cane unloaders, rotary-screens, juice-flow

stabilisation system, continuous sulphur burner, high-

efficiency centrifugal pumps, fluidised bed sugar drier

and sugar bag conveying system, efficient and

automatic centrifugal machines, semi kesteners, etc.

iii) Installation of condensing-cum-extraction turbine,

variable frequency drives with different machines, fans,

heat recovery units in boilers, pre-heaters for boiler

feed water, distributed control system for centralised

efficient operation.

iv) Replacement of Clear Bulb (40 watts) with CFL (15

watts), Recycling of process water and to reduce

extraction of ground water, Optimum and effective

utilisation of steam and balancing of motors in the

plant.

The above measures are expected to reduce the

consumption of fuel and power substantially and

consequently the cost of production.

Information pursuant to the Companies (Disclosures of particulars in thereport of the Board of Directors) rules 1988 and forming part of theDirectors’ Report for the year ended 30th September, 2008


Directors’ ReportAnnexure to the

b) The required data with regard to conservation of energy are furnished below:

(A) Power and Fuel Consumption 2007 - 08 2006 -07

1. a) Purchased units (excluding domestic units) 207664 210683

Total amount (Rs. lacs) 11.99 11.37

Rate per unit (Rs.) 5.77 5.40

b) Own Generation

i) Through Diesel Generator sets (units) 2113934 1224991

Units per ltr. of Diesel 3.31 3.48

Cost/unit (Rs.) 9.63 8.58

ii) Through Steam Turbine/Generator (units) 214110252 226519887

Unit per quintal of Bagasse cost/unit Steam produced by use of own bagasse


Kolkata Kishor Shah Vivek Saraogi

25th November, 2008. Director cum Chief Financial Officer Managing Director

B. Research and Development, TechnologyAbsorptionYour Company has been carrying out programme for

assisting farmers to produce improved variety of sugar cane

and gap filling process resulting in increased yield and

recovery and helps farmers to protect sugar cane from

diseases or to eradicate seed borne diseases. The Company

also facilitates farmers to produce multi crops in between

the inter-cropping of sugarcane.

Owing to the above efforts, a higher yield of disease free

cane will be available to the Company, resulting in a higher

return to the Company and the cane growers. Multi

cropping also helps farmers to get more returns.

Future Plans

The Company shall continue to assist farmers to get improved

variety of sugar cane with higher yield and recovery. The

Company shall install the plant & machinery with latest

technology at its factories, if the industry in which the

Company is engaged demands as such.

The Company has not imported any technology.

C. Foreign Exchange Earning and Outgoi) Activities relating to exports initiative taken to increase

exports

Various export proposals are being examined

ii) Development of new export market for product and

services and export plan

Various export proposals are being examined.

iii) Total Foreign Exchange Earnings : Rs.281.93 lacs

iv) Used : Rs. 3492.36 lacs


(A) Power and Fuel Consumption (Contd.) 2007 - 08 2006 -07

2. Coal (specify quality and where used quantity) Not directly consumed Not directly consumed

(tonnes) in production in production

Total amount /average cost -do- -do-

3. Furnace Oil (qty.k.ltrs.)

Total amount /average rate -do- -do-

4. Other/Internal Generation -do- -do-

Quantity total cost rate/ unit Nil Nil

(B) Consumption per unit of Production 2007 - 08 2006 -07

Sugar (lac quintal) 81.98 91.68

Electricity (Units per qntl of production) 26.40 24.86

Furnace Oil Nil Nil

Coal (specify quality) Nil Nil

Other (specify) Nil Nil


Particulars of employees as required under Section 217(2A) of theCompanies Act, 1956, and forming part of the Director’s report for the year ended 30th September, 2008.Name Designation Remuneration Qualification Age Date of Last employer,

(Rs.) and experience (years) commencement designation(years) of employment

Vivek Saraogi Managing Director 1,90,82,280 B.Com (Hons.), (21) 42 3rd July, 1987 None

Meenakshi Saraogi Jt. Managing Director 1,99,16,550 B.A. (26) 64 1st October, 1982 None

Kishor Shah Director-cum- 64,90,667 B. Com., ACA, (20) 44 24th January, 1994 Independent

Chief Financial Officer consultancy

K.N. Ranasaria Wholetime Director 33,30,231 M.A. (Sahityaratna), 73 Service transferred Balrampur Sugar Co.

(45) from Balrampur Ltd., Secretary

Sugar Co. Ltd.

S.K. Agrawala Company Secretary 24,54,244 B.Com (Hons), AASM, 53 20th January, 1995 Birla Cotton Spg. & Wvg.

FICWA, FCS (32) Mills Ltd., Secretary

Prem Kumar Executive President 32,24,030 B.Sc., Engineering 61 8th April, 2004 New Swadeshi Sugar

Shrawat (Mech.), (36) Mills, Executive V.P.

P.R. Singh Executive President 33,40,898 B.Com., PGDBM, LLB 60 1st August, 2003 JK Industries Limited,

(43) Chief Executive

K.P. Singh Executive President 30,69,596 Diploma in Mech. 51 16th September, Ghaghara Sugar

Engineering (31) 2002 Ltd, D.G.M. (Engg.)

R.L. Tamak Chief Executive - 27,94,441 B.Sc (Hons) Ag, FSTA 44 9th June, 2005 DCM Shriram

Operations Consolidated Ltd, Joint

Vice-president

N.K. Khetan Chief General Manager 30,11,912 B.Com., FCA, (24) 50 1st June, 1989 M/s M. Kumar Jain &

Co., Partner

G.L. Khetan Chief General Manager 28,93,992 B.Com. (Hons), FCA, 49 1st August, 1990 Hindustan Development

(25) Corporation, Manager-

Accounts & Administration

S.K. Pandey Chief General Manager 25,40,668 B.Sc., A.N.S.I. 59 19th August, 2006 Chadha Sugar Mills,

Diploma, Diploma in General Manager

Management, (33)

H.S. Gangwar Chief General Manager 27,32,292 Dip. In Mechanical 52 20th May, 2006 Oudh Sugar Mills Ltd,

Engineering, A.N.S.I. Executive President

in Sugar, (29)

N. K. Agarwal Chief General Manager 28,82,690 Diploma in Mechanical 50 8th June, 2006 Bajaj Hindusthan Ltd,

Engineering, (26) Vice-President

Notes:1) Remuneration includes salary, commission, Company’s contribution to provident fund and monetary value of perquisites but does not include

contribution to gratuity fund.

2) The appointments in respect of Managing / Wholetime Directors are contractual. Others terms and conditions are as per rules of the Company.

3) Shri Vivek Saraogi (Managing Director) and Smt. Meenakshi Saraogi (Jt. Managing Director) are related to each other.



25th November, 2008 Director-cum-Chief Financial Officer Managing Director


Directors’ ReportAnnexure to the

Statement as at 30th September, 2008 pursuant to Clause 12 of the SEBI(Employee Stock Option Scheme & Employee Stock Purchase Scheme)Guidelines, 1999.

a] Description

Year 2005 2006 2007

No. of Options

Granted 6,22,500 8,83,000 9,95,500

Date of grant 31.10.2005 27.11.2006 27.11.2007

Exercise price per

share (Each option

is equivalent to one

equity share of the

face value of

Re. 1/- each of the

Company) Rs.74.60 Rs.104.10 Rs.72.20

b] Pricing FormulaThe exercise price of the options is determined by the

Remuneration Committee on the date the option is

granted. It is based on the average daily closing market

price of the equity shares of the Company during the

preceding 26 weeks, prior to the date of grant [on the

stock exchange it is traded most].

c] Options Vested: 11,95,500

d] Options Exercised: 81,650

e] Total number of Equity Shares arising as a result ofExercise of Options: 81,650 Equity Shares of Re.1/-

each.

f] Options Lapsed: 3,84,500 options

g] Variation of Terms of Option: N. A.

h] Money realised of the Exercise of Option:Rs. 60,91,090/-

i] Total no of Option in Force: 20,34,850

j] Details of Option Granted to i] Senior Managerial Personnel:

Name Designation No. of Options Granted during

the Financial Year ended 30.09.2008

1 Shri K.N. Ranasaria Wholetime Director 10,000

2 Shri Kishor Shah Director-cum-CFO 10,000

3 Shri R.N. Mishra* Wholetime Director 10,000

4 Dr. Arvind Krishna Saxena** Wholetime Director 5,000

5 Shri S.K. Agrawala Company Secretary 10,000

6 Shri P.K. Shrawat Executive President 10,000

7 Shri P.R. Singh Executive President 10,000

8 Shri K.P. Singh Executive President 10,000

* Resigned on 31st July, 2008 \ ** Appointed as Wholetime Director w.e.f. 1st August, 2008.

ii] Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during

that year – NIL

Auditors’ Certificate as required under Clause 14 of the SEBI (Employees Stock Option Scheme &Employee Stock Purchase Scheme) Guidelines, 1999

We have examined the books of account and other relevant records of Balrampur Chini Mills Ltd. having its registered office

at ‘FMC Fortuna’, 2nd floor, 234/3A, A.J.C. Bose Road, Kolkata– 700 020 and based on the information and explanations given

to us, we certify that in our opinion, the Company has implemented the Employee Stock Option Scheme in accordance with

SEBI (Employees Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 and in accordance with the

special resolution passed by the Company in the Extra-ordinary General Meeting held on 8th September, 2005.

For G.P. Agrawal & Co.

Chartered Accountants

7A, Kiran Shankar Ray Road, (CA. Ajay Agrawal

Kolkata – 700 001. Membership no. 17643)

25th November, 2008. Partner


iii] Identified employees who were granted option, during

any one year, equal to or exceeding 1% of the issued capital

(excluding outstanding warrants and conversions) of the

Company at the time of grant – NIL

k] Diluted earnings per share (EPS) pursuant to the issue of

shares on exercise of options calculated in accordance with

Accounting Standard [AS] 20. Earning per share is Rs. 3.82.

l] i) The employee compensation cost has been calculated

using the intrinsic value method of accounting for options

issued under BCML Employees’ Stock Option Scheme. The

stock-based compensation cost as per the intrinsic value

method for year ended 30th September, 2008 is

Rs. 1,70,84,550.

ii) The employee compensation cost that shall have been

recognised if the Company had used the fair value of the

options is Rs.5,12,35,230. The difference between the

employee compensation cost so computed at (i) above and

the employee compensation cost that shall have been

recognised if the Company had used the fair value of the

options is Rs. 3,41,50,680.

iii) Impact of this difference on profits and EPS of the

Company: The effect of adopting the fair value method on

the net income and earnings per share is presented below:

Net Income/(Loss) Rs. in lacs

As reported 9702.93

Add: Intrinsic value Compensation cost 170.85

Less: Fair value Compensation cost

(Black Scholes model) 512.35

Adjusted Net Income/(Loss) 9361.43

Earning Per Share Basic (Rs.) Diluted (Rs.)

As reported 3.83 3.82

As adjusted 3.69 3.69

m] The weighted average exercise price of the options

granted on 27.11.2007 is Rs.72.20 per equity share. The

weighted average fair value of options is Rs.55.63 per

option.

n] A description of the method and significant assumptions

used during the period to estimate the fair values of options,

including the following weighted-average information is

given below:-

[1] Method – Black Scholes Model

[2] Risk-free interest rate – 7.98%

[3] Expected life – 9 years (including vesting period of

1 year)

[4] Expected volatility – 13.67%

[5] The price of the underlying share in market at the time

of option grant – 90.75


Kishor Shah Vivek Saraogi

Director cum Chief Financial Officer Managing Director

Kolkata

25th November, 2008.

Philosophy on Code of GovernanceWe believe that Corporate Governance is the set of

processes, customs, laws, policies and principles which

guides an organisation to excel in its functioning,

administration and control in the best possible interest of all

its stakeholders, including the society at large. Good

Corporate Governance generates from the mindset of the

organisation and is based on the principles of equity,

transparency, accountability, fairness and commitment to do

things in a manner where all resources can be utilised

optimally to meet stakeholders’ aspirations and societal

expectations.

We at Balrampur Chini, since inception, are being always

guided by ethical principles and are transparent and fair in

our business dealings and administration. We have an

adequate system of control and check in place to ensure

that the executive decisions should result in optimum

growth and development, benefiting all stakeholders. The

Company aims to increase and sustain its corporate value

through growth and innovation.

Board of DirectorsThe current policy is to have an appropriate mix of

Executive and Independent Directors to maintain the

independence of the Board. As on 30th September, 2008,

the constitution of the Board was:

• Two Promoters, Executive Directors

• Three Non-Promoters, Executive Directors

• Six Independent, Non-Executive Directors

During the year ended 30th September, 2008, five Board

meetings were held. The Company has held at least one

meeting in every quarter and the time gap between two

Board meetings does not exceed four months as prescribed

under Clause 49. The details are as follows:


CorporateGovernance Report

Sl. Date of Board No. of No. of Independent

No. Board meeting strength Directors present Directors present

1 19th November, 2007 11 7 4

2 27th November, 2007 11 8 5

3 31st January, 2008 11 7 4

4 30th April, 2008 11 7 4

5 31st July, 2008 11 9 5


The composition of the Board of Directors as on 30th September, 2008, the number of other Board of Directors or Board

Committees of which he/she is a member/Chairperson and the attendance of each Director at these Board meetings and the

last Annual General Meeting (AGM) are as under:

Name of the Director Category No. of other No. of membership/ No. of Board Attendance at directorships* (Public chairmanship on other meetings last AGM

Limited Company) Board Committees attended[1] [2] [3] [4] ** [5] [6]

Shri Suresh Neotia Independent, 5 (including

(Chairman) Non-executive 1 as Chairman) Nil 5 No

Shri Vivek Saraogi Promoter,

(Managing Director) Executive 1 Nil 5 Yes

Smt. Meenakshi Saraogi Promoter,

(Jt. Managing Director) Executive Nil Nil 1 No

Shri Sudhir Jalan Independent, 7 (including

Non-executive 3 as Chairman) 2 4 No

Shri R.K. Choudhury -do- 8 (including

2 as Chairman) 3 2 No

Shri S.B. Budhiraja -do- 3 3 (including 1 as Chairman) 5 Yes

Shri M.M. Mukherjee -do- Nil Nil 5 Yes

Shri Naresh Chandra -do- 11 9 (including 1 as Chairman) 1 No

Shri K.N. Ranasaria Non-promoter

(Wholetime Director) Executive 1 2 (including 1 as Chairman) 5 Yes

Shri Kishor Shah Non-promoter

[Director cum Chief Executive Nil Nil 5 Yes

Financial Officer]

Shri R.N. Misra Non-promoter

(Wholetime Director) Executive Nil Nil Nil No

resigned w.e.f.

31.07.2008

Dr. Arvind Krishna Non-promoter

Saxena (appointed as Executive 1 1 Nil N.A.

Wholetime Director

w.e.f. 01.08.2008)

(*) Excludes membership of the Managing Committee of various chambers/bodies and directorship in private limited

companies/ companies under section 25 of the Companies Act/ foreign companies.

(**) For reckoning the limit, the membership/ chairmanship of the Audit Committee and Shareholders’ Grievance Committee

of Indian public limited companies have been considered.

The composition of the Board and other provisions as to the Board and Committees are in compliance with Clause 49. All the

Independent Directors qualify the conditions for being Independent Director as prescribed under Clause 49. No Director is

related to any other Director, except Shri Vivek Saraogi and Smt. Meenakshi Saraogi, who are related to each other, as Shri

Vivek Saraogi is the son of Smt. Meenakshi Saraogi. Further, the Board periodically reviews compliance reports of all laws

applicable to the Company and necessary steps are being taken to ensure compliance in law and spirit.


Board CommitteesAudit Committee

Composition

The Audit Committee of the Company comprises four

Directors - all of whom are Independent, Non-Executive. All

of them are experts in corporate finance, accounts and

corporate law. The Chairman of the Committee is an

Independent Non-Executive Director, nominated by the

Board. The Company Secretary acts as the secretary to the

Committee. The Chief Financial Officer, the Statutory

Auditor, Cost Auditor and the Internal Auditor of the

Company are permanent invitees at the meetings of the

Committee. The composition of the Audit Committee meets

the requirement of Clause 49 and the provisions of the

Companies Act, 1956.

The composition of the Audit Committee:

Sl Name of Directors Position

1 Shri S.B. Budhiraja Chairman, Independent,

Non-Executive

2 Shri Naresh Chandra Vice-chairman,

(Resigned w.e.f. Independent,

26.09.2008) Non-Executive

3 Shri Suresh Neotia Member, Independent,

Non-Executive

4 Shri Sudhir Jalan -do-

5 Shri M.M. Mukherjee -do-

The Audit Committee has the following powers:

1) To investigate into any matter in relation to the items

specified in Section 292A of the Companies Act, 1956 or

referred to it by the Board and will have full access to

information contained in the records of the Company

and external professional advice, if necessary.

2) To investigate any activity within its terms of reference.

3) To seek information from any employee.

4) To obtain outside legal or other professional advice.

5) To secure attendance of outsiders with relevant

expertise, if it considers necessary.

The Role of the Audit Committee includes the following:

1. Oversight of the Company’s financial reporting process

and the disclosure of its financial information to ensure

that the financial statement is correct, sufficient and

credible.

2. Recommending to the Board, the appointment, re-

appointment and, if required, the replacement or

removal of the statutory auditor and the fixation of audit

fees.

3. Approval of payment to statutory auditors for any other

services rendered by them.

4. Reviewing, with the management, the annual financial

statements before submission to the Board for approval,

with particular reference to:

a. Matters required to be included in the Director’s

Responsibility Statement to be included in the

Board’s report in terms of Clause (2AA) of Section

217 of the Companies Act, 1956

b. Changes, if any, in accounting policies and practices

and reasons for the same

c. Major accounting entries involving estimates based

on the exercise of judgment by the management

d. Significant adjustments made in the financial

statements arising out of audit findings

e. Compliance with listing and other legal requirements

relating to financial statements

f. Disclosure of any related party transactions

g. Qualifications in the draft audit report.

5. Reviewing, with the management, the quarterly financial

statements before submission to the Board for approval.

6. Reviewing, with the management, performance of

Statutory and Internal Auditors, and adequacy of the

internal control systems.

7. Reviewing the adequacy of the internal audit function, if

any, including the structure of the internal audit

department, staffing and seniority of the official heading

the department, reporting structure coverage and

frequency of the internal audit.

8. Discussion with internal auditors, about any significant

findings and follow-up thereon.

9. Reviewing the findings of any internal investigations by

the internal auditors into matters, where there is

suspected fraud or irregularity or a failure of the internal

control systems of a material nature and reporting the

matter to the Board.


10. Discussion with Statutory Auditors before the audit

commences, about the nature and the scope of audit as

well as the post-audit discussion to ascertain any area of

concern.

11. To look into the reasons for substantial defaults in the

payment to the depositors, debenture holders,

shareholders (in case of non payment of declared

dividends) and the creditors.

12. Reviewing the Company’s financial and risk management

policies

13. Carrying out such other functions which, maybe, from

time to time, specifically referred by the Board of

Directors.

The Audit Committee also reviews the following information:

1. The management’s discussion and analysis of financial

condition and results of operations;

2. Statement of significant related party transactions,

submitted by the management;

3. Management letters/letters of internal control weaknesses

issued by the statutory auditors;

4. Internal audit reports relating to internal control

weaknesses;

5. The appointment, removal and terms of remuneration of

the Chief Internal Auditor; and

6. Review of uses/ application of funds raised through

(public issue, right issue, preferential issue, GDR etc.)

Meetings and AttendanceDuring the year ended 30th September, 2008, four Audit

Committee meetings were held on 19th November, 2007,

31st January, 2008, 30th April, 2008 and 31st July, 2008.

Name of Directors No. of Meetings Attended

Shri S.B. Budhiraja 4

Shri Naresh Chandra –

Shri Suresh Neotia 4

Shri Sudhir Jalan 3

Shri M.M. Mukherjee 4

Shri S.B. Budhiraja, the Chairman attended the AGM held on

18th February, 2008 and replied to the queries related to

accounts to the satisfaction of the shareholders.

Remuneration CommitteeThe Remuneration Committee recommends to the Board of

Directors regarding the remuneration payable to the

Executive Directors of the Company. The Remuneration

Committee comprises four Directors, all of whom are Non-

Executive, Independent Directors. The members of the

committee are Shri Naresh Chandra, Shri Suresh Neotia, Shri

R.K. Choudhury and Shri Sudhir Jalan. Shri Naresh Chandra

is the Chairman of the Committee.

The Remuneration Committee also administers the Employee

Stock Option Scheme, which was approved by a resolution

of shareholders at the Extraordinary General Meeting of the

Company held on 8th September, 2005. During the year

ended 30th September, 2008, two Remuneration Committee

meetings were held on 27th November, 2007 and 31st July,

2008. The attendance of the members at the meetings was

as follows:

Name of Directors No. of Meetings Attended

Shri Naresh Chandra 1

Shri Suresh Neotia 2

Shri R.K. Choudhury 1

Shri Sudhir Jalan 2

Remuneration PolicyThe remuneration of employees largely consists of base

remuneration, perquisites, bonus, exgratia, etc. The

components of the total remuneration vary for different

cadres/grades and are governed by industry pattern,

qualification and experience of the employee,

responsibilities handled by him, individual performance, etc.

The objectives of the remuneration policy are to motivate

employees to excel in their performance, recognise their

contribution, retain talent in the organisation, reward merits

and protect organisational stability and flexibility.

The Company pays remuneration by way of salary and

perquisites to the Managing Director, Joint Managing

Director and the Wholetime Directors. The Managing

Director, the Joint Managing Director and the Director-cum-

Chief Financial Officer are also entitled to receive an annual

commission. The salary and the commission is

recommended by the Remuneration Committee to the Board

of Directors and placed before the shareholders’ meeting for

approval. The commission payments to the Managing

Director, Joint Managing Director and Director-cum-Chief

Financial Officer are at the rate of one percent of the net

profits of the Company, subject to a ceiling of Rs. 90 lakhs

p.a. each in case of the Managing Director, Joint Managing

Director and Rs.30 lakhs p.a. in case of the Director-cum-

Chief Financial Officer.

The Non-executive Directors are remunerated by way of

commission and sitting fees of Rs. 10,000 for attending each

Board of Directors meeting and committee meeting. The

aggregate commission payable to the Non-Executive

Directors is up to one percent of the net profits of the

Company, with a maximum ceiling of Rs.20 lakhs per annum

in such proportion and manner as fixed by the Board of

Directors, subject to the approval of the shareholders in the

forthcoming Annual General Meeting of the Company.

Details of remuneration to the Directors for the year ended

30th September, 2008:


Name of Salary Benefits Bonus Commission Sitting Total No. of Stock Service Contract/the Directors Fees Options Notice period/

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) granted* Severance Fees

Shri Suresh Neotia – – – 3,33,334 130,000 463,334 – Retire by rotation

Shri Vivek Saraogi 9,000,000 1,082,280 – 9,000,000 – 19,082,280 – Term of office valid up to

31.03.2011. No notice period

and no severance fees.

Smt. Meenakshi Saraogi 9,000,000 1,916,550 – 9,000,000 – 19,916,550 – Term of office valid up to



Shri Sudhir Jalan – – – 333,333 190,000 523,333 – Retire by rotation

Shri R.K. Choudhury – – – 333,333 120,000 453,333 – -do-

Shri S.B. Budhiraja – – – 333,334 90,000 423,334 – -do-

Shri M.M. Mukherjee – – – 333,333 100,000 433,333 – -do-

Shri Naresh Chandra – – – 333,333 20,000 353,333 – -do-

Shri R.N. Misra

(resigned on 31.07.2008) 576,667 75,500 – – – 652,167 30,000 Resigned

Shri K.N. Ranasaria 2,493,333 356,898 480,000 – – 3,330,231 30,000 Terms of office valid up to



Shri Kishor Shah 3,116,667 374,000 – 3,000,000 – 6,490,667 30,000 Terms of office valid up to

30.01.2011 subject to re-

appointment after retirement

by rotation. No notice

period, no severance fees.

Shri Arvind Krishna 136,000 29,020 – – – 165,020 15,000 Terms of office valid up to

Saxena# 31.07.2011 subject to re-

appointment after retirement

by rotation. No notice

period, no severance fees.

Note:- The amount of gratuity has not been shown in the above table, as the Managing Directors and Whole time Directors

are entitled to receive gratuity at the end of their tenure

# Remuneration is for the period from 1st August, 2008 to 30th September, 2008, as Shri Saxena is appointed as the

Wholetime Director w.e.f. 1st August, 2008.

* Employee Stock Options (each option equivalent to one

equity share of the face value of Re.1/- each of the

Company) were granted on 31st October, 2005 at an

exercise price of Rs.74.60 per equity share, on 27th

November, 2006 at an exercise price of Rs.104.10 per equity

share and on 27th November, 2007 at an exercise price of

Rs.72.20 per equity share. These options will vest after one

year from the date of grant and may be exercised within a

period of 96 months from the date of their vesting.

Shareholders’ Committee

i) Share Transfer Committee

A share transfer committee was constituted to deal with

various matters relating to share transfer/transmission,

allotment, issue of duplicate share certificates, approving the

split and consolidation requests and other matters relating to

transfer and registration of shares.

The members of the committee are Shri Vivek Saraogi, Smt.

Meenakshi Saraogi, Shri Suresh Neotia, Shri Sudhir Jalan and

Shri R.K. Choudhury. During the year ended 30th

September, 2008, 11 Share Transfer Committee Meetings

were held.

ii) Shareholders’/Investors’ Grievance Committee

The Company constituted the Shareholders’/Investors’

Grievance Committee to oversee the redressal of shareholders’

and investors’ grievances in relation to the transfer of shares,

non-receipt of annual report, non-receipt of dividend, etc.

The constitution of the Committee is as follows:

Shri Sudhir Jalan, Chairman, Independent Non-executive

Shri M. M. Mukherjee, Member, Independent Non-executive

Shri Vivek Saraogi, Member, Promoter, Executive

Shri Naresh Chandra resigned from the membership of the

Shareholders’/Investors’ Grievance Committee with effect

from 21st March, 2008 and Shri M. M. Mukherjee were

appointed as a member of the committee.

During the year ended 30th September, 2008, the

Shareholders’/Investors’ Grievance Committee meeting was

held on 30th April, 2008.

Compliance Officer

The Board has designated Shri S.K. Agrawala, Company

Secretary as the Compliance Officer.

Details of Shareholders’ Complaints received

A total of 113 complaints/correspondences were received

and replied to the satisfaction of the shareholders during the

year ended 30th September, 2008. There were no

outstanding complaints as on 30th September, 2008. No

shares were pending for transfer as on 30th September, 2008.


General Body MeetingThe location and time, where last three Annual General Meetings were held are given below:

Year Date Location of the Meeting Time Special Resolution passed

2004-05 22.07.2005 Gorky Sadan, 3, Gorky Terrace, 3.00 p.m. 1. Delisting of equity shares from The Calcutta Stock Exchange

Kolkata-700017 Association Ltd. and The Delhi Stock Exchange Association Ltd.

2. Alteration of Articles of Association.

2005-06 11.01.2007 Kala Mandir, 48, Shakespeare 10.30 a.m. 1. Re-appointment of Shri Vivek Saraogi as the Managing Director.

Sarani, Kolkata – 700 017 2. Payment of Enhanced remuneration to Smt. Meenakshi Saraogi,

Jt. Managing Director.

3. Appointment of Shri Kishor Shah as the Director-cum-chief

financial officer.

4. Re-appointment of Shri K.N. Ranasaria as the Wholetime Director.

5. Re-appointment of Shri R.N. Misra as the Wholetime Director.

6. Investment by FIIs up to 60% of the paid up equity share capital

of the Company.

2006-07 18.02.2008 Kalakunj, 48, Shakespeare Sarani, 4.00 p.m. 1. Payment of existing remuneration to Shri K. N. Ranasaria.

Kolkata – 700 017

No special resolution was passed through ballot at the last AGM and no special resolution is proposed to be conducted through postal

ballot at the forthcoming AGM to be held on 30th January, 2009.

Profiles of Directors seeking re-appointment and appointment at the ensuing AGM

Shri Suresh Neotia

Date of birth 08.09.1936

Qualifications A law graduate

Disclosurei) The Company does not have any related party

transactions, which may have potential conflict with the

interests of the Company at large. However, disclosure

of transactions with related parties is set out in the Notes

to Accounts-Schedule-22, forming part of the Annual

Report.

The Company has allotted 73,00,000 Equity Shares and

1,00,00,000 convertible warrants on preferential basis on

4th January, 2008 to the Promoter Group in accordance

with the SEBI (Disclosure and Investor Protection)

Guidelines, 2000. These warrants are exercisable within a

maximum period of 18 months from the date of

allotment for conversion into an equal number of equity

shares.

ii) The Company has followed the guidelines of Accounting

Standards issued by the Institute of Chartered

Accountants of India in preparation of its financial

statements.

iii) The Company has laid down risk assessment and

minimisation procedures and the same is periodically

reviewed by the Board. Further, the Company has

adequate internal control systems to identify the risk at

appropriate time and to ensure that the executive

management controls the risk in a properly defined

framework.

iv) The amount received on preferential issue to the

Promoter Group has been utilised fully for general

corporate purpose.

v) The Company has no material unlisted Indian subsidiary

company as defined in Clause 49 of the Listing

Agreement.

vi) The Company has complied with the requirements of

regulatory authorities on capital markets and no

penalties/strictures were imposed against it during the

last three years.

vii) Shri R.K. Choudhury, Non-Executive Director hold 28,500

equity shares of the Company as on 30th September,

2008.

Means of Communicationi) A half-yearly report was not sent to each household of

shareholders. Shareholders were intimated through the

press and the Company’s website www.chini.com about

the quarterly performance and financial results of the

Company.

ii) The quarterly and annual results were published in

leading English and Bengali newspapers such as The

Business Standard, The Economic Times, Kalantar and

Dainik Lipi.

iii) As per Clause 51 of the Listing Agreement with stock

exchanges, certain documents/information such as

quarterly/annual financial results, shareholding pattern

and corporate governance are accessible on the website

www.sebiedifar.nic.in.

iv) Presentations were also made to the media, analysts,

institutional investors, fund managers, etc. from time to

time. Such presentations are also posted on the

Company’s website.

v) The Company has designated the following email-id

exclusively for redressal of the investor grievances and

the necessary disclosure to this effect has also been

made in the Company’s website www.chini.com:

[email protected].

vi) The Company sends reminders for the unpaid dividend

to the shareholders as per record every year.

vii) The management’s discussion and analysis forms part of

the Annual Report, which is posted to the shareholders

of the Company.

General Shareholders’ Information

Annual General Meeting

Date and time : 30th January, 2009 at 3.00 p.m.

Venue : Kalakunj, 48, Shakespeare Sarani,

Kolkata - 700 017


Expertise and experience He was the co-founder and chairman of Gujarat Ambuja Cements Limited. He has

wide interest in business and has served on the Board of several leading Indian

companies. He is also a director on the Central Board of Reserve Bank of India.

Directorship held in Ambuja Cements Ltd., Usha Martin Ltd., RKBK Ltd., Dwarikesh Sugar Industries Ltd.,

other Companies Neotia Elbit Hospital Venture Ltd., Ambuja Educational Institute (Sec 25 Co.), Ambuja

Cement Foundation (Sec 25 Co.), Ganpati Medical Institute (Sec 25 Co.), Boutique

Hotels India Pvt. Ltd., Gajraj Securities & Services Pvt. Ltd., RKBK Automobiles Pvt.

Ltd., RKBK Fiscal Services Pvt. Ltd., Ambuja Cement India Pvt. Ltd., Ganesh Realty

and Mall Development Ltd., J M Financial Asset Reconstruction Co. Pvt. Ltd. and

Macmet Interactive Technologies Pvt. Ltd.

Membership in other Chairman, Remuneration Committee & Member, Audit Committee of Boutique Hotels

Board Committees India Pvt. Ltd. and Member, Audit Committee of RKBK Fiscal Services Pvt. Ltd.

Shareholding as on 30.09.2008 Nil

Shri Sudhir Jalan

Date of Birth 07.11.1944

Qualifications B.Com, MBA

Expertise and experience He is the past president of FICCI (the Federation of Indian Chamber of Commerce

and Industry) and AIMA (All India Management Association) and is serving on the

Board of several companies. He is also the past President of several other associations

such as the Indian Chamber of Commerce and Industry, Indian Council of Arbitration,

All India Organisation of Employers, India Soap and Toiletries Maker’s Association.

He is the Hony. Consul of Greece (Kolkata).

Directorships held in Meenakshi Tea Co. Ltd., Bells Softech Ltd., Bells Softech Inc., SES (India) Ltd.,

other companies Sublime Agro Ltd., Strategic Weighing Systems Ltd., The Shahjahanpur Electric Supply

Co. Ltd., The Sirpur Paper Mills Ltd., A S A Holding Pvt. Ltd., Brar Properties and

Holdings (P) Ltd., Neo Foods (P) Ltd. and Rieter India Private Ltd.,

Membership in other Member, Audit Committee of Sublime Agro Limited, Member, Remuneration

Board Committees Committee & Member, Investment Committee of The Sirpur Paper Mills Ltd., Member,

Audit Committee & Member, Remuneration Committee of Strategic Weighing Systems

Limited and Chairman, Advisory Board of Rieter India Pvt. Limited.


Dr. Arvind Krishna Saxena

Date of Birth 26.08.1951

Qualifications M.Sc., Ph.D. (Botany)

Expertise and experience He has specialisation in Industrial Mycology, Bio-composting, Mushroom Production

and Processing from Horst, Holland. He has a wide experience of 34 years and is

associated with the Company since 2002. Previously, he held prestigious position in

various organisations and was also associated with scientific and research activities.

Directorship and Membership He is Director and member, Audit Committee in Indo Gulf Industries Ltd.

in other Board and Committees



Financial YearThe financial year 2005-06 of the Company was extended

up to 30th September, 2006. Thereafter, the Financial Year

of the Company is from 1st October to 30th September

every year.

Financial Year calendar for 2008–09 (Tentative)Results for the quarter : Fourth week of January 2009

ending 31st December, 2008

Results for the quarter : Fourth week of April 2009

ending 31st March, 2009

Results for the quarter : Fourth week of July 2009

ending 30th June, 2009

Results for the quarter : Third week of November 2009

ending 30th September, 2009

Book Closure Date20th January, 2009 to 30th January, 2009 (both days

inclusive) on account of AGM and Dividend.

Dividend Payment DateOn or after 30th January, 2009.

Listing of Equity Shares on Stock Exchanges at

i) National Stock Exchange of India Ltd.

Exchange Plaza, 5th Floor, Plot No. C/1, G Block

Bandra – Kurla Complex, Bandra (E), Mumbai 400 051

ii) Bombay Stock Exchange Ltd.

The Corporate Relationship Department

Rotunda Building, PJ. Towers, Dalal Street

Fort, Mumbai 400 001.

iii) The Calcutta Stock Exchange Association Ltd.

7 Lyons Range, Kolkata 700 001

[Application for delisting has been made].

iv] GDRs listed at Luxembourg Stock Exchange

SOCIETE DE LA BOURSE DE LUXEMBOURG

11 av de la Porte-Neuve, L-2227 Luxembourg

Listing FeesListing fee for the year 2008–09 has been paid to the above

stock exchanges.

Depositories

i) National Securities Depository Ltd.

Trade World, 4th Floor, Kamala Mills Compound

Senapati Bapat Marg, Lower Parel

Mumbai 400 003

ii) Central Depository Services (India) Ltd.

Phiroze Jeejeebhoy Towers, 17th Floor, Dalal Street

Mumbai 400 023

Stock CodeNSE symbol for BCML is BALRAMCHIN

BSE code for BCML is 500038

CSE code for BCML is 12012

ISIN number for BCML is INE119A01028

Regulation S GDR code for BCML is US0587882095

Rule 144A GDR code for BCML is US0587881006

Reuters CodeNSE – BACH.NS and BSE – BACH.BO

Stock market data (Face value of Re.1 each)


Months National Stock Exchange (NSE) Bombay Stock Exchange (BSE)

Month’s Month’s Volume Month’s Month’s Volume

high price (Rs.) Low Price (Rs.) (Nos) high price (Rs.) Low Price (Rs.) (Nos)

Oct. 2007 92.50 60.00 140816838 92.75 63.00 49036400

Nov. 2007 102.00 74.50 146500089 102.00 75.00 49854762

Dec. 2007 119.90 97.80 161697072 120.05 97.50 51560698

Jan. 2008 127.90 58.10 148847817 127.90 58.50 43972855

Feb. 2008 101.65 73.25 145738067 101.65 73.30 48133524

Mar. 2008 109.90 69.30 96572390 101.80 69.60 30510523

Apr. 2008 109.80 80.00 69533299 109.90 80.10 21129774

May 2008 105.90 85.15 69693228 105.90 86.60 21870547

Jun. 2008 94.80 71.00 79652915 93.50 71.55 22915269

Jul. 2008 87.35 68.00 77745352 87.25 68.25 24780867

Aug. 2008 98.90 83.50 103273472 98.85 82.65 34315376

Sept. 2008 95.75 73.30 67135102 95.60 74.00 21808499

Movement of BCML Share Price vs BSE SENSEX

Movement of BCML Share Price vs NSE S&P CNX NIFTY


Balrampur Chini Mills Limited SENSEX

70

80

90

100

110

120

10000

13000

16000

19000

22000

25000

Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08

66.80

72.75

78.70

84.65

90.60

96.55

102.50

108.45

114.40

120.35

126.30

3816.55

4063.70

4310.85

4558.00

4805.15

5052.30

5299.45

5546.60

5793.75

6040.90

6288.05

01.10.2007

Balrampur Chini Mills Limited S&P CNX NIFTY

10.12.2007 19.02.2008 07.05.2008 16.07.2008 30.09.2008

Share Price Performance

BSE Sensex NSE S & P CNX Nifty

Accounting year % Change in % Change % Change in % Change

BCML share price in Sensex BCML share price in Nifty

2007-08 + 7.28 - 25.62 + 7.55 - 21.91

Share Transfer SystemAt present, the share transfers which are received in physical form are normally put into effect within a maximum period of

30 days from the date of receipt and demat requests are confirmed within a maximum period of 15 days. The Company

provides investor and depository services in-house through its secretarial department.

* The graph is made on the basis of monthly closing price of BCML and monthly closing value of SENSEX.

* The graph is made on the basis of daily closing price of BCML and daily closing value of NIFTY.


Distribution of Shareholding as on 30th September, 2008 (Face Value: Re. 1/- each)

Demat mode Physical mode Total

Share holding Holders Shares % of total Holders Shares % of total Holders % of total shares % of total

range shares shares holders shares

Up to 5000 90098 22674151 8.87 3678 2126536 0.83 93776 98.73 24800687 9.71

5001–10,000 480 3513133 1.37 60 414600 0.16 540 0.57 3927733 1.54

10,001–50,000 441 9457402 3.70 46 903980 0.35 487 0.51 10361382 4.05

50,001–100,000 57 4213735 1.65 2 126900 0.05 59 0.06 4340635 1.70

100,001–500,000 66 15373815 6.02 1 284850 0.11 67 0.07 15658665 6.13

500,001–1,000,000 11 8286680 3.24 – – – 11 0.01 8286680 3.24

1,000,001 and above 38 188160528 73.63 – – – 38 0.04 188160528 73.63

Total 91191 251679444 98.49 3787 3856866 1.51 94978 100.00 255536310 100.00

Pattern of Shareholding as on 30th September, 2008 (Face Value: Re. 1/- each)

Category No. of Shares % of Holding

Promoters’ Group 91150890 35.67

Financial Institutions, Insurance Companies, Banks and Mutual Funds etc. 61634324 24.12

Foreign Institutional Investors 52591177 20.58

Private Corporate Bodies 11308434 4.43

NRIs 687272 0.27

Foreign Nationals 10775 0.00

Indian Public 38147638 14.93

Outstanding GDRs 5800 0.00

Total 255536310 100.00

Status of Unpaid Dividend since Financial Year 2001-02

Dividend for Amount of Dividend Amount of unpaid dividend % of dividend Due date of

the year (Rs. in lakhs) as on 30.09.2008 (Rs. in lakhs) unpaid transfer to IEPF

2001-02 1612.65 7.29 0.45 06.09.2009

2002-03 1043.48 8.25 0.79 05.09.2010

2003-04 1897.23 7.87 0.41 05.09.2011

2004-05 3708.83 18.03 0.49 29.08.2012

2005-06 (Interim) 4963.08 19.27 0.39 17.06.2013

2005-06 (Final) 3722.32 35.05 0.94 18.02.2014

Note: During the accounting year ended 30th September, 2008, the Company has transferred unpaid dividend for the financial

year 2000-01, amounting to Rs. 8,12,097.10 to the Investor Education and Protection Fund (IEPF) of the Central Government.

Declaration by the Managing Director on the Code of Conduct

Pursuant to Clause 49 of the Listing Agreement with stock exchanges, I, Vivek Saraogi, Managing Director of Balrampur Chini

Mills Limited, declare that all the Board members and Senior Executives of the Company have affirmed their compliance with

the Code of Conduct during the year ended 30th September, 2008.

Kolkata Vivek Saraogi

25th November, 2008 Managing Director

Dematerialisation of SharesAround 98.49 % of the share capital is held in dematerialised

form with the National Securities Depository Limited (NSDL)

and the Central Depository Services (India) Ltd. (CDSL) as

on 30th September, 2008.

Outstanding GDR/ADR/or any ConvertibleInstruments, etc.16352000 Global Depository Receipts [GDRs] (each GDR

represents one underlying equity share of the face value of

Re. 1/- each of the Company) were issued by the Company

on 27th January, 2006 and listed on the Luxembourg Stock

Exchange. Outstanding GDRs as on 30th September, 2008

represent 5800 equity shares constituting 0.00% (negligible)

of the paid-up equity capital of the Company.

Plant LocationUnit 1 : Balrampur (Sugar, Cogeneration, Distillery and

Organic Manure units), Dist: Balrampur,

Uttar Pradesh.

Unit 2 : Babhnan (Sugar, Cogeneration, Distillery & Organic

Manure units), Dist: Gonda, Uttar Pradesh

Unit 3 : Tulsipur (Sugar Unit), Dist: Balrampur,

Uttar Pradesh

Unit 4 : Haidergarh (Sugar and Cogeneration units),

Dist. Barabanki, Uttar Pradesh.

Unit 5 : Akbarpur (Sugar and Co-generation units),

Dist. Ambedkarnagar, Uttar Pradesh.

Unit 6 : Mankapur (Sugar, Co-generation, distillery and

Organic Manure units), Dist: Gonda, Uttar Pradesh.

Unit 7 : Rauzagaon (Sugar and Co-generation units)

Dist: Faizabad, Uttar Pradesh.

Unit 8 : Kumbhi (Sugar and Co-generation units),

Dist: Lakhimpur-Kheri, Uttar Pradesh.

Unit 9 : Gularia (Sugar and Co-generation units),

Dist: Lakhimpur–Kheri, Uttar Pradesh.

Investors’ Correspondence Mr. S.K. Agrawala, Company Secretary

Balrampur Chini Mills Ltd.

"FMC Fortuna", 2nd Floor

234/3A, A.J.C. Bose Road

Kolkata – 700 020

Phone : (033) 2287 4749

Email – [email protected]

Non-Mandatory Requirements

i) The Company shall take a decision on the maximum

tenure of Independent Directors on the Board of

Company at an appropriate time.

ii] The Company has set up a Remuneration Committee in

May 2005. The Remuneration Committee recommends to

the Board of Directors regarding the remuneration

payable to the Executive Directors and also administers

the Employee Stock Option Scheme [ESOS].

iii) The quarterly/half-yearly results are published in the

newspapers and hosted on the Company’s website

www.chini.com and EDIFAR website

www.sebiedifar.nic.in.

iv] The Company is always striving towards ensuring the

unqualified financial statements.

v] The Company has not yet adopted any system of

training for its Board members or performance

evaluation of its Non-Executive Directors.

vi] No resolution by postal ballot was passed during the last

year.

Code of ConductThe Company has adopted a code of conduct for its Board

of Directors and senior management personnel and the

same has been posted on the Company’s website.


The Board of Directors

Balrampur Chini Mills Limited

Kolkata.

Re : Financial Statements for the year ended 30.09.2008 -

Certification by Managing Director and Director-cum-Chief Financial Officer.

We, Vivek Saraogi, Managing Director and Kishor Shah, Director-cum-Chief Financial Officer, of Balrampur Chini Mills

Limited, on the basis of the review of the financial statements and the cash flow statement for the year ended 30th

September, 2008 and to the best of our knowledge and belief, hereby certify that :-

1. These statements do not contain any materially untrue statements or omit any material fact or contain statements that

might be misleading;

2. These statements together present a true and fair view of the Company’s affairs and are in compliance with existing

accounting standards, applicable laws and regulations.

3. There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year ended

30th September, 2008 which, are fraudulent, illegal or violative of the Company’s Code of Conduct.

4. We accept responsibility for establishing and maintaining internal controls for financial reporting. We have evaluated the

effectiveness of the internal control systems of the Company pertaining to financial reporting and we have disclosed to the

auditors and the Audit Committee those deficiencies in the design or operation of such internal controls of which, we are

aware and the steps we have taken or propose to take to rectify these deficiencies.

5. We have indicated to the Auditors and the Audit Committee:

(a) there have been no significant changes in internal control over financial reporting during this year.

(b) there have been no significant changes in accounting policies during this year.

(c) there have been no instances of significant fraud of which we have become aware and the involvement therein, of

management or an employee having significant role in the Company’s internal control systems over financial reporting.


25th November, 2008 Director-cum-Chief Financial Officer Managing Director

CEO/CFO Certification


To the members of

Balrampur Chini Mills Limited

We have examined the compliance of the conditions of Corporate Governance by Balrampur Chini Mills Limited for the year

ended 30th September, 2008, as stipulated in Clause 49 of the Listing Agreement of the said company with the Stock

Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited

to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of

Corporate Governance. It is neither an audit nor an expression of the opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, and the representation made

by the directors and the management, we certify that the Company has complied with the conditions of corporate governance

as stipulated in the above-mentioned Listing Agreement.

As required by the guidance note issued by the Institute of Chartered Accountants of India, we have to state that as per the

records maintained, there were no investor’s grievances remaining unattended/pending for more than 30 days as at 30th

September, 2008.

We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or

effectiveness with which the management has conducted the affairs of the company.

For G.P. Agrawal & Co.



Kolkata – 700 001. Membership no. 17643)


Auditor’s Certificate onCorporate Governance


Statement pursuant to Section 212 of the Companies Act, 1956, relating to the Company’s interestin subsidiary company for the year ended 30th September, 2008

1 Name of the Subsidiary Company Indo Gulf Industries Ltd. Balrampur Overseas Pvt. Ltd.

2 The Financial Year of the Subsidiary Company ends on 30th September, 2008 30th September, 2008

3 Date from which they became Subsidiary Company 30th August, 2007 11th October, 2007

4 Holding Company’s Interest 4353365 Equity Shares of 2000000 Equity Shares of

Rs.10 each fully paid-up Hong Kong $ 1 each fully

and 809158 Equity Shares paid up

of Rs.10 each partly paid-up

(Rs.5 paid-up per share)

5 Extent of Holding 53.96 % 100%

6 The net aggregate amount of the Subsidiary

Company profit/ loss so far as it concerns the

members of the Holding Company

a) Not dealt with in the Holding Company’s accounts:

i) For the Financial Year ended 30th September, 2008 (Rs. 1465.92 lacs) (HK $ 4.54 lacs)

ii) For the previous Financial Years of the Subsidiary (Rs. 88.04 lacs) Not Applicable

Company since they became the Holding

Company’s Subsidiary

b) Dealt with in the Holding Company’s accounts:

i) For the Financial Year ended 30th September, 2008 Nil Nil

ii) For the previous Financial Years of the Subsidiary Nil Not Applicable

Company since they became the Holding

Company’s Subsidiary


Kolkata S.K. Agrawala Kishor Shah Vivek Saraogi

25th November, 2008 Secretary Director cum Chief Financial Officer Managing Director

Section 212


Industry Structure and Development The Indian sugar industry is a major contributor to the

country’s economy with an annual turnover estimated at

around Rs. 700 billion. The industry is also the second

largest agro-based industry and a key driver of rural socio-

economic development. It directly employs more than 50

million farmers and labourers engaged in cultivation and

other activities, constituting around 7.5% of the rural

population. Besides, the industry provides employment to

another two million skilled and semi-skilled labourers,

especially from rural areas.

The industry is predominantly cyclical in nature as high

sugarcane production and higher prices lead other crop

producers into sugarcane manufacture. High production

precipitates reduce realisations for the millers, impacting

their ability to remunerate farmers. This creates arrears,

reducing the acreage usage in the subsequent years for

sugarcane production. This again leads the overall sugarcane

production, strengthening sugar realisations.

The sugar industry has also turned progressively into a

green business, engaged in the cogeneration of power from

bagasse, a sugar industry byproduct. The surplus power

generated by the sugar mills contributes to the country’s

huge energy requirement. Besides, the industry remains the

prime source for ethanol and alcohol production.

ProductionDuring the year under review, the country’s sugar

production declined marginally from 28.2 mn tonnes in

2006-07 to 26.4 mn tonnes in 2007-08. Sugarcane was grown

mainly in nine Indian states, of which six accounted for 94%

of the total production.

ManagementDiscussion andAnalysis


Sugar Production

Sugar Season (October-September) 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09E 2009-10E

Cane Acreage (‘000 hectares) 3,938 3,662 4,201 4,858 5,282 4,319 4,017

Yield per hectare (tonne/hectare) 59.4 64.7 66.9 71.1 67.3 71.9 70.1

Cane Production (mn tonne) 234 237 281 345 356 311 282

Drawal (%) 56.7 52.6 67.5 80.9 72 63.05 77

Cane Crushed (mn tonne) 132.5 124.8 189.8 279.4 256 196.1 216.8

Recovery (%) 10.2 10.2 10.1 10.1 10.3 10.2 10.1

Sugar Production (mn tonne) 13.5 12.7 19.1 28.2 26.4 20 21.9

[Source: Indian Sugar Mills Association, Centrum research]


ConsumptionA favourable 9% GDP growth and a record per capita

income contributed largely to the country’s growth in sugar

consumption. Domestic sugar consumption increased 4%

from 20.6 mn tonnes in 2006-07 to 21.8 mn tonnes in

2007-08. Gur and khandsari, two sugar alternatives mainly

produced by the country’s unorganised sector, were

progressively replaced by sugar. It is expected that the

domestic sugar consumption will grow at 3% annually in the

long-term driven by population and per capita consumption

growth, which are projected to grow at 1.51% and 2.1%

CAGR respectively.

Price TrendRecord production in the 2006-07 and 2007-08 sugar seasons

affected sugar realisations, which declined from their May

2006 levels of Rs. 19,350 per tonne to Rs. 13,291 per tonne in

May 2007. From May-December 2007, sugar prices ranged

between Rs. 13,291 per tonne and Rs. 14,000 per tonne.

Domestic sugar prices (Mumbai S-30) increased by 11.1% in

the first three months of 2008 to Rs. 15,080 per tonne in

March 2008. International raw sugar prices also rose 30.7%

from November 2007, largely on account of speculative

activity and a weak dollar [Source: CRISIL research, April

2008]. However, international sugar prices have retreated in

the recent past due to the decline in global commodity prices.

Cane pricing in the country continues to be a challenging

issue due to announcement of the State Advised Price (SAP),

based on political considerations by the state government. It

remained an issue mainly in Uttar Pradesh due to a lack in

clarity of the SAP. A high SAP fixed by the state government

independent of sugar realisations created an earnings risk.

OutlookWith a record inventory of the past few years, the sugar

industry is approaching the end of a sugar cycle. A sharp

fall in the sugarcane production will trigger a surge in

domestic sugar prices. Late payment to farmers and better

realisation from other crops, followed by delayed monsoon,

is expected to create a slide in production for the sugar

season 2008-09. The drought-like situation in Maharashtra is

likely to reduce production from 9.2 mn tonnes to 6 mn

tonnes in 2008-09, and further to 5.2 mn tonnes in 2009-10.

In Uttar Pradesh also, lower cane acreage and delayed

monsoons would reduce production to 6.2 mn tonnes, a

15% drop against 2007-08. Uttar Pradesh and Maharashtra

together account for more than 60% of the country’s

sugarcane output.

LitigationsThe fixing of unrealistic sugarcane prices, completely

disconnected with end product prices, created an adverse

situation for the Indian sugar industry. This led, the sugar

industry to seek justice.

Global Sugar Industry OverviewBrazil continues to be the largest global sugar producer

followed by India. Supply will override demand by 9.2 mn

tonnes in 2007-08, leading to a global inventory and

enhanced stock-to-use ratio of 28.78% in 2007-08, as against

26.55% in 2006-07.

World Sugar Balance/Stock (‘000 MT)

2007-08 2006-07 Change

In mn In %

tonnes

Production 165,384 164,183 1,201 0.73

Consumption 156,142 150,814 5,328 3.53

Surplus/(deficit) 9,242 13,369 (4,127) (30.87)

Import demand 45,892 46,038 (146) (0.32)

Export availability 50,242 50,442 (200) (0.40)

End stocks 44,936 40,044 4,892 12.22

Stocks/Consumption

ratio (in %) 28.78 26.55

[Source: USDA, FAS PSD Data base]

ProductionThe ISO estimate of global sugar production stood at 165.38

mn tonnes for 2007-08, against 164.18 mn tonnes in 2006-07,

the growth spearheaded by Brazil with a record production

of 34.1 mn tonnes, and around 54% of the sugarcane being

directed towards ethanol manufacture. The total production

in the developed countries stood at 40.4 mn tonnes, 1.8%

less than 2006-07, due to lower-than-expected production in

Australia. The top ten sugar producing countries accounted

for 77% of the aggregate global production.

Asia accounted for 65.8 mn tonnes of sugar in 2007-08,

marginally lower than 2006-07, following a slump in

sugarcane production in India and China. Thailand, another

major producer of sugar in Asia, recorded a 7.7% growth in

production [Source: FAO].

ConsumptionGlobal sugar consumption increased 3.5% over the previous

year, well above the ten-year average of 2.5%. In 2007-08,

global sugar consumption stood at around 156.14 mn

tonnes. It is estimated that 69% of the global sugar

production is consumed in the countries of origin; the rest

was traded on the global markets. Sugar consumption

increased in China, following a strong demand from the

domestic food and beverages industry as well as lower

competition from alternative sweeteners. Consumption also

increased in the Latin American and the Caribbean countries,

led by Brazil and Mexico [Source: FAO].

India remained the largest global sugar consumer. Brazil

recorded the highest global per capita consumption (58 kg)

while the global per capita sugar consumption increased

marginally from 23.6 kg in 2006-07 to 23.9 kg in 2007-08.

Per Capita Sugar Consumption

[Source: http://www.illovosugar.com/worldofsugar/

internationalSugarStats.htm]

TradeThe world sugar trade is expected to moderate to 45.9 mn

tonnes in 2007-08 due to a marginal demand decline in the

importing countries and a higher production in the

exporting geographies. Sugarcane production in the largest

six net importing countries increased 2.6% in 2007-08. The

major sugar exporting countries -- Australia, Brazil,

Guatemala, India, South Africa and Thailand -- accounted for

almost 94% of the world sugar trade in 2007-08. The EU

experienced a trade reversal, becoming a net importer of

sugar, following the implementation of the CMO sugar

reforms in 2006-07. With continued reduction of sugar

production over the projection period, the EU is expected to

become a major sugar importer [Source: FAPRI].

Price TrendsThe apparent disconnect between international sugar prices

and market fundamentals illustrates the influence of factors

exogenous to the sugar market. The world sugar market

price remained narrow but in volatile ranges in 2007-08,

following higher international supply. The price ranged

between US9.00 cents/lb and US11.00 cents/lb. Preferential

prices in the US and the EU continued to be at a significant

premium to the world sugar prices, largely influenced by

Brazil as the largest exporter and the lowest cost producer.

Besides, the global sugarcane price was largely influenced

by the price movement of global crude oil. When crude

price traded above USD 100 per barrel, a large proportion of

sugarcane production in Brazil was diverted to ethanol

manufacture (at present ethanol blending in gasoline in

Brazil ranges between 20-25%). Currently, 54% of the total

sugarcane production in Brazil is diverted into ethanol

production.

Crude and Global Sugar Prices have shown a strong

correlation in this decade:

[Source: Bloomberg, Credit Suisse estimates; 11.08.08]

By-productsMolasses, bagasse and press mud are the primary

byproducts of the sugar industry, from which ethanol and

exportable power are derived. Over the last few years, the

Indian sugar industry invested extensively in an integrated

business model, manifested in distilleries and cogeneration

capacities. The rationale for such an investment comprised –

enhanced realisations, lower cyclicality, a projected increase

in ethanol consumption following higher blending and

power as well as ethanol pricing supports.

The result: distillery and cogeneration capacities increased

significantly over the last few years, diversifying the product


30 40 50 602010

kilograms per annum

0

BrazilAustraliaThailand

South AfricaEU

SwazilandUSA

IndiaZambiaMalawiChina

MozambiqueTanzania

140 25

20

15

10

5

0

120

100

80

60

40

20

0

Jan 95 Jan 98 Jan 01 Jan 04

Crude - USD/bbl Sugar cents/lb (RHS)

Jan 07

CogenerationIndia’s power deficit is in excess of 10% and this is likely to

increase. The government intends to bridge this widening

gap through options extending beyond the conventional.

Cogeneration by the sugar industry represents one of the

options supported by government incentives like tax rebates,

soft loans and the permission to market merchant power

directly to consumers, instead of to state electricity boards

(SEBs). According to industry estimates, the potential for

bagasse-based cogeneration is around 9,700 MW, only a

small proportion of which has been realised.

AlcoholIn India, alcohol is produced from molasses, a sugar

industry by-product. Alcohol is used as a raw material for

industrial manufacture of potable alcohol and fuel ethanol.

The result is that around 80% of the total potable alcohol

production in India is derived from molasses. The

production of fuel ethanol emerged as a viable option, with

the potential to earn carbon credits in line with the

encouragement provided to other biofuels. The fuel ethanol

price regulated by the Central Government to be paid by oil

marketers stood at Rs. 21.50 per litre.

The Central Government formulated the policy of 5%

ethanol blending with petrol from October 2007 and 10%

blending from October 2008 onwards. However, the current

programme of blending 5% ethanol has not been

commercialised across all states in India due to high state

taxes and levies on ethanol.

base and rationalising the contribution from sugar. As most players possess a sub-optimal ratio of distillery to sugar capacity

and cogeneration to crushing capacity, there is still scope for capacity expansion in downstream products.

Sugar Industry By-products

[Source: KPMG report]

According toindustry estimates,the potential forbagasse-basedcogeneration is

around 9,700 MW,only a smallproportion of

which has beenrealised.


Sugarcane

Juice

Sugar Molasses Bagasse

Primary by-products

Emerging businesses

Press Mud

Bio FertiliserBiogasRectified Spirit

Fuel Ethanol

ExportablePower

IndustrialAlcohol

Potable Alcohol

EthanolBrazil is a pioneer in using ethanol as vehicle fuel,

producing it directly from sugarcane juice. Brazilian ethanol

production is estimated at 22 bn litres in 2007-08.

The ethanol industry in India is still nascent with an installed

capacity of 300 MMly (79 MMgy) and operating at less than

50%. Indian mills produce around 260 litres of ethanol from

each tonne of molasses, depending upon the technology

used. A substantial part of the molasses is supplied to

alcohol manufacturers at a much higher price. At a level of

5% blending, India requires 550-600 MMly of ethanol.

Ethanol acts as a major revenue generator for millers even in

times of lower sugar realisations. India being a net crude

importer, ethanol enjoys the ability to emerge as a major

alternative, saving forex outgo and protecting the

environment from green house gas emissions. With ethanol

offtake remaining certain, millers can protect their

bottomlines during periods of sugar industry downturn.

Strengths and Challenges

Strengths

India is the second-largest global sugar producer. The huge

population and mass consumption indicate a robust

domestic potential.

A key contributor to rural socio-economic development, the

industry provides direct employment to more than 50 mn

people

Challenges

A large number of the country’s sugar factories are more

than 30 years old, using outdated technology marked by

declining productivity.

Low installed production capacity leads to low production

and losses.

Opportunities and Threats Sugar business is essentially cyclical. Markets sentiments

change in tandem with the demand-supply equilibrium,

leading to a volatile product pricing. Cogeneration and

ethanol represent the much-desired byproducts, providing

value-addition and help soften the inimical impact of sugar

cycles.

Opportunities • Potential to enhance sugar production and sugar recovery

rate

• Huge potential in the domestic market with per capita

consumption less than the global average

• Increasing demand for high-value by-products such as

exportable power through bagasse and fuel ethanol

• Transition from an adverse sugar cycle to a favourable

sugar cycle

Threats • Adverse government policies

• Availability of ground water for irrigation

• Deteriorating soil quality due to increased use of fertilisers

and pesticides

• High price of sugarcane

Segment-wise PerformanceSugar: Revenue from the sugar segment constitutes the

largest share of the aggregate revenue. Revenue from the

segment contributed 75.08% to the Company’s total turnover

in 2007-08, compared with 79.42% in 2006-07.

Alcohol: Income from the alcohol segment contributed

10.27% of the Company’s revenue in 2007-08, compared

with 8.07% in 2006-07.

Ethanol enjoys theability to emerge asa major alternative,saving forex outgoand protecting theenvironment fromgreen house gas

emissions



Cogeneration: Income from this segment contributed 14.55%

of the revenue in 2007-08 as against 12.39% in

2006-07.

Organic Manure: The segment’s contribution to total

revenues stood at 0.10% in 2007-08, as against 0.12% in

2006-07.

Segment-wise Revenue

(Rs. in crores)

Products 2004-05 2005-06 2006-07 2007-08

Sugar 692.56 1757.71 1207.57 1230.64

Alcohol 191.20 134.96 122.65 168.40

Cogeneration 48.02 100.93 188.45 238.46

Organic Manure 0.77 1.17 1.84 1.52

Total 932.55 1994.77 1520.51 1639.02

Risks and Concerns

Industry Risk

The global economic downturn might affect the sugar

industry.

Risk Response

Food products demand is generally insulated from the

economic downturn. In spite of the present global recession,

sugar consumption is expected to be maintained at levels of

the previous year. Besides, sugar forms a small index of the

household food basket. With production declining and

consumption being maintained, inventory is expected to

decline and strengthen the sugar prices.

Raw Material Risk

Adverse climatic conditions may affect raw material

availability and sugar production.

Risk Response

With cane production declining (expected to plummet

further), cane availability remains a cause of concern.

Balrampur enjoys enduringly stable relations with farmers on

account of friendly practices and timely payment. The

Company will work closely with farmers to improve yield

through better seed varieties.

Regulatory Risk

Adverse cane pricing not linked to market realities could

impact business growth and sustainability.

Risk Response

Despite an industry downturn, the high SAP (Rs. 125 per

quintal) declared by the UP government for the sugar

seasons 2006-07 and 2007-08 has been stayed by the

Supreme Court at Rs. 118 per quintal for 2006-07 and

Rs. 110 per quintal for Rs. 2007-08, vide an interim order.

The Court is expected to dictate a method for fixing the

cane prices, removing arbitrariness. Since Balrampur was

already paying farmers at Rs. 110 per quintal for 2007-08,

the Company is unlikely to face any new liability.

Credibility Risk

In an adverse industry scenario, the credibility of the

Company to honour its financial commitments may be

affected.

Risk Response

Balrampur believes in sound governance. The conservative

and derisked mindset of the management protected the

credibility of the Company during adverse market situations.

The Company does not believe in keeping an open forex

position, despite ECB borrowings of about Rs. 802.91 crore.

It hedged its foreign exchange loans and desisted from

playing the market, protecting its financial health when the

rupee depreciated against the US dollar.

Import Risk

Import from low-cost sugarcane producing countries can

intensify competition.

Risk Response

The government imposed an import duty of 60% and a

countervailing duty of Rs. 850 per tonne on imported sugar

to protect the interests of farmers and manufacturers.

Cyclicality Risk

The Indian sugar industry is cyclical, exposed to high input

prices and lower realisations.

Risk response

The sugar industry is expected to experience a transition

from rising production and lower realisations, to declining

production and higher realisations. The Company invested

in an integrated business model to mitigate cyclicality,

stabilise revenues and strengthen the bottomline.

Financial Performance

Capital Structure

The equity capital of the Company increased from Rs. 24.82

crores in 2006-07 to Rs. 25.55 crores in 2007-08, due to

shares issued to the promoters and to the employees under

the Employees Stock Option Scheme during the year. The

equity share capital comprises 25,55,36,310 equity shares of

Re. 1/- each.

Reserves and Surplus

Reserves and surplus of the Company increased by 17.89%

from Rs. 839.35 crores in 2006-07 to Rs. 989.54 crores in

2007-08. This was on account of increased post-tax earnings,

which surged from a loss of Rs. 41.84 crores in 2006-07 to a

profit of Rs. 97.03 crores in 2007-08 and on account of issue

of shares at a premium.

During the year under review, the capital reserve, capital

redemption reserve and revaluation reserves remained

unchanged; while securities premium reserve of the

Company increased by 15.95% from Rs. 420.51 crores in

2006-07 to Rs. 487.59 crores in 2007-08.

The free reserve, comprising 99.64% of the Company’s total

reserves, increased from Rs. 837.14 crores in 2006-07 to

Rs. 986.03 crores in 2007-08.

Loan Profile

The loan fund of the Company increased by 5.06% from

Rs. 1,285.64 crores in 2006-07 to Rs. 1,350.68 crores in

2007-08. The loan fund comprises secured loan (92.6%)

and unsecured loans (7.4%). Secured loan increased from


2007-08. The unsecured loan of the Company grew from

Rs. 75 crores in 2006-07 to Rs. 100 crores in 2007-08.

The Company availed of increased loans to meet the

expanding scale of operation. During the year under review,

the Company availed interest-free rupee-term loan of

Rs. 116.43 crores from the State Bank of India and

Rs. 5.10 crores from Punjab National Bank.

The Company repaid Rs. 87.39 crores of term loans in

2007-08 and expects to repay Rs. 104.69 crores in 2008-09.

Capital Employed

The total capital employed increased by 10.47% from


2007-08, largely on account of an increase in the reserves

and surplus, as well as the debt fund of the Company.

Returns on capital employed increased significantly by 925

basis points from 4.62% in 2006-07 to 13.87% in 2007-08.

Gross Block and Depreciation

The gross block of the Company increased by 20.5% from

Rs. 1,970.32 crores in 2006-07 to Rs. 2,374.18 crores in 2007-

08, primarily due to additions in plant and machineries.

Depreciation, charged under the Straight Line Method,

increased from Rs. 80.23 crores in 2006-07 to Rs. 117.21

crores in 2007-08. Accumulated depreciation as a percentage

of the total gross block was only at 20.98% – indicating the

newness of fixed assets, protected from obsolescence.

Investments

Investment made by the Company surged by 60.05% from

Rs. 3.43 crores in 2006-07 to Rs. 5.49 crores in 2007-08.

Investment growth was largely due to the acquisition of

20,00,000 shares in Balrampur Overseas Pvt. Ltd, 10,00,000

shares in Asia Sugar Industries Pvt. Ltd. and an investment

made in Post Office national saving Certificates during the

year.

The Companyrepaid Rs. 87.39crores of term

loans in 2007-08 and

expects to repayRs.104.69 crores in

2008-09.


Inventories

Inventories of the Company increased by 28.50%, from

Rs. 432.99 crores in 2006-07 to Rs. 556.39 crores in 2007-08,

due to higher carry-over of finished goods.

Sundry Debtors

Sundry debtors of the Company increased by 7.53% from

Rs. 45.56 crores in 2006-07 to Rs. 48.99 crores in 2007-08.

Around 7.44% of the total debtors is more than six months,

reflecting the superior debtor portfolio quality.

Loans and Advances

Loans and advances made by the Company declined by

1.89%, from Rs. 240.63 crores in 2006-07 to Rs. 236.08 in

2007-08. Loans and advances formed 26.93% of the total

current asset.

Internal Control SystemThe Company has a proper and adequate internal control

system, commensurate with its nature of business and the

size of operations, to ensure that all assets are safeguarded

and protected against unauthorised use, as well as correct

recording and reporting of transactions. Such controls, which

are subjected to periodical review, also ensure efficiency of

operations, accuracy and promptness of financial reporting,

besides complying with the applicable laws and regulations.

There is an effective internal audit system, commensurate

with the requirements of the Company. The Audit Committee

of the Board of Directors, comprising independent directors,

oversees the functions of internal audit, reviews the reports

and monitors implementation of suggestions. The Audit

Committee regularly interacts with the Statutory Auditors

about the adequacy of internal audit systems and seeks

suggestions.

Human ResourceThe Company’s strength is derived from employee

involvement and team orientation, their high integrity

signifying intense loyalty and deep commitment. The

Company ardently believes that competent and motivated

manpower constitutes the most important factor in achieving

business goals. Policies in this regard are evolved and

pursued to achieve this objective. The Company had a total

employee strength of 5369 across its plants and offices. The

relation between the management and labourers continued

to be cordial.

Cautionary StatementStatements made in this report describing industry outlook

as well as the Company’s plans, policies and expectations

may constitute "forward-looking statements" within the

meaning of applicable laws and regulations. Actual results

may differ materially from those either expressed

or implied.



FinancialSection


To the members of Balrampur Chini Mills Limited

1. We have audited the attached Balance Sheet of BALRAMPUR

CHINI MILLS LIMITED as at 30th September, 2008, the relative

Profit and Loss Account and the Cash Flow Statement for the

year ended on that date, all of which we have signed under

reference to this report. These financial statements are the

responsibility of the management of the Company. Our

responsibility is to express an opinion on these financial

statements based on our audit.

2. We have conducted our audit in accordance with auditing

standards generally accepted in India. Those standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements

are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and

significant estimates made by management, as well as

evaluating the overall financial statement presentation. We

believe that our audit provides a reasonable basis for our

opinion.

3. As required by the Companies (Auditor's Report) Order, 2003

(as amended), issued by the Central Government of India in

terms of section 227(4A) of the Companies Act, 1956 (the

‘Act’) and on the basis of such checks as we considered

appropriate and according to the information and

explanations given to us, we set out in the Annexure, a

statement on the matters specified in paragraphs 4 and 5 of

the said Order.

4. Further to our comments in the Annexure referred to in

paragraph 3 above, we report that:

a) We have obtained all the information and explanations

which to the best of our knowledge and belief were

necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by

law have been kept by the Company so far as appears

from our examination of those books.

c ) The Balance Sheet, the Profit and Loss Account and the

Cash Flow Statement dealt with by this report are in

agreement with the books of account.

d) In our opinion, the Balance Sheet, the Profit and Loss

Account and the Cash Flow Statement dealt with by this

report have been prepared in compliance with the

applicable accounting standards referred to in section 211

(3C) of the Act.

e) On the basis of written representations received from the

Directors, as on 30th September, 2008 and taken on

record by the Board of Directors of the Company, none

of the Directors is disqualified as on 30th September, 2008

from being appointed as a Director in terms of clause (g)

of sub-section (1) of section 274 of the Act.

f) In our opinion and to the best of our information and

according to the explanations given to us, the Balance

Sheet, the Profit and Loss Account and the Cash Flow

Statement together with the Notes thereon and attached

thereto, give in the prescribed manner the information

required by the Act and give a true and fair view in

conformity with the accounting principles generally

accepted in India:

i) in the case of the Balance Sheet, of the state of affairs

of the Company as at 30th September, 2008,

ii) in the case of the Profit and Loss Account, of the

PROFIT for the year ended on that date, and

iii) in the case of the Cash Flow Statement, of the Cash

Flows for the year ended on that date.

For G. P. Agrawal & Co.



Kolkata – 700 001. Membership No. 17643)


Auditor’s Report

Annexure to the Auditor’s Report


i) a) The Company has maintained proper records showing

full particulars including quantitative details and

situation of its fixed assets.

b) As explained to us, the Company has a programme of

physically verifying all its fixed assets once in a period

of three years, and in accordance therewith, major

portion of fixed assets were physically verified by the

management during the year. In our opinion, the

frequency of verification is reasonable having regard to

the size of the Company and nature of its business. The

discrepancies noticed on such verification were not

material and have been properly dealt with in the books

of account.

c) During the year, the Company has not disposed off

substantial part of its fixed assets.

ii) a) The inventories have been physically verified during the

year by the management at reasonable intervals.

b) In our opinion and according to the information and

explanations given to us, the procedure of physical

verification of stocks followed by the management are

reasonable and adequate in relation to the size of the

Company and nature of its business.

c) On the basis of our examination, we are of the opinion

that the Company is maintaining proper records of

inventory. No material discrepancies were noticed on

verification between the physical stocks and the book

records.

(iii) a) The Company has not granted any loan, secured or

unsecured, to companies, firms or other parties covered

in the register maintained under section 301 of the Act.

b) As the Company has not granted any loan, secured or

unsecured, to companies, firms or other parties covered

in the register maintained under section 301 of the Act,

clauses (iii) (b) to (iii) (d) of paragraph 4 of the said

order are not applicable to the Company.

c) The Company has not taken any loan, secured or

unsecured, from companies, firms or other parties

covered in the register maintained under Section 301 of

the Act.

d) As the Company has not taken any loan, secured or

unsecured, from companies, firms or other parties

covered in the register maintained under section 301 of

the Act, clauses (iii) (f) and (iii) (g) of paragraph 4 of the

said order are not applicable to the Company.

iv) On the basis of the information and explanation given to us,

we are of the opinion that the Company has an adequate

internal control system commensurate with the size of the

Company and the nature of its business for the purchase of

inventory and fixed assets and for the sale of goods and

services.

v) a) Based on the audit procedure applied by us and

according to the information and explanations given to

us, the particulars of contracts or arrangements referred

to in section 301 of the Act have been entered in the

register required to be maintained under that section.

b) In our opinion and according to the information and

explanations given to us, the transactions made in

pursuance of such contracts have been made at prices

which are reasonable having regard to prevailing market

prices at the relevant time.

vi) The Company has not accepted any deposit within the

meaning of section 58A, 58AA or any other relevant

provisions of the Act and the rules framed there under.

vii) In our opinion, the internal audit system of the Company is

commensurate with the size of the Company and the nature

of its business.

viii) We have broadly reviewed the books of account maintained

by the Company in respect of products where pursuant to

the rules made by the Central Government, the maintenance

of cost records has been prescribed under section 209 (1) (d)

of the Act and are of the opinion that, prima facie, the

prescribed accounts and records have been made and

maintained. We, however, as not required, have not made a

detailed examination of such records.

ix) a) On the basis of our examination, the Company is regular

in depositing undisputed statutory dues including

Provident Fund, Income Tax, Sales Tax, Service Tax,

Custom Duty, Excise Duty, Cess, Investor Education and

Protection Fund, Wealth Tax and other statutory dues

with appropriate authorities and no undisputed amounts

payable in respect of the aforesaid dues were

outstanding as at 30th September, 2008 for a period of

more than six months from the date of becoming

payable. On the basis of our information, the provisions

of Employees’ State Insurance Act are not applicable to

the Company.

b) The disputed statutory dues aggregating to Rs. 1350.63

lacs that have not been deposited on account of matters

pending before appropriate authorities are as under:

Statement referred to in our report of even date to the members of BALRAMPUR CHINI MILLS LIMITED on the accounts for theyear ended 30th September, 2008.


x) The Company has no accumulated losses and has not

incurred any cash loss during the year covered by our audit

or in the immediately preceding financial year.

xi) The Company has not defaulted in payment of dues to a

financial institution or bank or debenture- holders.

xii) The Company has not granted loans and advances on the

basis of security by way of pledge of shares, debentures or

other securities.

xiii) The provisions of any special statue applicable to Chit Fund,

Nidhi or Mutual Benefit Society are not applicable to the

Company.

xiv) The Company is not dealing or trading in shares, securities,

debentures or other investments. However, the investments

made by the Company in shares and other securities are

held by the Company in its own name.

xv) On the basis of our examination and according to the

information and explanations given to us, the Company has

given guarantee for loan taken by a Subsidiary from a bank

the terms and conditions whereof are not prejudicial to the

interest to the Company.

xvi) On the basis of our examination and according to the

information and explanations given to us, the term loans

have been applied for the purpose for which the loans were

obtained.

xvii) According to the information and explanations given to us

and on an overall examination of the Balance Sheet of the

Company, we report that no funds raised on short term

basis have been used for long term purposes.

xviii) On the basis of our examination and according to the

information and explanations given to us, the Company has

made preferential allotment of Shares to parties and

companies covered in the register maintained under section

301 of the Act. The price at which these Shares have been

issued is not prejudicial to the interest of the Company.

xix) The Company has not issued any debentures.

xx) The Company has not raised any moneys by public issue

during the year covered by our audit report.

xxi) In our opinion and according to the information and

explanations given to us, no fraud on or by the Company

has been noticed or reported during the year that causes the

financial statements materially misstated.

For G. P. Agrawal & Co.



Kolkata – 700 001. Membership No. 17643)


Sl. Name of the Nature of dues Period to which Amount Forum (Where the dispute is pending)

No. statute pertain (Rs. Lacs)

1. Central Excise Act, 1944 Excise Duty 1995 - 1996 7.96 Commissioner of Central Excise.

2. Central Excise Act, 1944 Excise Duty 1998 to 2000 1.82 Joint Commissioner of Central Excise.

3. Central Excise Act, 1944 Excise Duty 2005 - 2006 4.80 Assistant Commissioner of Central Excise.

4. Central Excise Act, 1944 Excise Duty 2003 - 2004 6.57 Tribunal.



7. Central Excise Act, 1944 Excise Duty 2006 - 2007 11.78 Addl. Commissioner, Allahabad

8. U.P. Sheera Niyantran Administrative 1996 - 2007 1246.06 High Court.

Adhiniyam, 1964 Charges on

Molasses

9. U.P. Trade Tax Act, 1948 Sales Tax 1990 - 1991 0.22 High Court.



12. U.P. Trade Tax Act, 1948 Sales Tax 2000 - 2003 0.65 Joint Commissioner (Appeals).

13. Sugar Promotion Policy Entry Tax 2007 - 2008 64.54 High Court, Lucknow

2004 of U.P. Govt

Total 1350.63

Balance Sheet As at 30th September, 2008


(Rupees in Lacs)

Schedule As at 30th As at 30th

September, 2008 September, 2007

I. SOURCES OF FUNDS

1. Shareholders' Funds

a) Share Capital 1 2555.36 2481.55

b) Reserves & Surplus 2 98953.56 101508.92 83935.00 86416.55

2. Deposit against Convertible Warrants 920.00 –

(Refer Note No. 9 (b) of Schedule - 22)

3. Loan Funds

a) Secured Loans 3 125067.61 121064.12

b) Unsecured Loans 4 10000.00 135067.61 7500.00 128564.12

4. Deferred Tax Liability 24193.68 17145.33

(Refer Note No. 25 (a) of Schedule - 22)

261690.21 232126.00

II APPLICATION OF FUNDS

1. Fixed Assets

a) Gross Block 237418.38 197031.69

b) Less: Depreciation & Amortisation 49817.27 38252.48

c) Net Block 187601.11 158779.21

d) Capital Work-in-Progress 705.49 33218.00

Net Fixed Assets 5 188306.60 191997.21

2. Investments 6 549.00 343.01

3. Deferred Tax Assets 9934.33 4820.88


4. i) Current Assets, Loans & Advances

a) Inventories 7 55639.07 43298.94

b) Sundry Debtors 8 4899.23 4556.09

c) Cash and Bank Balances 9 3512.67 1651.98

d) Interest Accrued on Investments 1.62 3.26

e) Loans and Advances 10 23608.25 24062.81

87660.84 73573.08

ii) Less: Current Liabilities & Provisions

a) Current Liabilities 11 20305.55 35106.08

b) Provisions 12 4633.11 3823.29

24938.66 38929.37

Net Current Assets (i - ii) 62722.18 34643.71

5. Miscellaneous Expenditure 13 178.10 321.19

[To the extent not written off or adjusted]

261690.21 232126.00

Significant Accounting Policies 21

Notes on Accounts 22

Schedules 1 to 13, 21 & 22 form an integral part of the Balance Sheet.

This is the Balance Sheet referred to in our report of even date.

For G. P. Agrawal & Co.Chartered Accountants

(CA. Ajay Agrawal S. K. Agrawala Kishor Shah Vivek SaraogiMembership No. 17643) Secretary Director cum Managing DirectorPartner Chief Financial Officer

7A, Kiran Shankar Ray Road,Kolkata - 700 001.25th November, 2008.

Profit and Loss Account For the year ended 30th September, 2008


This is the Profit and Loss Account referred to in our report of even date.




(Rupees in Lacs)

Schedule Year ended 30th Year ended 30th


I INCOME

Gross Turnover

Sales 155250.21 147632.44Less: Excise Duty & Cess 8895.95 8460.54Net Turnover 146354.26 139171.90Other Income 14 1409.23 1113.18Adjustment relating to earlier years (Net) 3.40 –(Refer Note No. 16 of Schedule - 22)

147766.89 140285.08

II EXPENDITURE

Decrease/(Increase) in Stock 15 (12365.76) (21360.32)Cost of Raw Materials Consumed 101416.27 128150.17Loss from Farm Account 16 5.86 2.07Salaries, Wages & other Employees' Benefits 17 8196.64 7191.02Other Manufacturing & Administrative Expenses 18 16413.76 15498.97Selling Expenses 19 1150.68 866.60Interest & Other Financial Charges (Net) 20 8965.11 5441.73Depreciation & Amortisation 11720.50 8022.54Adjustment relating to earlier years (Net) – 9.04(Refer Note No. 16 of Schedule - 22)

135503.06 143821.82

III PROFIT/(LOSS) BEFORE TAX 12263.83 (3536.74)(Add)/Less: Provision for Tax

Current Tax 562.00 (186.00)(Including Wealth Tax Rs. 30.00 Lacs, Previous year Rs. 17.53 Lacs)Fringe Benefit Tax 64.00 (64.00)Deferred Tax 1934.90 2560.90 (397.68) (647.68)

IV PROFIT/(LOSS) AFTER TAX 9702.93 (4184.42)Balance brought forward (3608.43) 575.99

V PROFIT/(LOSS) AVAILABLE FOR APPROPRIATION 6094.50 (3608.43)

VI APPROPRIATIONS

Proposed Dividend on Equity Shares 1277.68 –Tax on Dividend 217.14 –General Reserve 3000.00 –Balance Carried to Balance Sheet 1599.68 (3608.43)

6094.50 (3608.43)

Earnings per Share of Re. 1/- each

(Refer Note No. 24 of schedule - 22)- Basic (Rs.) 3.83 (1.69)- Diluted (Rs.) 3.82 (1.69)Significant Accounting Policies 21Notes on Accounts 22

Schedules 14 to 22 form an integral part of the Profit and Loss Account.

Cash Flow Statement For the year ended 30th September, 2008


(Rupees in Lacs)

Year ended 30th Year ended 30th


A CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before Tax and Extraordinary Items 12263.83 (3536.74)

Adjustments to reconcile Net Profit before tax to Cash Flow

provided by Operating Activities :

Depreciation & Amortisation 11720.50 8022.54

Interest (Net) 8965.11 5441.73

Provision for Doubtful Debts & Advances 310.30 –

Provision for Retirement Benefits of Employees (1.54) 31.42

Provision for Contingencies – 7.60

Dividend Received (154.20) (1.44)

Unspent Liabilities and Balances written back (108.72) (72.61)

Sundry Debit Balances written off 59.72 4.97

Profit on Sale of Fixed Assets (5.36) (20.67)

Loss on Sale/discard of Fixed Assets 92.51 72.28

Loss on Sale of Current Investments (Other than Trade) 0.02 –

Unrealised Exchange Rate Fluctuation (Gain) (122.50) (306.66)

Unrealised Exchange Rate Fluctuation (Loss) 504.00 –

Employee Stock Option Expense 168.77 (4.00)

Share Issue Expenses written off 143.09 143.09

Storage Fund For Molasses written back (64.11) –

Transfer to Storage Fund for Molasses 30.35 21537.94 22.46 13340.71

Operating Profit before Working Capital changes 33801.77 9803.97

Adjustments to reconcile Operating Profit to Cash Flow

provided by Changes in Working Capital :

Trade and Other Receivables 207.71 3964.53

Inventories (12340.13) (23464.22)

Trade Payables (14264.86) (26397.28) 16114.88 (3384.81)

Cash Generated from Operations 7404.49 6419.16

Direct Taxes (paid) /Refund received (1280.50) 3358.42

Cash Flow before Extraordinary Items 6123.99 9777.58

Extraordinary Items – –

Net Cash Generated / (Used) ~ Operating Activities 6123.99 9777.58

B CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (Including Intangibles) (8246.22) (67098.12)

Sale of Fixed Assets 129.18 218.91

Purchase of Investments (56761.84) (8606.28)

Investment in Shares of an Associate (100.00) –

Investment in Shares of a Subsidiary (102.42) (321.72)

Sale of Investments 56758.26 8606.13

Fixed Deposit with Banks 30.25 (40.81)

Loan Given to a Subsidiary (466.32) (7033.68)

Loan Given to Others (2500.00) –

Loan Received back from Others 2500.00 –

Dividend Received 154.20 1.44

Interest Received from a Subsidiary 1036.82 430.90

Interest Received from Others 44.44 12.38

Net Cash Generated / (Used) ~ Investing Activities (7523.65) (73830.85)

Cash Flow Statement (Contd...)


This is the Cash Flow Statement referred to in our report of even date.




(Rupees in Lacs)



C CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Issuance of Equity Share Capital 6776.90 –

Deposit against Convertible Warrants 920.00 –

Proceeds from Long Term Borrowings 15347.40 66723.36

Repayment of Long Term Borrowings (8739.35) (6757.44)

(Repayment)/Proceeds from Other Borrowings (486.06) 14164.86

Interest Paid (10505.21) (5815.47)

Dividend Paid – (4244.38)

Net Cash Generated / (Used) ~ Financing Activities 3313.68 64070.93

Net Increase/(Decrease) in Cash & Cash Equivalents (A+B+C) 1914.02 17.66

Opening Cash and Cash Equivalents 1366.03 1348.37

Closing Cash and Cash Equivalents 3280.05 1366.03

Notes :

1) The above Cash Flow Statement has been prepared under the '' Indirect Method '' as set out in the Accounting Standard - 3 on Cash

Flow Statement notified under The Companies (Accounting Standard) Rules, 2006.

2) The Cash & Cash Equivalents do not include any amount which is not available to the Company for its use.

3) Purchase of Fixed Assets includes interest capitalised Rs 382.63 lacs (previous year Rs. 688.00 lacs). This amount is excluded from

Interest paid.

4) Figures in bracket represent cash outflow from respective activities.

5) Previous year figures have been regrouped / rearranged where ever found necessary to make them comparable with the current

year figures.

6) Cash and Cash Equivalents at the end of the year consists of:(Rupees in Lacs)



a) Cash in hand 240.65 156.84

b) Cheques in hand 1780.24 403.02

c) Balance with Banks in Current Accounts 1258.70 805.71

d) Balance with Post office in Savings Bank Account 0.46 0.46

3280.05 1366.03

Schedules forming part of the accounts


(Rupees in Lacs)

As at 1st As at 30th

October, 2007 Additions Deductions September, 2008

Capital Reserve 86.42 – – 86.42

Capital Redemption Reserve 2500.00 – – 2500.00

Revaluation Reserve 18.24 – – 18.24

Securities Premium 42050.56 6708.40 – 48758.96

General Reserve * 42772.19 3000.00 27.65 45744.54

Storage Fund for Molasses 83.30 30.35 64.11 49.54

Employees Stock Option Adjustment Account ** 32.72 184.67 21.21 196.18

Surplus as per Profit & Loss Account (3608.43) 5208.11 – 1599.68

83935.00 15131.53 112.97 98953.56

2 RESERVES AND SURPLUS

(Rupees in Lacs)

As at 30th As at 30th


Authorised

40,00,00,000 Equity Shares of Re.1/- each 4000.00 4000.00

25,00,000 Preference Shares of Rs.100/- each 2500.00 2500.00

6500.00 6500.00

Issued, Subscribed and Paid up

25,55,36,310 (Previous Year 24,81,54,660) Equity Shares of Re. 1/- each fully paid up 2555.36 2481.55

2555.36 2481.55

1 SHARE CAPITAL

Notes :

1) 15,55,39,650 Equity Shares have been issued and allotted as fully paid up Bonus Shares by capitalisation of Securities Premium,

Capital Redemption Reserve and General Reserve.

2) 2,37,55,600 Equity Shares have been issued to the members of erstwhile Babhnan Sugar Mills Limited pursuant to Scheme of

Amalgamation.

3) 21,15,400 Equity Shares have been issued to the members of erstwhile Tulsipur Sugar Company Limited pursuant to Scheme of

Amalgamation.

4) Out of 2,27,66,780 Equity Shares of Re. 1/- each offered to the shareholders on right basis, issue of 17,270 (Previous Year 17,270)

Equity Shares have been kept in abeyance as per the direction of court.

5) 1,63,52,000 fully paid up Equity Shares of Re.1/- each were allotted in January, 2006 at a price of Rs. 135/- per Share, ranking pari

passu with the existing Equity Shares, each of which is represented by one Global Depository Receipt (GDR) issued @ US$ 3.0577

each for an aggregate amount of US$ 50 million.

* Deductions in General Reserve represents adjustment as per transitional provisions of AS-15.

** Deductions in Employees Stock Options Adjustment Account represents forfeited & exercised Options.



(Rupees in Lacs)



A. TERM LOANS

I. RUPEE LOANS

a) State Bank of India (SBI) 1875.00 2500.00

b) Government of India, Sugar Development Fund (SDF) 7638.52 5454.01

c) Government of India (GOI) (Interest Free) 120.38 160.50

d) State Bank of India (SBI) (Interest Free) 11643.00 –

e) Punjab National Bank (PNB) (Interest Free) 510.00 –

II. EXTERNAL COMMERCIAL BORROWINGS (ECB)

a) International Finance Corporation, Washington (IFC) 18499.70 19395.50

b) ABN Amro Bank, NV (ABN) 9083.44 10110.73

c) State Bank of India (SBI) 19560.87 21993.12

d) DBS Bank Ltd. (DBS) 6651.00 6651.00

e) Standard Chartered Bank (SCB) 4372.00 4372.00

f) Cooperative Centrale Raiffeisen- Boerenleenbank, B.A. (CCRB) 8928.16 8928.16

g) BNP Paribas (BNP) 4655.00 6982.50

h) UCO Bank (UCO) 4120.50 4120.50

i) CITI Bank (CITI) 4420.00 4420.00

TOTAL (A) 102077.57 95088.02

B. CASH CREDIT ACCOUNT


b) Punjab National Bank (PNB) 1336.34 –

TOTAL (B) 22990.04 25976.10

TOTAL (A+B) 125067.61 121064.12

3 SECURED LOANS

Notes :

1) Rupee Term loan from SBI is secured by way of first pari passu equitable mortgage on immovable properties and hypothecation

of movable properties (excluding current assets and book debts), both present and future, pertaining to Company's sugar and co-

generation units at Akbarpur and also guaranteed by the Managing Director of the Company (due within a year Rs. 1250.00 lacs,

previous year Rs. 625.00 lacs).

2) Rupee Term Loans from SDF are secured by an exclusive second charge by way of equitable mortgage on immovable properties

and hypothecation of movable properties (excluding current assets and book debts), both present and future, pertaining to

Company's sugar and cogeneration units at Balrampur, sugar unit at Babhnan, sugar and cogeneration units at Haidergarh, sugar

and cogeneration units at Akbarpur, sugar and cogeneration units at Mankapur and sugar unit at Tulsipur (due within a year

Rs.852.89 lacs, previous year Rs 1009.89 lacs).

3) Interest Free Rupee Term Loan from GOI is secured by way of equitable mortgage on immovable properties and hypothecation of

movable properties, both present and future, pertaining to Company’s sugar unit at Babhnan, subject to charge on current assets

(including book debts) created in favour of SBI to secure the working capital limits and also guaranteed by some of the Directors

and an erstwhile Director of the Company (due within a year Rs. 40.13 lacs, previous year Rs. 40.12 lacs).

4) Interest Free Rupee Term Loan from SBI is secured by way of hypothecation of movable properties (excluding current assets and

book debts), both present and future, pertaining to Company's sugar unit at Balrampur, ranking pari passu with PNB and by way

of residual charge on movable properties (excluding current assets and book debts) and further secured / to be secured by way of

residual charge on immovable properties, pertaining to other units of the Company and also guaranteed by the Managing Director

of the Company (due within a year Nil, previous year Nil).

5) Interest Free Rupee Term Loan from PNB is to be secured by way of residual charge on movable properties (excluding current

assets and book debts), pertaining to Company’s sugar unit at Balrampur, both present and future, ranking pari passu with SBI,

(due within a year Nil, previous year Nil).

6) a) ECB from IFC amounting to Rs. 2099.70 lacs is secured by way of first equitable mortgage on immovable properties and

hypothecation of movable properties and residual charge on current assets, both present and future, pertaining to Company's



sugar and cogeneration units at Haidergarh, first equitable mortgage on immovable properties and hypothecation of movable

properties and residual charge on current assets, both present and future, pertaining to Company's distillery and organic manure

units at Babhnan and further guaranteed by some of the Directors and an erstwhile Director of the Company (due within a year

Rs. 1399.80 lacs, previous year Rs.1399.80 lacs).

b) ECB from IFC amounting to Rs. 16400.00 lacs is secured by way of first equitable mortgage on immovable properties and

hypothecation of movable properties and residual charge on current assets, both present and future, pertaining to Company's

sugar and cogeneration units at Haidergarh and Rauzagaon and further guaranteed by some of the Directors and an erstwhile

Director of the Company (due within a year Rs.1261.54 lacs, previous year Nil).

7) ECB from ABN are secured by way of first equitable mortgage on immovable properties and hypothecation of movable properties

(excluding current assets and book debts), both present and future, pertaining to Company's sugar and cogeneration units at

Mankapur (due within a year Rs. 1027.29 lacs, previous year Rs. 1027.29 lacs).

8) a) ECB from SBI amounting to Rs. 5774.38 lacs is secured by way of first pari passu equitable mortgage on immovable properties

and hypothecation of movable properties, (excluding current assets and book debts), both present and future, pertaining to

Company's sugar and cogeneration units at Akbarpur (due within a year Rs. 2309.76 lacs, previous year Rs. 2309.75 lacs).

b) ECB from SBI amounting to Rs. 13975.50 lacs is secured by way of first pari passu equitable mortgage on immovable properties

and hypothecation of movable properties (excluding current assets and book debts), both present and future, pertaining to

Company's sugar and cogeneration units at Kumbhi and Gularia (due within a year Nil, previous year Nil).

9) ECB from DBS is secured by way of first equitable mortgage on immovable properties and hypothecation of movable properties

(excluding current assets and book debts), both present and future, pertaining to Company's sugar unit at Balrampur (due within

a year Nil, previous year Nil).

10) ECB from SCB is secured by way of hypothecation of movable properties (excluding current assets and book debts), both present

and future, pertaining to Company's cogeneration unit at Balrampur (due within a year Nil, previous year Nil).

11) ECB from CCRB, BNP and UCO are secured by way of first pari passu equitable mortgage on immovable properties and

hypothecation of movable properties (excluding current assets and book debts), both present and future, pertaining to Company's

sugar and cogeneration units at Kumbhi and Gularia (due within a year Rs. 2327.50 lacs, previous year Rs. 2327.50 lacs).

12) ECB from CITI is secured by way of first pari passu hypothecation of movable properties (excluding current assets and book debts),

both present and future, pertaining to Company's sugar and cogeneration units at Kumbhi and Gularia (due within a year Nil,

previous year Nil).

13) Cash Credit with SBI is secured by way of hypothecation of entire stock of sugar, sugar in process, mill stores, bagasse, molasses

and other current assets including book debts, both present and future, of Balrampur sugar unit of the Company (excluding current

assets of cogeneration & distillery units) on pari passu basis with PNB and hypothecation of entire stock of sugar, sugar in process,

mill stores, bagasse, molasses and other current assets including book debts, both present and future, of other sugar units of the

Company (excluding current assets of cogeneration & distillery units) and further secured / to be secured by 3rd charge on fixed

assets of the sugar units of the Company (excluding cogeneration and distillery units) and also guaranteed by the Managing Director

of the Company.

14) Cash Credit with PNB is secured by way of hypothecation of entire stock of sugar, sugar in process, mill stores, bagasse, molasses

and other current assets including book debts, both present and future, pertaining to Company's sugar unit at Balrampur (excluding

current assets of cogeneration & distillery units) ranking pari passu with SBI.

15) Aggregate amount of Term Loans payable within a year Rs. 10468.91 lacs (Previous year Rs. 8739.35 lacs).

(Rupees in Lacs)



From a Bank 10000.00 4000.00

From Others – 3500.00

10000.00 7500.00

4 UNSECURED LOANS

Note :

Aggregate amount of Loans payable within a year Rs.10000.00 Lacs (Previous year Rs. 7500.00 Lacs).

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48



(Rupees in Lacs)

Face Value Number of As at 30th Number of As at 30th

Per Share/Unit Shares/Units September, 2008 Shares/Units September, 2007

Long Term Investments

In Government Securities :

(Deposited with Government authorities)

National Plan Certificates 0.04 0.04

Post Office National Saving Certificates 5.12 1.55

In Shares of Joint Stock Companies :

Trade Investments :

Subsidiary Companies:

Quoted :

Fully Paid Up Equity Shares in Indo Gulf Industries Ltd. Rs.10 43,53,365 305.39 @ 43,53,365 305.39

Partly Paid Up Equity Shares in Indo Gulf Industries Ltd. Rs.10 8,09,158 16.33 @ 8,09,158 16.33

(Rs.5/- per Share paid up)

Unquoted, Fully Paid Up Equity Shares :

Balrampur Overseas Pvt. Ltd. (Acquired during the year) HKD1 20,00,000 102.42 – –

Other Companies :


Avantika Ganna Pvt. Ltd. Rs.10 1,96,600 19.66 1,96,600 19.66

Asia Sugar Industries Pvt. Ltd. (Acquired during the year) Rs.10 10,00,000 100.00 – –

Balrampur Sugar Company Consumers Co-operative Rs.100 35 0.03 35 0.03

Society Ltd.

Co-operative Development Union Ltd. Rs.10 110 0.01 110 0.01

Co-operative Stores Ltd. Rs.10 1 – * 1 – *

Other than Trade :


Fortuna Services Ltd. Re. 1 48 – * 48 – *

549.00 343.01

Aggregate Book Value of Quoted Investments @ 321.72 321.72

Aggregate Book Value of Unquoted Investments 227.28 21.29

*Book Value Re.1/-, hence shown as Nil.

@Market Value not available.

The Following units were purchased and sold during the year :

1) 25,037,701.139 Units of ABN Amro Cash Fund Institutional Plus

2) 25,168,621.302 Units of ABN Amro Cash Fund Money Plus

3) 295,216.245 Units of DSP Merrill Lynch Liquidity Fund - Ins.

4) 21,972,285.738 Units of HDFC C M F - Savings Plus Plan Wholesale

5) 15,985,706.387 Units of HDFC Cash Management Fund - Savings Plan

6) 50,029,578.716 Units of HSBC Cash Fund Institutional Plus

7) 6,647,174.614 Units of ICICI Prudential Flexible Income Plan

8) 204,416,962.945 Units of ICICI Prudential Ins. Liquid Plan

9) 19,541,258.900 Units of Reliance Floating Rate Fund

10) 43,336,278.444 Units of Reliance Liquidity Fund

11) 83,813,959.937 Units of SBI Premier Liquid Fund - Super Institutional

12) 360,491.510 Units of TATA Liquid Super High Inv Fund.

6 INVESTMENTS



(Rupees in Lacs)



Stores & Spare Parts 5735.62 6546.76Loose Tools & Equipments 370.38 365.09Scrap 28.51 32.07Raw Materials 5.34 10.64Finished Goods

i) Sugar 47191.39 34421.68ii) Industrial Alcohol 806.94 307.35iii) Organic Manure 48.47 73.67iv) Banked Power 56.35 48103.15 26.18 34828.88Work- in- Process

i) Sugar 67.84 83.18ii) Molasses 2.69 1.89iii) Organic Manure 13.60 84.13 13.31 98.38Molasses 961.69 893.36Bagasse 342.21 509.76Press mud 4.28 11.18Standing Crop 3.76 2.82

55639.07 43298.94

7 INVENTORIES (As taken, valued & certified by the Management)

(Rupees in Lacs)



Debts outstanding for a period exceeding six months

Considered Good 281.15 386.40

Considered Doubtful 83.30 364.45 – 386.40

Other debts - Considered Good 4618.08 4169.69

4982.53 4556.09

Less : Provision for Doubtful Debts 83.30 –

4899.23 4556.09

8 SUNDRY DEBTORS (Unsecured)

Note :

Stock in transit included in Stock of Stores & Spare Parts Rs. 217.85 Lacs (Previous year Rs. 133.45 Lacs).

Note :

Sundry debtors include Rs. 47.44 Lacs (Previous year Rs. 45.59 Lacs) under litigation.(Rupees in Lacs)



Cash and cheques in hand (As certified)

i) Cash in hand 240.65 156.84ii) Cheques in hand 1780.24 2020.89 403.02 559.86With Scheduled Banks

i) In Current Accounts 1168.40 805.71ii) In Fixed Deposit Accounts 136.86 167.11iii) In Unclaimed Dividend Accounts 95.76 1401.02 118.84 1091.66With Non-Scheduled Banks

In Current Accounts 90.30 –(Refer Note No. 11 of Schedule - 22) With Post Office

In Saving Bank Accounts 0.46 0.463512.67 1651.98

9 CASH AND BANK BALANCES



(Rupees in Lacs)



LOANS (Secured)

To a Subsidiary Company 7500.00 7033.68

ADVANCES (Unsecured)

Advances recoverable in cash or in kind or for

value to be received or pending adjustment



Advance against Capital Assets 115.57 3874.97

Advance Payment of Tax 7425.77 6105.40

Less: Provision for Tax 7425.77 – 6105.40 –

Advance against Excise Duty, Cane Purchase Tax etc. 6559.35 8372.56

Security Deposit 59.58 67.39

23835.24 24062.81

Less: Provision for Doubtful Advances 226.99 –

23608.25 24062.81

10 LOAN AND ADVANCES (Considered good except stated otherwise)

(Rupees in Lacs)



Sundry Creditors

Due to Micro, Small and Medium Enterprises 42.56 –

(Refer Note No. 6 of Schedule - 22)

Due to others 17881.55 17924.11 32291.99 32291.99

Interest accrued but not due 2242.53 2652.10

Excess Price of Levy Sugar 43.15 43.15


Investor Education & Protection Fund:

Unclaimed Dividend 95.76 118.84

20305.55 35106.08

11 CURRENT LIABILITIES

(Rupees in Lacs)



Provision for Tax 10246.85 9631.89

Less: Advance Payment of Tax 7425.77 2821.08 6105.40 3526.49

Proposed Dividend 1277.68 –

Provision for Tax on Dividend 217.14 –

Provision for Retirement Benefits of Employees 307.91 281.80

Provision for Contingencies 9.30 15.00


4633.11 3823.29

12 PROVISIONS

Notes :

i) Maximum amount of loan outstanding from a Subsidiary Company during the year Rs.10194.45 Lacs (Previous year Rs. 7033.68 Lacs).

ii) Loans & Advances include Rs. 23.07 Lacs (Previous year Rs. 13.36 Lacs) under litigation.



(Rupees in Lacs)



Dividend on Current Investments (Other than trade) 154.20 1.44

Profit from Sugar Trading – 4.69

Insurance Claims 269.63 233.95

Unspent Liabilities and Balances written back 108.72 72.61

Storage Fund For Molasses written back 64.11 –

Profit on sale of Fixed Assets 5.36 20.67

Miscellaneous Income* 286.34 249.97

Export Subsidy 115.70 –

Exchange Rate Fluctuation 182.24 464.99

Insurance & Storage Charges on Buffer Stock 222.93 64.86

1409.23 1113.18

14 OTHER INCOME

* Includes Rent received (Gross) Rs. 40.51 Lacs (Previous year Rs. 100.03 Lacs), TDS Rs. 1.23 Lac (Previous year Rs. 1.28 Lacs) andTDS on Miscellaneous Income (other than rent) Rs.2.00 Lacs (Previous year Rs. Nil).

(Rupees in Lacs)



Opening Stock

Finished Goods 34828.88 12231.00

Molasses 893.36 455.22

Bagasse 509.76 622.68

Press mud 11.18 3.45

Work-in-Process 98.38 36341.56 90.00 13402.35

Closing Stock


Molasses 961.69 893.36

Bagasse 342.21 509.76


Work-in-Process 84.13 49495.46 98.38 36341.56

(13153.90) (22939.21)

Less/(Add): Excise Duty & Cess on Stock (788.14) (1578.89)


(12365.76) (21360.32)

15 DECREASE / (INCREASE) IN STOCK

(Rupees in Lacs)



Share Issue Expenses 321.19 464.28

Less : Written off during the year 143.09 178.10 143.09 321.19

178.10 321.19

13 MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted )



(Rupees in Lacs)



Sales 4.10 3.94Closing Stock of Standing Crop 3.76 2.82Rent 0.10 – Net Loss transferred to Profit & Loss Account 5.86 2.07

13.82 8.83Opening Stock of Standing Crop 2.82 4.58Cane Seed Purchased 2.16 0.06Fertiliser & Manures 1.76 0.49Salaries & Wages 2.72 0.95Power & Fuel 0.66 0.25Rent 1.00 1.00Irrigation & Cultivation Expenses 0.90 0.50Repairs & Maintenance - Others 1.75 0.26Miscellaneous Expenses 0.05 0.74

13.82 8.83

16 FARM ACCOUNT

(Rupees in Lacs)



Salaries, Wages, Bonus, etc. 7161.62 6145.22Contribution to Provident Fund, Gratuity & Other Funds (Including provisions) 765.32 734.93Workmen & Staff Welfare Expenses 269.70 310.87

8196.64 7191.02

17 SALARIES, WAGES & OTHER EMPLOYEES’ BENEFITS

(Rupees in Lacs)



Stores & Spare Parts consumed 6550.34 7377.55Power & Fuel 512.88 380.24Filling & Packing Expenses 186.55 216.41Rent 42.24 57.27Rates & Taxes 134.87 152.24Repairs & Maintenance

Plant & Machinery 3436.36 2793.25Buildings 204.79 301.52Others 255.44 3896.59 219.85 3314.62

Payment to Auditors 27.02 22.02(Refer Note No. 13 of Schedule -22)Miscellaneous Expenses 2802.63 2691.97Insurance 476.70 579.82Charity & Donation 111.74 90.49Directors' fees 6.50 6.40Managerial Remuneration 532.68 359.54(Refer Note No. 14 of Schedule -22)Loss on sale of Current Investments (Other than Trade) 0.02 – Loss on Sale/Discard of Fixed Assets 92.51 72.28Exchange Rate Fluctuation 497.03 – Provision for Contingencies – 7.60(Refer Note No. 26 of Schedule -22)Provision for doubtful debts/advances 310.30 – Sundry Debit Balances written off 59.72 4.97Share Issue Expenses written off 143.09 143.09Transfer to Storage Fund for Molasses 30.35 22.46

16413.76 15498.97

18 OTHER MANUFACTURING & ADMINISTRATIVE EXPENSES



(Rupees in Lacs)



Brokerage 338.68 378.34

Despatching & Forwarding Expenses 450.04 275.36

Cash Discount 217.44 181.19

Others 144.52 31.71

1150.68 866.60

19 SELLING EXPENSES

The accounts are prepared under the historical cost convention and are in accordance with the generally accepted accounting principlesin India and provisions of the Companies Act, 1956. The significant accounting policies followed by the Company are stated below:

1 Fixed Assets

a) Fixed Assets are stated at their original cost adjusted by revaluation of Land, Building, Plant & Machinery, Railway Siding andTube well of the Balrampur Unit as on 30th June, 1988 and Land, Building and Plant & Machinery of Tulsipur Unit as on 31stMarch, 1999. Cost includes acquisition price, attributable expenses and pre operational expenses including finance charges,wherever applicable.

b) Depreciation on Fixed Assets is provided on Straight Line method on revalued cost in accordance with the rates as specified inSchedule XIV to the Companies Act, 1956 (as amended) other than Power Transmission line and Mobile Phones. PowerTransmission Lines are amortised/depreciated over a period of five years and Mobile Phones over a period of three years.

c) Expenditure during construction period :Expenditure (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred onprojects under implementation are treated as Pre-operative expenses pending allocation to the assets and are shown under"Capital Work-in-Progress".

d) Lease hold land in the nature of perpetual lease are not depreciated. Other lease hold land are depreciated over the period ofthe lease.

2 Investments

Long Term Investments are carried at cost. Provision for diminution is made to recognise a decline, other than temporary, in thevalue of long term investments, script wise. Current Investments are valued at lower of cost or fair value, category wise. Cost ofinvestments includes acquisition cost such as brokerage, stamp duty etc.

3 Inventories

a) Inventories (other than By-products, Scrap and Standing crop) are valued at lower of cost or net realisable value.

21 SIGNIFICANT ACCOUNTING POLICIES

(Rupees in Lacs)



On Fixed Loans 7308.41 2835.62

On Other Loans (Including Financial Charges) 2787.23 3473.29

10095.64 6308.91

Less:

Interest Received (Gross) *

On Long Term Investments (Other than trade) 0.11 0.14

On Loan to a Subsidiary 1036.82 430.90

On Loan to Others 23.40 –

On Income Tax Refund 50.91 424.83

On Term Deposits with Banks 14.65 9.18

Others (NSC, Deposits etc.) 4.64 1130.53 2.13 867.18

8965.11 5441.73

20 INTEREST & OTHER FINANCIAL CHARGES

* Tax deducted at Source Rs. 2.18 Lacs (Previous year Rs. 14.84 Lacs).



The cost of Inventories is computed on weighted average basis. The cost of Finished goods and Work-in-Process include costof conversion and other cost incurred in bringing the Inventories to their present location and condition.

b) By-products (Molasses & Bagasse), Scrap and Standing Crop are valued at net realisable value.

4 Revenue Recognition

a) Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

b) Gross turnover includes excise duty but exclude sales tax.

c) Dividend income is accounted for in the year it is declared.

d) All other income are accounted for on accrual basis.

5 Expenses

All the expenses are accounted for on accrual basis.

6 Employee Benefits

a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Profit & Loss Account of theyear in which the related service is rendered.

b) Long-term employee benefits are recognised as an expense in the Profit & Loss Account for the year in which the employeehas rendered services. The expense is recognised at the present value of the amount payable as per actuarial valuations.Actuarial gains and losses in respect of such benefits are recognised in the Profit and Loss Account.

7 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of suchassets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for intended use. All other borrowingcosts are charged to revenue.

8 Intangible Assets

Computer Software (Acquired) and Share Issue Expenses are amortised equally over a period of five years.

9 Insurance Claims

Accounted for on settlement of claims.

10 Government Grants & Subsidies

a) Government grants related to specific fixed assets are adjusted with the value of the fixed asset. If not relating to a specific fixedasset, it is credited to Capital Reserve.

b) Government grants related to revenue items are adjusted with the related expenditure. If not relating to a specific expenditure,it is taken as income.

11 Foreign Currency Transactions

a) Transactions in Foreign currency are initially recorded at the exchange rate at which the transaction is carried out.

b) Monetary Assets and Liabilities related to foreign currency transactions remaining outstanding at the year end are translated atthe year end rate. The effect of Exchange Rate fluctuations in respect of the same is taken to Profit and Loss Account.

c) The premium or discount on forward exchange contracts is amortised over the period of the respective contract.

Exchange difference on such contracts at the year-end/ upon termination is taken to Profit and Loss Account.

d) Transactions covered by cross currency swap contracts are marked to market at the Balance Sheet date and the gain or loss istaken to Profit and Loss Account.

12 Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subjectto the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxableincome and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

13 Impairment of Assets

Impairment losses, if any, are recognised in accordance with the accounting standard notified under The Companies (Accounting Standard)

Rules, 2006.

14 Provisions, Contingent Liabilities and Contingent Assets

Provision is recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet dateis considered probable.

21 SIGNIFICANT ACCOUNTING POLICIES (Contd...)



Contingent Liabilities are shown by way of notes to the Accounts in respect of obligations where, based on the evidence available,their existence at the Balance Sheet date is considered not probable.

A Contingent Asset is not recognised in the Accounts.

15 Employee Stock Option Scheme

In respect of stock options granted pursuant to the company's Employee Stock Option Scheme, the intrinsic value of the options(excess of market price of the share over the exercise price of the option) is treated as discount and accounted for as employeecompensation cost over the vesting period.

21 SIGNIFICANT ACCOUNTING POLICIES (Contd...)

4. The levy sugar price for the seasons 2004-05 to 2007-08 is yet to be announced by the Government of India. Pending suchannouncement, the sale of levy sugar has been accounted for at the 2003-04 season's levy price.

5. The Company has accounted for cane price for sugar season 2006-07 at the State Advised Price of Rs.125/- per quintal.Subsequently, the Hon'ble Supreme Court of India vide its interim order dated 27th February, 2008, announced a price of Rs.118/-per quintal for general variety of sugarcane based on which all the cane dues were paid by the company. Pending final decisionof the Hon'ble Supreme Court, effect of the differential cane price has not been given in the accounts.

6. There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45days as at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises have been determined to theextent such parties have been identified on the basis of information available with the Company.

7. There is a pari passu charge by way of hypothecation and equitable mortgage on the fixed assets of Kumbhi and Gularia units ofthe Company for an amount of Euro 4.50 million equivalent to Rs.2456.61 lacs in favour of BNP Paribas, India for securing variousSwap Contracts entered into in connection with hedging in respect of various External Commercial Borrowings availed by theCompany.

22 NOTES ON ACCOUNTS

(Rupees in Lacs)



1. a) Estimated amount of Contracts remaining to be executed on Capital Account

and not provided for 256.97 8603.06

b) Advances paid against above 115.57 3874.97

2. Contingent Liabilities not provided for in respect of:

a) Calls in arrear in respect of partly paid up Equity Shares 181.90 181.90

b) Differential cane price for the sugar seasons 1978-79 and 1979-80 pending disposal

of the Writs filed by the Company in Hon'ble Calcutta High Court 32.93 32.93

c) Differential cane price for the sugar season 2007-08 pending disposal of the Writ filed

by the UP Sugar Mills Association of which the Company is a member, in Hon'ble

Supreme Court of India 9076.97 –

d) Interest on excess amount of levy sugar for sugar season 1982-83 realised as per Court

Order against which TDR of Rs. 25.54 lacs has been deposited with a Bank – 25.54

e) Claims for acquisition of 9.17 acres of land for the Chemical unit at Balrampur and Amount not Amount not

compensation there against is under dispute and the matter is subjudice ascertainable ascertainable

f) Claims against the Company not acknowledged as debts :

i) Excise duty Demand - under appeal 228.94 233.09

ii) Sales Tax Demand - under appeal 18.79 18.53

iii) Others - under appeal/litigation 203.46 189.06

g) Bank Guarantees furnished 2096.53 1739.44

h) Corporate Gaurantee given to a Bank on behalf of a Subsidiary 3550.00 –

3. Excess amount of levy sugar received to date for various sugar seasons

as per Orders of the Hon'ble High Court has not been credited to the

Profit and Loss Account as the matter is subjudice 43.15 43.15



8. During the year, the Company has set up a Subsidiary in Honk Kong. The name, country of incorporation and proportion ofownership interest in the said Subsidiary are as under :

Name of the Subsidiary Balrampur Overseas Pvt. Ltd.

Country of incorporation or residence Hong KongOwnership interest 100%

9. a) During the year, the Company has issued and allotted 73,00,000 Equity Shares of Re. 1/- each on preferential basis to thePromoter group at a premium of Rs.91/- per Share, aggregating to Rs. 6716.00 lacs.

b) The Company has also issued 1,00,00,000 Warrants convertible into equal number of Equity Shares of Re.1/- each at a premium ofRs.91/- per Share to the Promoter group and received Rs.920.00 lacs being 10% of the value of the Warrants as per the terms of issue.

c) The above proceeds of the preferential issue have been utilised for general corporate purpose.

10. The Employee Stock Option Scheme (Scheme 2005) of the Company was approved by the Board of Directors and the shareholdersin 2005. Under the said scheme, options granted have vesting period of one year and exercise period of maximum eight years. Thedetails of options granted, lapsed and exercised are as under :

11. Balance with Non-Scheduled Banks on Current Accounts :

22 NOTES ON ACCOUNTS (Contd...)

Year of Issue 2005-06 2006-07 2007-08 Total

Date of Grant of Option 31/10/05 27/11/06 27/11/07 -

Exercise Price (Rs.) 74.60 104.10 72.20 -

Market Price on the date of grant (Rs.) 81.10 87.65 90.75 -

Number of options granted up to 30.09.2007 622500 883000 - 1505500

Number of options outstanding on 01.10.2007 503500 797500 - 1301000

Number of options granted during the year - - 995500 995500

Number of options exercised during the year 81650 - - 81650

Number of options lapsed during the year 32000 73500 74500 180000

Number of options outstanding on 30.09.2008 389850 724000 921000 2034850

Maximum amount outstanding

Closing Balance at any time during the year

as at 30th September ended 30th September

Name of the Bank 2008 2007 2008 2007

i) Aryavart Gramin Bank, Barabanki 15.35 - 109.02 -

ii) Aryavart Gramin Bank, Fatehpur 1.55 - 14.01 -

iii) Aryavart Gramin Bank, Haidergarh 0.37 - 18.69 -

iv) Baroda Eastern U.P. Gramin Bank, Faizabad 19.73 - 20.13 -

v) Baroda Eastern U.P. Gramin Bank, Fatehpur 0.91 - 18.28 -

vi) District Co-Operative Bank, Sikardabad 0.11 - 0.20 -

vii) District Co-Operative Bank, Odraha 0.09 - 0.32 -

viii) District Co-Operative Bank, Amirnagar - - 0.16 -

ix) District Co-Operative Bank, Barabanki 8.20 - 26.73 -

x) District Co-Operative Bank, Faizabad 1.71 - 1.82 -

xi) District Co-Operative Bank, Fatehpur 0.96 - 9.99 -

xii) District Co-Operative Bank, Gola 0.11 - 238.91 -

xiii) District Co-Operative Bank, Mohammdi 0.11 - 30.00 -

xiv) District Co-Operative Bank, Nakha 0.14 - 0.33 -

xv) District Co-Operative Bank, Neemgaon 0.41 - 47.65 -

xvi) District Co-Operative Bank, Phardhan 0.07 - 0.28 -

xvii) District Co-Operative Bank, Pipariadhani 0.11 - 36.28 -

xviii) District Co-Operative Bank, Sultanpur 7.58 - 101.85 -

xix) Kshetriya Gramin Bank, Semri 0.15 - 5.45 -

xx) Kshetriya Gramin Bank, Akbarpur 0.27 - 38.54 -

xxi) Kshetriya Gramin Bank, Dostpur 0.98 - 5.48 -

xxii) Kshetriya Gramin Bank, Mijhaura 8.06 - 569.59 -

(Rupees in Lacs)




2007-08 2006-07

i) As Audit Fees 15.00 12.50

ii) For Other Services 9.49 6.74

iii) For Certification Work 1.47 1.33

iv) For Expenses 1.06 1.45

27.02 22.02




Name of the Bank 2008 2007 2008 2007

xxiii) Lucknow Kshetriya Gramin Bank, Jarwal Kasba 0.47 - 6.96 -

xxiv) Purvanchal Gramin Bank, Faizabad 7.18 - 0.94 -

xxv) Serve UP Gramin Bank, Tulsipur 3.84 - 1167.70 -

xxvi) Shahjahanpur Krishak Gramin Bank, Kurai 0.36 - 26.37 -

xxvii) Zila Sahkari Bank Ltd., Sultanpur 3.37 - 4.09 -

xxviii) Zila Sahkari Bank Ltd., Lucknow 7.17 - 8.22 -

xxix) Zila Sahkari Bank Ltd., Parsurampur 0.94 - 22.98 -

90.30

(Rupees in Lacs)

(Rupees in Lacs)

2007-08 2006-07

i) Salary, Bonus and Leave encashment 248.03 248.04

ii) Commission 230.00 –

iii) Contribution to Provident Fund, Gratuity and other Funds 50.20 100.63

iv) Perquisites (including monetary value of perquisites Rs.4.80 lacs, previous year Rs.1.33 lacs) 9.25 12.20

537.48 360.87

(Rupees in Lacs)

2007-08

Profit before tax as per Profit & Loss Account 12263.83

Add:

i) Directors' Fees 6.50

ii) Directors' Remuneration 532.68

iii) Storage Fund for Molasses 30.35

iv) Loss on Sale/discard of Fixed Assets 92.51

v) Loss on Sale of Investments 0.02

vi) Depreciation as per books of account 11720.50

vii) Provision for doubtful debts / advances 310.30 12692.86

24956.69

Less :

i) Depreciation as per Section 350 of the Companies Act* 11366.85

ii) Profit on sale of Fixed Assets 5.36

iii) Storage Fund for Molasses written back 64.11

iv) Brought forward loss 3536.74 14973.06

Net Profit for the purpose of Directors' Remuneration 9983.63

12. Excise Duty & Cess on Stock :

The amount of Excise Duty & Cess on Stock shown in Schedule - 15 represents differential Excise Duty & Cess on opening & closingstock of finished goods/by products.

13. Payment to Auditors :

14. a) Details of Remuneration paid/payable to Directors :

b) Computation of Net Profit for the purpose of calculating Directors Remuneration : (Rupees in Lacs)




2007-08

Commission payable @ 1% each to Managing Director, Joint Managing Director and

Wholetime Director 299.50

Restricted as per terms of agreements 210.00

Commission payable @ 1% of Net Profit to Non-Executive Directors 99.84

Restricted, as decided by the Board of Directors (Subject to Shareholders approval) 20.00

* The Company depreciates some fixed assets based on estimated useful live that are lower than those implicit in Schedule XIV to

the Companies Act, 1956. Accordingly, the rate of depreciation used by the Company in respect of these fixed assets are higher

than the rate prescribed under Schedule XIV.

Note:

Computation of Net Profit for the previous year for the purpose of calculating Directors' Remuneration has not been made as

remuneration paid to the directors in the previous year was on the basis of minimum remuneration.

17. a) Land, Building, Plant & Machinery, Railway Siding, Tubewell and Water Supply Machinery of Balrampur unit were revalued as

at 30th June, 1988 on net replacement value as per the report of S.R. Batliboi Consultants Pvt. Ltd. and the cost of respective

assets aggregating to Rs.1200.77 lacs was substituted by the revalued amount of Rs.1920.52 lacs and the resultant increase was

15. Details of aggreegate amount of loans outstanding which are guaranteed by the Managing Director / Joint Managing Director /

Erstwhile Director :

16. Details of Adjustment relating to earlier years (Net) :

Note : No guarantee commission is payable to the above guarantors.

(Rupees in Lacs)

Sl. No. Particulars 2007-08 2006-07

a) Rupee Term Loan 13638.38 2660.50

b) External Commercial Borrowings (ECB) 18499.70 19395.50

32138.08 22056.00

c) Working Capital Limits :

Fund Based 21653.70 25976.10

Non-Fund Based 322.12 225.03

21975.82 26201.13

54113.90 48257.13

(Rupees in Lacs)

2007-08 2006-07

a) Expenses:

i) Cost of Raw Materials Consumed 0.02 0.11

ii) Salaries, Wages & other Employees' Benefits 1.23 –

iii) Rates & Taxes – 1.08

iv) Power & Fuel 0.82 –

v) Repairs & Maintenance (Others) 0.06 0.48

vi) Interest & Financial Charges – 0.52

vii) Miscellaneous Expenses 2.82 14.05

4.95 16.24

b) Income:

i) Miscellaneous Income 1.73 3.05

ii) Stores & Spare Parts Consumed 6.51 –

iii) Workers & Staff Welfare Expenses 0.11 0.13

iv) Contribution to Provident Fund etc. written back – 4.02

8.35 7.20

Adjustment relating to earlier years (Net) - (a - b) (3.40) 9.04

(Rupees in Lacs)



Defined Benefit Plan:

Post employment and other long-term employee benefits in the form of gratuity and leave encashment are considered as defined

benefit obligation. The present value of obligation is determined based on actuarial valuation using projected unit credit method as

at the Balance Sheet date. The amount of defined benefit recognised in the Balance Sheet represent the present value of the

obligation as adjusted for unrecognised past service cost and as reduced by the fair value of plan assets.

Provident fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a defined benefit

plan since the Company has to meet the interest shortfall. The interest shortfall of Rs.24.61 lacs at the year end is recognised as

expense for the year.

Any asset resulting from this calculation is limited to the discounted value of any economic benefit available in the form of refunds

from the plan or reduction in future contribution to the plan. The amount recognised in the Profit and Loss Account in respect of

credited to Revaluation Reserve.

b) Land, Building and Plant & Machinery of Tulsipur unit were revalued as at 31st March, 1999 on net replacement value as per

the report of Lodha & Co. and the cost of the respective assets aggregating to Rs.1023.85 lacs was substituted by the revalued

amount of Rs.2944.93 lacs and the resultant increase was credited to Revaluation Reserve in the books of erstwhile Tulsipur

Sugar Company Limited.

18. The Company has been granted eligilibility certificate dated 23rd February, 2007 under New Sugar Industry Promotion Policy, 2004

of the Government of Uttar Pradesh. Accordingly, incentives aggregating to Rs.4281.53 lacs (Previous year Rs.1757.09 lacs) allowable

under the above policy have been accounted for during the year.

The above policy has been terminated by the Government of Uttar Pradesh vide order dated 4th June, 2007 wherein the Government

expressed its intention to introduce another policy. The Company has been legally advised that it continues to be eligible to receive

the incentives under the above policy. Furthermore, the Company has filed Writ Petition against revocation of the aforesaid policy

which has been admitted by the Lucknow Bench of the Hon'ble Allahabad High Court vide its Order dated 9th May, 2008, the

hearing in respect of which is in progress.

19. Intangible Assets

a) The unamortised amount of Share Issue Expenses Rs.18.26 lacs and Rs.159.84 lacs are to be amortised equally in the next six

months and 1 year & six months respectively.

b) The unamortised amount of Computer Software (Acquired) Rs.3.64 lacs and Rs. 0.28 lac are to be amortised equally in the next

4 years & three months and 4 years & seven months respectively.

20. Employee Benefits :

As per Accounting Standard - 15 "Employee Benefits", the disclosure of Employee Benefits as defined in the Accounting Standard

are as follows:

The Company has with effect from 1st October, 2007 adopted Accounting Standard - 15, "Employee Benefits" notified under the

Companies (Accounting Standards) Rules, 2006.

In accordane with the stipulations of the said Accounting Standard, the Company has adjusted Rs.27.65 lacs towards the additional

liability for employee benefits upto 30th September, 2007 against the balance of General Reserve as at 1st October, 2007 as permitted

under the transitional provision in the Accounting Standard - 15.

Defined Contribution Plan :

Employee benefits in the form of Provident Fund and Labour Welfare Fund are considered as defined contribution plan except that

Provident fund in respect of certain employees is contributed to a fund set up by the Company which is treated as defined benefit

plan since the Company has to meet the interest shortfall.

The contribution to the respective fund are made in accordance with the relevant statute and are recognised as an expense when

employees have rendered service entitling them to the contribution. The contribution to defined contribution plan, recognised as

expense for the year are as under :


Amount

Defined Contribution Plan

Employer’s Contribution to Provident Fund 244.65

Employer’s Contribution to Labour Welfare Fund 0.01

(Rupees in Lacs)



Employees Benefit Schemes based on actuarial reports as on 30th September, 2008 is as follows :


Gratuity Provident Fund Leave Encashment

(Funded) (Funded) (Unfunded)

I. Components of Employer Expense :

1 Current Service Cost 146.77 112.47 13.392 Past Service Cost - - - 3 Interest Cost 115.06 129.27 9.504 Expected return on Plan Assets 103.28 121.66 - 5 Acturial Gain/(Loss) recognised in the year (26.85) 16.94 101.046 Expense recognised in Statement of Profit & Loss Account 131.70 137.02 123.93

II. Change in Present Value of Defined Benefit Obligation :

1 Present value of Defined Benefit Obligation at the beginning of the year 1427.50 1520.87 190.702 Interest Cost 115.06 129.27 9.503 Past Service Cost - - - 4 Current Service Cost 146.77 112.47 13.395 Employees Contribution - 129.21 - 6 Benefits Paid 147.73 30.50 157.777 Actuarial Gain/ (Losses) (37.12) (55.72) 101.048 Present value of Defined Benefit Obligation at the end of the year 1504.48 1805.60 156.86

III. Change in Fair Value of Plan Assets during the

year ended 30th September, 2008 :

1 Plan Assets at the beginning of the year 1290.97 1520.81 - 2 Expected return on Plan Assets 103.28 121.66 - 3 Actual Company Contribution 169.28 241.68 - 4 Benefits paid 147.73 30.50 - 5 Actuarial Gains / (Losses) (10.26) (72.66) - 6 Plan Assets at the end of the year 1405.54 1780.99 -

IV. Net Asset / (Liability) recognised in the Balance Sheet

as at 30th September, 2008 :

1 Present value of Defined Benefit Obligation 1504.48 1805.60 156.862 Fair value of Plan Assets 1405.54 1780.99 - 3 Funded Status (Surplus/(Deficit)) (98.94) (24.61) (156.86)4 Net Asset / (Liability) recognised in Balance Sheet (98.94) (24.61) (156.86)

V. Acturial Assumptions :

1 Discount Rate (per annum) 8.50 8.50 8.502 Expected return on Plan Assets (per annum) 8.00 8.00 - 3 Salary increase 6.00 6.00 6.004 Retirement/Superannuation Age 60 60 60 5 Mortality LICI 1994-1996 LICI 1994-1996 LICI 1994-1996

VI. Major Category of Plan Assets as a % of the Total Plan Assets


1 Administered by Insurance Companies 47% - - 2 Public Financial Institutions / Public Sector Companies 23% 51% - 3 Central / State Government Securities 28% 49% - 4 Bank Deposits 1% - - 5 Others (Cash and Cash Equivalents) 1% - -

VII. Experience Adjustments :

1 Defined Benefit obligation - - - 2 Plan Assets - - - 3 Surplus /(Deficit) - - - 4 Experience adjustments on Plan Liabilities - - - 5 Experience adjustments on Plan Assets - - -

VIII. Expected Employer's Contribution for the next year :

Expected Employer's Contribution for the next year 186.21 119.22 -

(Rupees in Lacs)



IX. Basis used to determine the expected Rate of return on Plan Assets :

The basis used to determine overall expected Rate of return on Plan Assets is based on the current portfolio of assets, investment

strategy and market scenario. In order to protect the Capital and optimise returns within acceptable risk parameters, the Plan

Assets are well diversified.

X. Basis of estimates of Rate of escalation in salary :

The estimates of rate of escalation in salary, considered in acturial valuation, take into account inflation, seniority, promotion and

other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

XI. Other disclosures :

a) The Gratuity and Provident Fund Expenses have been recognised under "Contribution to Provident Fund, Gratuity and Other

Funds" and Leave Encashment under "Salaries, Wages, Bonus, etc." under Schedule - 17.

b) The amount of the Present value of Obligations, fair value of Plan Assets, Surplus/Deficit in the plan and experience

adjustment arising on Plan Liabilities and Plan Assets for the previous four annual periods are not available and therefore,

not disclosed.

c) As this is the first year of adoption of Accounting Standard-15 on Employee Benefits, only the current year’s figures have

been given.

21. Segment information as per Accounting Standard - 17 on 'Segment Reporting' :

The Company has identified four business segments viz. Sugar, Distillery, Co-generation and Organic Manure. Segments have been

identified and reported taking into account the nature of the products, the differing risks and returns, the organisational structure

and internal business reporting system.

a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment.

Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been

disclosed as “Unallocable”.

b) Segment Assets and Segment Liabilities represent assets and liabilities of respective segment. Investments, tax related

assets/liabilities and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed

as "Unallocable".

c) Information about Primary Business Segments:


Particulars Sugar Distillery Co-generation Organic Manure Unallocable Total

Gross Sales 130611.08 18750.25 23688.10 143.78 - 173193.21(128291.79) (13494.58) (18738.89) (182.99) ( - ) (160708.25)

Less : Inter Segment Sales 11634.97 14.09 6293.74 0.20 - 17943.00(8714.38) (7.34) (4247.60) (106.49) ( - ) (13075.81)

External Sales 118976.11 18736.16 17394.36 143.58 - 155250.21

(119577.41) (13487.24) (14491.29) (76.50) ( - ) (147632.44)

Less : Excise Duty & Cess on 6910.05 1985.90 - - - 8895.95External Sales (7210.06) (1250.48) ( - ) ( - ) ( - ) (8460.54)

Net Sales 112066.06 16750.26 17394.36 143.58 - 146354.26

(112367.35) (12236.76) (14491.29) (76.50) ( - ) (139171.90)

Add : Allocable other income 820.54 75.55 157.77 8.42 - 1062.28(489.18) (20.31) (106.26) (1.09) ( - ) (616.84)

Total Revenue 112886.60 16825.81 17552.13 152.00 - 147416.54

(112856.53) (12257.07) (14597.55) (77.59) ( - ) (139788.74)

Result

Segment Result 6530.97 6511.19 10779.00 (197.30) - 23623.86(–) (10425.26) (5062.24) (8717.99) (-) (55.04) ( - ) (3299.93)

Less: Unallocable expenditure 2394.92 2394.92net of unallocable income (1394.94) (1394.94)Interest & financial charges (net) 8965.11 8965.11

(5441.73) (5441.73)Profit / (Loss) Before Tax 12263.83

(–) (3536.74)

(Rupees in Lacs)




Tax

Current Tax 562.00(186.00)

Fringe Benefit Tax 64.00(64.00)

Deferred Tax 1934.90(397.68)

Profit /(Loss) After Tax 9702.93

(–) (4184.42)

Other Information

Segment Assets 188078.57 17584.02 59067.67 1310.10 20588.51 286628.87(177321.07) (17782.65) (60288.90) (1419.72) (14243.03) (271055.37)

Segment Liabilities 14672.68 2677.74 410.27 24.33 31347.32 49132.34(29351.71) (2295.84) (299.32) (22.14) (24105.69) (56074.70)

Capital Expenditure 4762.70 204.72 3205.14 15.12 93.88 8281.56(39091.80) (6273.28) (21302.41) (560.80) (98.73) (67327.02)

Depreciation & Amortisation 7034.01 808.89 3741.92 73.65 62.03 11720.50(4884.87) (596.39) (2429.76) (53.71) (57.81) (8022.54)

(Rupees in Lacs)

Notes :

1) Transactions between segments are primarily for materials which are transferred at market determined prices. Common costs

are apportioned on a reasonable basis.

2) Unallocable expenses are net of unallocable income Rs.350.35 lacs (previous year Rs.496.34 lacs).

3) Inter Segment Sales include Excise Duty & Cess Rs.1457.93 lacs (Previous year Rs.813.91 lacs).

d) Information about Secondary Geographical Segments :

i) The information about secondary segments has not been furnished as the export revenue is less than 10% of the total

revenue of the Company.

ii) The Company has common fixed assets located in India for producing goods for domestic and overseas markets. Therefore,

the value of fixed assets and additions there to can not be allocated to the geographical segments. Hence, the total carrying

amount of segment assets and cost incurred during the year to acquire segment assets has not been given in respect of

secondary segments.

22. Related party disclosures as per Accounting Standard - 18 for the year ended 30th September, 2008 are given below :

a) Name of the related parties and description of relationship :

i) Subsidiaries : Indo Gulf Industries Ltd.

(Control exists) Balrampur Overseas Pvt. Ltd.

ii) Associates : Avantika Ganna Pvt. Ltd.

Asia Sugar Industries Pvt. Ltd.

iii) Key Managerial Personnels (KMP) : Mr. Vivek Saraogi - Managing Director

Mrs. Meenakshi Saraogi - Joint Managing Director

Mr. K.N. Ranasaria - Whole-time Director

Mr. Kishor Shah - Whole-time Director

Mr. R.N. Mishra - Whole-time Director upto 31.07.2008

Dr. Arvind Krishna Saxena - Whole-time Director from 01.08.2008.

iv) Relatives of Key Managerial Personnel :

Mr. Vivek Saraogi 1. Mr. K.N.Saraogi (Father) - Chairman Emeritus

2. Mrs. Meenakshi Saraogi (Mother)

3. Mr. Karan Saraogi (Son)

4. Miss Avantika Saraogi (Daughter)

5. Mrs. Satyawati Saraogi (Grand-mother)

6. Mrs. Stuti Dhanuka (Sister)

7. Mrs. Sumedha Saraogi (Wife)




Nature of transaction / Name of the party Enterprises over

which KMP and Key

their relatives Managerial Relatives

have substantial Personnel of

Subsidiaries Associates interest (KMP) KMP Total

i) Purchase of Raw Materials and By-products

Kamal Nayan & Co. - - 0.67 - - 0.67

( - ) ( - ) (1.00) ( - ) ( - ) (1.00)

Indo Gulf Industries Ltd. 272.61 - - - - 272.61

( - ) ( - ) ( - ) ( - ) ( - ) ( - )

ii) Purchase of Stores & Other Materials


( - ) ( - ) ( - ) ( - ) ( - ) ( - )

iii) Purchase of Fixed Assets


( - ) ( - ) ( - ) ( - ) ( - ) ( - )

iv) Sale of Raw Materials and By-products


( - ) ( - ) ( - ) ( - ) ( - ) ( - )

v) Sale of Stores & Other Materials


( - ) ( - ) ( - ) ( - ) ( - ) ( - )

vi) Sale of Fixed Assets


( - ) ( - ) ( - ) ( - ) ( - ) ( - )

vii) Reimbursement of Expenses


( - ) ( - ) ( - ) ( - ) ( - ) ( - )

viii)Recovery of Expenses


( - ) ( - ) ( - ) ( - ) ( - ) ( - )

ix) Inter-corporate Loan Given


(6616.92) ( - ) ( - ) ( - ) ( - ) (6616.92)

x) Investments made during the year

Balrampur Overseas Pvt. Ltd. 102.42 - - - - 102.42

( - ) ( - ) ( - ) ( - ) ( - ) ( - )

Asia Sugar Industries Pvt. Ltd. - 100.00 - - - 100.00

( - ) ( - ) ( - ) ( - ) ( - ) ( - )

xi) Interest Received/Receivable


(430.90) ( - ) ( - ) ( - ) ( - ) (430.90)

(Rupees in Lacs)

Mrs. Meenakshi Saraogi 1. Mr. K.N.Saraogi (Husband)2. Mr. Vivek Saraogi (Son)3. Mr. Karan Saraogi (Grand-son)4. Miss Avantika Saraogi (Grand-daughter)5. Mrs. Satyawati Saraogi (Mother-in-law)6. Mrs. Stuti Dhanuka (Daughter)7. Mrs. Sumedha Saraogi (Daughter-in-law)

v) Enterprises in which KMP and their 1. Kamal Nayan & Co.relatives have substantial interest : 2. Meenakshi Mercantiles Ltd.

3. Udaipur Cotton Mills Co. Ltd.

b) Transactions with Related parties :






which KMP and Key



Subsidiaries Associates interest (KMP) KMP Total

xii) Rendering of Services

Avantika Ganna Pvt. Ltd. - - - - - -( - ) (2.90) ( - ) ( - ) ( - ) (2.90)

Mr. K.N. Saraogi - - - - - -( - ) ( - ) ( - ) ( - ) (0.20) (0.20)

Mrs. Meenakshi Saraogi - - - 194.47 - 194.47( - ) ( - ) ( - ) (95.29) ( - ) (95.29)

Mr. Vivek Saraogi - - - 190.82 - 190.82( - ) ( - ) ( - ) (116.50) ( - ) (116.50)

Mr. K.N. Ranasaria - - - 33.30 - 33.30( - ) ( - ) ( - ) (33.30) ( - ) (33.30)

Mr. Kishor Shah - - - 64.91 - 64.91( - ) ( - ) ( - ) (34.03) ( - ) (34.03)

Mr. R.N. Mishra - - - 6.52 - 6.52( - ) ( - ) ( - ) (7.75) ( - ) (7.75)

Dr. Arvind Krishna Saxena - - - 1.55 - 1.55( - ) ( - ) ( - ) ( - ) ( - ) ( - )

xiii) Dividend Paid to Shareholders

Mr. K.N. Saraogi - - - - - -( - ) ( - ) ( - ) ( - ) (472.15) (472.15)

Mrs. Meenakshi Saraogi - - - - - -( - ) ( - ) ( - ) (194.65) ( - ) (194.65)

Mr. Vivek Saraogi - - - - - -( - ) ( - ) ( - ) (64.22) ( - ) (64.22)

Mr. K.N. Ranasaria - - - - - -( - ) ( - ) ( - ) (2.87) ( - ) (2.87)

Mr. Kishor Shah - - - - - -( - ) ( - ) ( - ) (0.08) ( - ) (0.08)

Mrs. Sumedha Saraogi - - - - - -( - ) ( - ) ( - ) ( - ) (146.99) (146.99)

Mrs. Satyawati Saraogi - - - - - -( - ) ( - ) ( - ) ( - ) (66.34) (66.34)

Mr. Karan Saraogi - - - - - -( - ) ( - ) ( - ) ( - ) (53.48) (53.48)

Miss Avantika Saraogi - - - - - -( - ) ( - ) ( - ) ( - ) (53.48) (53.48)

Mrs. Stuti Dhanuka - - - - - -( - ) ( - ) ( - ) ( - ) (75.18) (75.18)

Meenakshi Mercantiles Ltd. - - - - - -( - ) ( - ) (21.56) ( - ) ( - ) (21.56)

Udaipur Cotton Mills Co. Ltd. - - - - - -( - ) ( - ) (36.22) ( - ) ( - ) (36.22)

xiv) Finance (Contribution towards Equity

Shares and convertible Warrants in cash)

Mr. K.N. Saraogi - - - - 2553.00 2553.00( - ) ( - ) ( - ) ( - ) ( - ) ( - )

Mrs. Meenakshi Saraogi - - - 883.20 - 883.20( - ) ( - ) ( - ) ( - ) ( - ) ( - )

(Rupees in Lacs)




Enterprises over

which KMP and Key



Nature of transaction / Name of the party Subsidiaries Associates interest (KMP) KMP Total

Mrs. Satyawati Saraogi - - - - 204.70 204.70( - ) ( - ) ( - ) ( - ) ( - ) ( - )

Mr. Karan Saraogi - - - - 350.70 350.70( - ) ( - ) ( - ) ( - ) ( - ) ( - )

Miss Avantika Saraogi - - - - 166.70 166.70( - ) ( - ) ( - ) ( - ) ( - ) ( - )

Meenakshi Mercantiles Ltd. - - 1438.33 - - 1438.33( - ) ( - ) ( - ) ( - ) ( - ) ( - )

Udaipur Cotton Mills Co. Ltd. - - 2039.37 - - 2039.37( - ) ( - ) ( - ) ( - ) ( - ) ( - )

xv) Guarantees (Given for the Loans

obtained by the Company)

Mr. Vivek Saraogi - - - 14643.00 - 14643.00( - ) ( - ) ( - ) ( - ) ( - ) ( - )

xvi) Corporate Guarantee Given

Indo Gulf Industries Ltd. 3550.00 - - - - 3550.00( - ) ( - ) ( - ) ( - ) ( - ) ( - )

xvii) Balance Outstanding

a) Accounts payable

Mrs. Meenakshi Saraogi - - - 90.00 - 90.00( - ) ( - ) ( - ) ( - ) ( - ) ( - )

Mr. Vivek Saraogi - - - 90.00 - 90.00( - ) ( - ) ( - ) ( - ) ( - ) ( - )

Mr. K.N. Ranasaria - - - 2.40 - 2.40( - ) ( - ) ( - ) (2.40) ( - ) (2.40)

Mr. Kishor Shah - - - 30.00 - 30.00( - ) ( - ) ( - ) (6.96) ( - ) (6.96)

b) Accounts receivable

Indo Gulf Industries Ltd. @ 7500.00 - - - - 7500.00(7033.68) ( - ) ( - ) ( - ) ( - ) (7033.68)

c) Amount outstanding against Guarantees

Mr. K.N. Saraogi - - - - 18620.08 18620.08( - ) ( - ) ( - ) ( - ) (19556.00) (19556.00)

Mrs. Meenakshi Saraogi - - - 18620.08 - 18620.08( - ) ( - ) ( - ) (19556.00) ( - ) (19556.00)

Mr. Vivek Saraogi - - - 54113.90 - 54113.90( - ) ( - ) ( - ) (48257.13) ( - ) (48257.13)

d)Amount outstanding against Corporate

Guarantees Given

Indo Gulf Industries Ltd. 2661.16 - - - - 2661.16( - ) ( - ) ( - ) ( - ) ( - ) ( - )

(Rupees in Lacs)

@ Maximum amount outstanding during the year Rs.10194.45 lacs (Previous year Rs.7033.68 lacs).

c) No amount has been written back / written off during the year in respect of due to / from related parties.

d) The amount due from related parties are good and hence no provision for doubtful debts in respect of dues from such

related parties is required.



23. Disclosure under clause 32 of the Listing Agreement :

There are no transactions (other than loan transactions with subsidiaries as given in para 22 (b) (xvii) (b) above) which are required

to be disclosed under Clause 32 of the Listing Agreement.

24. Earnings per Share

The numerators and denominators used to calculate Basic/Diluted Earnings per Share :

25. Details of Deferred Tax Liability and Assets as at 30th September, 2008 :

26. Disclosure in terms of Accounting Standard -29 on Provisions, Contingent Liabilities and Contingent Assets:

a) Movement for Provision for Liabilities:


2007-08 2006-07

a) Amount used as the numerator (Rs. Lacs)

Profit / (Loss) after Tax 9702.93 (4184.42)

Total - (A) 9702.93 (4184.42)

b) Weighted average number of Equity Shares used as the denominator for

Basic Earnings per Share - (B) 253595395 248154660

Add : Weighted average number of Equity Shares on account of

Employees Stock Option Scheme 190187 40355

c) Weighted average number of Equity Shares used as the denominator for

Diluted Earnings per Share - (C) 253785582 248195015

d) Nominal value of Equity Shares (Re.) 1.00 1.00

e) Basic Earnings per Share (Rs.) 3.83 (1.69)

f) Diluted Earnings per Share (Rs.) 3.82 (1.69)

2007-08 2006-07

a) Deferred Tax Liability :

Depreciation 24193.68 17145.33

24193.68 17145.33

b) Deferred Tax Assets :

i) MAT Credit 3250.24 1559.90

ii} Carried Forward Losses 3596.73 1446.31

iii) Expenses allowable for tax purposes when paid 3087.36 1814.67

9934.33 4820.88

(Rupees in Lacs)

(Rupees in Lacs)

Note :

Carried forward losses have been recognised as Deferred Tax Assets as per latest Income Tax assessment order / Return of Income

filed by the Company.

b) The Contingent Liabilities & Liabilities mentioned at Sl. No. 2 & 26 (a) respectively are dependent upon Court decision / out

of court settlement/disposal of appeals etc.

c) No reimbursement is expected in the case of Contingent Liabilities & Liabilities shown respectively under Sl.No. 2 & 26 (a)

above and in view of this no asset has been recognised for the expected reimbursement.

Particulars Duties & taxes Others Amount

Balance as at 1st October, 2007 13.92 1.08 15.00

Provided during the year – – –

Amount used during the year 5.65 0.05 5.70

Reversed during the year – – –

Balance as at 30th September, 2008 8.27 1.03 9.30

Timing of outflow/uncertainties Outflow on settlement/crystallization



27. Additional information pursuant to the provisions of paragraphs 3 & 4 of Part - II of Schedule VI to the Companies Act, 1956:

A. Quantitative Information :


i) Licensed Capacity

Sugar Not applicable Not applicable

Distillery 320 KLPD 320 KLPD

Organic Manure Not applicable Not applicable

Power Not applicable Not applicable

ii) Installed Capacity (As certified by the Management)

Sugar 73500 TCD 65000 TCD

Distillery 320 KLPD 320 KLPD

Organic Manure 58000 M.T. 58000 M.T.

Power 179.85 M.W. 134.30 M.W.

iii) Particulars of Goods Manufactured

Class of Goods Production SalesUnit Quantity Quantity Amount (Rs. Lacs)

a) Sugar Qtls. 8184902 ^ 7419774 117691.00(9148718) (7536409) (115894.44)

b) Molasses Qtls. 3994250 # 4341993 1176.54(4866521) (4288459) (3201.29)

c) Industrial Alcohol B.L. 91088540 * 86941105 18626.18(65292513) (63821352) (13389.74)

d) Power Kw. 790688367 $ 787509312 17393.55(676806039) (675802276) (14491.29)

e) Organic Manure M.T. 34192 & 31006 147.81(25460) (19564) (186.75)

f) Bagasse Qtls. 26141213 § 26851055 27.32(30318175) (30127071) (268.97)

g) Miscellaneous 187.81(199.96)

Total 155250.21(147632.44)

^ Includes 1619 Qtls. (561 Qtls.) process/storage loss.

# Includes 77441 Qtls. (114997 Qtls.) auto combustion/storage loss and 3787241 Qtls. (2780970 Qtls.) inter unit transfers taken

at nil value.

* Includes 796011 B.L. (909786 B.L.) storage loss and 19400 B.L. (previous year 10000 B.L.) captive consumption taken at

nil value.

$ Includes 85806632 Kw (69271106 Kw) captive consumption, 6133077 Kw (11350654 Kw) transmission loss and 122034382

Kw (102563450 Kw) inter unit transfers taken at nil value.

& Includes 7459 M.T. (2187 M.T.) issued as sample / loss and Nil M.T. (1448 M.T.) inter unit transfers taken at nil value.

§ Includes 9404195 Qtls. (12326093 Qtls.) captive consumption and 17334577 Qtls. (16738148 Qtls.) inter unit transfers

taken at nil value.




Class of Goods Unit Opening Stock Closing StockQuantity Amount (Rs. Lacs) Quantity Amount (Rs. Lacs)

a) Sugar Qtls. 2396464 34421.68 3161592 47191.39(784155) (11980.69) (2396464) (34421.68)

b) Molasses Qtls. 836479 893.36 488736 961.69(258417) (455.22) (836479) (893.36)

c) Industrial Alcohol B.L. 2618327 307.35 6765762 806.94(1147166) (180.72) (2618327) (307.35)

d) Power - Banked Kw. 1763120 26.18 4942175 56.35(759357) (13.27) (1763120) (26.18)

e) Organic Manure M.T. 11373 73.67 14559 48.47(5477) (56.32) (11373) (73.67)

f) Bagasse Qtls. 1863488 509.76 1153646 342.21(1672385) (622.68) (1863488) (509.76)

Total 36232.00 49407.05 (13308.90) (36232.00)

Unit Quantity Amount (Rs. lacs)

a) Sugar Cane Qtls. 80579371 97459.68

(92310134) (125543.20)

b) Molasses Qtls. * 4014546 1899.11

(2868377) (1422.40)

c) Pressmud M.T. # 111414 31.10

(88724) (30.69)

d) Bagasse Qtls. @ 18013723 1967.32

(16738148) (1070.53)

e) Others 59.06

(83.35)

Total 101416.27

(128150.17)

* Includes 3787241 Qtls. (2780970 Qtls.) consumed out of inter unit transfers taken at nil value.

# Consumed out of inter unit transfers taken at nil value.

@ Includes 17334577 Qtls. (16738148 Qtls.) consumed out of inter unit transfers taken at nil value.

B. Raw Materials Consumed

Percentage Amount (Rs. lacs)

Imported - -

(-) (-)

Indigenous 100.00 101416.27

(100.00) (128150.17)

100.00 101416.27

(100.00) (128150.17)

C. Consumption of Raw Materials




Note : Figures in brackets pertain to previous year.

Percentage Amount (Rs. lacs)

Imported 0.01 0.63

(0.03) (2.14)

Indigenous 99.99 6549.71

(99.97) (7375.41)

100.00 6550.34

(100.00) (7377.55)

D. Consumption of Stores & Spare Parts

2007-08 2006-07

i) Number of non-resident shareholders - 1205

ii) Number of Ordinary shares held by them - 54295381

iii) Gross amount of Dividend (Rs. in Lacs) - 814.43

28. Dividend remitted in Foreign Currency :

The Company has not remitted any amount in foreign currency on account of dividend. The particulars of dividend payable to non-

resident shareholders are as under :

Amount (Rs. lacs)

On Professional & Consultancy Expenses 4.20

(16.58)

On Travelling 34.56

(26.50)

On Interest 3441.25

(3516.04)

On Others 12.35

( - )

E. Expenditure in Foreign Currency

Amount (Rs. lacs)

FOB Value of Exports

Direct 281.98

( -)

Through Export House 1251.50

( -)

F. Earnings in Foreign Exchange

Amount (Rs. lacs)

Capital Goods 738.17

(1054.34)

G. C.I.F. Value of Imports




(Rs. in Thousands)

a) Registration details :

Company Identification No. L15421WB1975PLC030118State Code 21Balance Sheet Date 30th September, 2008

b) Capital raised during the year

Public Issue NilRights Issue NilBonus Issue NilPrivate Placement 769691.09

c) Position of mobilisation and deployment of funds

Total Liabilities 26169020.79Total Assets 26169020.79SOURCES OF FUNDS

Paid up Capital 255536.31Reserve & Surplus 9895356.49Deposit against convertible Warrants 92000.00Secured Loans 12506760.17Unsecured Loans 1000000.00Deferred Tax Liability 2419367.82

26169020.79

APPLICATION OF FUNDS

Net Fixed Assets 18830661.14Investments 54900.09Deferred Tax Assets 993433.33Net Current Assets 6272215.61Miscellaneous Expenditure 17810.62

26169020.79

d) Performance of the Company

Turnover (including Other Income) 14776689.44Total Expenditure 13550305.98Profit / (Loss) before Taxation 1226383.46Profit / (Loss) after Tax 970293.62Earnings per Share (Rs.) 3.83Dividend Rate (%) 50%

e) Generic names of principal products of the Company

Product Description Item Code No. (ITC Code)

Sugar 170111.09Industrial Alcohol 220720.00Cogeneration N.A.

29. Balance Sheet Abstract & Company's General Business Profile

30. Previous year's figures have been re-grouped / re-arranged wherever found necessary to make them comparable with those of thecurrent year.

Signatories to all foregoing Schedules “1” to “22” forming part of the accounts




Auditor’s Report on Consolidated Financial statements


1. We have examined the attached Consolidated Balance Sheet

of BALRAMPUR CHINI MILLS LIMITED, its Subsidiaries and

Associates as at 30th September, 2008, the Consolidated Profit

& Loss account and the Consolidated Cash Flow Statement for

the year ended on that date annexed thereto.

2. These financial statements are the responsibility of the

management of the Company and have been prepared by the

management on the basis of separate financial statements and

other financial information regarding components thereof.

Our responsibility is to express an opinion on these financial

statements based on our audit.

3. We conducted our audit in accordance with auditing

standards generally accepted in India. Those standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements

are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and

significant estimates made by management, as well as

evaluating the overall financial statement presentation. We

believe that our audit provides a reasonable basis for our

opinion.

4. The financial statements for the year ended 30th September,

2008 of Indo Gulf Industries Limited, the Subsidiary Company

whose total assets of Rs.14874.27 lacs and total revenue of

Rs.3012.45 lacs and the related Cash Flows have been

proportionately consolidated, have been audited by another

auditor whose report has been furnished to us and our

opinion, so far it relates to the amount included in respect of

the Subsidiary, is based solely on the report of the other

auditor.

5. The financial statements for the year ended 30th September,

2008 of Balrampur Overseas Private Limited, the wholly

owned Subsidiary Company whose total assets of Rs. 93.13

lacs and total revenue of Rs. 0.92 lacs and the related Cash

Flows have been fully consolidated, have been audited by

another auditor whose report has been furnished to us and

our opinion, so far it relates to the amount included in respect

of the Subsidiary, is based solely on the report of the other

auditor.

6. The financial statements of Avantika Ganna Private Limited

and Asia Sugar Industries Private Limited (Associate

Companies) in which Company’s Share of Profit / (Loss) of

Rs. 2.66 Lacs and Rs. (1.40) Lacs respectively have been

consolidated, have been audited by other auditors for the

year ended 31st March, 2008 whose reports have been

furnished to us and our opinion, so far it relates to the

amount included in respect of the Associate Companies, is

based solely on the reports of the other auditors.

7. We report that the Consolidated Financial Statements have

been prepared by the management of Balrampur Chini Mills

Limited in accordance with Accounting Standard -21,

“Consolidated Financial Statements” and Accounting

Standard -23, “Accounting for investment in Associates in

Consolidated Financial Statements” notified under Companies

(Accounting Standard) Rules, 2006 on the basis of separate

audited financial statements of Balrampur Chini Mills Limited,

its Subsidiaries and Associates.

8. Attention is drawn to the following in respect of one of the

Subsidiary Company namely Indo Gulf Industries Limited:

i) Note No. 24 (ii) (c) in Schedule ‘22’ of the Consolidated

Financial Statements regarding erosion of net worth of the

Company. However, in view of the factors mentioned

there at, the accounts have been prepared on the

presumption of going concern.

ii) Note No. 24 (v) of Schedule ‘22’ regarding non-provision

of interest and penalty on statutory liabilities - quantum

unascertained.

iii) Note No. 24 (viii) of Schedule ‘22’ regarding non-

provision of interest on Deferred Sales Tax

Liability – quantum unascertained.

9. Subject to the above and on the basis of the information and

explanations given to us and based on our audit and on

consideration of the separate audit reports on the individual

financial statements of the Company, its Subsidiaries and

Associates read together with Significant Accounting Policies

and notes thereon, we are of the opinion that the attached

Consolidated Financial Statements give a true and fair view in

conformity with the accounting principles generally accepted

in India:

i) in the case of the Consolidated Balance Sheet, of the

consolidated state of affairs of Balrampur Chini Mills

Limited, its Subsidiaries and Associates as at 30th

September, 2008;

ii) in the case of the Consolidated Profit & Loss Account, of

the consolidated result of operation of Balrampur Chini

Mills Limited, its Subsidiaries and Associates for the year

ended on that date; and

iii) in the case of the Consolidated Cash Flow Statement, of

the Consolidated Cash Flows of Balrampur Chini Mills

Limited, its Subsidiaries and Associates for the year ended

on that date.For G. P. Agrawal & Co.Chartered Accountants

7A, Kiran Shankar Ray Road, (CA. Ajay AgrawalKolkata – 700 001. Membership No. 17643)25th November, 2008. Partner

To the Board of Directors of

BALRAMPUR CHINI MILLS LIMITED

Consolidated Balance Sheet As at 30th September, 2008


(Rupees in Lacs)



I. SOURCES OF FUNDS


a) Share Capital 1 2555.36 2481.55

b) Reserves & Surplus 2 96594.21 99149.57 83428.71 85910.26

2. Deposit against Convertible Warrants 920.00 –


3. Minority Interest – –

4. Loan Funds

a) Secured Loans 3 127728.77 121064.12

b) Unsecured Loans 4 10308.38 138037.15 7844.55 128908.67

5. Deferred Tax Liability 24193.68 17145.33

(Refer Note No. 22 (a) of Schedule - 22)

262300.40 231964.26


1. Fixed Assets

a) Gross Block 248805.76 208203.64

b) Less: Depreciation & Amortisation 55157.01 42787.33

c) Net Block 193648.75 165416.31

d) Capital Work-in-Progress 817.84 33371.52

Net Fixed Assets 5 194466.59 198787.83

2. Investments 6 160.15 63.60

3. Deferred Tax Assets 9934.33 4820.88


4. i) Current Assets, Loans & Advances

a) Inventories 7 58412.43 44099.36

b) Sundry Debtors 8 5167.27 4606.94

c) Cash and Bank Balances 9 3781.96 1805.66

d) Interest Accrued on Investments 1.62 3.26

e) Loans and Advances 10 16461.86 17532.42

83825.14 68047.64

ii) Less: Current Liabilities & Provisions

a) Current Liabilities 11 21157.79 35904.88

b) Provisions 12 5106.12 4172.00

26263.91 40076.88

Net Current Assets (i - ii) 57561.23 27970.76

5. Miscellaneous Expenditure & Losses 13 178.10 321.19

[To the extent not written off or adjusted]

262300.40 231964.26

Basis of Consolidation and Significant Accounting Policies 21

Consolidated Notes on Accounts 22

Schedules 1 to 13, 21 & 22 referred to above form an integral part of the Consolidated Balance Sheet.

This is the Consolidated Balance Sheet referred to in our report of even date.




Consolidated Profit and Loss Account For the year ended 30th September, 2008


This is the Consolidated Profit and Loss Account referred to in our report of even date.




(Rupees in Lacs)

Schedule Year ended 30th Year ended 30thSeptember, 2008 September, 2007

I INCOMEGross TurnoverSales 158155.01 147987.26Less: Excise Duty & Cess 9060.55 8506.48Net Turnover 149094.46 139480.78Other Income 14 1518.64 1151.97

150613.10 140632.75II EXPENDITURE

Decrease/(Increase) in Stock 15 (14203.27) (21839.82)Cost of Raw Materials Consumed 104825.58 128938.07Loss from Farm Account 16 3.74 3.11Salaries, Wages & other Employees' Benefits 17 8641.57 7376.13Other Manufacturing & Administrative Expenses 18 17242.53 15904.91Selling Expenses 19 1158.90 867.33Interest & Other Financial Charges (Net) 20 10008.09 6004.30Depreciation & Amortisation 12525.51 8765.57Adjustment relating to earlier years (Net) 15.43 317.09(Refer Note No. 14 of Schedule - 22)

140218.08 146336.69III Profit/(Loss) before Tax 10395.02 (5703.94)

(Add)/Less: Provision for TaxCurrent Tax 562.00 (186.00)(Including Wealth Tax Rs. 30.00 Lacs, Previous year Rs. 17.53 Lacs)Fringe Benefit Tax 65.65 (65.63)Deferred Tax 1934.90 2562.55 (397.68) (649.31)

IV Profit/(Loss) after Tax but before Adjustment 7832.47 (6353.25)of Minority Interest & Share of Associates(Add)/Less: Loss for the year before the date of becoming Subsidiary - 1624.31Less: Profit/(Loss) attributable to Minority Shareholders - - Add: Share of Profit in Associates 1.26 0.89

V Profit/ (Loss) after Adjustment of Minority Interest & Share of Associates 7833.73 (4728.05)Balance brought forward (4152.06) 575.99

V Profit/ (Loss) Available for Appropriation 3681.67 (4152.06)VI APPROPRIATIONS :

Proposed Dividend on Equity Shares 1277.68 - Tax on Dividend 217.14 - General Reserve 3000.00 - Balance carried to Balance Sheet (813.15) (4152.06)

3681.67 (4152.06)Earnings per Share of Re. 1/- each(Refer Note No. 21 of schedule - 22)- Basic (Rs.) 3.09 (1.91)- Diluted (Rs.) 3.09 (1.90)Basis of Consolidation and Significant Accounting Policies 21Consolidated Notes on Accounts 22

Schedules 14 to 22 form an integral part of the Consolidated Profit and Loss Account.

Consolidated Cash Flow Statement For the year ended 30th September, 2008


(Rupees in Lacs)

Year ended 30th

September, 2008

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before Tax, Adjustment of Minority Interest and Share of Associates 10395.02

Adjustments to reconcile Net Profit before tax

Adjustments of Minority Interest and Share of Associates to Cash Flow

provided by Operating Activities:

Depreciation & Amortisation 12525.51

Interest (Net) 10008.09

Provision for Doubtful Debts & Advances 310.30

Provision for Retirement Benefits of Employees 2.25

Other Liabilities 120.51

Dividend Received (154.20)

Unspent Liabilities and Balances written back (201.90)

Sundry Debit Balances written off 59.72

Profit on Sale of Fixed Assets (5.36)

Loss on Sale/discard of Fixed Assets 92.51

Loss on Sale of Current Investments (Other than Trade) 0.02

Unrealised Exchange Rate Fluctuation (Gain) (122.50)

Unrealised Exchange Rate Fluctuation (Loss) 504.00

Employee Stock Option Expense 168.77

Share Issue Expenses written off 143.09

Storage Fund for Molasses written back (64.11)

Transfer to Storage Fund for Molasses 30.35 23417.05

Operating Profit before Working Capital changes 33812.07

Adjustments to reconcile Operating Profit to Cash Flow

provided by Changes in Working Capital :

Trade and Other Receivables 140.22

Inventories (14313.07)

Trade Payables (14118.25) (28291.10)

Cash Generated from Operations 5520.97

Direct Taxes (paid) /Refund received (1282.15)

Cash Flow before Extraordinary Items 4238.82

Extraordinary Items -

Net Cash Generated / (Used) ~ Operating Activities 4238.82

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (Including Intangibles) (8432.76)

Sale of Fixed Assets 148.53

Purchase of Investments (56761.84)

Investment in Shares of an Associate (100.00)

Sale of Investments 56759.33

Fixed Deposit with Banks 29.31

Loan Given (2500.00)

Loan Received back 2500.00

Dividend Received 154.20

Interest Received 44.44

Net Cash Generated / (Used) ~ Investing Activities (8158.79)

Consolidated Cash Flow Statement (Contd...)


This is the Consolidated Cash Flow Statement referred to in our report of even date.




(Rupees in Lacs)

Year ended 30th

September, 2008

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Issuance of Equity Share Capital 6776.90

Deposit against Convertible Warrants 920.00

Proceeds from Long Term Borrowings 15577.40

Repayment of Long Term Borrowings (8739.35)

Proceeds from Other Borrowings 1908.93

Interest Paid (10511.37)

Net Cash Generated / (Used) ~ Financing Activities 5932.51

D. EXCHANGE DIFFERENCES ON TRANSLATION OF FOREIGN CURRENCY 16.14

Net Increase/(Decrease) in Cash & Cash Equivalents (A+B+C+D) 2028.68

Opening Cash and Cash equivalents 1518.50

Closing Cash and Cash equivalents 3547.18

Notes :

1) The above Cash Flow Statement has been prepared under the ''Indirect Method'' as set out in the Accounting Standard - 3 on Cash

Flow Statement notified under The Companies (Accounting Standard) Rules, 2006.

2) The Cash & Cash Equivalents do not include any amount which is not available to the Company for its use.

3) Purchase of Fixed Assets includes interest capitalised Rs. 382.63 lacs (previous year Rs. 688.00 lacs). This amount is excluded from

Interest paid.

4) Figures in bracket represent cash outflow from respective activities.

5) Cash Flow Statement for the previous year is not given as the same was the first year of consolidation.

6) Cash and Cash Equivalents at the end of the year consists of: (Rupees in Lacs)

Year ended 30th

September, 2008

a) Cash in hand 242.38

b) Cheques in hand 1780.24

c) Balance with Banks in Current Accounts 1524.10

d) Balance with Post office in Savings Bank Account 0.46

3547.18

Schedules forming part of the consolidated accounts


(Rupees in Lacs)

As at 1st As at 30th

October, 2007 Additions Deductions September, 2008

Capital Reserve 86.42 – – 86.42

Capital Reserve (Arising on Consolidation) 11.57 – – 11.57

Capital Redemption Reserve 2500.00 – – 2500.00

Revaluation Reserve 18.24 – – 18.24

Securities Premium 42050.56 6708.40 – 48758.96

General Reserve * 42797.96 3000.00 27.65 45770.31

Add/(Less): Debit Balance of Profit & Loss Account (4152.06) 4152.06 813.15 (813.15)

(As per Contra) 38645.90 7152.06 840.80 44957.16

Storage Fund for Molasses 83.30 30.35 64.11 49.54

Employees Stock Option Adjustment Account ** 32.72 184.67 21.21 196.18

Foreign Currency Translation Reserve on consolidation

of overseas Subsidiary – 16.14 – 16.14

83428.71 14091.62 926.12 96594.21

2 RESERVES AND SURPLUS

(Rupees in Lacs)



Authorised

40,00,00,000 Equity Shares of Re.1/- each 4000.00 4000.00

25,00,000 Preference Shares of Rs.100/- each 2500.00 2500.00

6500.00 6500.00

Issued, Subscribed and Paid up

25,55,36,310 (Previous Year 24,81,54,660) Equity Shares of Re. 1/- each fully paid up 2555.36 2481.55

2555.36 2481.55

1 SHARE CAPITAL

Notes :

1) 15,55,39,650 Equity Shares have been issued and allotted as fully paid up Bonus Shares by capitalisation of Security Premium, Capital

Redemption Reserve and General Reserve.

2) 2,37,55,600 Equity Shares have been issued to the members of erstwhile Babhnan Sugar Mills Limited pursuant to Scheme of

Amalgamation.

3) 21,15,400 Equity Shares have been issued to the members of erstwhile Tulsipur Sugar Company Limited pursuant to Scheme of

Amalgamation.

4) Out of 2,27,66,780 Equity Shares of Re. 1/- each offered to the shareholders on right basis, issue of 17,270 (Previous Year 17,270)

Equity Shares have been kept in abeyance as per the direction of court.

5) 1,63,52,000 fully paid up Equity Shares of Re.1/- each were allotted in January, 2006 at a price of Rs. 135/- per Share, ranking pari

passu with the existing Equity Shares, each of which is represented by one Global Depository Receipt (GDR) issued @ US $ 3.0577

each for an aggregate amount of US $ 50 million.

* Deductions in General Reserve represents adjustment as per transitional provisions of AS-15.

** Deductions in Employees Stock Options Adjustment Account represents forfeited & exercised Options.



(Rupees in Lacs)



A. TERM LOANS

I. RUPEE LOANS


b) Government of India, Sugar Development Fund (SDF) 7638.52 5454.01

c) Government of India (GOI) (Interest Free) 120.38 160.50

d) State Bank of India (SBI) (Interest Free) 11873.00 –

e) Punjab National Bank (PNB) (Interest Free) 510.00 –

II. EXTERNAL COMMERCIAL BORROWINGS (ECB)

a) International Finance Corporation, Washington (IFC) 18499.70 19395.50

b) ABN Amro Bank , NV (ABN) 9083.44 10110.73

c) State Bank of India (SBI) 19560.87 21993.12

d) DBS Bank Ltd. (DBS) 6651.00 6651.00

e) Standard Chartered Bank (SCB) 4372.00 4372.00

f) Cooperatieve Centrale Raiffeisen- Boerenleenbank, B.A. (CCRB) 8928.16 8928.16

g) BNP Paribas (BNP) 4655.00 6982.50

h) UCO Bank (UCO) 4120.50 4120.50

i) CITI Bank (CITI) 4420.00 4420.00

TOTAL (A) 102307.57 95088.02

B. CASH CREDIT ACCOUNT


b) Punjab National Bank (PNB) 1336.34 –

TOTAL (B) 25421.20 25976.10

TOTAL (A+B) 127728.77 121064.12

3 SECURED LOANS

Notes :1) Rupee Term loan from SBI is secured by way of first pari passu equitable mortgage on immovable properties and hypothecation

of movable properties (excluding current assets and book debts), both present and future, pertaining to Company's sugar and co-generation units at Akbarpur and also guaranteed by the Managing Director of the Company (due within a year Rs. 1250.00 lacs,previous year Rs. 625.00 lacs).

2) Rupee Term Loans from SDF are secured by an exclusive second charge by way of equitable mortgage on immovable propertiesand hypothecation of movable properties (excluding current assets and book debts), both present and future, pertaining toCompany's sugar and cogeneration units at Balrampur, sugar unit at Babhnan, sugar and cogeneration units at Haidergarh, sugarand cogeneration units at Akbarpur, sugar and cogeneration units at Mankapur and sugar unit at Tulsipur (due within a yearRs.852.89 lacs, previous year Rs 1009.89 lacs).

3) Interest Free Rupee Term Loan from GOI is secured by way of equitable mortgage on immovable properties and hypothecation ofmovable properties, both present and future, pertaining to Company’s sugar unit at Babhnan, subject to charge on current assets(including book debts) created in favour of SBI to secure the working capital limits and also guaranteed by some of the Directorsand an erstwhile Director of the Company (due within a year Rs. 40.13 lacs, previous year Rs. 40.12 lacs).

4) a) Interest Free Rupee Term Loan from SBI amounting to Rs. 11643.00 lacs is secured by way of hypothecation of movableproperties (excluding current assets and book debts), both present and future, pertaining to Company’s sugar unit at Balrampur,ranking pari passu with PNB and by way of residual charge on movable properties (excludng current assets and book debts)and further secured/ to be secured by way of residual charge on immovable properties, pertaining to other unit of the Companyand also guaranteed by the Managing Director of the Company (due within a year Nil, previous year Nil).

b) Interest Free Rupee Term Loan from SBI amounting to Rs. 230.00 lacs is secured by way of hypothecation of movable properties(excluding current assets and book debts), both present and future, pertaining to Company’s sugar unit at Maizapur and is tobe secured by way of residual charge on immovable properties of the said unit (due within a year Nil, previous year Nil).

5) Interest Free Rupee Term Loan from PNB is to be secured by way of residual charge on movable properties (excluding currentassets and book debts), pertaining to Company’s sugar unit at Balrampur, both present and future, ranking pari passu with SBI,(due within a year Nil, previous year Nil).

6) a) ECB from IFC amounting to Rs. 2099.70 lacs is secured by way of first equitable mortgage on immovable properties andhypothecation of movable properties and residual charge on current assets, both present and future, pertaining to Company's



sugar and cogeneration units at Haidergarh, first equitable mortgage on immovable properties and hypothecation of movableproperties and residual charge on current assets, both present and future, pertaining to Company's distillery and organic manureunits at Babhnan and further guaranteed by some of the Directors and an erstwhile Director of the Company (due within a yearRs. 1399.80 lacs, previous year Rs.1399.80 lacs).

b) ECB from IFC amounting to Rs. 16400.00 lacs is secured by way of first equitable mortgage on immovable properties andhypothecation of movable properties and residual charge on current assets, both present and future, pertaining to Company'ssugar and cogeneration units at Haidergarh and Rauzagaon and further guaranteed by some of the Directors and an erstwhileDirector of the Company (due within a year Rs.1261.54 lacs, previous year Nil).

7) ECBs from ABN are secured by way of first equitable mortgage on immovable properties and hypothecation of movable properties(excluding current assets and book debts), both present and future, pertaining to Company's sugar and cogeneration units atMankapur (due within a year Rs. 1027.29 lacs, previous year Rs. 1027.29 lacs).

8) a) ECB from SBI amounting to Rs. 5774.38 lacs is secured by way of first pari passu equitable mortgage on immovable propertiesand hypothecation of movable properties, (excluding current assets and book debts), both present and future, pertaining toCompany's sugar and cogeneration units at Akbarpur (due within a year Rs. 2309.76 lacs, previous year Rs. 2309.75 lacs).

b) ECB from SBI amounting to Rs. 13975.50 lacs is secured by way of first pari passu equitable mortgage on immovable propertiesand hypothecation of movable properties (excluding current assets and book debts), both present and future, pertaining toCompany's sugar and cogeneration units at Kumbhi and Gularia (due within a year Nil, previous year Nil).

9) ECB from DBS is secured by way of first equitable mortgage on immovable properties and hypothecation of movable properties(excluding current assets and book debts), both present and future, pertaining to Company's sugar unit at Balrampur (due withina year Nil, previous year Nil).

10) ECB from SCB is secured by way of hypothecation of movable properties (excluding current assets and book debts), both presentand future, pertaining to Company's cogeneration unit at Balrampur (due within a year Nil, previous year Nil).

11) ECB from CCRB, BNP and UCO are secured by way of first pari passu equitable mortgage on immovable properties andhypothecation of movable properties (excluding current assets and book debts), both present and future, pertaining to Company'ssugar and cogeneration units at Kumbhi and Gularia (due within a year Rs. 2327.50 lacs, previous year Rs. 2327.50 lacs).

12) ECB from CITI is secured by way of first pari passu hypothecation of movable properties (excluding current assets and book debts),both present and future, pertaining to Company's sugar and cogeneration units at Kumbhi and Gularia (due within a year Nil,previous year Nil).

13) a) Cash credit with SBI amounting to Rs. 21653.69 lacs is secured by way of hypothecation of entire stock of sugar, sugar inprocess, mill stores, bagasse, molasses and other current assets including book debts, both present and future, of Balrampursugar unit of the Company (excluding current assets of cogeneration & distillery units) on pari passu basis with PNB andhypothecation of entire stock of sugar, sugar in process, mill stores, bagasse, molasses and other current assets including bookdebts, both present and future, of the sugar units of the Company (excluding current assets of cogeneration & distillery units)and further secured / to be secured by 3rd charge on fixed assets of the sugar units of the Company (excluding cogenerationand distilerry units) and also guaranteed by the Managing Director of the Company.

b) cash credit with SBI amounting to Rs. 2431.16 lacs is secured by way of hypothecation of entire stock of sugar, sugar in process,mill stores, bagasse, molasses and other current assets including book debts, both present and future, pertaining to Company’ssugar unit at Maizapur and is to be secured by first charge on immovable properties of the said sugar unit.

14) Cash Credit with PNB is secured by way of hypothecation of entire stock of sugar, sugar in process, mill stores, bagasse, molassesand other current assets including book debts , both present and future, pertaining to Company's sugar unit at Balrampur (excludingcurrent assets of cogeneration & distillery units) ranking pari passu with SBI.

15) Aggregate amount of Term Loans payable within a year Rs. 10468.91 lacs (Previous year Rs. 8739.35 lacs).

(Rupees in Lacs)



From Directors – 36.17

From a Bank 10000.00 4000.00

From Others – 3500.00

Deferred Sales Tax 308.38 308.38

10308.38 7844.55

4 UNSECURED LOANS

Note :

Aggregate amount of Loans payable within a year Rs.10,000.00 Lacs (Previous year Rs. 7536.17 Lacs).

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(Rupees in Lacs)

Face Value Number of As at 30th Number of As at 30th

Per Share/Unit Shares/Units September, 2008 Shares/Units September, 2007

Long Term InvestmentsIn Government Securities :(Deposited with Government authorities)National Plan Certificates 0.04 0.04Kishan Vikash Patra – 0.01Post Office National Saving Certificates 5.13 2.63In Shares of Joint Stock Companies :Trade Investments :Avantika Ganna Pvt. Ltd. Rs.10 1,96,600 60.54 1,96,600 57.88(Including Capital Reserve of Rs. 11.57 Lacs arising onacquisition of the Associate)Asia Sugar Industries Pvt Ltd. (Acquired during the year) Rs.10 10,00,000 91.41 – –(Net of Rs. 7.19 Lacs Goodwill on acquisition of Associate)Unquoted, Fully Paid Up Equity Shares :Balrampur Sugar Company Consumers Co-operative Society Ltd. Rs.100 35 0.03 35 0.04Co-operative Development Union Ltd. Rs.10 110 0.01 110 0.01Co-operative Stores Ltd. Rs.10 1 – * 1 – *Quoted :Fully Paid Up :American Paints (India) Ltd. Rs.10 200,000 20.00@ 200,000 20.00 @Classic Global Security Ltd. Rs.10 8,400 1.64@ 8,400 1.64 @Damania Capital Markets Ltd. Rs.10 60,100 18.08@ 60,100 18.08 @Easter India Ltd. Rs.10 1,000 0.37@ 1,000 0.37 @Eastern Sugar Mills Ltd. Rs.10 23,000 2.30@ 23,000 2.30 @Inland Printers Ltd. Rs.10 52,000 31.24@ 52,000 31.24 @KM Capital Ltd. Rs.10 16,500 2.14@ 16,500 2.14 @Ram Gopal Poly Ltd. Rs.10 135,320 22.32@ 135,320 22.32 @VLS Finance Ltd. Rs.10 10,300 38.42 10,300 38.42Other than Trade :Unquoted, Fully Paid Up Equity Shares :Fortuna Services Ltd. Re. 1 48 – * 48 – *

293.67 197.12Less:Provision for Diminution in value of Investments 133.52 133.52

160.15 63.60Aggregate Book Value of Quoted Investments 136.51 136.51Aggregate Book Value of Unquoted Investments 157.16 60.61Aggregate Market Value of Quoted Investments, wherever available 1.07 2.99*Book Value Re.1/-, hence shown as Nil.@Market Value not available.

The Following units were purchased and sold during the year :1) 25,037,701.139 Units of ABN Amro Cash Fund Institutional Plus2) 25,168,621.302 Units of ABN Amro Cash Fund Money Plus3) 295,216.245 Units of DSP Merrill Lynch Liquidity Fund - Ins.4) 21,972,285.738 Units of HDFC CMF - Savings Plus Plan Wholesale5) 15,985,706.387 Units of HDFC Cash Management Fund - Savings Plan6) 50,029,578.716 Units of HSBC Cash Fund Institutional Plus7) 6,647,174.614 Units of ICICI Prudential Flexible Income Plan8) 204,416,962.945 Units of ICICI Prudential Ins. Liquid Plan9) 19,541,258.900 Units of Reliance Floating Rate Fund10) 43,336,278.444 Units of Reliance Liquidity Fund11) 83,813,959.937 Units of SBI Premier Liquid Fund - Super Institutional12) 360,491.510 Units of TATA Liquid Super High Inv Fund.

6 INVESTMENTS



(Rupees in Lacs)



Stores & Spare Parts 6001.83 6819.31Loose Tools & Equipment 388.88 381.90Scrap 28.51 32.08Raw Materials 5.34 10.64Finished Goods

i) Sugar 49631.03 34925.85ii) Industrial Alcohol 806.94 307.35iii) Organic Manure 48.47 73.67iv) Banked Power 56.35 50542.79 26.18 35333.05Work- in- Process

i) Sugar 97.02 84.25ii) Molasses 2.69 1.89iii) Organic Manure 13.60 113.31 13.31 99.45Molasses 967.91 893.36Bagasse 345.26 513.14Press mud 4.28 11.17Standing Crop 14.32 5.26

58412.43 44099.36

7 INVENTORIES (As taken, valued & certified by the Management)

(Rupees in Lacs)



Debts outstanding for a period exceeding six months



Other debts - Considered Good 4886.12 4220.54

5250.57 4606.94

Less : Provision for Doubtful Debts 83.30 –

5167.27 4606.94

8 SUNDRY DEBTORS (Unsecured)

Note :

Stock in transit included in Stock of Stores & Spare Parts Rs. 217.85 Lacs (Previous year Rs. 133.45 Lacs).

Note :

Sundry debtors include Rs. 47.44 Lacs (Previous year Rs. 45.59 Lacs) under litigation.(Rupees in Lacs)



Cash and cheques in hand (As certified)

i) Cash in hand 242.38 157.44ii) Cheques in hand 1780.24 2022.62 403.02 560.46With Scheduled Banks

i) In Current Accounts 1340.04 957.58ii) In Fixed Deposit Accounts 139.02 168.33iii) In Unclaimed Dividend Accounts 95.76 1574.82 118.83 1244.74With Non-Scheduled Banks

In Current Accounts 184.06 – (Refer Note No. 10 of Schedule - 22)With Post Office

In Saving Bank Accounts 0.46 0.463781.96 1805.66

9 CASH AND BANK BALANCES



(Rupees in Lacs)



ADVANCES (Unsecured)

Advances recoverable in cash or in kind or for

value to be received or pending adjustment


Considered Doubtful 592.59 10298.19 365.60 5451.28

Advance against Capital Assets 115.57 3874.97

Advance Payment of Tax 7425.77 6105.40

Less: Provision for Tax 7425.77 – 6105.40 –

Advance against Excise Duty, Cane Purchase Tax etc.



Security Deposit



17209.69 18053.26

Less: Provision for Doubtful Advances etc. 747.83 520.84

16461.86 17532.42

10 LOAN AND ADVANCES (Considered good except stated otherwise)

(Rupees in Lacs)



Sundry Creditors

Due to Micro, Small and Medium Enterprises 42.56 –


Due to others 18733.79 18776.35 33090.80 33090.80

Interest accrued but not due 2242.53 2652.10

Excess Price of Levy Sugar 43.15 43.15


Investor Education & Protection Fund :

Unclaimed Dividend 95.76 118.83

21157.79 35904.88

11 CURRENT LIABILITIES

(Rupees in Lacs)



Provision for Tax 10246.85 9631.89

Less: Advance Payment of Tax 7425.77 2821.08 6105.40 3526.49

Proposed Dividend 1277.68 –

Provision for Tax on Dividend 217.14 –


Provision for Liabilities 298.98 304.68


Other provisions 120.51 –

5106.12 4172.00

12 PROVISIONS

Note :

Loans & Advances include Rs. 23.07 Lacs (Previous year Rs. 13.36 Lacs) under litigation.



(Rupees in Lacs)



Dividend on Current Investments (Other than trade) 154.20 1.44

Profit from Sugar Trading – 4.69

Insurance Claims 269.63 233.95

Unspent Liabilities and Balances written back 201.90 100.33

Storage Fund For Molasses written back 64.11 –

Profit on Sale of Fixed Assets 5.36 20.67

Miscellaneous Income* 302.57 261.04

Export Subsidy 115.70 –

Exchange Rate Fluctuation 182.24 464.99

Insurance & Storage Charges on Buffer Stock 222.93 64.86

1518.64 1151.97

14 OTHER INCOME

Note:* Includes Rent received (Gross) Rs. 40.51 Lacs (Previous year Rs. 100.03 Lacs), TDS Rs. 1.23 Lac (Previous year Rs. 1.28 Lacs) and

TDS on Miscellaneous Income (other than rent) Rs.2.00 Lacs (Previous year Rs. Nil).

(Rupees in Lacs)



Opening Stock


Molasses 893.36 455.22

Bagasse 513.14 622.68


Work-in-Process 99.45 36850.17 90.00 13402.35

Closing Stock


Molasses 967.91 893.36

Bagasse 345.26 513.14


Work-in-Process 113.31 51973.55 99.45 36850.17

(15123.38) (23447.82)

Less/(Add): Excise Duty & Cess on Stock (920.11) (1608.00)


(14203.27) (21839.82)

15 DECREASE / (INCREASE) IN STOCK

(Rupees in Lacs)




Less : Written off during the year 143.09 178.10 143.09 321.19

Debit Balance of Profit and Loss Account 813.15 4152.06

(As per annexed Acount)

Less: General Reserve (As per Contra) 813.15 – 4152.06 –

178.10 321.19

13 MISCELLANEOUS EXPENDITURE & LOSSES (To the extent not written off or adjusted)



(Rupees in Lacs)



Sales 7.49 3.94Closing Stock of Standing Crop 14.32 5.26Rent 0.10 – Net Loss transferred to Profit & Loss Account 3.74 3.11

25.65 12.31Opening stock of Standing Crop 5.26 4.58Cane Seed Purchased 3.46 0.67Fertiliser & Manures 4.32 1.18Salaries & Wages 5.59 1.52Power & Fuel 0.66 0.25Rent 1.00 1.00Irrigation & Cultivation Expenses 3.31 1.84Repairs & Maintenance - Others 2.00 0.53Miscellaneous Expenses 0.05 0.74

25.65 12.31

16 FARM ACCOUNT

(Rupees in Lacs)



Salaries, Wages, Bonus, etc. 7542.48 6302.12Contribution to Provident Fund, Gratuity & Other Funds (Including provisions) 816.00 758.64Workmen & Staff Welfare Expenses 283.09 315.37

8641.57 7376.13

17 SALARIES, WAGES & OTHER EMPLOYEES’ BENEFITS

(Rupees in Lacs)



Stores & Spare Parts consumed 6834.82 7438.41Power & Fuel 559.53 401.85Filling & Packing Expenses 198.23 219.51Rent 45.84 61.87Rates & Taxes 142.88 152.93Repairs & MaintenancePlant & Machinery 3556.03 2903.95Buildings 216.58 315.17Others 267.36 4039.97 225.89 3445.01Payment to Auditors 33.17 25.50(Refer Note No. 12 of Schedule -22)Miscellaneous Expenses 2995.33 2837.74Insurance 488.31 584.53Charity & Donation 111.74 90.49Directors' fees 6.50 6.40Managerial Remuneration 532.68 359.54(Refer Note No. 13 of Schedule -22)Loss on sale of Current Investment (Other than Trade) 0.02 – Loss on Sale/Discard of Fixed Assets 92.51 72.28Exchange Rate Fluctuation 497.03 – Provision for Contingencies – 7.60(Refer Note No. 23 of Schedule -22)Sundry Debit Balances written off 59.72 4.97Bad Debts – 30.73Provision for doubtful debts / advances 430.81 –Share Issue Expenses written off 143.09 143.09Transfer to Storage Fund for Molasses 30.35 22.46

17242.53 15904.91

18 OTHER MANUFACTURING & ADMINISTRATIVE EXPENSES



(Rupees in Lacs)



Brokerage 345.24 379.07

Despatching & Forwarding Expenses 450.04 275.36

Cash Discount 217.44 181.19

Others 146.18 31.71

1158.90 867.33

19 SELLING EXPENSES

I. Basis of Consolidation :

The Consolidated Financial Statements relate to Balrampur Chini Mills Limited ("Company"), its Subsidiaries and Associates. The

Company and its Subsidiaries constitute the Group.

a) Basis of Accounting:

i) The financial statements of the Subsidiary Companies used in the consolidation is drawn upto the same reporting date as

of the Company i.e. 30th September, 2008.

ii) The financial statement of the Group have been prepared in accordance with the Accounting Standards issued by the

Institute of Chartered Accountants of India, and other generally accepted accounting principles.

b) Principles of Consolidation :

The Consolidated Financial Statements have been prepared on the following basis:

i) The financial statements of the Company and its Subsidiaries have been combined on a line-by-line basis by adding together

like items of assets, liabilities, income and expenses. The intra-group balances and intra-group transactions and unrealised

profits or losses have been fully eliminated.

ii) Non-integral Foreign Operations of Foreign Subsidiary :

Revenue items are consolidated at the average rate prevailing during the year. All assets and liabilities are converted at the

rate prevailing at the end of the year. Any exchange difference arising on consolidation is recognised in the Foreign Currency

Translation Reserve.

iii) The Consolidated Financial Statements include the share of profit/loss of the Associate Companies which has been

accounted as per the "Equity method"; and accodingly the share of profit/loss of the Associate Companies have been added

to/deducted from the cost of investments.

An Associate is an enterprise in which the investor has significant influence and which is neither a Subsidiary nor a Joint

Venture of the investor.

iv) The excess of cost to the Company of its investments in the Subsidiaries and Associates over its share of equity of the

21 BASIS OF CONSOLIDATION AND SIGNIFICANT ACCOUNTING POLICIES

(Rupees in Lacs)



On Fixed Loans 7308.41 2835.62


10101.80 6440.57

Less:

Interest Received (Gross) *

On Long Term Investments (Other than trade) 0.11 0.14

On Loan to Others 23.40 –

On Income Tax Refund 50.91 424.83

On Term Deposits with Banks 14.65 9.18

Others (NSC, Deposits etc.) 4.64 93.71 2.12 436.27

10008.09 6004.30

20 INTEREST & OTHER FINANCIAL CHARGES

* Tax deducted at Source Rs. 2.18 Lacs (Previous year Rs. 14.84 Lacs).



Subsidiaries and Associates, at the date on which the investment in the Subsidiaries and Investments are made, is recognised

as "Goodwill" being an asset in the Consolidated Financial Statements. The Goodwill so arising is amortised in 5 years.

v ) The minority interest in the net assets of the Subsidiary (other than 100% wholly owned Subsidiary) on the date of Balance

Sheet is nil as the net worth of the Subsidiary has been fully eroded. Accordingly, the minority share in the loss up to the

date in which investment is made in the Subsidiary has been adjusted with the share of majority and shown as Goodwill.

c) Companies considered in the Consolidated Financial Statements are :

II. Significant Accounting Policies :

The accounts are prepared under the historical cost convention and are in accordance with the generally accepted accountingprinciples in India and provisions of the Companies Act, 1956. The significant accounting policies followed by the Company andits Subsidiaries are appended to the Financial Statement of the respective company. A summary of the important accounting policiesis set out below:

1. Fixed Assets

a) Fixed Assets are stated at their original cost adjusted by revaluation of Land, Building, Plant & Machinery, Railway Sidingand Tube well of the Balrampur Unit as on 30th June, 1988 and Land, Building and Plant & Machinery of Tulsipur Unit ason 31st March, 1999. Cost includes acquisition price, attributable expenses and pre operational expenses including financecharges, wherever applicable.

b) Depreciation on Fixed Assets is provided on Straight Line method on revalued cost in accordance with the rates as specifiedin Schedule XIV to the Companies Act, 1956 (as amended) other than Power Transmission line and Mobile Phones. PowerTransmission Lines are amortised/depreciated over a period of five years and Mobile Phones over a period of three yearsexcept for a Subsidiary namely Indo Gulf Industries Limited where Mobile Phones are depreciated at the rate specified inSchedule XIV to the Companies Act, 1956.

c) Expenditure during construction period :Expenditure (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred onprojects under implementation are treated as Pre-operative expenses pending allocation to the assets and are shown under"Capital Work-in-Progress".

d) Lease hold land in the nature of perpetual lease are not depreciated. Other lease hold land are depreciated over the periodof the lease.

2. Investments

Long Term Investments are carried at cost. Provision for diminution is made to recognise a decline, other than temporary, inthe value of long term investments, script wise. Current Investments are valued at lower of cost or fair value, category wise.Cost of investments includes acquisition cost such as brokerage, stamp duty etc.

3. Inventories

a) Inventories (other than By-products, Scrap and Standing crop) are valued at lower of cost or net realisable value. The costof Inventories is computed on weighted average basis except for a Subsidiary namely Indo Gulf Industries Limited wherethe cost is calculated on FIFO basis. The cost of Finished goods and Work-in-Process include cost of conversion and othercost incurred in bringing the Inventories to their present location and condition.


4. Revenue Recognition


b) Gross turnover includes excise duty but excludes sales tax.


21 BASIS OF CONSOLIDATION AND SIGNIFICANT ACCOUNTING POLICIES (Contd...)

Name of the Company Country of Percentage of ownership interest as at Financial Year

Incorporation 30.09.2008 30.09.2007 ends on

Subsidiaries :

Indo Gulf Industries Ltd. India 53.96% 53.96% 30th September

Balrampur Overseas Pvt. Ltd. Hong Kong 100.00% - 30th September

Associates :

Avantika Ganna Pvt. Ltd. India 39.34% 39.34% 31st March

Asia Sugar Industries Pvt. Ltd. India 33.33% - 31st March




5. Expenses

All the expenses are accounted for on accrual basis.

6. Employee Benefits


b) Long-term employee benefits are recognised as an expense in the Profit & Loss Account for the year in which the employeehas rendered services. The expense is recognised at the present value of the amount payable as per acturial valuations.Acturial gains and losses in respect of such benefits are recognised in the Profit and Loss Account.

7. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost ofsuch assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for intended use. All otherborrowing costs are charged to revenue.

8. Intangible Assets

Computer Software (Acquired) and Share Issue Expenses are amortised equally over a period of five years except for aSubsidiary namely Indo Gulf Industires Limited where Share Issue Expenses are amortised over a period of ten years.

9. Insurance Claims


10. Government Grants & Subsidies

a) Government grants related to specific fixed assets are adjusted with the value of the fixed asset. If not relating to a specificfixed asset, it is credited to Capital Reserve.

b) Government grants related to revenue items are adjusted with the related expenditure. If not relating to a specificexpenditure, it is taken as income.

11. Foreign Currency Transactions

a) Transactions in Foreign currency are initially recorded at the exchange rate at which the transaction is carried out.

b) Monetary Assets and Liabilities related to foreign currency transactions remaining outstanding at the year end are translatedat the year end rate. The effect of Exchange Rate fluctuations in respect of the same is taken to Profit and Loss Account.

c) The premium or discount on forward exchange contracts is amortised over the period of the respective contract. Exchangedifference on such contracts at the year-end/ upon termination is taken to Profit and Loss Account.

d) Transactions covered by cross currency swap contracts are marked to market at the Balance Sheet date and the gain or lossis taken to Profit and Loss Account.

12. Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised,subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference betweentaxable income and accounting income that originate in one period and are capable of reversal in one or more subsequentperiods.

13. Impairment of Assets

Impairment losses, if any, are recognised in accordance with the accounting standard notified under The Companies (AccountingStandard) Rules, 2006.

14. Provisions, Contingent Liabilities and Contingent Assets

Provision is recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheetdate is considered probable.

Contingent Liabilities are shown by way of notes to the Accounts in respect of obligations where, based on the evidenceavailable, their existence at the Balance Sheet date is considered not probable.


15. Employee Stock Option Scheme

In respect of stock options granted pursuant to the Company's Employee Stock Option Scheme, the intrinsic value of the options(excess of market price of the share over the exercise price of the option) is treated as discount and accounted for as employeecompensation cost over the vesting period.

21 BASIS OF CONSOLIDATION AND SIGNIFICANT ACCOUNTING POLICIES (Contd...)



4. The levy sugar price for the seasons 2004-05 to 2007-08 is yet to be announced by the Government of India. Pending such

announcement, the sale of levy sugar has been accounted for at the 2003-04 season's levy price.

5. The Parent Company and one of it's Subsidiary viz. Indo Gulf Industries Limited has accounted for cane price for sugar season 2006-

07 at the State Advised Price of Rs.125/- per quintal. Subsequently, the Hon'ble Supreme Court of India vide its interim order dated

27th February, 2008, announced a price of Rs.118/- per quintal for general variety of sugarcane based on which all the cane dues

were paid by the company. Pending final decision of the Hon'ble Supreme Court, effect of the differential cane price has not been

given in the accounts.

6. There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45

days as at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises have been determined to the

extent such parties have been identified on the basis of information available with the Company.

7. There is a pari passu charge by way of hypothecation and equitable mortgage on the fixed assets of Kumbhi and Gularia units of

the Company for an amount of Euro 4.50 million equivalent to Rs.2456.61 lacs in favour of BNP Paribas, India for securing various

Swap Contracts entered into in connection with hedging in respect of various External Commercial Borrowings availed by the

Company.

8. a) During the year, the Company has issued and allotted 73,00,000 Equity Shares of Re. 1/- each on preferential basis to the

Promoter group at a premium of Rs.91/- per Share, aggregating to Rs. 6716.00 lacs.

b) The Company has also issued 1,00,00,000 Warrants convertible into equal number of Equity Shares of Re.1/- each at a premium

of Rs.91/- per Share to the Promoter group and received Rs.920.00 lacs being 10% of the value of the Warrants as per the terms

of issue.

c) The above proceeds of the preferential issue have been utilised for general corporate purpose.

9. The Employee Stock Option Scheme (Scheme 2005) of the Company was approved by the Board of Directors and the shareholders

in 2005. Under the said scheme, options granted have vesting period of one year and exercise period of maximum eight years.

22 NOTES ON ACCOUNTS

(Rupees in Lacs)



1. a) Estimated amount of Contracts remaining to be executed on Capital Account and

not provided for 258.39 8688.25


2. Contingent Liabilities not provided for in respect of:

a) Differential cane price for the sugar seasons 1978-79 and 1979-80 pending disposal of

the Writs filed by the Company in Hon'ble Calcutta High Court 32.93 32.93

b) Differential cane price for the sugar season 2007-08 pending disposal of the Writ filed

by the U.P. Sugar Mills Association of which the Company is a member, in Hon'ble

Supreme Court of India 9461.04 -

c) Interest on excess amount of levy sugar for sugar season 1982-83 realised as per Court

Order against which TDR of Rs. 25.54 lacs has been deposited with a Bank - 25.54

d) Claims for acquisition of 9.17 acres of land for the Chemical unit at Balrampur and Amount not Amount not

compensation there against is under dispute and the matter is subjudice ascertainable ascertainable

e) Claims against the Company not acknowledged as debts :

i) Excise duty Demand - under appeal 228.94 233.09

ii) Sales Tax Demand - under appeal 18.79 18.53

iii) Others - under appeal/litigation 207.37 189.06

f) Bank Guarantees furnished 2097.53 1740.44

3. Excess amount of levy sugar received to date for various sugar seasons as per Orders of the

Hon'ble High Court has not been credited to the Profit and Loss Account as the matter is

subjudice 43.15 43.15




The details of options granted, lapsed and exercised are as under :

11. Excise Duty & Cess on Stock :

The amount of Excise Duty & Cess on Stock shown in Schedule - 15 represents differential Excise Duty & Cess on opening & closing

stock of finished goods/by products.

Year of Issue 2005-06 2006-07 2007-08 Total

Date of grant of option 31/10/2005 27/11/2006 27/11/2007 -

Exercise Price (Rs.) 74.60 104.10 72.20 -

Market Price on the date of grant (Rs.) 81.10 87.65 90.75 -

Number of options granted up to 30.09.2007 622500 883000 - 1505500

Number of options outstanding on 01.10.2007 503500 797500 - 1301000

Number of options granted during the year - - 995500 995500

Number of options exercised during the year 81650 - - 81650

Number of options lapsed during the year 32000 73500 74500 180000

Number of options outstanding on 30.09.2008 389850 724000 921000 2034850

10. Balance with Non-Scheduled Banks on Current Accounts :




Name of the Bank 2008 2007 2008 2007

i) Aryavart Gramin Bank, Barabanki 15.35 - 109.02 -

ii) Aryavart Gramin Bank, Fatehpur 1.55 - 14.01 -

iii) Aryavart Gramin Bank, Haidergarh 0.37 - 18.69 -

iv) Baroda Eastern U.P. Gramin Bank, Faizabad 19.73 - 20.13 -

v) Baroda Eastern U.P. Gramin Bank, Fatehpur 0.91 - 18.28 -

vi) District Co-Operative Bank, Sikardabad 0.11 - 0.20 -

vii) District Co-Operative Bank, Odraha 0.09 - 0.32 -

viii) District Co-Operative Bank, Amirnagar - - 0.16 -

ix) District Co-Operative Bank, Barabanki 8.20 - 26.73 -

x) District Co-Operative Bank, Faizabad 1.71 - 1.82 -

xi) District Co-Operative Bank, Fatehpur 0.96 - 9.99 -

xii) District Co-Operative Bank, Gola 0.11 - 238.91 -

xiii) District Co-Operative Bank, Mohammdi 0.11 - 30.00 -

xiv) District Co-Operative Bank, Nakha 0.14 - 0.33 -

xv) District Co-Operative Bank, Neemgaon 0.41 - 47.65 -

xvi) District Co-Operative Bank, Phardhan 0.07 - 0.28 -

xvii) District Co-Operative Bank, Pipariadhani 0.11 - 36.28 -

xviii) District Co-Operative Bank, Sultanpur 7.58 - 101.85 -

xix) Kshetriya Gramin Bank, Semri 0.15 - 5.45 -

xx) Kshetriya Gramin Bank, Akbarpur 0.27 - 38.54 -

xxi) Kshetriya Gramin Bank, Dostpur 0.98 - 5.48 -

xxii) Kshetriya Gramin Bank, Mijhaura 8.06 - 569.59 -

xxiii) Lucknow Kshetriya Gramin Bank, Jarwal Kasba 0.47 - 6.96 -

xxiv) Purvanchal Gramin Bank, Faizabad 7.18 - 0.94 -

xxv) Serve U.P. Gramin Bank, Tulsipur 3.84 - 1167.70 -

xxvi) Shahjahanpur Krishak Gramin Bank, Kurai 0.36 - 26.37 -

xxvii) Zila Sahkari Bank Ltd., Sultanpur 3.37 - 4.09 -

xxviii) Zila Sahkari Bank Ltd., Lucknow 7.17 - 8.22 -

xxix) Zila Sahkari Bank Ltd., Parsurampur 0.94 - 22.98 -

xxx) ING Asia Private Bank Ltd., Singapore 93.76 94.45

184.06

(Rupees in Lacs)




12 Payment to Auditors :

2007-08 2006-07

i) As Audit Fees 19.71 14.35 ii) Tax Audit Fees 0.84 0.84 iii) For Other Services 9.49 7.30 iv) For Certification Work 2.07 1.33 v) For Expenses 1.06 1.68

33.17 25.50

(Rupees in Lacs)

2007-08 2006-07

i) Salary, Bonus and Leave encashment 248.03 248.04 ii) Commission 230.00 - iii) Contribution to Provident Fund, Gratuity and other Funds 50.20 100.63 iv) Perquisites (including monetary value of perquisites Rs.4.80 lacs, previous year Rs.1.33 lacs) 9.25 12.20

537.48 360.87

(Rupees in Lacs)13. Details of Remuneration paid/payable to Directors :

14. Details of Adjustment relating to earlier years (Net) :

2007-08 2006-07

a) Expenses:

i) Cost of Raw Materials Consumed 0.02 0.11ii) Salaries, Wages & other Employees' Benefits 20.06 - iii) Rates & Taxes - 1.08iv) Power & Fuel 0.82 - v) Repairs & Maintenance (Others) 0.06 0.48vi) Interest & Financial Charges - 308.57vii) Miscellaneous Expenses 2.82 14.05

23.78 324.29

b) Income:

i) Miscellaneous Income 1.73 3.05ii) Stores & Spare Parts Consumed 6.51 - iii) Workers & Staff Welfare Expenses 0.11 0.13iv) Contribution to Provident Fund etc. written back - 4.02

8.35 7.20

Adjustment relating to earlier years (Net) - (a - b) 15.43 317.09

(Rupees in Lacs)

15. a) Land, Building, Plant & Machinery, Railway Siding, Tubewell and Water Supply Machinery of Balrampur unit were revalued asat 30th June, 1988 on net replacement value as per the report of S.R. Batliboi Consultants Pvt. Ltd. and the cost of respectiveassets aggregating to Rs.1200.77 lacs was substituted by the revalued amount of Rs.1920.52 lacs and the resultant increase wascredited to Revaluation Reserve.

b) Land, Building and Plant & Machinery of Tulsipur unit were revalued as at 31st March, 1999 on net replacement value as perthe report of Lodha & Co. and the cost of the respective assets aggregating to Rs.1023.85 lacs was substituted by the revaluedamount of Rs.2944.93 lacs and the resultant increase was credited to Revaluation Reserve in the books of erstwhile TulsipurSugar Company Limited.

16. The Company has been granted eligilibility certificate dated 23rd February, 2007 under New Sugar Industry Promotion Policy, 2004of the Government of Uttar Pradesh. Accordingly, incentives aggregating to Rs.4281.53 lacs (Previous year Rs.1757.09 lacs) allowableunder the above policy have been accounted for during the year.

The above policy has been terminated by the Government of Uttar Pradesh vide order dated 4th June, 2007 wherein the Governmentexpressed its intention to introduce another policy. The Company has been legally advised that it continues to be eligible to receivethe incentives under the above policy. Furthermore, the Company has filed Writ Petition against revocation of the aforesaid policywhich has been admitted by the Lucknow Bench of the Hon'ble Allahabad High Court vide its Order dated 9th May, 2008, thehearing in respect of which is in progress.

17. Intangible Assetsa) The unamortised amount of Share Issue Expenses Rs.18.26 lacs and Rs.159.84 lacs are to be amortised equally in the next six




months and 1 year & six months respectively.

b) The unamortised amount of Computer Software (Acquired) Rs.3.64 lacs and Rs. 0.28 lac are to be amortised equally in the next4 years & three months and 4 years & seven months respectively.

18. Employee Benefits : As per Accounting Standard - 15 "Employee Benefits", the disclosure of Employee Benefits as defined in the Accounting Standardare as follows:

The Company has with effect from 1st October, 2007 adopted Accounting Standard - 15, "Employee Benefits" notified under theCompanies (Accounting Standards) Rules, 2006.

In accordane with the stipulations of the said Accounting Standard, the Company has adjusted Rs.27.65 lacs towards the additionalliability for employee benefits upto 30th September, 2007 against the balance of General Reserve as at 1st Ocotber, 2007 as permittedunder the transitional provision in the Accounting Standard - 15.

Defined Contribution Plan :Employee benefits in the form of Provident Fund and Labour Welfare Fund are considered as defined contribution plan except thatProvident fund in respect of certain employees is contributed to a fund set up by the Company which is treated as defined benefitplan since the Company has to meet the interest shortfall.

The contribution to the respective fund are made in accordance with the relevant statute and are recognised as an expense whenemployees have rendered service entitling them to the contribution. The contribution to defined contribution plan, recognised asexpense for the year are as under :

Defined Benefit Plan:Post employment and other long-term employee benefits in the form of gratuity and leave encashment are considered as definedbenefit obligation. The present value of obligation is determined based on actuarial valuation using projected unit credit method asat the Balance Sheet date. The amount of defined benefit recognised in the Balance Sheet represent the present value of theobligation as adjusted for unrecognised past service cost and as reduced by the fair value of plan assets.

Provident fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a defined benefitplan since the Company has to meet the interest shortfall. The interest shortfall of Rs.24.61 lacs at the year end is recognised asexpense for the year.

Any asset resulting from this calculation is limited to the discounted value of any economic benefit available in the form of refundsfrom the plan or reduction in future contribution to the plan. The amount recognised in the Profit and Loss Account in respect ofEmployees

Benefit Schemes based on actuarial reports as on 30th September, 2008 is as follows :

Amount

Defined Contribution Plan

Employers' Contribution to Provident Fund 260.59

Employers' Contribution to Labour Welfare Fund 0.01

(Rupees in Lacs)



I. Components of Employer Expense :

1 Current Service Cost 155.07 112.47 15.162 Past Service Cost – – –3 Interest Cost 115.66 129.27 9.894 Expected return on Plan Assets 103.28 121.66 –5 Acturial Gain/(Loss) recognised in the year (27.47) 16.94 103.396 Expense recognised in Statement of Profit & Loss Account 139.98 137.02 128.44

II. Change in Present Value of Defined Benefit Obligation :

1 Present value of Defined Benefit Obligation at the beginning of the year 1437.28 1520.87 197.442 Interest Cost 115.66 129.27 9.893 Past Service Cost – – –4 Current Service Cost 155.07 112.47 15.165 Employees Contribution – 129.21 –6 Benefits Paid 153.07 30.50 162.037 Actuarial Gain/ (Losses) (37.74) (55.72) 103.398 Present value of Defined Benefit Obligation at the end of the year 1517.20 1805.60 163.85

(Rupees in Lacs)






III. Change in Fair Value of Plan Assets during the year

ended 30th September, 2008 :

1 Plan Assets at the beginning of the year 1290.97 1520.81 –2 Expected return on Plan Assets 103.28 121.66 –3 Actual Company Contribution 169.28 241.68 –4 Benefits paid 147.73 30.50 –5 Actuarial Gains / (Losses) (10.26) (72.66) –6 Plan Assets at the end of the year 1405.54 1780.99 –

IV. Net Asset / (Liability) recognised in the Balance Sheet


1 Present value of Defined Benefit Obligation 1504.48 1805.60 163.852 Fair value of Plan Assets 1405.54 1780.99 –3 Funded Status (Surplus/(Deficit)) (111.66) (24.61) (163.85)4 Net Asset / (Liability) recognised in Balance Sheet (111.66) (24.61) (163.85)

V. Acturial Assumptions :

1 Discount Rate (per annum) 8.50 8.50 8.502 Expected return on Plan Assets (per annum) 8.00 8.00 –3 Salary increase 6.00 6.00 6.004 Retirement/Superannuation Age 60 60 60 5 Mortality LICI 1994-1996 LICI 1994-1996 LICI 1994-1996

VI. Major Category of Plan Assets as a % of the Total Plan Assets


1 Administered by Insurance Companies 47% - - 2 Public Financial Institutions / Public Sector Companies 23% 51% –3 Central / State Government Securities 28% 49% –4 Bank Deposits 1% – –5 Others (Cash and Cash Equivalents) 1% - –

VII. Experience Adjustments :

1 Defined Benefit obligation – – –2 Plan Assets – – –3 Surplus /(Deficit) - – –4 Experience adjustments on Plan Liabilities – – –5 Experience adjustments on Plan Assets – – –

VIII. Expected Employer's Contribution for the next year :

Expected Employer's Contribution for the next year – – –

(Rupees in Lacs)

IX. Basis used to determine the expected Rate of return on Plan Assets :The basis used to determine overall expected Rate of return on Plan Assets is based on the current portfolio of assets, investmentstrategy and market scenario. In order to protect the Capital and optimise returns within acceptable risk parameters, the PlanAssets are well diversified.

X. Basis of estimates of Rate of escalation in salary :The estimates of rate of escalation in salary, considered in acturial valuation, take into account inflation, seniority, promotionand other relevant factors including supply and demand in the employment market. The above information is certified by theactuary.

XI. Other disclosures :a) The Gratuity and Provident Fund Expenses have been recognised under "Contribution to Provident Fund, Gratuity and Other

Funds" and Leave Encashment under "Salaries, Wages, Bonus, etc." under Schedule - 17.

b) The amount of the Present value of Obligations, fair value of Plan Assets, Surplus/Deficit in the plan and experienceadjustment arising on Plan Liabilities and Plan Assets for the previous four annual periods are not available and therefore,not disclosed.

c) In the case of a Subsidiary Gratuity is unfunded.

d) As this is the first year of adoption of Accounting Standard-15 (Revised) on Employee Benefits, only the current year’s figureshave been given.




19. Segment information as per Accounting Standard - 17 on 'Segment Reporting' :The Group has identified four business segments viz. Sugar, Distillery, Co-generation and Organic Manure. Segments have beenidentified and reported taking into account the nature of the products, the differing risks and returns, the organisational structureand internal business reporting system.

a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment.

Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have beendisclosed as “Unallocable”.

b) Segment Assets and Segment Liabilities represent assets and liabilities of respective segment. Investments, tax related assets andother assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".

c) Information about Primary Business Segments:


Gross Sales 133515.88 18750.25 23688.10 143.78 - 176098.01(128646.61) (13494.58) (18738.89) (182.99) ( - ) (161063.07)

Less : Inter Segment Sales 11634.97 14.09 6293.74 0.20 - 17943.00(8714.38) (7.34) (4247.60) (106.49) ( - ) (13075.81)

External Sales 121880.91 18736.16 17394.36 143.58 - 158155.01(119932.23) (13487.24) (14491.29) (76.50) ( - ) (147987.26)

Less : Excise Duty & Cess on 7074.65 1985.90 - - - 9060.55External Sales (7256.00) (1250.48) ( - ) ( - ) ( - ) (8506.48)

Net Sales 114806.26 16750.26 17394.36 143.58 - 149094.46(112676.23) (12236.76) (14491.29) (76.50) ( - ) (139480.78)

Add : Allocable other income 929.95 75.55 157.77 8.42 - 1171.69(527.96) (20.31) (106.26) (1.09) ( - ) (655.62)

Total Revenue 115736.21 16825.81 17552.13 152.00 - 150266.15(113204.19) (12257.07) (14597.55) (77.59) ( - ) (140136.40)

ResultSegment Result 6084.25 6511.19 10779.00 (197.30) - 23177.14

(-) (11648.53) (5062.24) (8717.99) (-) (55.04) ( - ) (2076.66)Less: Unallocable expenditure 2774.03 2774.03net of unallocble income (1776.30) (1776.30)Interest & financial charges (Net) 10008.09 10008.09

(6004.30) (6004.30)Profit / (Loss) Before Tax 10395.02

( -) (5703.94)TaxCurrent Tax 562.00

(186.00)Fringe Benefit Tax 65.65

(65.63)Deferred Tax 1934.90

(397.68)Profit /(Loss) After Tax 7832.47

( -) (6353.25)Other InformationSegment Assets 196758.52 17584.02 59067.67 1310.10 13844.00 288564.31

(177060.86) (17782.65) (60288.90) (1419.72) (15489.01) (272041.14)Segment Liabilities 15997.92 2677.74 410.27 24.33 31347.33 50457.59

(30499.21) (2295.84) (299.32) (22.14) (24105.70) (57222.21)Capital Expenditure 4956.57 204.72 3205.14 15.12 93.88 8475.43

(41117.12) (6273.28) (21302.41) (560.80) (98.73) (69352.35)Depreciation & Amortisation 7459.91 808.89 3741.92 73.65 441.14 12525.51

(5246.55) (596.39) (2429.76) (53.71) (439.16) (8765.57)

(Rupees in Lacs)

Notes :

1) Transactions between segments are primarily for materials which are transferred at market determined prices. Common costs

are apportioned on a reasonable basis.



2) Unallocable expenses are net of unallocable income Rs.350.35 lacs (previous year Rs.496.34 lacs).

3) Inter Segment Sales include Excise Duty & Cess Rs.1457.93 lacs (Previous year Rs.813.91 lacs).

d) Information about Secondary Geographical Segments :

i) The information about secondary segments has not been furnished as the export revenue is less than 10% of the total

revenue of the Company.

ii) The Group has common fixed assets located in India for producing goods for domestic and overseas markets. Therefore,

the value of fixed assets and additions there to can not be allocated to the geographical segments. Hence, the total

carrying amount of segment assets and cost incurred during the year to acquire segment assets has not been given in

respect of secondary segments.

20. Related party disclosures as per Accounting Standard - 18 for the year ended 30th September, 2008 are given below :

a) Name of the related parties and description of relationship :

i) Associates : Avantika Ganna Pvt. Ltd.

Asia Sugar Industries Pvt. Ltd.

iii) Key Managerial Personnels (KMP) : Mr. Vivek Saraogi - Managing Director

Mrs. Meenakshi Saraogi - Joint Managing Director

Mr. K.N. Ranasaria - Whole-time Director

Mr. Kishor Shah - Whole-time Director

Mr. R.N. Mishra - Whole-time Director upto 31.07.2008

Dr. Arvind Krishna Saxena - Whole-time Director from 01.08.2008.

iv) Relatives of Key Managerial Personnel :

Mr. Vivek Saraogi 1. Mr. K.N.Saraogi (Father) - Chairman Emeritus

2. Mrs. Meenakshi Saraogi (Mother)

3. Mr. Karan Saraogi (Son)

4. Miss Avantika Saraogi (Daughter)

5. Mrs. Satyawati Saraogi (Grand-mother)

6. Mrs. Stuti Dhanuka (Sister)

7. Mrs. Sumedha Saraogi (Wife)

Mrs. Meenakshi Saraogi 1. Mr. K.N.Saraogi (Husband)

2. Mr. Vivek Saraogi (Son)

3. Mr. Karan Saraogi (Grand-son)

4. Miss Avantika Saraogi (Grand-daughter)

5. Mrs. Satyawati Saraogi (Mother-in-law)

6. Mrs. Stuti Dhanuka (Daughter)

7. Mrs. Sumedha Saraogi (Daughter-in-law)

v) Enterprises in which KMP and their 1. Kamal Nayan & Co.

relatives have substantial interest : 2. Meenakshi Mercantiles Ltd.

3. Udaipur Cotton Mills Co. Ltd.

b) Transactions with Related parties :



which KMP and Key



Associates interest (KMP) KMP Total

i) Purchase of Raw Materials and By-products

Kamal Nayan & Co. - 0.67 - - 0.67

( - ) (1.00) ( - ) ( - ) (1.00)

ii) Investments made during the year

Asia Sugar Industries Pvt. Ltd. 100.00 - - - 100.00

( - ) ( - ) ( - ) ( - ) ( - )

(Rupees in Lacs)





which KMP and Key




iii) Rendering of Services

Avantika Ganna Pvt. Ltd. - - - - -

(2.90) ( - ) ( - ) ( - ) (2.90)

Mr. K.N. Saraogi - - - - -

( - ) ( - ) ( - ) (0.20) (0.20)

Mrs. Meenakshi Saraogi - - 194.47 - 194.47

( - ) ( - ) (95.29) ( - ) (95.29)

Mr. Vivek Saraogi - - 190.82 - 190.82

( - ) ( - ) (116.50) ( - ) (116.50)

Mr. K.N. Ranasaria - - 33.30 - 33.30

( - ) ( - ) (33.30) ( - ) (33.30)

Mr. Kishor Shah - - 64.91 - 64.91

( - ) ( - ) (34.03) ( - ) (34.03)

Mr. R.N. Mishra - - 6.52 - 6.52

( - ) ( - ) (7.75) ( - ) (7.75)

Dr. Arvind Krishna Saxena - - 1.55 - 1.55

( - ) ( - ) ( - ) ( - ) ( - )

iv) Dividend Paid to Shareholders

Mr. K.N. Saraogi - - - - -

( - ) ( - ) ( - ) (472.15) (472.15)

Mrs. Meenakshi Saraogi - - - - -

( - ) ( - ) (194.65) ( - ) (194.65)

Mr. Vivek Saraogi - - - - -

( - ) ( - ) (64.22) ( - ) (64.22)

Mr. K.N. Ranasaria - - - - -

( - ) ( - ) (2.87) ( - ) (2.87)

Mr. Kishor Shah - - - - -

( - ) ( - ) (0.08) ( - ) (0.08)

Mrs. Sumedha Saraogi - - - - -

( - ) ( - ) ( - ) (146.99) (146.99)

Mrs. Satyawati Saraogi - - - - -

( - ) ( - ) ( - ) (66.34) (66.34)

Mr. Karan Saraogi - - - - -

( - ) ( - ) ( - ) (53.48) (53.48)

Miss Avantika Saraogi - - - - -

( - ) ( - ) ( - ) (53.48) (53.48)

Mrs. Stuti Dhanuka - - - - -

( - ) ( - ) ( - ) (75.18) (75.18)

Meenakshi Mercantiles Ltd. - - - - -

( - ) (21.56) ( - ) ( - ) (21.56)

Udaipur Cotton Mills Co. Ltd. - - - - -

( - ) (36.22) ( - ) ( - ) (36.22)

(Rupees in Lacs)





which KMP and Key




v) Finance (Contribution towards Equity Shares

and convertible Warrants in cash)

Mr. K.N. Saraogi - - - 2553.00 2553.00

( - ) ( - ) ( - ) ( - ) ( - )


( - ) ( - ) ( - ) ( - ) ( - )

Mrs. Satyawati Saraogi - - - 204.70 204.70

( - ) ( - ) ( - ) ( - ) ( - )

Mr. Karan Saraogi - - - 350.70 350.70

( - ) ( - ) ( - ) ( - ) ( - )

Miss Avantika Saraogi - - - 166.70 166.70

( - ) ( - ) ( - ) ( - ) ( - )

Meenakshi Mercantiles Ltd. - 1438.33 - - 1438.33

( - ) ( - ) ( - ) ( - ) ( - )

Udaipur Cotton Mills Co. Ltd. - 2039.37 - - 2039.37

( - ) ( - ) ( - ) ( - ) ( - )

vi) Guarantees (Given for the Loans obtained

by the Company)

Mr. Vivek Saraogi – – 14643.00 – 14643.00

( - ) ( - ) ( - ) ( - ) ( - )

vii) Balance Outstanding

a) Accounts payable


( - ) ( - ) ( - ) ( - ) ( - )

Mr. Vivek Saraogi - - 90.00 - 90.00

( - ) ( - ) ( - ) ( - ) ( - )

Mr. K.N. Ranasaria - - 2.40 - 2.40

( - ) ( - ) (2.40) ( - ) (2.40)

Mr. Kishor Shah - - 30.00 - 30.00

( - ) ( - ) (6.96) ( - ) (6.96)

b) Amount outstanding against Guarantees

Mr. K.N. Saraogi - - - 18620.08 18620.08

( - ) ( - ) ( - ) (19556.00) (19556.00)


( - ) ( - ) (19556.00) ( - ) (19556.00)

Mr. Vivek Saraogi - - 54113.90 - 54113.90

( - ) ( - ) (48257.13) ( - ) (48257.13)

(Rupees in Lacs)

c) No amount has been written back / written off during the year in respect of due to / from related parties.

d) The amount due from related parties are good and hence no provision for doubtful debts in respect of dues from such

related parties is required.



21. Earnings per ShareThe numerators and denominators used to calculate Basic/Diluted Earnings per Share :

22. Details of Deferred Tax Liability and Assets as at 30th September, 2008 :

23. Disclosure in terms of Accounting Standard -29 on Provisions, Contingent Liabilities and Contingent Assets:



2007-08 2006-07

a) Amount used as the numerator (Rs. Lacs)

Profit / (Loss) after Tax , Minority Interest and share in Associates 7833.73 (4728.05)

Total - (A) 7833.73 (4728.05)


Basic Earnings per Share - (B) 253595395 248154660

Add : Weighted average number of Equity Shares on

account of Employees Stock Option Scheme 190187 40355

c) Weighted average number of Equity Shares used as the denominator for

Diluted Earnings per Share - (C) 253785582 248195015

d) Nominal value of Equity Shares (Re.) 1.00 1.00

e) Basic Earnings per Share (Rs.) 3.09 (1.91)

f) Diluted Earnings per Share (Rs.) 3.09 (1.90)

2007-08 2006-07

a) Deferred Tax Liability :


24193.68 17145.33

b) Deferred Tax Assets :

i) MAT Credit 3250.24 1559.90

ii} Carried Forward Losses 3596.73 1446.31

iii) Expenses allowable for tax purposes when paid 3087.36 1814.67

9934.33 4820.88

(Rupees in Lacs)

(Rupees in Lacs)

Note :

Carried forward losses have been recognised as Deferred Tax Assets as per latest Income Tax assessment order / Return of Incomefiled by the Company.

Particulars Duties & taxes Others Amount

Balance as at 1st October, 2007 303.60 1.08 304.68

Provided during the year – – –

Amount used during the year 5.65 0.05 5.70

Reversed during the year – – –

Balance as at 30th September, 2008 297.95 1.03 298.98

Timing of outflow/uncertainties Outflow on settlement/ crystallization




b) The Contingent Liabilities & Liabilities mentioned at Sl. No. 2 & 23 (a) respectively are dependent upon Court decision / out

of court settlement/disposal of appeals etc.

c) No reimbursement is expected in the case of Contingent Liabilities & Liabilities shown respectively under Sl.No. 2 & 23 (a)

above and in view of this no asset has been recognised for the expected reimbursement.

24. Other notes in respect of a Subsidiary Company (Indo Gulf Industries Limited)

i) The supplier of the plant & machinery of the sugar division has gone into arbitration regarding certain claims & company has

also filed counter claim. The case is pending with the arbitrator. No effect has been taken in the books of account, as ultimate

effect is not ascertainable.

ii) a) The Government of Uttar Pradesh has initiated in the earlier years recovery proceedings for recovery of Sales Tax dues

related to Explosive unit at Jhansi, pursuant to which, the factory at Jhansi has been seized by the Government authorities.

All the assets located at factory including records there at remain seized till the year end. Out of the above assets, certain

assets pertaining to the said unit have been auctioned by the office of the labour commissioner, Jhansi, against which a

sum of Rs. 8.03 lacs is lying with them. Pending availability of relevant information, no adjustment in this respect has been

carried out in these accounts.

b) Pursuant to recovery proceedings initiated by U.P. State Government for the recovery of pending dues of Cane Growers

and for giving effect to the Recovery Certificates amounting to Rs. 1561.00 lacs, all the moveable & immoveable assets of

the sugar unit located at Maizapur, District Gonda (U.P.) were seized by the District Administration on August 12, 2002.

Towards the said recovery Certificate, District Administation sold the entire stocks belonging to the Company and

deposited the sale proceeds amounting to Rs. 1250.41 lacs with Registrar Allahabad High Court. The Company also

deposited a sum of the Rs. 323.31 lacs with the Hon’ble High Court towards the said recovery and other cane dues. Out

of the said amount, Rs. 1493.31 lacs had been released by the Court to the Cane Commissioner leaving a balance of

Rs. 80.41 lacs in the Court,which is being reflected under the head loan and advances.

c) The Company's net worth has been fully eroded as the accumulated loss of Rs.76.09 crores has exceeded its shareholders’

fund of Rs. 44.05 crores. It is felt that the status of the Company will improve in the following years, as the production

has already commenced and plant will run on a continuous basis. Further, the holding Company has provided necessary

funds for the operations. Accordingly, the Company has considered that it will be able to continue as a Going Concern entity.

iii) The un-reconciled old bank balances amounting to Rs. 120.51 lacs have been considered doubtful. Provision for doubtful bank

balances have been made in the books during the year. The amount includes Rs.15.45 lacs realised from the auction of

molasses during the previous year, kept with Gonda District Administration and Allahabad Bank, Gonda Branch in a no-lien

account subject to order disposal as per the of Hon’ble Allahabad High Court, Lucknow Bench, Lucknow do not seem to be

recoverable hence provision for doubtful balances have been made in the accounts during the year.

iv) a) In the opinion of management, the “Loans and Advances” have a value on realization in the ordinary course of business

at least equal to the amount at which they are stated in the Balance Sheet. Further, in respect of certain items which were

long outstanding, necessary provision has been made.

b) i) Rs. 112.60 lacs given as share application money and included in Loans and Advances against which shares are yet

to be issued by the concerned companies are still considered to be good, there by no provision has been made for

the same.

ii) Loans and Advances includes Rs. 71.35 lacs paid under protest with Sales Tax Authorities towards Sales Tax dues,

against which liability for Rs. 289.68 lacs have been provided.



v) Pending final settlement, Interest on statutory liabilities outstanding for a long period has not been provided, as the quantum

thereof is not ascertainable.

vi) Interest receivable (net of interest payable) on allotment money remaining unpaid in respect of Equity Shares issued on

conversion of 12% Convertible Debentures will be accounted for on receipt basis.

vii) Due to seizure of company’s explosive plant at Jhansi, the condition of the plant & machineries and other fixed assets there

at and the impairment loss, if any, in respect thereof could not be determined, pending which no provision for such loss, if

any, could be made in the accounts.

viii) a) Calls in arrears and Deferred Sales Tax Liabilities are under reconciliation. Necessary adjustment, if any, will be made after

reconciliation.

b) The installments for payment of Deferred Sales Tax converted into unsecured loan by Sales Tax Department are overdue.

The same has not been paid and the interest thereon, if any, has not been provided in the accounts, as the quantum

thereof is not ascertainable.

ix) Investments in Shares are in the name of the Company except those, which are in the process of transfer.

x) Lease deed for 50 Acres of Land (Out of total land of 705 acres) for Jhansi Plant has not been executed. In respect of some

other land, the registration formalities are under progress.

25. Previous year's figures have been re-grouped / re-arranged wherever found necessary to make them comparable with those of the

current year.


Signatories to all foregoing Schedules “1” to “22” forming part of the accounts




Corporate Information

120 | Indo Gulf Industries Limited

INDO GULF INDUSTRIES LIMITED

BOARD OF DIRECTORS


Mr. Gauri Shankar Agarwala

Mr. Vimal Kumar Jain

Mr. Shiv Bhagwan Khowala

Mr. Anup Kumar Acharya

AUDIT COMMITTEE

Mr. Vimal Kumar Jain (Chairman)




REMUNERATION COMMITTEE

Mr. Anup Kumar Acharya (Chairman)



COMPANY SECRETARY

Ms. Neha Kejriwal

SHARE TRANSFER COMMITTEE




SHAREHOLDERS GRIEVANCE COMMITTEE

Mr. Anup Kumar Acharya (Chairman)



STATUTORY AUDITORS

M/s. Vipin Aggarwal & Associates


E-4, IInd Floor, Defence Colony,

New Delhi – 110 024

BANKERS

State Bank of India

Commercial Branch,

24, Park Street,

Kolkata - 700 016

FACTORIES

EXPLOSIVE DIVISION

Babina Plant

Village Koti

Sukhwa & Prithi Pura, Babina

Dist. Jhansi (U.P.)

SMS DIVISION

Singrauli Plant (SMS)

Near Central Workshop

Jayant, Village – Garda

Singrauli

Dist. Sidhi, M.P.

Korba Plant (SMS)

Vill. Goberaghora

(Dipka) Korba

Dist. Bilaspur

Talcher Plant (SMS)

Plot No. 2

IDCO Industrial Estate

Village Ghanipura,

Dist. Dhenkanal,

Talchar, Orissa

I.B.Valley

Vill. Sarandamal

Tehsil – Lakhanpur,

Dist. Sambalpur, Orissa

ACCESSORIES DIVISION

(Detonating Fuse etc.)

Village Koti

Sukhwa & Prithi Pura, Babina,

Dist. Jhansi (U.P.)

SUGAR DIVISION

Maizapur, Tehsil Colonelgunj,

Dist. Gonda, U.P.

REGISTERED OFFICE

213,Rectangle 1, D-4, District Centre, Saket,

New Delhi-110017

Directors’ Report

Indo Gulf Industries Limited | 121

Dear Members,

Your Directors have pleasure in presenting the Twenty-Sixth

Annual Report and Audited Accounts of the Company for the year

ended 30th September, 2008.

(Rs.in thousand)

Particulars Year ended Year ended

30.09.08 30.09.07

Sales and other Income 3,01,244.54 34,766.09

Profit/(Loss) before Depreciation,

Interest and Taxation 461.60 (86,160.13)

Less: Interest 1,04,298.82 56,255.57

Less: Depreciation 42,590.07 36,167.75

Profit/(Loss) before Tax (1,46,427.29) (17,85,83.45)

Provision for Tax (165.19) (163.44)

Net Profit/(Loss) (1,46,592.48) (1,78,746.89)

Add: Balance brought forward

from previous year (6,14,372.82) (435,625.93)

Carried over to Balance Sheet (7,60,965.30) (614,372.82)

PERFORMANCE

The Maizapur unit of the Company commenced crushing

operations for the season 2007-2008 w.e.f 6th December, 2007.

The quantitative performance results of Season 2007-08 were as

under:

Duration of Sugar season : From 6th December, 2007 to

31st March, 2008

Cane Crushed (Qtls.) : 2970539

Recovery(%) : 9.63

Production of Sugar (Qtls.) : 287576

None of the Explosive Units of the Company is in operation

during the year.

The Board of Industrial & Financial Reconstruction (BIFR) in the

hearing held on 23rd October, 2008 has declared the Company

sick in terms of Section 3(1)(o) of the Sick Industrial Companies

(Special Provisions) Act, 1985 (SICA). The Bench was of the

opinion that the Company would not be able to revive of its own

and it was necessary in the public interest to take the measures

specified under Section 18 of the SICA. Accordingly, State Bank

of India (SBI) was appointed as Operating Agency (OA) under

Section 17(3) of SICA to examine the viability of the Company

and formulate Rehabilitation Scheme.

LEGAL CASES RELATED TO CANE ARREARS

1. The State Govt. vide order dated 26.12.2006 fixed State

Advised Price for the season 2006-07 at Rs.122.50, Rs. 125.00,

and Rs. 130/- per quintal for rejected, normal and early

varieties respectively. The Allahabad High Court vide order

dated 19.12.2007 quashed the State Advised Price. SLPs were

filed against this order by the State and cane growers before

the Hon’ble Supreme Court.

2. The Hon’ble Supreme Court vide order dated 27.2.2008 fixed

interim price of sugarcane as Rs. 115/-, Rs. 118/- and Rs. 123/-

per quintal for rejected, normal and early varieties

respectively.

3. The State Govt. vide its order dated 30.10.2007 fixed State

Advised Cane Price for the season 2007-08 as fixed for the

season 2006-07. This cane price was again challenged by the

sugar industry before the Allahabad Bench and Lucknow

Bench of Allahabad High Court. The Lucknow Bench vide

order dated 07.07.2008 upheld the State Advised Price for the

season 2007-08 and the Allahabad Bench quashed the SAP.

Both these orders were challenged in the Hon’ble Supreme

Court by various SLPs.

4. The Hon’ble Supreme Court vide order dated 08.09.2008 fixed

an interim price of sugarcane as Rs. 110/- per quintal for the

season 2007-08. The SLPs are pending in the Hon’ble

Supreme Court.

5. The State Govt vide order dated 18.10.2008 has fixed SAP for

the crushing season 2008-09 at Rs.137.50, Rs.140/- and

Rs. 145/- per qtl for rejected, normal and early varieties. The

sugar factories have challenged the State Government’s Order

dated 18.10.2008 in Allahabad High Court. The Writ Petition

filed by the Sugar Industry challenging the SAP for the season

2008-09 came up for hearing before Allahabad High Court.

Allahabad Bench on 06.11.2008 after hearing the arguments,

adjourned the case, gave time for filing the Counter Affidavit

and Rejoinder Affidavit and listed the case for hearing on

18.11.2008. The Hearing is going on day to day basis.

FUTURE OUTLOOK & PROSPECTS

The Company as per the guidelines of the Board of Industrial and

Financial Reconstruction will submit the Draft Rehabilitation

Scheme to the State Bank of India (OA) in due course.


DIVIDEND

In view of Losses, the directors regret their inability to

recommend dividend for the year under review.

PUBLIC DEPOSITS

During the year under review, the Company has not accepted any

deposits within the purview of Section 58A of the Companies Act,

1956.

DIRECTORS

Mr. Shiv Bhagwan Khowala will retire from the Board by rotation

at this Annual General Meeting and being eligible, offers himself

for reappointment. Your Directors recommend his re-

appointment.

Dr. Arvind Krishna Saxena will retire from the Board by rotation

at this Annual General Meeting and being eligible, offers himself

for reappointment. Your Directors recommend his re-

appointment.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the

Companies Act, 1956 with respect to Directors’ Responsibility

Statement, your directors hereby confirm:

i) that in the preparation of the annual accounts for the financial

year ended 30th September, 2008, the applicable accounting

standards have been followed along with proper explanation

relating to material departures;

ii) that the directors had selected such accounting policies and

applied them consistently and made judgments and estimates

that were reasonable and prudent so as to give a true and fair

view of the state of affairs of the Company at the end of the

financial year and of the Profit or Loss of the Company for the

year under review;

iii) that the directors had 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 had prepared the accounts for the financial

year ended 30th September, 2008 on a ‘going concern’ basis.

AUDITORS’ REPORT

The observations of Auditors in their report read with the relevant

notes to accounts in Schedule Q and R are self explanatory and

do not required further explanation.

AUDITORS:

M/s Vipin Aggarwal & Associates, Chartered Accountants,

Statutory Auditors of the Company retire and being eligible, offer

themselves for reappointment. The Company has received a

certificate from the Auditors to the effect that their reappointment,

if made, would be in accordance with section 224 of the

Companies Act, 1956.

CORPORATE GOVERNANCE

As per clause 49 of the Listing Agreement with the Stock

Exchanges, Management Discussion and Analysis, a report on

Corporate Governance together with the Certificate from

Practicing Company Secretary’s on the compliance of conditions

of the Corporate Governance forms part of the Annual Report.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY

ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

In accordance with the requirement of Section 217(1)(e) of the

Companies Act, 1956 read with Companies (Disclosure of

Particulars in the Report of the Board of Directors) Rules, 1988,

the statement showing particulars with respect to conservation of

Energy, Technology Absorption and Foreign Exchange Earnings

and Outgo is annexed hereto and form a part of this report.

PARTICULARS OF EMPLOYEES

During the year under review there were no employees who

were drawing remuneration as prescribed in section 217(2A) of

the Companies Act, 1956 read with Companies (Particulars of

Employees) Rules, 1975 either for full year or for a part of the

year under review.

ACKNOWLEDGEMENTS

Your directors wish to place on records their appreciation for co-

operation and support extended by the Bankers, other Financial

Agencies and employees of the company.

By order of the Board

For INDO GULF INDUSTRIES LIMITED

Sd/- Sd/-

Dr. Arvind Krishna Saxena Anup Kumar Acharya

Director Director

Place : New Delhi

Date : 21st November, 2008.

Annexure to the Directors’ Report


INFORMATION PURSUANT TO THE COMPANIES [DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS]

RULES, 1988 AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 30TH SEPTEMBER, 2008

A. CONSERVATION OF ENERGY

a) Your Company continues to give high priority to the conservation of energy on an ongoing basis, some of the significant

measures taken are:

i) Modification of vapour bleeding system, Insulation of hot water and steam pipe lines, Automation of boiler operation.

ii) Modification of ID Fan, FD Fan and soot blower system and Increased re-cycling of water.

b) The required data with regard to conservation of energy are furnished below:

2007-08 2006-07

A) Power and fuel consumption

1. a) Purchased Units Nil Nil

Total Amount (Rs. Thousand) Nil Nil

Rate per Unit (Rs.) Nil Nil

b) Own generation

i) Through Diesel Generator sets (Units) 392502 381495

Units per ltr. of Diesel 3.09 3.21

Cost/ Units (Rs.) 11.32 10.49

ii) Through Steam Turbine/Generator (Units) 11584080 2539413.70

Unit per quintal of Bagasse Cost/Unit Steam produced by use of own bagasse

2. Coal (specify quality and where used quantity) (Tonnes) Not directly consumed in production

Total amount/Average Cost -do- -do-

3. Furnace Oil (K.Ltrs.) -do- -do-

4. Other/Internal Generation -do- -do-

Quantity total cost rate/Unit Nil Nil

B) Consumption per Unit of production

Sugar (lac quintal) 2.88 0.55

Electricity (Units per qtl. of production) 40.28 46.33

Furnace Oil Nil Nil

Coal (specify quality) Nil Nil

Other (specify quality) Nil Nil

B. RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION

Your Company has been carrying out research and development in the following specific areas:

i) Rearing of seed nurseries of new improved varieties, procured from different cane development centers for varietals

replacement.

ii) Pest control measures to protect cane from disease.

iii) Ratoon crop management helping increase yield and recovery.

iv) Sugar cane planting during Autumn season.

Owing to the efforts, a higher yield of disease free cane will be available to the Company, resulting in a higher return to the

Company and to the cane growers.

Future plans

i) Continuing research to generate better-yielding and disease free cane varieties.

ii) Installing machineries with the latest technology at different stations in the factory

iii) Providing irrigation facilities to growers by distributing pumping sets and boring.

C. FOREIGN EXCHANGE EARNING AND OUTGO 2007-08 2006-07

i) Activities relating to exports initiative taken to increase exports Nil Nil

ii) Development of new export market for product and services and export plan Nil Nil

iii) Total foreign exchange earnings (Rs. Thousand) Nil Nil

iv) Used (Rs. Thousand) Nil Nil

For and on behalf of the Board of directors

Sd/- Sd/-

New Delhi Dr. Arvind Krishna Saxena Anup Kumar Acharya

21st November, 2008. Director Director

Corporate Governance Report


COMPANY’S PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE

The company firmly believes that Corporate Governance is a continuous process to attain high standards of efficiency, transparency,

integrity and ethical behavior with a view to maximize benefits from the business for all constituents with due regards to and compliance

with laws.

Your company has adopted a ‘Code of Business Conduct and Ethics’, which lays down the standards of values, ethics and business

principles for Board Members and Senior Management of the Company.

BOARD OF DIRECTORS

The composition of Board of Directors as on 30th September, 2008 is as follows:

1. Non-executive Directors

i) Dr. Arvind Krishna Saxena

2. Independent Non-executive Directors

i) Mr. Gauri Shankar Agarwala

ii) Mr. Vimal Kumar Jain

iii) Mr. Shiv Bhagwan Khowala

iv) Mr. Anup Kumar Acharya

The composition of the Board of Directors, number of other Board of Directors or Board Committees of which he is a Member and the

attendance of each Director at the Board Meeting and the last Annual General Meeting (AGM) are as under:-

Sl. Name of Director Number of other Number of membership/ Number of Board Attendance at

No. Directorship* Chairmanship of other meetings attended last AGM

(Public Ltd. Company) Board Committee**

1 Dr. Arvind Krishna Saxena 1 Nil 4 Yes

2 Mr. Gauri Shankar Agarwala 1 Nil 5 Yes

3 Mr. Vimal Kumar Jain 1 Nil 5 Yes

4 Mr. Shiv Bhagwan Khowala Nil Nil 5 Yes

5 Mr. Anup Kumar Acharya Nil Nil 5 Yes

* Excludes membership of the Managing Committee of various chambers/bodies and directorship in Private Limited Companies/

Companies under section 25 of the Companies Act/ foreign companies.

** For reckoning the limit, the membership/ chairmanship of the Audit Committee and Shareholders’ Grievance Committee of the Indian

Public Limited Companies have been considered.

During the year ended 30th September, 2008, five Board Meetings were held i.e on 14th November 2007, 29th January, 2008, 30th April,

2008, 30th July, 2008 and 22nd September, 2008

BOARD COMMITTEES:

Audit Committee

The Audit Committee constituted by the Board of Directors

consists of the following Directors as members:

1. Mr. Vimal Kumar Jain : Chairman, Independent, Non-

executive

2. Dr. Arvind Krishna Saxena : Member. Non-executive

3. Mr. Shiv Bhagwan Khowala : Member, Independent, Non-

executive

4. Mr. Anup Kumar Acharya : Member, Independent, Non-

executive

All these Directors possess knowledge of corporate finance,

accounts and Company Law. The Chairman of the Committee is

an Independent Non-executive Director nominated by the Board.

The Company Secretary acts as a Secretary to the Committee.

The Audit Committee have following powers :

1. To investigate into any matter in relation to the items specified

in Sections 292A of the Companies Act, 1956 or referred to it

by the Board and shall have full access to information

contained in the records of the Company and external

professional advice, if necessary.

2. To investigate any activity within its terms of reference.

3. To seek information from any employee.

4. To obtain outside legal or other professional advice.

5. To secure attendance of outsiders with relevant expertise, if it

considers necessary.

The Role of the Audit Committee includes following:

1) Oversee the company’s financial reporting process and the

disclosure of its financial information to ensure that the

financial statement is correct, sufficient and credible.

2) Recommending to the Board, the appointment, re-

appointment and, if required, the replacement or removal of

the statutory auditors and the fixation of audit fees.


3) Approval of payment to statutory auditors for any other

services rendered by the statutory auditors.

4) Reviewing, with the management, the annual financial

statements before submission to the board for approval, with

particular reference to:

a) Matters in the Director’s Responsibility Statement to be

included in the Board’s report in terms of clause (2AA) of

section 217 of the Companies Act, 1956

b) Changes, if any, in accounting policies and practices and

reasons for the same

c) Major accounting entries involving estimates based on the

exercise of judgment by management

d) Significant adjustments made in the financial statements

arising out of audit findings

e) Compliance with listing and other legal requirements

relating to financial statements

f) Disclosure of any related party transactions

g) Qualifications in the draft audit report.

5) Reviewing, with the management, the quarterly financial

statements before submission to the board for approval.

6) Reviewing, with the management, performance of statutory

and internal auditors, and adequacy of the internal control

systems.

7) Reviewing the adequacy of internal audit function, if any,

including the structure of the internal audit department,

staffing and seniority of the official heading the department,

reporting structure coverage and frequency of internal audit.

8) Discussion with internal auditors of any significant findings

and follow up there on.

9) Reviewing the findings of any internal investigations by the

internal auditors into matters where there is suspected fraud

or irregularity or a failure of internal control systems of a

material nature and reporting the matter to the board.

10) Discussion with statutory auditors before the audit

commences, about the nature and scope of audit as well as

post-audit discussion to ascertain any area of concern.

11) To look into the reasons for substantial defaults in the

payment to the depositors, debenture holders, shareholders

(in case of non payment of declared dividends) and creditors.

12) Reviewing Company’s financial and risk management

policies,

13) Carrying out such other function as may be from time to time

specifically referred by the Board of Directors.

The Audit Committee also reviews the following information:

1. The Management discussion and analysis of financial

condition and results of operations;

2. Statement of significant related party transactions, submitted

by management;

3. Management letters / letters of internal control weaknesses

issued by the statutory auditors;

4. Internal audit reports relating to internal control weaknesses;

5. The appointment, removal and terms of remuneration of the

Chief internal auditor;

6. Review of uses/ application of funds raised through public

issue, right issue, preferential issue, etc.

Meetings and attendance

During the financial year ended 30th September, 2008, Audit

Committee meetings were held on 14th November, 2007, 29th

January, 2008, 30th April, 2008, 30th July, 2008.

Name Of Directors No of Meetings attended

Mr. Vimal Kumar Jain 4

Dr. Arvind Krishna Saxena 4

Mr. Shiv Bhagwan Khowala 4

Mr. Anup Kumar Acharya 4

Mr. Vimal Kumar Jain, Chairman attended the AGM held on 29th

January, 2008 and replied to the queries related to accounts to the

satisfaction of the shareholders.

Remuneration Committee

The Remuneration Committee recommends to the Board of

Directors regarding the remuneration payable to the Executive

Directors and Managers of the Company.

The Remuneration Committee comprises of 3 Directors, all of

whom are Non-Executive, Independent Directors. The members

of the Committee are:-

1. Mr. Anup Kumar Acharya : Chairman

2. Mr. Vimal Kumar Jain : Member

3. Mr. Shiv Bhagwan Khowala : Member

During the financial year ended 30th September, 2008, meeting of

Remuneration Committee was not held.

Remuneration of Employees largely consists of base

remuneration, perquisites, bonus, exgratia, etc. The components

of the total remuneration vary for different cadres/grades. All the

Directors of the Company are liable to retire by rotation and are

only paid sitting fees for attending the Board Meeting.

The details of payment to Non-Executive Directors during the

year 2007-08 are as under:

Non –Executive Directors Sitting Fees (Rs.)

Dr. Arvind Krishna Saxena 4000

Mr. Gauri Shankar Agarwala 5000

Mr. Vimal Kumar Jain 5000

Mr. Shiv Bhagwan Khowala 5000

Mr. Anup Kumar Acharya 5000

Shareholders’ Committee

i) Share Transfer Committee

A Share Transfer Committee was constituted to deal with

various matters relating to share transfer / transmission, issue

of duplicate share certificates, approving the split and

consolidation requests and other matters relating to transfer

and registration of shares.


The members of Share Transfer Committee are as below:

1. Mr. Vimal Kumar Jain

2. Mr. Shiv Bhagwan Khowala

3. Mr. Anup Kumar Acharya

During the financial year ended 30th September, 2008, Eight

Share Transfer Committee meetings were held.

ii) Shareholders / Investors’ Grievance Committee

The Company constituted the Shareholders/Investors’

Grievance Committee to oversee the redressal of shareholders

and investor grievances in relation to transfer of shares, non-

receipt of Annual Report, non- receipt of dividend etc. The

constitution of the Committee is as follows :-

1. Mr. Anup Kumar Acharya : Chairman

2. Mr. Vimal Kumar Jain : Member

3. Mr. Shiv Bhagwan Khowala : Member

During the financial year ended 30th September, 2008, two

Shareholders/Investors’ Grievance Committee meetings were

held.

The Company attends the shareholders’/investors’ grievances/

correspondence expeditiously. During the year under review,

16 investor complaints were received and all of them have

been resolved. No shares were pending for transfer as on 30th

September, 2008.

Compliance Officer

Ms. Neha Kejriwal, Company Secretary is the Compliance Officer

of the Company.

General Body Meeting

The last three Annual General Meetings were held as given

below:-

Financial Date Location of Time Special

Year the Meeting Resolution

passed.

2004-05 15.11.2006 422,Okhla Industrial 10.00 A.M Nil

Estate, Phase-III

New Delhi 110020

2005-06 30.03.2007 The Little Theatre Group, 10.00 A.M Nil

Copernicus Marg,

New Delhi 110001

2006-07 29.01.2008 The Little Theatre Group,

Copernicus Marg,

New Delhi 110001 11.00 A.M Nil

No special resolution was put through ballot at the last AGM and

no special resolution is proposed to be conducted through postal

ballot at the forthcoming AGM.

Disclosures

i) The company does not have any related party transactions

which may have potential conflict with the interests of the

company at large. However, disclosure of transaction with

related Parties is set out in the Notes to Accounts- Schedule-

R forming part of the Annual report.

ii) The Company has followed the guidelines of Accounting

Standards issued by the Institute of Chartered Accountants of

India in preparation of its financial statements.

iii) The Company has laid down Risk Assessment and

Minimization procedures and the same is periodically

reviewed by the Board. Further, the company has adequate

internal control systems to identify the risk at appropriate time

and to ensure that the executive management controls the

risk in properly defined framework.

iv) The Company has fulfilled all statutory compliances except

the payment of listing fees to “Ahmedabad Stock Exchange

Limited”.

Means of communication

The Company published its Quarterly, Half Yearly Un-audited

Financial Results and Audited Financial Results in the prescribed

form in English and Hindi, such as, Financial Express and

Jansatta, etc. The results were also sent to Stock Exchanges where

the securities of the Company are listed.

The Management’s discussion and analysis forms a part of the

Annual Report, which is posted to the shareholders of the

Company.

General Shareholders’ Information

Annual General Meeting.

Date and Time 22nd January, 2009 at 10.A.M

Venue The Little Theatre Group,

Copernicus Marg, New Delhi - 110001

Financial year calendar : 1st October, 2008 to

30th September, 2009. (Tentative)

Results for the quarter ending Fourth week of January, 2009

31st December, 2008

Results for the quarter ending Fourth week of April, 2009.

31st March, 2009

Results for the quarter ending Fourth week of July, 2009

30th June, 2009

Results for the quarter ending Fourth week of October, 2009

30th September, 2009

Book Closure Date

12th January, 2009 to 22nd January, 2009 (both days inclusive).

Dividend

Considering the Losses, the Board of Directors have not

recommended any dividend for the year.

Listing of Equity shares on Stock Exchanges at :

i) Bombay Stock Exchange Ltd. (BSE) The Corporate

Relationship Department, Rotunda Building, P.J. Towers,

Dalal Street, Fort, Mumbai – 400 001.

ii) Ahmedabad Stock Exchange Limited (ASE) - Kamdhenu

Complex, opposite Sahajanand College, Panjara Pole,

Ambawadi, Ahmedabad - 380015.

Listing Fee

Listing fee for the year 2007-08 has been paid to the BSE.

Listing fee of ASE is in arrear.


Stock Code

BSE Code for Indo Gulf Industries Ltd. - 506945

ASE Code for Indo Gulf Industries Ltd. - 26110

Trading of Shares

Presently, the trading of the shares of the Company is suspended

on the above Stock Exchanges.

Share Transfer System :

Shares lodged for transfer are normally effected with in a

maximum period of 30 days from the date of receipt. Shares for

transfer should be lodged at the Registered Office of the

Company i.e. 213, Rectangle-1, D-4, District Centre Saket, New

Delhi-110017

Dematerialisation of shares

The company has not received the ISIN number and the shares

of the company are not in dematerialized form.

Plant location

Explosive Division

Unit 1: Babina, Jhansi (U.P)

Unit 2: Singrauli, (M.P)

Unit 3: Korba, Chattisgarh

Unit 4: I.B Valley, Orissa

Unit 5: Talchar, Orissa

Sugar Division:

Maizapur, Gonda (U.P.)

Investor correspondence

Indo Gulf Industries Ltd.,

213, Rectangle-1, D-4

District Centre, Saket,

New Delhi-110017

Non Mandatory Requirement

The Company has set up a Remuneration Committee on 20th

December, 2006. The Remuneration Committee makes/

recommends to the Board of Directors regarding remuneration

payable to the Managerial Personnel.

Code of Conduct

The company has adopted a Code of Conduct for its Board of

Directors and Senior Management Personnel.

Declaration on the Code of Conduct

Pursuant to clause 49 of the Listing Agreement with stock

exchanges, I, Dr. Gopi Krishna Gupta, Manager of Indo Gulf

Industries Limited, declare that all the Board Members and Senior

Executives of the Company have affirmed their compliance with

the Code of Conduct during the Year ended 30th September,

2008.

Sd/-

Date: 21st November, 2008. Dr. Gopi Krishna Gupta

Place: New Delhi. Manager

Distribution of Shareholding as on 30th September, 2008 (Face Value of Rs. 10 each).

Shareholding range No. of Shares % of Shareholding No. of Shares holders % of shareholders

Upto 5,000 2,780,996 29.07 18,071 99.77

5,001-10,000 131,834 1.38 18 0.10

10,001-20,000 109,398 1.14 7 0.04

20,001-30,000 23,650 0.25 1 0.01

30,001-40,000 69,500 0.73 2 0.01

40,001-50,000 50,000 0.52 1 0.01

50,001-100,000 470,050 4.91 6 0.03

100,001 and above 5,931,842 62.00 7 0.03

Total 9,567,270 100.00 18,113 100.00

Pattern of Shareholding as on 30th September, 2008 (Face Value of Rs. 10 each).

No. of Shares % of Holding

Promoters Group 5162523 53.96

Financial Institution, Insurance Companies, Banks and Mutual Funds etc. 175548 1.83

Foreign Institutional Investors 1298 0.01

Private Corporate Bodies 898686 9.39

NRIs 97658 1.02

Indian Public 3231557 33.78

Total 9567270 100.00

CEO/CFO Certification


Certificate on Corporate Governance

The Board of Directors,

Indo Gulf Industries Limited,

New Delhi.

Re: Financial Statements for the financial year 2007-08 –

Certification by Manager and Manager (Accounts)

We, Gopi Krishna Gupta, Manager and Sanjay Kumar Agarwal,

Manager (Accounts) of Indo Gulf Industries Limited, on the basis

of the review of the financial statements and the cash flow

statement for the financial year ending 30th September, 2008 and

to the best of our knowledge and belief, hereby certify that:-

1. These statements do not contain any materially untrue

statements or omit any material fact or contain statements that

might be misleading.

2. These statements together present a true and fair view of the

Company’s affairs and are in compliance with existing

accounting standards, applicable laws and regulations.

3. There are, to the best of our knowledge and belief, no

transactions entered into by the Company during the financial

year ended 30th September, 2008 which are fraudulent, illegal

or violative of the Company’s Code of Conduct.

4. We accept responsibility for establishing and maintaining

internal controls for financial reporting. We have evaluated

the effectiveness of the internal control systems of the

company pertaining to financial reporting and we have

disclosed to the auditors and the Audit Committee those

deficiencies in the design or operation of such internal

controls of which we are aware and the steps we have taken

or propose to take to rectify these deficiencies.

5. We have indicated to the Auditors & the Audit Committee:-

a) there have been no significant changes in internal control

over financial reporting during this period.

b) there have been no significant changes in accounting

policies during this period.

c) there have been no instances of significant fraud of which

we have become aware and the involvement therein, of

management or an employee having significant role in the

Company’s internal control systems over financial

reporting.

Sd/- Sd/-

Sanjay Kumar Agarwal Dr. Gopi Krishna Gupta

Manager (Accounts) Manager

New Delhi.

Dated : 21st November, 2008.

The Members of

Indo Gulf Industries Limited

We have reviewed the compliance of conditions of corporate

governance by Indo Gulf Industries Limited for the year ended

30th September, 2008, as stipulated in the Clause 49 of the Listing

Agreement of the said Company with Stock Exchanges, with the

relevant records and documents maintained by the Company and

furnished to us.

The compliance of conditions of Corporate Governance is the

responsibility of the management. Our examination is limited to

procedures and implementation thereof, adopted by the

Company for ensuring the compliance of conditions of corporate

governance. It is neither an audit nor an expression of opinion on

the financial statements of the Company.

In our opinion and to the best of our information and according

to explanations given to us, we certify that the company has

complied with the conditions of corporate governance as

stipulated in the abovementioned ‘Listing Agreement’.

We further state that such compliance is neither an assurance to

the future viability of the Company nor the efficiency of

effectiveness with which the management has conducted the

affairs of the Company.

We have been explained that no investor grievances are pending

as on 30th September, 2008 for a period exceeding one month

against the Company as per the records maintained by the

Company.

For Anjali Yadav & Associates

Company Secretaries

B-6/32, Sector - 15, Rohini Sd/-

New Delhi - 110 085 (Anjali Yadav)

21st Day of November, 2008. Membership No. 15353.

Management Discussion and Analysis Report


The Indian Sugar Industry is cyclic in nature. The phase of

surplus Sugar Production is expected to end, in the Year 2007-08

the Country’s sugar production declined marginally from 28.3mn

in 2006-07 to 26mn tones because of late payment to farmers and

better realization from other crop. The drought-like situation in

Maharashtra and delayed monsoons are expected to result in

decline in sugarcane production. Fall in the Sugar Cane

Production, Strength the Sugar realization and vice versa.

Cane pricing in the country continues to be a challenging issue

due to government regulations related to sugarcane procurement,

cane pricing and sugar price. It remained an issue mainly in Uttar

Pradesh due to a lack in clarity of the State Advised Price (SAP).

A high SAP fixed by the state government independent of sugar

realizations created an earnings risk.

During the last season, 2007-08, Maizapur Sugar Unit of the

Company commenced operations and 287576 Quintals of sugar

was produced.

Opportunities and threats

Indian Sugar consumption is expected to grow steadily at 3%

annually, driven by population and per capita consumption

growth, which are projected to grow at 1.51% and 2.1% CAGR.

Mandatory blending of ethanol with petrol will give boost to

sugar industry. The sugar industry is moving from dull phase to

good phase. The threats faced by sugar Industry are adverse

government policies, high price of sugar cane, low installed

production capacity etc.

Outlook

Due to the fall in sugar cane production sugar Industry is

expected to recover from its dull phase by realizing reasonable

Sugar Price. The Company has been declared sick by the Board

of Industrial & Financial Reconstruction and will submit the Draft

Rehabilitation Scheme to the State Bank of India (OA) in due

course.

Risks

Sugar industry is dependent on Sugar Cane production, which is

monsoon-dependent crop. It makes the business vulnerable

particularly to a bad season.

Sugar is the last of the industries still to be liberalized. The Govt.

still stipulates the price that sugar companies must pay to the

farmers for cane, arrived at more through political rather than

economic considerations. The business with a high raw material

cost, even a small variation can potentially impact profitability.

Lower sugar cane realizations or arrears can prompt farmers to

shift to alternative crops, threatening a Company’s significant

investment in assets and infrastructure.

The Company, like all other entities, is subject to standard risks

like loss of property due to natural disasters like fire, earthquake,

etc.

Internal Control System and other adequacy

Internal Control Systems have been a core focus of the

Management of the Company. Effective / adequate Internal

Control Systems are being placed to ensure that all assets are

safeguarded and protected against unauthorized use and the

transactions are authorized, recorded and reported correctly.

Financial performance with respect to operational performance

The Board of Industrial & Financial Reconstruction (BIFR) in the

hearing held on 23rd October, 2008 has declared the Company

Sick in terms of Section 3(1)(o) of the Sick Industrial Companies

(Special Provisions) Act, 1985 (SICA). The Bench was of the

opinion that the Company would not be able to revive of its own

and it was necessary in the public interest to take the measures

specified under Section 18 of the SICA. Accordingly, State Bank

of India (SBI) was appointed as Operating Agency (OA) under

Section 17(3) of SICA to examine the viability of the Company

and formulate Rehabilitation Scheme.

Material Development in human resources

After taking over by the new management the company has

evolved a policy to ensure adequate and efficient human

resources. The underlying Policy of Management toward human

resource development is that competent and motivated

manpower is the most important factor in achieving business

goals. As on 30th September, 2008 the total number of Employees

on the payrolls of the Company were 536.

Cautionary statement

Details given herein above relating to various activities and

futures plans may be ‘forward-looking statements’ within the

meaning of applicable laws and regulations. The actual

performance may differ from these expressed or implied.

Auditors’ Report


To the Members of INDO GULF INDUSTRIES LIMITED

1. We have audited the attached Balance Sheet of INDO GULFINDUSTRIES LIMITED as at 30th September, 2008 and alsothe Profit and Loss Account and the Cash Flow Statement forthe year ended on that date, annexed thereto. These FinancialStatements are the responsibility of Company’s management.Our responsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financial statementsare free of material misstatements. An audit includesexamining, on a test basis, evidence supporting the amountsand disclosures in financial statements. An audit also includesassessing the accounting principles used and significantestimates made by the management, as well as evaluating theoverall financial statements presentation. We believe that ouraudit provides a reasonable basis for our opinion.

3. As required by the Companies, (Auditor’s Report) Order,2003, issued by the Central Government of India in terms ofsection 227 (4A) of the Companies Act, 1956, we enclose inthe Annexure hereto, a statement on the matters specified inParagraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to inparagraph 3 above; we report that: -

I. we have obtained all the information and explanations,which to the best of our knowledge and belief werenecessary for the purposes of our audit except nonavailability of non-operative bank account statements andits reconciliation;

II. in our opinion, proper books of account, as required bylaw, have been kept by the Company so far as appearsfrom our examination of the books;

III. the Balance Sheet, Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement withthe books of account;

IV. in our opinion, the Balance Sheet, Profit and Loss Accountand Cash Flow Statement dealt with by this report complywith the Accounting Standards referred to in sub-section(3C) of section 211 of the Companies Act, 1956;

V. in our opinion and to the best of our information and

according to the explanations given to us, the saidaccounts read with significant accounting policies andnotes thereon, subject to matters stated in paragraphsherein below:

i. Your attention is drawn on Note No. 6(c) in ScheduleR of the Financial Statement regarding erosion of net-worth of the Company. As of date accumulated lossesof Rs. 76.09 crores of the Company has exceeded theshareholders’ fund of Rs. 44.05 crores subject toamounts presently un-ascertainable as mentioned inunder noted para (ii). In view of the factors asmentioned in para 6 (c) of the Notes on Accounts, theaccounts have been made on the presumption ofgoing concern.

ii a. Regarding non-provision of interest on DeferredSales Tax Liability under the head UnsecuredLoans, amount being unascertained. (Note No. 23(b) of schedule R)

b. Regarding non-provision of interest and penaltyon statutory liabilities the amount beingunascertained. (Note No. 9 of schedule R)

give the information required by the CompaniesAct, 1956 in the manner so required and we statethat the accounts present a true and fair view inconformity with the accounting principlesgenerally accepted in India:

i) in the case of the Balance Sheet of the state ofaffairs of the Company as at 30th September ,2008;

ii) in the case of the Profit and Loss Account, ofthe loss for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of thecash flows for the year ended on that date.

For Vipin Aggarwal & Associates


Sd/-

(Vipin Aggarwal)

Place : New Delhi Membership No. 01654421st November, 2008. Partner

Annexure referred to in paragraph [3] of our report of even date

i) a) We have been informed that, the Company is againunder process of preparing the records of fixed assets.

b) According to explanation given to us, fixed assetsacquired during the year for the Sugar unit at Gonda

(U.P.) have been physically verified by the management.However, in respect of the fixed assets acquired duringthe previous years, the management is in the process ofits reconciliation.

Annexure to the Auditors’ Report


Further, in respect of the fixed assets of the explosiveunits, we have been informed that the same could notbe physically verified due to seizure of the plants.

c) There was no major disposal of fixed assets during theyear.

ii) a) The inventories have been physically verified during theperiod by the management at reasonable intervals forthe sugar unit at Maizapur, Gonda (U.P). Further, thereis no inventory at Explosive unit, Jhansi as the same hasbeen written off during the year.

b) In our opinion and according to the information andexplanations given to us, the procedure of physicallyverifying the inventory followed by the management isreasonable and adequate in relation to the size of theCompany and nature of its business.

c) On the basis of our examination, we are of the opinionthat the Company is maintaining proper records ofinventory. No material discrepancies were noticed onverification between the physical stocks and the bookrecords.

iii) The Company has neither granted nor taken any loanssecured or unsecured to/from Companies, firm or otherparties listed in the register maintained under section 301and/or to the Companies Act, 1956.

iv) On the basis of information and explanations given to us,we are of the opinion that the Company has an adequateinternal control system commensurate with the size of theCompany and the nature of its business for the purchase ofinventory and fixed assets and for the sale of goods.

v) Based on the audit procedures applied by us and accordingto the information and explanations provided by themanagement, we are of the opinion that there are notransactions that need to be entered into the registermaintained under Section 301 of the Companies Act.Accordingly, clause 4(v) of the Order is not applicable to theCompany.

vi) The Company has not accepted any deposits from thepublic within the meaning of Section 58A, 58AA or anyother relevant provisions of the Act and rules framed thereunder.

vii) In our opinion, the Company has an internal audit systemcommensurate with its size and the nature of its business.

viii) To the best of our knowledge and as explained, the CentralGovernment has not prescribed the maintenance of costrecords under clause (d) of sub section (1) of Section 209 ofthe Companies Act, 1956 for the products of the Company.

ix) There are no such undisputed statutory dues during theyear. However, due to non availability of records onaccount of seizure of sugar factory at Maizapur, Gonda(U.P.) and explosive units, we are unable to commentwhether in respect of earlier years any undisputed statutorydues were outstanding at the year end.

x) The accumulated losses are Rs. 7,609.65 lakhs (without

including unascertained amounts as mentioned in para V ii(a to b) of our report against the shareholders’ fund of Rs. 4,404.74 lakhs, which exceeds its net worth.

Further, it has incurred cash losses of Rs.1,083.58 lakhsduring the year under consideration and Rs.1,420.57 lakhsin the immediately preceding financial year withoutconsidering the effect as mentioned above.

xi) According to the information and explanations given to us,Paragraph 4(xi) of the order regarding default in payment ofdues to a financial institution or bank or debenture-holders,is not applicable.

xii) According to the information and explanations given to us,and based on the documents and records produced to us,the company has not granted loans and advances on thebasis of security by way of pledge of shares, debentures andother securities.

xiii) In our opinion and according to the information andexplanations given to us, the nature of activities of theCompany does not attract any special statute applicable tochit fund and Nidhi / mutual benefit fund/societies.

xiv) The Company does not deal or trade in shares, securities,and debentures other than the investments made by it.

xv) During the year, since the Company has not given anyguarantee for loans taken by others, paragraph 4 (xv) of theorder is not applicable.

xvi) According to the information and explanations given to us,and based on the documents and records produced to us,the company has applied the term loans for the purpose forwhich the loans were obtained.

xvii) According to the information and explanations given to us,and an overall examination of the Balance Sheet of theCompany, we report that no funds raised on short-termbasis have been used for long-term investment by theCompany and vice-versa.

xviii) The Company has not made any preferential allotment ofshares to parties or Companies covered in the registermaintained under section 301 of the Companies Act, 1956.

xix) During the year, since the company has not issued anydebentures, paragraph 4 (xix) of the order is not applicable.

xx) The Company has not raised any money through a publicissue during the year. Hence paragraph 4 (xx) of the orderis not applicable.

xxi) Based upon the audit procedures performed andinformation and explanations given by the management, wereport that no fraud on or by the Company has been noticedor reported during the course of our audit.



Sd/-

(Vipin Aggarwal)

Place : New Delhi Membership No. 01654421st November, 2008. Partner



(Rupees in Thousand)



I. SOURCES OF FUNDS


a) Share Capital A 88179.90 88179.90

b) Reserves & Surplus B 352293.44 440473.34 352293.44 440473.34

2. Loan Funds

a) Secured Loans C 1016115.34 703368.12

b) Unsecured Loans D 30838.24 1046953.58 34455.35 737823.47

1487426.92 1178296.81


1. Fixed Assets

a) Gross Block 948265.23 926522.24

b) Less: Depreciation 457930.66 415349.48

c) Net Block 490334.57 511172.76

d) Capital Work-in-progress 11234.58 15352.36

Net Fixed Assets E 501569.15 526525.12

2. Investments F 301.21 408.18

3. Current Assets, Loans and Advances

a) Current Assets G

i) Inventories 277336.41 80041.36

ii) Sundry Debtors 26803.86 5084.32

iii) Cash and Bank Balances 17552.18 15368.07

b) Loans & Advances H 35330.71 50329.04

357023.16 150822.79

c) Less: Current Liabilities & Provisions I 132431.90 114750.87

Net Current Assets 224591.26 36071.92

4. Miscellaneous Expenditure

(To the extent not written off or adjusted)


Less: Written off during the period 918.77 - 1904.48 918.77

5. Profit and Loss Account 760965.30 614372.82

1487426.92 1178296.81

Significant Accounting Policies Q

Notes on Accounts R

Schedules “A” to “I”, Q & “R” referred to above form an integral part of the Balance Sheet.

This is the Balance Sheet referred to in our report of even date.

For Vipin Aggarwal & AssociatesChartered Accountants

Sd/- Sd/- Sd/- Sd/-Vipin Aggarwal Neha Kejriwal Anup Kumar Acharya Vimal Kumar JainMembership No. 016544 Company Secretary Director DirectorPartner

E-4, Defence Colony,New Delhi.21st November, 2008.

Profit and Loss Account For the year ended 30th September, 2008


This is the Profit and Loss Account referred to in our report of even date.


Sd/- Sd/- Sd/- Sd/-Vipin Aggarwal Neha Kejriwal Anup Kumar Acharya Vimal Kumar JainMembership No. 016544 Company Secretary Director DirectorPartner



Schedule Year ended 30th Year ended 30th


I INCOME

Gross Turnover

Sales 315122.76 35482.24

Less : Excise Duty and Cess 24727.65 4594.18

Net Turnover 290395.11 30888.06

Other Income J 10849.43 3878.03

301244.54 34766.09

II EXPENDITURE

Cost of Raw Materials Consumed 357305.76 78789.97

Decrease / (Increase) in Stock K (183750.87) (47950.14)

Loss /(Profit) from Farm Account L (211.61) 103.94

Salaries, Wages & other Employees' Benefits M 44493.04 18510.99

Other Manufacturing & Administrative Expenses N 80241.29 40593.75

Selling Expenses O 822.41 72.85

Interest & Other Financial Charges P 104298.82 56255.57


Adjustment Relating to Earlier Years 1882.92 30804.86

(Refer Note No.-13 of Schedule R)

447671.83 213349.54

III LOSS BEFORE TAX 146427.29 178583.45

Add: Provision for Fringe Benefit Tax 165.19 163.44

IV LOSS AFTER TAX 146592.48 178746.89

Balance brought forward 614372.82 435625.93

V BALANCE CARRIED TO BALANCE SHEET 760965.30 614372.82

Significant Accounting Policies Q

Notes on Accounts R

Schedules “J” to “R” form an integral part of the Profit and Loss Account.

Cash Flow Statement For the year ended 30th September, 2008



Year ended 30th Year ended 30thSeptember, 2008 September, 2007

A CASH FLOW FROM OPERATING ACTIVITIESNet Profit before Tax and Extra Ordinary Items (144,544.37) (147,778.59)Adjustment for:Depreciation 42,590.07 36,167.75 Share Issue Expenses written off 918.77 1,904.48 Provision for dimunition in value of Investments - (162.74)Other Provisions 1,114.82 836.56 Prior period items (1,882.92) (30,804.86)Interest Paid 104,298.82 56,255.57 Inventories/Assets written off 479.25 (177.22)Provision for Doubtful Debts - (2,343.71)Bad Debts Written Off - 3,073.09 Balances Written Back (7,029.56) (2,771.57)Profit on Sale of Fixed Asset (5.59) - Loss on Sale of Asset 1.14 -Operating Profit before Working Capital changes (4,059.57) (85,801.24)Adjustment for:Trade and Other Receivables (6,721.21) 41,462.99 Inventories (197,774.31) (79,220.38)Trade Payables 23,537.55 (180,957.97) (43,166.79) (80,924.18)Cash Generated from Operations (185,017.54) (166,725.42)Direct Taxes (paid)/refund – –Cash Flow before Extra Ordinary Itmes (185,017.54) (166,725.42)Extra Ordinary Items – –Net Cash from Operating Activities (185,017.54) (166,725.42)

B) CASH FLOW FROM INVESTMENT ACTIVITIESPurchase of Investments - (2.00)Capital Work-in-Process (6,667.91) (8,256.91)Purchase of Fixed Assets (11,039.73) (194,108.07)Sale of Fixed Assets 78.00 - Net Cash from Investing Activities (17,629.64) (202,366.98)

C) CASH FLOW FROM FINANCING ACTIVITIESProceeds from other Borrowings 312,747.22 482,031.05 Interest Paid (104,298.82) (56,255.57)Loans Repaid (3,617.11) (59,496.78)Net Cash from Financing Activities 204,831.29 366,278.70 Net Increase/ (Decrease) in Cash & Cash Equivalents 2,184.11 (2,813.70)Opening Cash and Cash Equivalents 15,368.07 18,181.77 Closing Cash and Cash Equivalents 17,552.18 15,368.07

Notes :1) The above Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting Standard - 3 on Cash Flow

Statement issued by the Institute of Chartered Accountants of India.2) Figure in bracket represent cash outflow.3) Cash and Cash equivalent at the end of the year consist of:

a) Cash and Cheques in hand 172.89 59.31 b) Balances with banks:

Current Accounts 17,164.01 15,187.55 Fixed Deposits 215.28 121.21

Total 17,552.18 15,368.07

As per our report of even date.


Sd/- Sd/- Sd/- Sd/-ipin Aggarwal Neha Kejriwal Anup Kumar Acharya Vimal Kumar JainMembership No. 016544 Company Secretary Director DirectorPartner







Authorised

1,97,50,000 (Previous Year 1,97,50,000) Equity Shares of Rs.10/- each 197500.00 197500.00

25,000 (Previous Year 25,000) 10% Convertible Cumulative Preference

Shares of Rs.100/- each 2500.00 2500.00

200000.00 200000.00

Issued, Subscribed & Paid up

95,67,270 (Previous Year 95,67,270) Equity Shares of Rs. 10/- each 95672.70 95672.70

Less: Call unpaid (Allotment money) 7492.80 7492.80

88179.90 88179.90

A SHARE CAPITAL




Capital Reserve 13599.83 13599.83

Securities Premium 378044.08 378044.08

Less: Calls in Arrears 39450.47 338593.61 39450.47 338593.61

Debenture Redemption Reserve 100.00 100.00

352293.44 352293.44

B RESERVES AND SURPLUS




From Holding Company 750000.00 703368.12

State Bank of India (Term Loan Interest Free) 23000.00 -

State Bank of India (Cash Credit Account) 243115.34 -

1016115.34 703368.12

C SECURED LOANS (Refer to Note No. 4 of Schedule 'R')




From Others (Ex-Director) - 3617.11

Deferred Sales Tax 30838.24 30838.24

30838.24 34455.35

D UNSECURED LOANS


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ETS




Number of As at 30th Number of As at 30th

Shares / September, Shares / September,

Units 2008 Units 2007

Long Term Investments

In Government Securities :

(Deposited with Government authorities)

Kisan Vikas Patra - 1.00

Post Office National Saving Certificates 2.00 107.97

In Shares of Companies:

Trade Investments :

Quoted, Fully Paid Up :

American Paints (India) Ltd. 200,000 2000.00 @ 200,000 2000.00 @

Classic Global Security Ltd. 8,400 164.00 @ 8,400 164.00 @

Damania Capital Markets Ltd. 60,100 1,808.00 @ 60,100 1808.00 @

Easter India Ltd. 1,000 37.00 @ 1,000 37.00 @

Eastern Sugar Mills Ltd. 23,000 230.00 @ 23,000 230.00 @

Inland Printers Ltd. 52,000 3124.11 @ 52,000 3124.11 @

KM Capital Ltd. 16,500 214.00 @ 16,500 214.00 @

Ram Gopal Poly Ltd. 135,320 2232.00 @ 135,320 2232.00 @

VLS Finance Ltd. 10,300 3842.00 10,300 3842.00

13653.11 13760.08

Less : Provision for dimunition in value of investments 13351.90 13351.90

301.21 408.18

F INVESTMENTS

Aggregrate Market Value of Investments Current year Rs. 106.61 Thousands (Previous year Rs.299.22 Thousands)

@ Market Value not available.(Rupees in Thousand)



a) Inventories (As taken, valued & certified by the Management)

i) Stores & Spare Parts 26620.46 27256.00

ii) Loose Tools & Equipments 1850.98 28471.44 1680.22 28936.22

Finished Goods

Sugar 243963.69 50416.51

Work- in- Process

Sugar 2918.32 107.14

Molasses 622.40 -

Bagasse 304.56 337.49

Standing Crop 1056.00 244.00

277336.41 80041.36

b) Sundry Debtors (Unsecured, Considered Good)

i) Debts outstanding for a period exceeding six months - -

ii) Other debts 26803.86 5084.32

26803.86 5084.32

c) Cash & Bank Balances

Cash in hand 172.89 59.31

With Scheduled Banks

i) In Current Accounts 17164.01 15187.55

ii) In Fixed Deposit Accounts 215.28 17379.29 121.21 15308.76

17552.18 15368.07

G CURRENT ASSETS






Advances

Advances recoverable in cash or in kind or for value to be received or

pending adjustment


Considered Doubtful 36559.79 36559.79

Less: Provision for Doubtful Debts 36559.79 - 36559.79 -

Deposits



Less: Provision made for Doubtful Deposits 12601.00 - 12601.00 -

Excise Duty & Cane Purchase Tax Advance



Less: Provision made 2922.79 - 2922.79 -

35330.71 50329.04

H LOANS & ADVANCES (Unsecured, considered good unless stated otherwise)




Current Liabilities

Sundry Creditors 85131.17 79880.74

Provisions


Provision for Unconfirmed Bank Balances 12050.78 -

Provision for Liabilities & Others 28967.63 28967.63

132431.90 114750.87

I CURRENT LIABILITIES & PROVISIONS




Liabilities no Longer Required Written Back 9317.41 2771.57

Miscellaneous Income * 1532.02 1106.46

10849.43 3878.03

J OTHER INCOME

* Includes Scarp Sale Rs. Nil (Previous year Rs. 895.68 Thousands), TCS Rs. Nil (Previous year Rs 10.54 Thousands).






Opening Stock

Finished Goods 50416.51 -

Bagasse 337.49 -

Work- in- Process 107.14 50861.14 - -

Closing Stock

Finished Goods 243963.69 50416.51

Molasses 622.40 -

Bagasse 304.56 337.49

Work- in- Process 2918.32 247808.97 107.14 50861.14

(196947.83) (50861.14)

Less/ (Add) : Excise Duty & Cess on Stock* (13196.96) (2911.00)

(183750.87) (47950.14)

K DECREASE / (INCREASE ) IN STOCK




Sales 339.56 -

Closing Stock of Standing Crop 1056.00 244.00

Net Loss/(Profit) transferred to Profit & Loss Account (211.61) 103.94

1183.95 347.94

Opening Stock of Standing Crop 244.00 -

Cane Seed Purchased 130.21 61.24

Fertiliser & Manures 255.89 69.60

Salaries & Wages (labour) 286.95 56.56

Irrigation & Cultivation Expenses 241.16 133.76

Repairs & Maintenance - Others 25.74 26.78

1183.95 347.94

L FARM ACCOUNT




Salaries, Wages, Bonus, etc. 38085.60 15690.30

Contribution to Provident Fund, Gratuity & Other Funds (Including provisions) 5067.83 2371.55

Workmen & Staff Welfare Expenses 1339.61 449.14

44493.04 18510.99

M SALARIES, WAGES & OTHER EMPLOYEES' BENEFITS

* Represents differential Excise duty & Education Cess on opening & closing stock of finished goods / by products.






Stores & Spare Parts Consumed 28447.94 6086.36

Power & Fuel 4664.83 2160.62

Filling & Packing Expenses 1167.18 309.85

Rent 360.17 459.85

Rates & Taxes 800.73 69.09

Repairs & Maintenance

Plant & Machinery 11967.34 11069.86

Buildings 1179.07 1365.61

Others 1191.83 14338.24 604.00 13039.47

Payment to Auditors (Refer to Note No. 12 of Schedule 'R') 571.01 348.42

Travelling and Conveyance 3087.56 2317.99

Legal and Professional 2131.17 6324.34

AGM Expenses 187.16 413.13

Security Expenses 2254.63 983.32

Miscellaneous Expenses 7445.22 2092.65

Insurance 1160.61 470.93

Conservancy and Upkeep 655.29 540.16

Bad Debts - 3073.09

Share Issue Expenses written off 918.77 1904.48

Provision for Unconfirmed Bank Balances 12050.78 -

80241.29 40593.75

N OTHER MANUFACTURING & ADMINISTRATIVE EXPENSES




Brokerage 656.21 72.85

Others 166.20 -

822.41 72.85

O SELLING EXPENSES




On ICD from Holding Co. 103682.00 43090.20


104298.82 56255.57

104298.82 56255.57

P INTEREST & OTHER FINANCIAL CHARGES



The accounts are prepared under the historical cost convention and are in accordance with the generally accepted accounting principlesin India and provisions of the Companies Act, 1956 and also in compliance with the accounting standard issued by The Institute ofChartered Accountants of India. The significant accounting policies followed by the Company are stated below:

1 Fixed Assets

a) Fixed Assets are stated at cost less accumulated depreciation. Cost of Acquisition or construction is inclusive of freight, duties,taxes, financial costs and other related expenses up to the date of commissioning of the assets.

b) The Company is following the straight line method of depreciation in respect of all assets at the rates specified in Schedule XIVto the Companies Act, 1956 (as amended). Depreciation is not provide on assets sold, discarded etc. in the year of sale.

c) Expenditure during construction period:Expenditure (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred onprojects under implementation are treated as Pre-operative expenses pending allocation to the assets and are shown under'Capital Work-in-Progress'.

d) Leasehold land value is not amortised in view of the long-term nature of the lease.

2 Investments

Long Term Investments are carried at cost. Provision for major diminution is made to recognise a decline, other than temporary,in the value of long term investments, script wise. Current Investments are valued at lower of cost or fair value, category wise. Costof investments includes acquisition cost such as brokerage, stamp duty etc.

3 Inventories

a) Inventories including Finished Goods (other than By-products, Scrap and Standing crop) are valued at lower of cost or netrealisable value. Selling price includes Excise Duty but excludes Sales Tax. Cost is determined by using FIFO method and doesnot include recoverable taxes. The cost of Finished goods and work-in-process include cost of conversion and other costincurred in bringing the Inventories to their present location and condition.


4 Revenue Recognition


b) Gross turnover includes excise duty but exclude sales tax.



5 Expenses

All the expenses are accounted for on accrual basis except interest on calls in arrears, which is accounted for on receipt basis.

6 Excise Duty

Excise Duty is paid on clearance of goods from the factory, however liability for the same is provided on the finished goods stocklying in the factory.

7 Material in transit

All the materials which are purchased before the closing date of the financial year but are not received by the Company, areaccounted for as material in transit. CENVAT on such material in transit is also accounted for as CENVAT receivable.

8 Employee Benefits


b) Long-term employee benefits i.e. Gratuity, Leave Encashment, Contributions to Provident Fund & Pension Fund etc., arerecognised as an expense in the Profit & Loss Account for the year in which the employee has rendered services. The expenseis recognised at the present value of the amount payable as per actuarial valuations. Actuarial gains and losses in respect ofsuch benefits are recognised in the Profit and Loss Account.

9 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of suchassets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for intended use. All other borrowingcosts are charged to revenue.

Q SIGNIFICANT ACCOUNTING POLICIES



10 Insurance Claims


11 Government Grants & Subsidies

a) Government grants related to specific fixed assets are adjusted with the value of the fixed asset. If not relating to a specific fixedasset, it is credited to Capital Reserve.

b) Government grants related to revenue items are adjusted with the related expenditure. If not relating to a specific expenditure,it is taken as income.

12 Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subjectto the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxableincome and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

13 Impairment of Assets

Impairment losses, if any, are recognised in accordance with the accounting standard issued in this regard by The Institute ofChartered Accountants of India.

14 Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheetdate is considered probable.

Contingent Liabilities are shown by way of notes to the Accounts in respect of obligations where, based on the evidence available,their existence at the Balance Sheet date is considered not probable.


Q SIGNIFICANT ACCOUNTING POLICIES (Contd...)

3 The supplier of the plant & machinery of the sugar division has gone into arbitration regarding certain claims & company has alsofiled counter claim. The case is pending with the arbitrator. No effect has been taken in the books of account, as ultimate effect isnot ascertainable.

4 a) Loan from Holding Company is secured by way of second charge on the entire current assets including book debts and movablefixed assets at the Company's sugar unit at Maizapur.

b) Interest Free Rupee Term Loan from SBI is secured by way of hypothecation of goods, book debts & all movable properties atCompany's sugar unit at Maizapur both present and future, and by way of Corporate Guarantee by Holding Company and isfurther to be secured by way of residual charge on entire fixed assets including extension of equitable mortgage charge on Land& Building and hypothecation of Plant & Machinery, present & future, of the Company's sugar unit at Maizapur.

c) Cash Credit with SBI is secured by way of hypothecation of entire stock of sugar, sugar in process, mill stores, bagasse, molassesand other current assets including book debts, both present and future, and by way of Corporate Guarantee of the HoldingCompany.

5 Disclosures required under the Micro, Small & Medium Development Act, 2006.

There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45days as at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises have been determined to the

R NOTES ON ACCOUNTS




1 a) Estimated amount of contracts remaining to be executed on Capital Account and

not provided for 141.59 8518.70


2 Contingent Liabilities not provided for in respect of:

a) Bank guarantee provided to U.P. Pollution Control Board for granting consent of

Air and water is backed by FDRs of the same amount. 100.00 100.00

b) Differential cane price for the sugar season 2007-08 pending disposal of the Writ filed

by the UP Sugar Mills Association of which the Company is member in Hon'ble

Supreme Court of India 38407.00 -



extent such parties have been identified on the basis of information available with the Company.

6 a) The Government of Uttar Pradesh has initiated in the earlier years recovery proceedings for recovery of Sales Tax dues relatedto Explosive unit at Jhansi, pursuant to which, the factory at Jhansi has been seized by the Government authorities. All theassets located at factory including records there at remain seized till the year end. Out of the above assets, certain assetspertaining to the said unit have been auctioned by the office of the labour commissioner, Jhansi, against which a sum of Rs.803.00 Thousands is lying with them. Pending availability of relevant information, no adjustment in this respect has been carriedout in these accounts.

b) Pursuant to recovery proceedings initiated by U.P. State Government for the recovery of pending dues of Cane Growers andfor giving effect to the Recovery Certificates amounting to Rs. 156100.00 thousands, all the moveable & immoveable assets ofthe sugar unit located at Maizapur, District Gonda (U.P.) were seized by the District Administration on August 12, 2002. Towardsthe said recovery Certificate District Administation sold the entire stocks belonging to the Company and deposited the saleproceeds amounting to Rs. 125041.00 thousands with Registrar Allahabad High Court. The Company also deposited a sum ofthe Rs. 32331.00 thousands with the Hon’ble High Court towards the said recovery and other cane dues. Out of the said amountRs. 149331.00 thousands had been released by the Court to the Cane Commissioner leaving a balance of Rs. 804l.00 thousandsin the Court, which is being reflected under the head loan and advances.

c) The Company’s net worth has been fully eroded as the accumulated loss of Rs.760965.30 thousands has been exceeded itsshareholders’ fund of Rs. 440473.34 thousands. It was felt that the status of the Company will be improved in the followingyears, as the production has already commenced and plant will run on a continuous basis. Further the holding Company hasprovided the necessary funds for the operations. Accordingly the Company has considered that it will be able to continue as aGoing Concern entity.

7 The un-reconciled old bank balances amounting to Rs. 12050.78 thousands have been considered doubtful. Provision for doubtfulbank balances have been made in the books during the year. The amount includes Rs.1545.08 thousands realized from the auctionof molasses during the previous year, kept with Gonda District Administration and Allahabad Bank, Gonda Branch in a no-lienaccount subject to disposal as per the order of Hon’ble Allahabad High Court, Lucknow Bench, Lucknow do not seem to berecoverable hence provision for doubtful balances have been made in the accounts during the year.

8 a) In the opinion of management, the “Loans and Advances” have a value on realization in the ordinary course of business at leastequal to the amount at which they are stated in the Balance Sheet. Further, in respect of certain items which were longoutstanding, necessary provision has been made.

b) i) Rs. 11260.00 thousands given as share application money and included in Loans and Advances against which shares are yetto be issued by the concerned companies are still considered to be good, there by no provision has been made for thesame.

ii) Loans and Advances includes Rs. 7135.52 thousands paid under protest with Sales Tax Authorities towards Sales Tax dues,against which liability for Rs. 28967.63 thousands have been provided

9 Pending final settlement, Interest on statutory liabilities outstanding for a long period has not been provided, as the quantum thereofis not ascertainable.

10 Interest receivable (net of interest payable) on allotment money remaining unpaid in respect of Equity Shares issued on conversionof 12% Convertible Debentures will be accounted for on receipt basis.

11 Computation of Net Profit for the purpose of calculating directors remuneration has not been made as no remuneration paid/payableto the directors except sitting fees .

12 Payment to Auditors include:

R NOTES ON ACCOUNTS (Contd...)

2007-08 2006-07

i) As Audit Fees 426.97 185.39

ii) Tax Audit 84.27 84.27

iii) Tax matters - 56.18

iv) Certification etc. 59.77 22.58

571.01 348.42





2007-08 2006-07

Expenses

i) Workmen & Gratuity Expenses 1882.92 -

ii) FIs & Banks - 30804.86

1882.92 30804.86

13 Details of Adjustment relating to earlier years :

14 Employee Benefits

a) Defined Benefit Plans / Long Term Compensated Absences - As per Acturial Valuation as on 30th September, 2008 andrecognised in the financial statements in respect of Employee Benefit Schemes :

b) The Gratuity Expenses have been recognised in "Contribution to Provident Fund, Gratuity & Other Funds" and LeaveEncashment in "Salaries, Wages, Bonus, etc." under Schedule - 'M'


Gratuity Leave Encashment

(Unfunded) (Unfunded)

I. Actuarial Assumptions

1 Discount Rate 8.50 8.502 Expected Return on Plan Assets (per annum) – - 3 Salary Increment 6.00 6.00 4 Retirement/ Superannuation Age 58 58 5 Mortality LICI 1994-1996 LICI 1994-1996

II. Change in Present Value of Defined Benefit Obligation

1 Present Value of Defined Benefit Obligation at the Beginning of the year 9.78 6.742 Acquisition Adjustment - - 3 Interest Cost 0.60 0.394 Past Service Cost - - 5 Current Service Cost 8.30 1.776 Curtailment Cost - - 7 Settlement Cost - - 8 Benefits Paid 5.34 4.269 Actuarial Gain (Losses) (0.62) 2.3510 Present Value of Defined Benefit Obligation at the End of the Period 12.72 6.99

III. Change in Fair Value of Plan Assets during the year ended 30th September, 2008

1 Plan Assets at the Beginning of the Year - - 2 Acquisition Adjustment - - 3 Expected Return on Plan Assets - - 4 Actuarial Gains / (Losses) - - 5 Actual Company Contribution - - 6 Benefits Paid - - 7 Plan Assets at the End of the Period - -

IV. Net Asset / (Liability) recognised in the Balance Sheet as at 30th September, 2008

1 Present value of Defined Benefit Obligation 12.72 6.992 Fair Value on Plan Assets - - 3 Funded Status (12.72) (6.99)4 Unrecognised actuarial gain / loss - - 5 Net Asset / (Liability) recognised in Balance Sheet (12.72) (6.99)

V. Components of Employer Expense

1 Current Service Cost 8.30 1.772 Past Service Cost - - 3 Interest Cost 0.60 0.394 Expected Return on Plan Asset - - 5 Curtailment Cost - - 6 Settlement Cost - - 7 Actuarial gain/(loss) recognised in the year (0.62) 2.358 Expense Recognised in Statement of Profit & Loss Account 8.28 4.51




2007-08 2006-07

a) Amount used as the numerator (Rupees in Thousands)

Loss after Tax 146592.48 178746.89

Total - (A) 146592.48 178746.89


Basic Earnings per Share - (B) 8817990.00 8817990.00

c) Nominal value of Equity Shares (Rs.) 10.00 10.00

d) Basic/Diluted Earnings per Share (Rs.) (16.62) (20.27)

15 Subsidy (Central and others) and Investment Allowance Reserve (utilized) have been transferred to Capital Reserve Account duringthe year.

16 Related party disclosures as per Accounting Standard - 18 for the year ended 30th September, 2008 are given below:

a) Maximum amount outstanding during the year Rs.1019445.00 thousands (Previous year Rs.703368.00 Thosands).

b) No amount has been written back / written off during the year in respect of due to / from related parties.

17 In accordance with Accounting Standard 22 “Accounting for taxes on Income Tax”, issued by The Institute of Chartered Accountantsof India , the company has not accounted for deferred tax during the year. The Company has significant amount of carried forwardlosses and unabsorbed depreciation under the Income Tax Act, 1961. However, as a matter of prudence deferred tax assets havenot been recognised.

18 Disclosure under clause 32 of the Listing Agreement :

There are no transactions (other than transactions with Holding Company as given in para16 above) which are required to bedisclosed under clause 32 of Listing Agreement.

19 Earning per Share

Earnings per Share - The numerators and denominators used to calculate Basic/Diluted Earnings per Share :

20 Intangible Assets

The amount of Share Issue Expenses has been fully amortised during this year.

21 Due to seizure of company’s explosive plant at Jhansi, the condition of the Plant & Machineries and other fixed assets there at andthe impairment loss, if any, in respect thereof could not be determined, pending which no provision for such loss, if any, could bemade in the accounts.





1. Holding Company – Balrampur Chini Mills Limited

i) Sale of Raw Material and Bye-products 27260.94 -

ii) Sale of Store Materials and Others 1704.44 -

iii) Sale of Fixed Assets 35.84 -

iv) Purchase of Raw Material and Bye-products 1029.00 -

v) Purchase of Store Materials and Others 2393.31 -

vi) Purchase of Fixed Assets 600.16 -

vii) Recovery of Expenses 6482.91 -

viii) Reimbursement of Expenses 38905.60 -

ix) Inter-corporate Loan Taken 524023.00 661692.00

x) Interest Paid/Payable 103682.00 43090.20

xi) Accounts Payable 750000.00 703368.13



22 Disclosure in terms of Accounting Standard -29 on Provisions, Contingent Liabilities and Contingent Assets:


23 a) Calls in arrears and Deferred Sales Tax Liabilities are under reconciliation. Necessary adjustment, if any, will be made afterreconciliation.

b) The installments for payment of Deferred Sales Tax converted into unsecured loan by Sales Tax Department are overdue. Thesame has not been paid and the interest thereon, if any, has not been provided in the accounts, as the quantum thereof is notascertainable.

24 Investments in Shares are in the name of the company except those, which are in the process of transfer.

25 Balances shown under Sundry Creditors and advances are subject to confirmation and reconciliation with the parties.

26 Lease deed for 50 Acres of Land (Out of total land of 705 acres) for Jhansi Plant has not been executed. In respect of some otherland, the registration formalities are under process.

27 Additional information pursuant to the provisions of paragraphs 3 & 4 of Part - II of Schedule VI to the Companies Act, 1956:

A QUANTITATIVE INFORMATION:

b) The Liabilities mentioned above depend upon Court decision/out of court settlement/disposal of appeals etc.

c) No reimbursement is expected in the case of Contingent Liabilities & Liabilities shown respectively under Sl. No. 2 & 22 (a)above.


Particulars Duties & Taxes

Balance as at 1st October, 2008 28967.63

Provided during the year -

Amount used during the year -

Reversed during the year -

Balance as at 30th September, 2008 28967.63

Timing of outflow/uncertainties Outflow on settlement/crystallization




i) Licensed Capacity

Slurry Explosive (MT) 10000 10000

Blasting Agent (MT) 35000 35000

Cast Booster (MT) 20 20

Detonating Fuse (million meters) 5 5

Sugar (TCD) 3000 3000

ii) Installed capacity (As certified by the Management)

Slurry Explosive (MT) 10000 10000

Blasting Agent (MT) 35000 35000

Cast Booster (MT) 20 20

Detonating Fuse (million meters) 5 5

Sugar (TCD) 3000 3000

Class of Goods Production Sales

Unit Quantity Quantity Amount

a) Sugar Qtls. 285780 180329 280473.67

(54814) (20213) (27818.67)

b) Molasses Qtls. 146026 # 143564 32152.68

(37852) (37852) (6339.17)

c) Bagasse Qtls. 980112 § 982929 2496.41

(232415) (217415) (1324.40)

Total 315122.76

(35482.24)

iii) Particulars of Goods Manufactured

# Includes 295.40 Qtls. (408 Qtls.) storage loss. § Includes 886540 Qtls. (148850 Qtls.) captive consumption.





Class of Goods Unit Opening Stock Closing Stock

Quantity Amount Quantity Amount

a) Sugar Qtls. 34601 50416.51 140052 243963.69

( - ) ( - ) (34601) (50416.51)

b) Molasses Qtls. - - 2462 622.40

( - ) ( - ) ( - ) ( - )

c) Bagasse Qtls. 15000 337.49 12183 304.56

( - ) ( - ) (15000) (337.49)

Total 50754.00 244890.65

( - ) (50754.00)


(Rupees in Thousand)B RAW MATERIALS CONSUMED

Unit Quantity Amount

Sugar Cane lakh/Qtls. 29.71 357305.76

(5.95) (78789.97)

Total 357305.76

(78789.97)

(Rupees in Thousand)C CONSUMPTION OF STORES & SPARE PARTS

Amount

Imported NIL

NIL

Indigenous 28447.94

(6086.36)

(Rupees in Thousand)D EXPENDITURE IN FOREIGN CURRENCY

Amount

On Professional & Consultancy NIL

On Travelling NIL

On Interest NIL

On Others NIL

(Rupees in Thousand)E EARNINGS IN FOREIGN EXCHANGE

Amount

FOB Value of exports NIL

Others NIL

(Rupees in Thousand)F C.I.F. VALUE OF IMPORTS

Note : Figures in brackets pertain to previous year.

Amount

Raw Materials NIL

Components and Spare Parts NIL

Capital Goods NIL




(Rs. in Thousands)

a) Registration details :

Company Identification No. L74900DL1981PLC011425State Code 55Balance Sheet Date 30th September, 2008

b) Capital raised during the year

Public Issue NIL Rights Issue NIL Bonus Issue NIL Private Placement NIL

c) Position of mobilisation and deployment of funds

Total Liabilities 1487426.92Total Assets 1487426.92SOURCES OF FUNDS

Paid up Capital 88179.90Reserve & Surplus 352293.44Secured Loans 1016115.34Unsecured Loans 30838.24

1487426.92

APPLICATION OF FUNDS

Net Fixed Assets 501569.15Investments 301.21Net Current Assets 224591.26Miscellaneous Expenditure 760965.30

1487426.92

d) Performance of the Company

Turnover (including Other Income) 301244.54Total Expenditure 447671.83Loss Before Taxation 146427.29Loss After Tax 146592.48Earnings per Share (Rs.) (16.62)Dividend Rate (%) NIL

e) Generic names of principal products of the Company Item Code No.

Product Description (ITC Code)

Industrial Explosive 36020009 Sugar 170111.09

28 Balance Sheet Abstract & Company's General Business Profile

29 No provision for taxation has been made since there are no taxable profits as per the provisions of Income Tax Act, 1961.

30 Previous year's figures have been re-grouped / re-arranged wherever found necessary.

Signatories to all foregoing Schedules 'A' to 'Q' forming part of the Accounts.



Sd/- Sd/- Sd/- Sd/-

Vipin Aggarwal Neha Kejriwal Anup Kumar Acharya Vimal Kumar Jain

Membership No. 016544 Company Secretary Director Director

Partner

E-4, Defence Colony,

New Delhi.

21st November, 2008.

Report of the Directors

Balrampur Overseas Pvt Limited | 149

BALRAMPUR OVERSEAS PVT LIMITED

The directors have pleasure in submitting their first reporttogether with the audited financial statements for the period from13 September 2007 (date of incorporation) to 30 September 2008.

Principal Activities

The principal activity of the company was trading.

Results and Affairs

The results and cash flows of the company for the period ended30 September 2008 and the state of its affairs at that date are setout in the annexed financial statements.

Share Capital

Movement in share capital during the period is set out in note 6to the financial statements.

Directors

The directors during the period were:

Kedar Nath Ranasaria - appointed on 13 September 2007

Kishor Shah - appointed on 13 September 2007

Santosh Kumar Agrawala - appointed on 13 September 2007

There being no provision in the company’s articles of associationfor retirement by rotation, all the director continue in office.

Directors’ Interests

No contracts of significance in relation to the company’s businessto which the company was a party and in which the directors ofthe company had a material interest, whether directly orindirectly, subsisted at the end of the period or at any time duringthe period.

At no time during the period was the company a party to anyarrangements to enable the directors of the company to acquirebenefits by means of the acquisition of shares in, or debenturesof, the company or any other body corporate.

Auditors

The financial statements have been audited by Golden Mark &Company, Certified Public Accountants who retire and beingeligible, offer themselves for re-appointment at the forthcomingAnnual General Meeting.

On behalf of the board

Sd/-

Hong Kong, Kishor Shah

Date: 18.11.2008 Sole Director

Independent Auditor’s Report

We have audited the financial statements of Balrampur OverseasPvt Limited set out on pages 5 to 12 which comprise the balancesheet as at 30 September 2008, and the income statement,statement of changes in equity and cash flow statement for thefirst period then ended and a summary of significant accountingpolicies and other explanatory notes.

Directors’ responsibility for the financial statements

The directors are responsible for the preparation and the true andfair presentation of these financial statements in accordance withHong Kong Financial Reporting Standards issued by the HongKong Institute of Certified Public Accountants and the Hong KongCompanies Ordinance. This responsibility includes designing,implementing and maintaining internal control relevant to thepreparation and the true and fair presentation of financialstatements that are free from materials misstatement, whether dueto fraud or error; selecting and applying appropriate accountingpolicies; and making accounting estimates that are reasonable inthe circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these financialstatements based on our audit and to report our opinion solely toyou, as a body, in accordance with Section 141 of the Hong KongCompanies Ordinance and for no other purpose. We do notassume responsibility towards or accept liability to any otherperson for the contents of this report. We conducted our audit inaccordance with Hong Kong Standards on Auditing issued by theHong Kong Institute of Certified Public Accountants. Thosestandards require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance as to

whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidenceabout the amounts and disclosures in the financial statements.The procedures selected depend on the auditor’s judgment,including the assessment of the risks of material misstatement ofthe financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal controlrelevant to the entity’s preparation and true and fair presentationof the financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the entity’sinternal control. An audit also includes evaluating theappropriateness of accounting policies used and thereasonableness of accounting estimates made by the directors, aswell as evaluating the overall presentation of the financialstatements.

We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, , the financial statements give a true and fair viewof the state of the company’s affairs as at 30 September 2008 andof its loss and cash flows for the period then ended in accordancewith Hong Kong Financial Reporting Standards and have beenproperly prepared in accordance with the Hong Kong CompaniesOrdinance.

GOLDEN MARK & COMPANY

Certified Public Accountants

Date: 18.11.2008 Hong Kong,

To the Shareholders of BALRAMPUR OVERSEAS PVT LIMITED (incorporated in Hong Kong with limited liability)

150 | Balrampur Overseas Pvt Limited

Income Statement For the period from 13th September 2007 (Date of incorporation) to 30th September, 2008

Notes HK$Turnover 3 -- Other Income 3 16,371 Administrative Expenses (470,844)Loss Before Taxation 4 (454,473)Income Tax 5 -- Loss For The Period (454,473)

Statement of Changes in Equity For the period from 13th September 2007 (Date of incorporation) to 30th September, 2008

Share Capital Accumulated loss Total

Issue of share capital 2,000,000 -- 2,000,000

Loss for the first period -- (454,473) (454,473)

Balance at 30 September 2008 2,000,000 (454,473) 1,545,527


Notes HK$Current AssetsPrepayment 4,975 Cash at bank 1,556,152

1,561,127 Less: Current LiabilitiesAccrued expenses 15,600

15,600 Net Current Assets 1,545,527 Net Assets 1,545,527 Financed by:Share Capital 6 2,000,000 Accumulated Loss (454,473)Shareholders' Fund 1,545,527

Cash Flow Statement For the period from 13th September 2007 (Date of incorporation) to 30th September, 2008

HK$CASH FLOWS FROM OPERATING ACTIVITIESLoss before taxation (454,473)Adjustments for:Interest income (16,282)

(470,755)Increase in prepayment (4,975)Increase in accrued expenses 15,600

(460,130)CASH FLOWS FROM INVESTING ACTIVITIESInterest income 16,282 CASH FLOWS FROM FINANCING ACTIVITIESIssue of share capital 2,000,000 Net Increase in Cash and Cash Equivalents 1,556,152 Cash and Cash Equivalents at Incorporation -- Cash and Cash Equivalents at 30 September, 2008 1,556,152 Analysis of Balance of Cash and Cash EquivalentsCash at bank 1,556,152

The notes form part of the financial statements.

Approved by:

Sd/- Sd/-Kishor Shah Santosh Kumar AgrawalaDirector Director

(HK$)

Notes to the Financial Statements 30th September, 2008

Balrampur Overseas Pvt Limited | 151

1. GENERALThe company is a private limited company incorporated inHong Kong on 13 September 2007. The company’s registeredoffice is located at Room 1001-1002, 10/F, Man Yee Building,68 Des Voeux Road Central, Hong Kong.

The principal activity of the company is trading.

2. SIGNIFICANT ACCOUNTING POLICIESa. Basis of preparation of financial statements

The financial statements have been prepared in accordancewith all applicable Hong Kong Financial ReportingStandards (HKFRSs), which include all applicableindividual Hong Kong Financial Reporting Standards, HongKong Accounting Standards (HKASs) and Interpretationsissued by the Hong Kong Institute of Certified PublicAccountants, accounting principles generally accepted inHong Kong, and the requirements of the Hong KongCompanies Ordinance. A summary of the significantaccounting policies is set out below.

The measurement basis adopted is the historical costconvention.

b. Income recognitionInterest income is recognised on time proportion basis.

c. Translation of foreign currenciesThe financial statements are stated in Hong Kong dollars.

Foreign currency transactions during the period aretranslated at the exchange rates ruling at the transactiondates. Monetary assets and liabilities in foreign currenciesare translated at the exchange rates ruling at the balancesheet date. Exchange gains and losses arising are dealt within the income statement.

3. TURNOVER AND REVENUEThe company has no business turnover for the period.

Other income represents:

HK$Interest income 16,282Exchange gain 89

16,371

4. LOSS BEFORE TAXATIONLoss before taxation is stated after charging:

HK$Audit fee 7,800Directors’ remuneration fee --Other emoluments --Incorporation fee 15,000Management fee 28,240

5. INCOME TAXNo provision for Hong Kong Profits Tax has been made as thecompany did not earn income subject to Hong Kong ProfitsTax during the period.

6. SHARE CAPITAL

HK$Authorized, issued and fully paid:2,000,000 shares of HK$1 each 2,000,000

The company was incorporated with an authorized sharecapital of HK$2,000,000 dividing into 2,000,000 shares of HK$1each, of which 1 share was taken up by the subscriber.

On 11 October 2007, 1,999,999 share of HK$1 each wasallotted at par for cash to broaden the working capital of thecompany.

7. CONTINGENT LIABILITIESAt 30 September 2008, the management of the company wasnot aware of any liabilities or gain or loss contingenciesconsidered material, individually or in aggregate, that wererequired to be accrued or disclosed.

8. FINANCIAL INSTRUMENTSThe main risks arising from the company’s financialinstruments in the ordinary course of the company’s businessare credit risk, liquidity risk, interest rate and currency risk.These risks are limited by the company’s financialmanagement policies and practices described below.

a) Credit riskThe company’s principal financial assets are cash at bank.

At 30 September 2008, the company has no concentrationof credit risk.

b) Liquidity riskThe company will consistently maintain a prudent financialpolicy and ensure that it maintains sufficient cash to meetits liquidity requirements.

c) Fair value and cash flow interest rate riskThe company’s exposure to fair value and cash flowinterest risks is minimal as the company does not have anylong term interest-bearing financial assets and liabilities.

d) Foreign currency riskThe company has no significant exposure to any specificforeign currency other than United States dollars.

e) Fair valueAll financial instruments are carried at amounts notmaterially difference from their fair values as at 30September 2008.

9. PARENT AND ULTIMATE HOLDING COMPANYThe directors consider the company’s parent and ultimateholding company to be Balrampur Chini Mills Limited, acompany incorporated in India and has not produced financialstatements available for public use.

10.APPROVAL OF FINANCIAL STATEMENTSThe financial statements were approved and authorised forissue by the Board of Directors on 18.11.2008.


Chairman EmeritusKamal Nayan Saraogi

Board of DirectorsSuresh Neotia, Chairman

Vivek Saraogi, Managing Director

Meenakshi Saraogi,

Joint Managing Director

Sudhir Jalan, Director

R.K. Choudhury, Director

S.B. Budhiraja, Director

M.M. Mukherjee, Director

Naresh Chandra, Director

Kedar Nath Ranasaria,

Whole-time Director

Kishor Shah, Director cum

Chief Financial Officer

Dr. Arvind Krishna Saxena,

Whole-time Director

Secretary S.K. Agrawala

Board CommitteesAudit Committee:S.B. Budhiraja, Chairman

Suresh Neotia

Sudhir Jalan

M.M. Mukherjee

Remuneration Committee:Naresh Chandra, Chairman

Suresh Neotia

R.K. Choudhury

Sudhir Jalan

Share Transfer Committee:Vivek Saraogi

Meenakshi Saraogi

Suresh Neotia

Sudhir Jalan

R.K. Choudhury

Shareholders’/Investors’ GrievanceCommittee:Sudhir Jalan, Chairman

M.M. Mukherjee

Vivek Saraogi

Solicitors and Advocates Khaitan & Co.

1B, Old Post Office Street,

Kolkata 700 001

Bankers State Bank of India

Auditors G.P. Agrawal & Co.


Registered office FMC Fortuna, 2nd Floor,

234/3A, A.J.C. Bose Road,

Kolkata 700 020

Sugar factories Unit 1: Balrampur (Including Distillery, Organic Manure

and Co-generation units)

Dist: Balrampur, Uttar Pradesh

Unit 2: Babhnan (Including Distillery, Organic Manure


Dist: Gonda, Uttar Pradesh

Unit 3: Tulsipur Dist: Balrampur, Uttar Pradesh

Unit 4: Haidergarh (Including Co-generation unit)

Dist: Barabanki, Uttar Pradesh

Unit 5: Akbarpur(Including Co-generation unit)

Dist: Ambedkar Nagar, Uttar Pradesh

Unit 6: Rauzagaon(Including Co-generation unit)

Dist: Faizabad, Uttar Pradesh

Unit 7: Mankapur(Including Distillery, Organic Manure


Dist: Gonda, Uttar Pradesh

Unit 8: Kumbhi(Including Co-generation unit)

Dist: Lakhimpur Kheri, Uttar Pradesh

Unit 9: Gularia(Including Co-generation unit)

Dist: Lakhimpur Kheri, Uttar Pradesh

Corporate information

A PRODUCT

[email protected]

Forward-looking statement Statements in this report that describe the company’s objectives, projections, estimates, expectations or

predictions of the future may be ‘forward-looking statements’ within the meaning of the applicable

securities laws and regulations. The company cautions that such statements involve risks and

uncertainty and that actual results could differ materially from those expressed or implied. Important

factors that could cause differences include raw materials’ cost or availability, cyclical demand and

pricing in the company’s principal markets, changes in government regulations, economic

developments within the countries in which the company conducts business, and other factors relating

to the company’s operations, such as litigation, labour negotiations and fiscal regimes.

ContentsOur performance in 2007-08 2

Our strengths 13

MD’s review 14

Five-year operational summary 16

Five-year financial summary 17

Financial Ratios 18

How we enhanced shareholder value 20

Report of the Board of Directors 22

Corporate Governance Report 33

Management Discussion and Analysis 48

Auditor’s Report 57

Balance Sheet 60

Profit and Loss Account 61

Cash Flow Statement 62

Schedules forming part of the accounts 64

Consolidated Accounts 91

Subsidiary Accounts 120

Balrampur Chini Mills LimitedAnnual Report 2007-08

Need of the hour

Balrampur Chini Mills LimitedRegistered office: FMC Fortuna, 2nd Floor

234/3A, Acharya Jagdish Chandra Bose Road, Kolkata 700 020

Website: www.chini.com

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