modi annual report part-1 -2009...56, darya ganj, new delhi. stock exchanges up stock exchange...

MODI INDUSTRIES LIMITED

77thAnnual Report

andAccounts2010–11

MODIENTERPRISES

CONTENTSBoard of Directors,Secretary, Bankers, Auditorsand Registered Office 2

Notice 3

Directors’ Report 5

Corporate Governance Report 10

Auditors’ Report 13

Accounts 19

Notes to the Accounts 26

Balance Sheet, Abstract and Company’s 39General Business Profile

Auditors’ Report on Consolidated 41Financial Statements

Consolidated Financial Statements 43

Notes to the Consolidated Financial Statements 50

MODI INDUSTRIES LIMITED2

MODI INDUSTRIES LIMITED, MODINAGARRegistered Office: Modinagar-201204 (U.P.)

BOARD OF DIRECTORS

MANAGING DIRECTORS Shri Mahendra Kumar ModiShri Umesh Kumar Modi

DIRECTORS Shri Krishan Kumar ModiShri Vinay Kumar ModiShri Rakesh Kumar ModiShri Suraj Parkash ModiShri Manish ModiShri Abhishek ModiShri Santosh Kumar AggarwalShri Krishna Kumar Jain

COMPANY SECRETARY Shri Ajay PS Saini

BANKERS Allahabad BankPunjab National BankState Bank of India

Citi Bank N.A.

AUDITORS M/s. P.R. Mehra & Co.,Chartered Accountants,56, Darya Ganj, New Delhi.

STOCK EXCHANGES UP Stock Exchange Limited,14/113, Padam Towers,Civil Lines, Kanpur, (U.P.) 208001

Delhi Stock Exchange Limited,DSE House, 3/1 Asaf Ali Road,New Delhi-110002

REGISTERED OFFICE Modinagar,District Ghaziabad (U.P.) 201204

NAME OF UNITS Modi Sugar MillsModi Vanaspati Mfg. Co.Modi Paint & Varnish WorksModi Gas & ChemicalsModi DistilleryModi Arc Electrodes Co.Modi Steels.

MODI INDUSTRIES LIMITED 3

NOTICE

NOTICE is hereby given that the 77th Annual General Meeting of Modi Industries Limited will be held on Thursday,the 29th September, 2011, at 12.30 P.M. at Modi Industries Transit House (Modi Industries Complex),Modinagar, to transact the following business :

ORDINARY BUSINESS:

1. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2011 and Profit & Loss Account forthe year ended on that date and the reports of the Directors’ and Auditors’ thereon.

2. To appoint Directors, who retire by rotation and being eligible, offer themselves for reappointment and toconsider and, if thought fit, to pass, with or without modification(s), the following Resolution(s) as ordinaryresolution(s):(a) “RESOLVED that Shri Vinay Kumar Modi, who retires by rotation and is eligible for reappointment be and is

hereby reappointed as Director of the Company.”(b) “RESOLVED that Shri Manish Modi, who retires by rotation and is eligible for reappointment be and is hereby

reappointed as Director of the Company.”(c) “RESOLVED that Shri Abhishek Modi, who retires by rotation and is eligible for reappointment be and is

hereby reappointed as Director of the Company.”3. To consider and, if thought fit, to pass, with or without modification(s), the following Resolution as a Special

Resolution:“RESOLVED as a Special Resolution that pursuant to the provisions of Section 224-A and other applicableprovisions, if any, of the Companies Act, 1956, M/s. P.R. Mehra & Co., Chartered Accountants, New Delhi, theretiring Auditors, be and are hereby reappointed as Auditors of the Company to hold office from the conclusionof this Annual General Meeting until the conclusion of the next Annual General Meeting, on such remuneration asmay be determined by the Board of Directors plus applicable Service Tax payable to them together with out ofpocket expenses actually incurred by them in connection with the Statutory Audit of the Company.”

SPECIAL BUSINESS:4. To consider and, if thought fit, to pass, with or without modification(s), the following Resolution as a Special

Resolution:“RESOLVED as a Special Resolution that the Company be and is hereby authorized to carry on any of theactivities of the object clause 3(34) mentioned in Memorandum of Association of the Company pursuant tosection 149(2A) of the Companies Act, 1956.”

NOTES:1 A member, entitled to attend and vote, is entitled to appoint a proxy to attend and vote instead of himself, a proxy

need not be a member of the company. The Proxy Form, duly completed and signed, should reach the Company’sRegistered Office atleast 48 hours before the time fixed for the meeting. The Proxy Form is enclosed.

2. Brief resume of Directors seeking re-appointment at the Annual General Meeting are annexed hereto.3. The Register of Members of the Company will remain closed from 24th September, 2011 to 29th September 2011

(both days inclusive).4. All documents referred to in the accompanying Notice are open for inspection at the Registered Office of the

Company on all working days, except Sundays and Bank Holidays, between 9.00 A.M. to 11.00 A.M. upto thedate of the Annual General Meeting.

5. Shareholders are requested to intimate change in their address, if any, to the company.6. The Ministry of Corporate Affairs (“Ministry”) has undertaken a “Green Initiative in Corporate Governance” by

allowing paperless compliance by companies through electronic mode. Shareholders are requested to registertheir e-mail ID in the format given below with the company to receive communication through electronic mode aspermitted by Circular No.17/2011 dated 21st April, 2011 and Circular No.18/2011 dated 29th April, 2011 issued bythe Ministry of Corporate Affairs.

MODINAGARDated: 29th August, 2011

BY ORDER OF THE BOARDfor MODI INDUSTRIES LIMITED

(AJAY PS SAINI)Company Secretary


BRIEF RESUME, EXPERIENCE AND OTHER DIRECTORSHIPInformation of Directors retiring by rotation seeking re-appointment at this Annual General Meeting are given hereunder:

SHRI VINAY KUMAR MODIShri Vinay Kumar Modi has been a Director of the Company since 29th April, 1967. He is a first class Bachelor ofTechnology (Chemical Engineering) from the Indian Institute of Technology, Kanpur.He is a leading Industrialist andhas vast experience in various industries. He holds directorship/membership of Committees of the Board in thefollowing other Public Limited Companies:

1. Modi Rubber Limited 2. Gujarat Guardian Limited 3. Man Diesel India Limited

He holds 25,477 Equity shares and 8 Redeemable Cumulative Preference Shares of the company in his name.

SHRI MANISH MODI

Shri Manish Modi has been a Director of the Company since 8th December, 2006. He has a Bachelor Degree inComputer Science from Banglore University and is an MBA in Marketing from Columbia University. He has extensiveindustry experience. He is holding directorship in the following other Public Limited Companies.

SHRI ABHISHEK MODI

Shri Abhishek Modi has been a Director of the Company since 8th December, 2006. He is a Chemical engineer andMBA from Harvard Business School, U.S.A. He is having vast experience in the management of the industrial units.He is holding the directorship in the following other Public Limited Companies.

MODINAGARDated: 29th August, 2011

BY ORDER OF THE BOARDfor MODI INDUSTRIES LIMITED

(AJAY PS SAINI)Company Secretary

1. Bihar Sponge Iron Limited

2. Morgardshammar India Limited

3. SBEC Sugar Limited

4. SBEC Bio-Energy Limited

5. Modi Gourmet Limited

1. Modipon Limited2. Exevo India Limited3. Weld Excel India Limited

4. Net Across Inc. USA5. Exevo UK Limited, U.K.6. Exevo Inc., USA

E-COMMUNICATION REGISTRATION FORM

(In terms of Circular No. 17/2011 dated 21st April, 2011 issued by the Ministry of Corporate Affairs)

Folio No.:...................... Name of 1st Registered Holder............................Name of Joint Holder(s):.............................

Registered Address:.....................................................E-mail ID (to be registered):.......................................................

I/We shareholder(s) of Modi Industries Limited agree to receive communication from the Company in electronic mode.Please register my above e-mail in your records for sending communication through e-mail.

Signature(First Holder)Date:..........

Note: Shareholder(s) are requested to keep the company informed as and when there is any change in the e-mail address.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.

ITEM NO.4:As permitted under Object Clause 3(34) of Memorandum of Association of the Company, as reproduced below,the company commenced new business of ‘Structural Fabricators’ during the year under review. Accordingly,approval of shareholders is required by way of Special Resolution to commence such business under Section149(2A) of the Companies Act, 1956.3(34) “ To carry on the trade or business of Engineers ( civil, mechanical and electrical) founders, smiths,manufacturers and contractors and to erect, construct, maintain, alter, repair, pull down and restore, eitheralone or jointly with any companies or persons works of all descriptions; including wharves,docks, piers,railways, tramways, waterways, roads, bridges, warehouses, factories, mills, engines, machinery railway,railway carriages and wagons, ships and vessels of every descriptions, gas works, elctric works, waterworks, drainage and sewage works and building of every descriptions.”None of the Directors are interested in the Resolution No.4.

He holds 100 equity shares of the company in his name.

He holds 22,050 equity shares of the company in his name.


To,The Shareholders,

The Directors of your Company hereby present the 77thAnnual Report together with the Audited Statement of Accountof the Company and the Auditors’ Report thereon for the yearended on 31st March, 2011. The working results of the year aresummarised as under :

DESCRIPTION YEAR ENDED YEAR ENDED31.3.2011 31.3.2010 ` Lacs ` Lacs

GROSS SALES & OTHER INCOME 41,769.67 24,512.43PROFIT BEFORE DEPRECIATION,INTEREST AND EXCEPTIONAL ITEMS 1,407.70 2,447.87Less:

I n t e r e s t 1,191.77 789.41D e p r e c i a t i o n 564.46 528.24

1,756.23 1,317.65

PROFIT/(LOSS) BEFOREEXCEPTIONAL ITEMS (348.53) 1130.22ADD: EXCEPTIONAL ITEMSInterest income of Income tax Refund 816.11 —Electricity Expenses for earlier years — (243.37)Amount Written Back — 472.65Excess provision for interest written back — 735.18

816.11 964.46PROFIT BEFORE TAX 467.58 2,094.68Less: Provision for Taxation (FBT) — 0.53PROFIT AFTER TAX 467.58 2,094.15Less:Transferred to Molasses Storage Fund 5.03 3.24NET PROFIT FOR THE YEARAFTER APPROPRIATION 462.55 2,090.91

DIVIDEND:On account of accumulated losses, your Directors are not in aposition to recommend any dividend for this year.

PERFORMANCE OF THE UNITS FOR THE YEARUNDER REPORT :(a) SUGAR UNIT:

The cane crushing in the year under review was 63.45 Lacsqtls as against 48.59 Lacs qtls in last year. Due to excessand late rains, the maturity of Sugarcane was adverselyaffected and resulted in decrease in Sugar recovery to8.46% in current year from 9.47% in last year.Decline in prices of sugar coupled with decrease inrecovery has resulted in loss of ` 664.51 Lacs as againstprofit of ` 261.39 Lacs in last year.

(b) DISTILLERY UNIT: During the year, the production of Spirit(RS) was 4048 KL as compared to last year 2387 KL. The saleof country liquor was 391000 cases during the year 2010-11,91999 cases in the last year. Due to distribution policy, themargins in country liquor were remained tight. There wasimprovement in working of the unit which has resulted indecrease in net loss to ` 96.04 Lacs during the current yearas against net loss of ` 196.75 Lacs in the last year. Ifthe Company continues with the sale of country liquor, theCompany expects profits during the year 2011-12.

(c) ELECTRODE UNIT: Sale in quantities registered a negativegrowth of approx. 11% as compared to the previous year.The net profit was also lower in comparison with theprevious year. The raw material price went up substantiallyputting severe pressure on the margins. Our companycould not pass on the increase in the raw material pricedue to severe competition from the global as well asdomestic competitors. The pressure on the margins wasparticularly high in general purpose welding electrodes andthe solid wire business.

(d) GAS UNIT: The sales and profitability of the unit wassatisfactory under the prevailing circumstances.

DIRECTORS’ REPORT

(e) PAINT UNIT: The unit registered a growth both in water baseand solvent base products. Overall the company had a growthin excess of 20% over last year.

FIXED DEPOSITS:The deposits of 1535 depositors amounting to 116.40 Lacs includinginterest thereon till the date of maturity was claimed, but remained unpaidas on 31st March, 2011. During the year under review company haspaid 36.12 Lacs to 539 depositors towards their deposits, this includesinterest upto the date of maturity as per the conditions laid down in thescheme of acceptance of public deposits. The company has writtenletters to all the depositors whose fixed deposits have not yet been repaidrequesting them to confirm their address so that their fixed deposit canbe repaid to them.The deposits of 162 depositors amounting to `10.84 Lacsincluding interest thereon till the date of maturity remainedunclaimed as on 31st March, 2011DEBENTURES:Debentures worth ` 537.32 Lacs are due for payment as on31st March, 2011. The Company will repay to debenture holdersas per final orders of BIFR that may be passed.

DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of theCompanies Act, 1956, in respect of all units of the company(excluding Balance Sheet of Steel Unit - refer note 4 of Schedule14 of Annual Accounts) it is hereby confirmed:

i) that in the preparation of the annual accounts, the applicable accountingstandards have been followed and wherever required proper explanationsrelating to material departures have been given;

ii) that the directors have selected such accounting policies andapplied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financialyear and of the profit or loss of the company for that period;

iii) that the directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding the assets of the company andfor preventing and detecting fraud and other irregularities;

i v ) that the annual accounts have been prepared on a goingconcern basis.

DIRECTORS:Shri Vinay Kumar Modi, Shri Manish Modi and Shri AbhishekModi are due to retire by rotation this year and beingel igible, offer themselves for re-appointment.CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION& FOREIGN EXCHANGE:As required under Rule 2 of the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988,the particulars relating to Conservation of Energy in Form ‘A’pertaining to Sugar Unit is annexed hereto. The particularsrelating to Technology Absorption in Form ‘B’ and of the ForeignCurrency in Form ‘C’, are annexed hereto for the units,wherever applicable.

PARTICULARS OF EMPLOYEES:The particulars of the employees as required under Section217(2A) of the Companies Act, 1956, are given in a seperateannexure attached hereto and form part of this report.

SUBSIDIARY COMPANIES:The Company have two subsidiaries namely, Your Investment(India) Limited and Own Investment (India) Limited.The staement under Section 212(3) of the Companies Act,1956in respect of subsidiaries companies is separately annexed.In accordance with the general circular No.2/2011 dated 8thFebruary,2011 issued by the Ministry of Corporate Affairs,Government of India, the Balance Sheet, Profit and LossAccount and other documents of the subsidiary companies arenot being attached with the Balance Sheet of the Company. Theannual accounts of the subsidiary companies and the related


detailed information shall be made available to shareholders ofthe holding and subsidiary companies seeking such informationat any point. The annual accounts of the subsidiary companiesshall be kept for inspection by any shareholders at RegisteredOffice of the holding company and of the subsidiary companiesconcerned.CONSOLIDATED FINANCIAL STATEMENTS:In compliance with the Accounting Standards 21 and 23 of theCompanies (Accounting Standards) Rules, 2006 and pursuantto the Listing Agreement with the Stock Exchanges, theconsolidated financial statements form a part of this AnnualReport.LISTING AGREEMENT:The securities of the Company are listed with U.P. StockExchange Limited, Kanpur as a Regional Exchange and DelhiStock Exchange Limited, New Delhi. The Company has paid theAnnual Listing Fees to each Exchange.APPOINTMENT OF AUDITORS:M/s. P. R. Mehra & Co., Chartered Accountants, the retiring auditors,being eligible, offer themselves for reappointment. The appointmentof auditors has to be done by a Special Resolution in terms ofSection 224A of the Companies Act, 1956.AUDITORS’ REPORT:With reference to the qualifications contained in the Auditors’Report, the Directors wish to state that the Notes referred toby the auditors in their report are self-explanatory and hencedo not call for any further comments.MANAGEMENT DISCUSSION & ANALYSIS REPORT:In terms of Clause 49 of the Listing Agreement with the StockExchanges, Management Discussion & Analysis Report isannexed and forms part of this report.CORPORATE GOVERNACE:The report on the Corporate Governance together with the

Auditors’ Certificate thereon are annexed hereto and forms partof this report. All Board members and Senior Managementpersonnel have affirmed compliance with the Code of Conductfor the year under review.COST AUDITORS:Pursuant to the order of the Central Government under theprovisions of Section 233B of the Companies Act, 1956, M/s.M.K. Singhal & Co., Cost Accountants, were appointed toconduct cost audits relating to Sugar and Industrial Alcohol.The Cost Audit Report for the last audited accounts for thefinancial year ended 31st March, 2010 was filed by the CostAuditors with respect to the sugar and industrial alcohol unitsof the company on 1st October, 2010.LABOUR RELATIONS:The labour management relations generally remainedharmonious.ACKNOWLEDGEMENT:The Directors wish to thank the Central Government,Government of Uttar Pradesh, Financial Institutions and theCompany’s bankers for all the help and encouragement theyextended to the Company. Your Directors gratefullyacknowledge the continued trust and confidence, you haveplaced in this Company. The Directors also wish to place onrecord their deep appreciation for the services rendered by theofficers, staff and workers of the Company at all levels andfor their dedication and loyalty.

for & on behalf of the Board

NEW DELHIDated:29th August, 2011

(M.K. MODI) (U.K.MODI)MANAGING DIRECTORS

ANNEXURE TO DIRECTORS’ REPORTPARTICULARS REQUIRED UNDER THE COMPANIES

(DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988FORM ‘A’: DISCLOSURE OF PARTICULARS WITH RESPECT OF CONSERVATION OF ENERGY.PARTICULARS S U G A R

Year Ended Year Endedon 31.3.2011 on 31.3.2010

(A) POWER & FUEL CONSUMPTION(1) ELECTRICITY

(a) Purchased units — —Total Amount (`) — —Rate/Unit (`) — —

(b) Own Generation through Diesel Generator :Unit 874512 778049Unit per Ltr. of Diesel Oil — —Cost/Unit (`) 12.05 11.13Through Steam Turbine/ Generator :Unit 17039021 13029528Unit per Ltr. of Fuel Oil/Gas — —Cost/Unit (`) 1.50 1.00

(2) COAL (Specify quality & where used)Quantity (M.T.) — —Total Cost (`) — —Average Rate (`) — —

(3) FURNACE OILQuantity K. Ltr. — —Total Amount (`) — —Average Rate (`) — —

(4) OTHERS/INTERNAL GENERATION :Quantity — —Total Cost (`) — —Rate/Unit (`.) — —

(B) CONSUMPTION PER UNIT OF PRODUCTION :Product (with details) Unit:Electricity KWH PMT 312.70 296.72Furnace Oil Ltr. PMT — —Coal(Specify quality) — —


FORM ‘B’ : DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION:

DESCRIPTION ELECTRODE PAINTRESEARCH & DEVELOPMENT (R & D) :1 Specific areas in which R&D Development of new products,improvement

carried out by the Company in existing products, cost reduction throughimprovement in technology and improvementin production system.

2 Benefits derived as a result Increase of product sale with customer Percentage contribution has increased.of the above R & D satisfaction.Fulfilment of market

requirements at competitive price. Induction ofnewly developed product/technology in the market.

3. Future Plan of Action New Development/upgradation ofproducts as per market requirementsand cost control of products.

DESCRIPTION ELECTRODE PAINTEXPENDITURE ON R&Da Capital (`) — —b Recurring (`) 9,41,218.00 24,20,994.40

TOTAL (`) 9,41,218.00 24,20,994.40c R&D Expenditure

percentage of total turnover 0.13% 1.00%

TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION:

DESCRIPTION ELECTRODE PAINT

1 Efforts in brief made towards N.A. N.A.technology absorption, adaptationand innovation.

2 Benefits derived as a result of the N.A. N.A.above efforts e.g. product improvementcost reduction, product development,import substitution etc.

3 In case of imported technology (imported

during the last five years reckoned fromthe beginning of the financial year)following information may be furnished:a Technology Imported N.A. N.A.b Year of Import N.A. N.A.c Has Technology been fully absorbed N.A. N.A.

d If not fully absorbed, areas, where this N.A. N.A.has not taken place, reasons thereforeand future plan of action

FORM ‘C’ : FOREIGN EXCHANGE EARNINGS & OUTGO:

Name of Units Activities Relating to Exports, Initiative taken to Total Foreign Exchange Usedincrease Exports Development of New Export and EarnedMarkets for Products and Services and Export Plans

` in Lacs

Electrode Earnings Nil

Outgo Raw Material 69.62

Other Matters 0.04

M.D. Office Earnings Nil

Outgo Other Matters 3.98

Gas Earnings Nil

Outgo Stores purchased 1.00

Modi Guard Exterior Emulsion Paint,Epoxy high build primer, GlitterEmulsion Paint.

Development of Antigraffity Paint, HighResistant Paint, Quick Drying Enamel.


STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES1. Name of the Subsidiary Companies Own Investment (India) Ltd. Your Investment (India) Ltd.2. Number of Shares held in 13,200 Equity Shares of 21,450 Equity Shares of

Subsidiary Companies. `100/- each fully paid-up `100/- each fully paid-up3. Percentage of Holding in the 99.89% 99.93%

Subsidiary Companies.4. Financial Year ended 31st March, 2011 31st March, 20115. Profit/Loss of the subsidiary Companies for their

Financial Year so far as they concern the membersof Modi Industries Ltd., which have not beendealt with in the Accounts of Modi IndustriesLimited for the year ended 31st March, 2011:For the year ended ` 5,04,420.53 ` 2,58,654.81For the previous years ` (–)45,933.91 ` 6,11,137.36

6. The net aggregate of Profit/Loss of theSubsidiary Companies which have been dealtwith in the Accounts of Modi Industries Ltd.for the year ended 31st March, 2011:For the year ended NIL NILFor the previous years NIL NIL

` 13.22 4.59 17.81 17.81 11.72 37.70 37.41 - 37.41 27.75

` 21.46 8.71 30.17 30.17 20.23 38.01 37.72 0.09 37.63 30.05

FINANCIAL INFORMATION OF SUBSIDIARY COMPANIES (` in Lacs)

Name of theS u b s i d i a r yCompany

ReportingCurrency

Capital Reser-ves

TotalAssets

TotalLiabilities

Invest-ments

Turnover/TotalIncome

Profit/(Loss)BeforeTaxation

ProvisionforTaxation

Profit/(Loss)AfterTaxation

OwnI n v e s t m e n t(India) Ltd.

You rI n v e s t m e n t(India) Ltd.

D iv idendPaid

PARTICULARS OF EMPLOYEES IN TERMS OF SECTION 217(2A) OF THE COMPANIES ACT, 1956(FORMING PART OF THE DIRECTOR’S REPORT)

(A) Persons employed throughout the financial year under review and were in receipt of remuneration for the year aggregating of not less than ` 60,00,000/-:Sl. Name Designation Nature of Duties Qualifications Experience Date of Total Age Last employmentNo. (Years) commencement Remuneration (Years) before joining the

of employment ( ` ) company

(B) Persons employed for part of the financial year under review and were in receipt of remuneration not less than ` 5,00,000/- per month:Sl. Name Designation Nature of Duties Qualifications Experience Date of Total Age Last employmentNo. (Years) commencement Remuneration (Years) before joining the

of employment ( ) company01 Mr. Sanjay Bhatia G r o u p Overall responsibilities M.B.A. 31 15.01.2011 12, 58, 065. 0 0 55 Puzzolana Ltd.

C.E.O. of Paint, Gas &Electrode Units

Ni l

01 Remuneration includes salary, commission, exgratia, company’s contribution to Provident Fund and money value of perquisites.02 Employee mentioned above is not a relative of any Director of the Company.

(a) INDUSTRY SCENARIO

SUGAR UNITThe sugarcane area is expected to increase by 8-10% incrushing season 2011-12, which will result an increase of 8-10% in sugarcane production. The sugar production in thecountry is expected to be around 26-26.5 million tons in theseason 2011-12 against the production of 24.20-24.50 milliontons in 2010-11.The consumption of sugar is likely to be around 22-23 milliontons during 2011-12.

DISTILLERY UNITThe industry continues to be regulated at various levels byGovernment. The Potable Alcohol policy of last year hasbeen continued by U.P. Government. In the policy, the wholesale rights of Country liquor has been given to RoyalBeverages Pvt. Ltd.

ELECTRODE UNITThe Indian economy grew at about 9% in the financial year2010-11 due to growth in automobile and infrastructurerelated industries and business. Majority of welding growthwas driven by automobile, power, oil and gas and shipbuilding sectors. The year was also marked by high inflationand postponement of the much expected CAPEX plans ofthe industry. In the second half, raw material prices wentup substantially putting severe pressure on the margins. A

key driver boosting market revenues has also been the gradualmove from manual to automatic and semi-automatic weldingequipment and thus the corresponding change in weldingequipment and thus the corresponding change in consumables.The spiraling demand for steel is promoting the use ofinnovative state-of-art uses of steel while triggering the uptakeof high volumes of welding equipment and consumables.

PAINT UNITThe Paint industry had a growth of about 9-10% in the year 2010-11.

GAS UNITGas unit operates in the merchant market, in which freight is amajor cost. Thus, the area of operation is limited to approx. 100Km around Modinagar. The gas industry witnessed growth matchingwith industrial production in the country.(b) OPPORTUNITIES AND THREATSSUGAR UNITThe State Government has so far been unable to evolve an equitablepolicy for allocation of sugarcane area amongst factories. Efforts arecontinuing at various levels to evolve an equitable methodology forreservation of cane area on factory wise basis, in the overall interestof the industry. The Government is considering for full decontrol onsugar industry.

After the decision of Hon’ble Supreme Court empowering the StateGovernment to fix cane price, one of the major threat to the SugarIndustry relates to the successive interventions of the State

ANNEXURE TO DIRECTORS’ REPORTMANAGEMENT DISCUSSION AND ANALYSIS REPORT


Government in the pricing as well as distribution of Sugarcane.DISTILLERY UNITWith the likely increase in production of sugar output, resultingan increase in production and availability of Molasses, theproduction of Rectified Spirit will be better as compared to lastyear.ELECTRODE UNITEnhanced foreign direct investment (FDI) equity inflow in Indiahas supported projects in the oil and gas sector, offshoreactivit ies, aerospace and heavy machinery industries.Several foreign automobile companies have established theirmanufaturing base in India. Such trends have had a positiveimpact on the uptake of welding equipment and consumables.Another challenge faced by Indian Welding ConsumablesManufacturers is the unorganised sector that currentlyoccupies close to 30 to 45 percent of the market. This sectoris continously growing due to the lack of specifctions andapprovals required for welding activities in end user industries.Although some approvals are required for high risk jobs inpower and offshore, there are no such requirements in thefabrication industry where welding finds extensive use.

PAINT UNITMore & more foreign companies are entering Indian market.The raw material prices have been very volatile due toincrease in crude oil prices. Margin of all the companies havebeen under severe pressure. The competition will alsoincrease with entry of new large players with deep pockets.

GAS UNITThe unit operates largely in the industrial gases segment.Thus, growth in industrial and construction activity presentgood opportunity for the gas market.Subsidy by the Government on LPG continues to be a threatto the market for dissolved acetylene, an importantmanufactured product for the Gas Unit. The increase inusage of liquid gases pose threat to gas business in cylinders.

(c) OPERATIONAL PERFORMANCESUGAR UNITThe cane crushing in the year under review was 63.45 LacsQtls as against 48.59 Lacs Qtls in last year. There washeavy rainfall during 2010-11 in the area, the sugar cane waswater logged resulted in increase in fiber in sugar cane. Thematurity of sugar cane was late, which resulted in decreasein Sugar recovery from 9.47% last year to 8.46% currentyear.Decline in prices of sugar coupled with decrease in recoveryhas resulted in loss of ` 664.51 lacs as against profit of` 261.39 lacs in the last year.DISTILLERY UNITDuring the year, the production of Spirit(RS) was 4048 KL ascompared to last year 2387 KL. The sale of Country Liquorwas 391000 cases during the year 2010-11, 91999 cases inthe last year. Due to Distribution Policy, the margins inCountry Liquor were remained tight. There was improvementin working of the unit which has resulted in decrease in netloss to ` 96.04 Lacs during the current year as against netloss of `196.75 Lacs in the last year.

ELECTRODE UNITSales in quantities registered a negative growth of approx. 11%,as compared to the prevoius year. The net profit was also lowerin comparison with the previous year. The raw material priceswent up substantially putting severe pressure on the margins.Our company could not pass on the increase in the raw materialprice due to severe competition from the global as well asdomestic competitors. The pressure on the margins wasparticularly high in general purpose welding electrodes and thesolidwire business.

PAINT UNIT

The Unit registered a growth both in water base and solventbase products. Overall the unit had a growth in excess of 20%over last year.

GAS UNITThe sales and profitability of the unit was satisfactory underthe prevailing circumstances.

international market would be the key determinants of futureprofitability.(d) FUTURE OUTLOOK

SUGAR UNITThe sugar prices & profitability of Indian Sugar companies wouldremain volatile and dependent on domestic and internationalsupply and demand trends. These in turn would depend on agro-climatic conditions in major producing countries and crude oilprice trends, which determine the diversion of sugarcane cropto ethanol. Consequently, the price trends in internationalmarkets would be the key determinants of future profitability.

DISTILLERY UNITThe molasses production is expected to be good in comingyears which results to higher production of rectified spirit withlower cost of production. The unit has launched a new rangeof vodka under IMFL products in the whole country. the Unitis also planning to launch scotch whiskey in the coming year.

In the light of India’s growing fuel demand and the surge in theglobal pricing, the Government of India is keen to promoteadmixing of ethanol with petrol. Keeping this in view and thenormal growth in the Chemicals and Potable sectors, thedemand for alcohol are expected to remain strong in the future.

ELECTRODE UNITOutlook for the financial year 2011-12 looks generallyencouraging with the provisions of a higher CentralGovernment budgetary allocation to the infra sector. ModiArc Electrodes Company plans to improve the serviceportfolio and broaden the market reach to increase thepenetration into new end user industries such as fabricationand automotives. This becomes necessary so as to exploreopportunities in other general fabrication which have movedto higher automation levels. New competition from the globalplayers setting up manufacturing activities locally wouldincrease pressure on margins.

PAINT UNITPaint is a growing business and with increase in infrastructuredevelopment and real estate growth; it is bound to growfurther and there is huge potential for paint unit to increaseits business.

GAS UNITThe outlook for the gas industry is promising inview ofcontinued industrial development. The unit is aiming at higherproductivity and superior product mix. Reasonable growth isexpected in the business of the unit.

(e) RISKS & CONCERNSThe company is a Sick Industrial Company within the meaningof Section 3(1) (o) of Sick Industrial Companies (SpecialProvisions) Act,1985. Hence fresh funds both for workingcapital requirement and / or long term requirements are notmade available by Banks/Financial Institutions.

(f) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACYThe key features of the Internal Control Systems are given below:1 Well defined organisation structure, documented policy

guidelines, predefined authority levels ensures optimalutilisation and protection of resources.

2 Assets are adequately maintained and protected againstTheft, Burglary and other Losses.

3 Transactions are properly recorded and accounted for.4 Accounting records are maintained complying with all the

statutory laws and reflect true and fair view.5 There are adequate Management reporting systems for

control and monitoring of performance.6 Budgetary control system is in place.7 Periodical review by the Management is being done.8 Periodical review of system, procedures and transactions

by Internal Auditors is conducted.(g) MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:The underlying rule of company’s policy towards humanresource development is that competent and motivatedmanpower is the most important factor in achieving businessgoals. The policies in this regard are evolved and pursued toachieve this objective. Industrial relations remained cordialthroughout the year.As on 31st March, 2011 the total number of employees onthe payrolls of the company were 1131.


CORPORATE GOVERNANCE REPORTCORPORATE GOVERNANCE AS REQUIRED BY CLAUSE 49 OF THE LISTING AGREEMENT WITH STOCK EXCHANGES

(1) Company’s Philosophy: Your company firmly believes in good corporate governance. Towards this, the Companyconsistently evaluates and defines its management practices aimed at enhancing its commitment and delivery of thebasic tenets of the corporate governance.

(2) Board of Directors(a) Composition of Board: The Board consists of ten directors as on the date of report. Out of these ten directors, eightare non-executive directors which include four independent directors. The company did not have any material pecuniary relationor transaction with non-executive directors during the year under review.(b) Board Procedure: During the year, four Board meetings were held on 28th April, 2010, 12th August, 2010, 1stNovember, 2010 and 8th February, 2011.The Board was presented with the relevant and necessary information at itsmeetings. None of the directors is a member of more than ten committees or acting as Chairman of more than fiveCommittees across all companies in which he is a director. The attendance at the Board meetings during the year 2010-11 and at the last Annual General Meeting held on 27th September, 2010 and also number of other directorship are givenherein below:

(3) Audit Committee:(a) Terms of Reference: Terms of Reference of the Audit Committee specified by the Board areas contained in clause 49 of the Listing Agreement.(b) Composition : The ‘Audit Committee’ of the Company consists of 4 Non Executive Independent Directors, namely,(1) Shri Suraj Parkash Modi, (2) Shri Rakesh Kumar Modi, (3) Shri Santosh Kumar Aggarwal and (4) Shri Krishna KumarJain as members and Shri Ajay PS Saini as Secretary of the Committee.

During the year, Four Audit Committee meetings were held on 28th April, 2010, 12th August, 2010, 1st November,2010 and8th February, 2011.All four meetings were attended by all its Members.

(4) Remuneration of Directors: The Remuneration Committee consists of 4 Non Executive Independent Directors, namely,(1) Shri Suraj Parkash Modi, (2) Shri Rakesh Kumar Modi, (3) Shri Santosh Kumar Aggarwal and (4) Shri Krishna KumarJain as members and Shri Ajay PS Saini as Secretary of the Committee. The decisions regarding remuneration of executiveand non-executive directors are taken by the entire Board on recommendation of the Remuneration Committee subject to suchapprovals from the Shareholders or Central Government as may be necessary. The Company does not pay any remunerationto the non-executive directors except payment of sitting fees for attending Board/ Committee meetings. Details of remunerationpaid to the directors during the year under review are given below :

(a) Executive Directors: No remuneration has been paid to Shri Umesh Kumar Modi, Managing Director during the year underreview.The Central Government has accorded its approval for payment of remuneration to Shri Mahendra Kumar Modi, as ManagingDirector for the period 1st November, 2009 to 31st October, 2012 and accordingly the Company has made a payment of` 18.00 Lacs to him for the period 1st April, 2010 to 31st March, 2011.

(c) Relationship amongst Directors: Shri Krishan Kumar Modi, Non-Executive Director, Shri Vinay Kumar Modi, Non-Executive Director and Shri Umesh Kumar Modi, Managing Director are real brothers. Shri Manish Modi, Non-ExecutiveDirector, is son of Shri Mahendra Kumar Modi, Managing Director and Shri Abhishek Modi, Non-Executive Director, isson of Shri Umesh Kumar Modi, Managing Director.

(5) Share Transfer and Investors’ Grievance Committee: The Committee, consisting of four members i.e. Shri Mahendra KumarModi, Managing Director, Shri Umesh Kumar Modi, Managing Director, Shri Suraj Parkash Modi, Independent-Non-Executive Directorand Shri Rakesh Kumar Modi-Independent Non-Executive Director, has been entrusted with the work of Share/Debenture Transferand dealing with investors grievances. Shri Suraj Parkash Modi Chaired all meetings of the committee held during the year underreview. Shri Ajay PS Saini, Company Secretary, acts as Secretary to the Committee and is Compliance Officer under Clause49 of the Listing Agreement. All transfers, transmissions etc. of Shares and Debentures were effected within the stipulated periodby the Company.

MD: Managing Director, NED:Non Executive Director, @ excludes Private Limited Companies & Foreign Companies.$ Represents Audit Committee and Investor’s Grievance Committee.

(` in thousands)

(b) Non- Executive Directors:

Name Shares heldSitting Fees

Equity Preference

Shri Krishan Kumar Modi 2.0 9664 8Shri Vinay Kumar Modi — 25477 8Shri Rakesh Kumar Modi 13.5 48901 10Shri Suraj Parkash Modi 13.5 870 —Shri Manish Modi 8.0 22050 —Shri Abhishek Modi 4.0 100 —Shri Santosh Kumar Aggarwal 10.0 100 —Shri Krishna Kumar Jain 10.0 100 —

Name Category No.of Board Attendance No.of outside No.of othermeetings at previous Directorships Committee(s) $attended AGM @ Membership Chairmanship

Shri Mahendra Kumar Modi MD 4 Yes 2 1 -Shri Umesh Kumar Modi MD 4 Yes 7 - -Shri Krishan Kumar Modi NED 1 No 11 2 1Shri Vinay Kumar Modi NED - No 3 2 3Shri Rakesh Kumar Modi NED 4 No - - -Shri Suraj Parkash Modi NED 4 No - - -Shri Manish Modi NED 4 Yes 3 - -Shri Abhishek Modi NED 2 Yes 5 - -Shri Santosh Kumar Aggarwal NED 4 No - - -Shri Krishna Kumar Jain NED 4 No 1 1 1


(9) General Shareholders’ Information:(a) Annual General Meeting:

Date: 29th September, 2011, Time: 12.30 P.M., Venue: Modi Industries Transit House(Modi IndustriesComplex), Modinagar.(b) Financial Calender:

(i) Financial Year : April to March(ii) First Quarter Results : With in 45 days from the end of the quarter(iii) Second Quarter Results : With in 45 days from the end of the quarter

(iv) Third Quarter Results : With in 45 days from the end of the quarter(v) Fourth Quarter Results : With in 45 days from the end of the quarter

(c) Date of Book Closure: 24th September, 2011 to 29th September, 2011 (both days Inclusive).(d) Dividend Payment Date:

The Directors have not recommended any dividend on shares in view of accumulated losses.(e) Stock Exchange Listing : Shares of the company are listed on:

Uttar Pradesh Stock Exchange Ltd., Kanpur (U.P.)Delhi Stock Exchange Limited, New Delhi

(f) Stock Code :Uttar Pradesh Stock Exchange Ltd., -- Z-493, Delhi Stock Exchange Limited, -- 013154

(g) Market Price Data: High/ Low during each month in the year 2010-11The Company is a Sick Industrial Unit. There have been no transactions of Company’s Shares on the StockExchanges, where the shares of the Comapny are listed, since long.

(h) Registrar and Transfer Agents:Company has not appointed any Registrar for Shares/ Debentures transfer. All such work is done in-house atCompany’s Share Department.

(i) Share Transfer System :Shares lodged with the Company for transfer are processed and returned to the shareholders within the stipulatedtime, provided transfer documents are complete and valid in all respect.

All 30 Shareholders/ Investors complaints, received directly from them or through SEBI/ Stock Exchanges and other authoritiesduring the year under review, have been replied by the company and none remained outstanding at the end of the year underreview. The status of Shareholders/Investors complaints received during the period under review were reported to the ShareTransfer and Investors Grievance Committee by the Compliance Officer.

(6) General Body Meetings : The last three Annual General Meetings were held at Modi Industries Transit House (ModiIndustries Complex), Modinagar, on the following dates and time.

Special resolutions for re-appointment of Statutory Auditors of the company were passed in the last three Annual GeneralMeetings of the Company. However, Special Resolution for remuneration payable to Shri Mahendra Kumar Modi asManaging Director of the Company was passed in the Annual General Meeting of the Company held on 29th September,2009. The Company has so far no business which had to be conducted through postal ballot for passing any resolutionat general meetings.

(7) Disclosures : There were no transactions of the company of material significance with its directors or the management, theirsubsidiaries or relatives during the year which may have potential conflict with interest of the company. There was no non-compliance during the last three years by the company on any matters related to capital markets. Consequently, neither anypenalties were imposed nor strictures passed on the company by Stock Exchanges, SEBI or any Statutory Authority. Duringthe year Shri Sanjay Bhatia joined as the group C.E.O. of Electrodes, Paints and Gas Units of the Company. The companyhas complied with all the mandatory requirements of revised Clause 49.

(8) Means of Communication : The Quarterly results of the Company are published in English and Local Language newspapersas required under the Listing Agreement. All financial and other vital information are promptly communicated to the StockExchanges on which company’s shares are listed. The company is in the process of creating the website. Management discussionand analysis form a part of annual report and is given in a seperate chapter thereto.

(k) Dematerilisation of Shares and Liquidity:The Company is a Sick Industrial Company within the meaning of Section 3(1)(o) of The Sick Industrial Companies(Special Provisions) Act, 1985 and all its shares are held in physical form.

(l) Outstanding GDRs/ADRs/Warrant or any Convertible Instruments, Conversion date and likely impact on Equity:The Company has no GDRs/ADRs/or any convertible instrument.

(m) Plant Location: At Modinagar, District Ghaziabad(U.P.) 201204(n) Address for Correspondance:

Modi Industries Limited, Registered Office: P.O. Modinagar, District-Ghaziabad (U.P.), Pincode-201204.

Financial Year Date Time2009-10 27-09-2010 12.30 P.M.2008-09 29-09-2009 03.00 P.M.2007-08 27-09-2008 11.00 A.M.

(j) Distribution of Shareholding as on 31-03-2011.

Distribution ofShareholding

Number of

Equity Shares of ` 10 each

Pref. Shares of ` 100 each

Number ofShareholders

Equity Shares Pref. Shares

% age ofShareholding

Equity Shares Pref.Shares

Upto 500 681607 248 8938 19 20.60 0.61501-1000 96824 - 129 - 2.93 -1001-2000 97722 - 65 - 2.95 -2001-3000 37135 - 15 - 1.12 -3001-4000 32657 3520 10 1 0.98 8.644001-5000 27988 9005 6 2 0.85 22.105001-10000 92957 14344 13 2 2.81 35.2110001 and above 2242324 13624 53 1 67.76 33.44Total 3309214 40741 9229 25 100.00 100.00


CERTIFICATE

To The Members ofMODI INDUSTRIES LIMITEDModinagar.

We have examined the compliance of conditions of corporate governance by Modi Industries Limited,for the year ended on 31st March, 2011, as stipulated in clause 49 of the Listing Agreement of the saidCompany with Stock Exchanges.

The compliance of conditions of corporate governance is the responsibility of the management. Ourexamination was limited to procedures and implementation thereof, adopted by the company for ensuringthe compliance of the conditions of the Corporate Governance. It is neither an audit nor an expressionof 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, thecompany has complied with the conditions of corporate governance for the year ended 31st March, 2011as stipulated in the above mentioned Listing Agreement except that the Chairman of the Audit Committeedid not attend the Annual General Meeting of the Company.

We state that no investor grievances are pending for a period exceeding one month against the companyas per the records maintained by the Shareholders/Investors Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the companynor the efficiency or effectiveness with which the management has conducted the affairs of thecompany.

for and on behalf ofP. R. MEHRA & CO.,

Chartered Accountants,Regn. No. 000051N

ASHOK MALHOTRA PARTNER

M.No.82648

Place : New DelhiDated :29th August, 2011


AUDITORS’ REPORT

To The Members ofMODI INDUSTRIES LIMITED

(1) We have audited the attached Balance Sheet of MODI INDUSTRIES LIMITED as at 31st March, 2011 and the Profit& Loss Account and Cash Flow Statement for the year ended on that date, both annexed thereto. The attachedBalance Sheet does not include Assets and Liabilities including Contingent Liabilities and quantitative details ofSteel Unit as at 31st March, 2011 but includes balances as on 31st March, 1992,except for reduction of: (i)unsecured loans by ` 323.95Lacs in view of write-back of ` 278.95 Lacs during the financial year 2004-05 andpayment of ` 45 Lacs during 2005-06 on account of one-time settlement of dues of a bank and (ii) net fixed assetsby ` 662.52Lacs (Previous year ` 655.75Lacs) on account of provision for depreciation for the period 01.04.1993to 31.03.2011 on fixed assets as stated in Note 4(c) of Schedule 14. The Profit and Loss Account does not include:(i) certain provisions as stated in Note 4(f) of Schedule 14 and (ii) loss, amount unascertained, of the Steel Unit forthe year 1992-93 in view of non-incorporation of annual accounts of the Steel Unit for the above year. The Cash FlowStatement, except for certain adjustments made as stated in foot-note 2 of cash flow statement, does not includeadjustments for Cash Flows from investing/financing activities and changes in current assets and liabilities ofSteel Unit in view of non-availability of audited Balance Sheets of the Unit as on 31.03.2010 and 31.03.2011 (ReferNote 4 of Schedule 14). These financial statements are the responsibility of the Company’ management. Ourresponsibility is to express an opinion on these financial statements based on our audit.(2) Subject to paragraphs 1 & 3 of this report, we conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis forour opinion.(3) We report that :(A) The books of accounts, vouchers and other documents of the Steel Unit for 1992-93 were not made available

to us and consequently audit could not be conducted in respect of the same (Note 4 of Schedule 14 to AnnualAccounts). Therefore, as stated in Para 1 above, the attached Balance Sheet, Profit & Loss Account and CashFlow Statement does not include: (a) the financial data/impact of working results and of declaration of closure/post-closure transactions, which includes realization of depot sales/dues from debtors, provision/payment offinal dues of employees and payments to various parties and manufacturing/personnel/administration expensesetc., of the Steel Unit for the year 1992-93 during which the Unit had operated for ten months the exclusion ofwhich, in our opinion, substantially impairs the presentation of above financial statements of the Companyespecially in view of the fact that (i) the assets and liabilities of Steel Unit constituted 28% and 43% respectivelyof the total Assets & Liabilities of the Company as at 31st March, 1992 and the Income & Expenditure of theSteel Unit constituted 30% and 32% respectively of the total Income & Expenditure of the Company for the saidyear which resulted in a loss of ` 787.22Lacs for the Unit and (b) impact on assets , liabilities and cash flowson account of non-incorporation of balance sheets for the years 1993-94 to 2010-11 as stated in note 4(c) ofSchedule 14.

(B) As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in termsof Sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on thematters specified in paragraphs 4 and 5 of the said order except for certain matters relating to Steel Unit of thecompany in view of non-availability of information / details on account of non-incorporation of: (i) annualaccounts of the Steel Unit for the year 1992-93 and (ii) balance sheets for the years 1993-94 to 2010-11 asstated in note 4(c) of Schedule 14 . (See Paragraph 3(A) above).

(C) Further to our comments in paragraphs 1 and 3(A) above and in the Annexure referred to in paragraph 3(B)above, we report that:(i) We have obtained the information and explanations, which to the best of our knowledge and belief were

necessary for the purpose of our audit of the Company except in case of Steel Unit in respect of which nodetails, information and explanations are available for the opening assets and liabilities as on 01.04.2010and for contingent liabilities and quantitative details etc. as on 01.04.2010 in view of non-incorporation of(i) accounts of Steel Unit for 1992-93 and (ii) balance sheets for the years 1993-94 to 2010-11 as statedin note 4(c) of Schedule 14. (See Paragraphs 1 and 3A above).

(ii) In our opinion, proper books of accounts as required by Law have been kept by the Company so far asappears from our examination of the books except in respect of Steel Unit, where audited balances ofopening assets, liabilities, contingent liabilities and quantitative details etc. as on 01.04.2010 were notavailable and consequently not incorporated in the books of account. (See Paragraph 3(A) above).

(iii) TheThe Balance Sheet referred to in this report is in agreement with the books of accounts of all units andaccounting centres taken together, other than Steel Unit, as on 31st March, 2011 as consolidated withthe Balance Sheet of Steel Unit as stated in Note 4 (c) & (d) of Schedule 14 of Annual Accounts and


hence is not in agreement with the books of account of the Company as a whole. Further, the Cash FlowStatement for the year ended on that date, which does not include adjustments for Cash Flows frominvesting/financing activities and changes in current assets and liabilities in view of non-availability ofaudited Balance Sheet of Steel Unit as on 31.03.2010 & 31-03-2011, is also not in agreement with thebooks of account. (Refer foot-note 2 of cash flow statement). Except for non-incorporation of profit andloss account of Steel Unit for the year 1992-93, the Profit and Loss Account is in agreement with the booksof accounts.

(iv) In our opinion and to the best of our information and according to the explanations given to us, the saidaccounts read together with the Accounting Policies and Notes thereon, so far as they relate to theremaining Units i.e. other than Steel Unit, give the information required by the Companies Act, 1956 in themanner so required except for non-disclosure of information relating to micro, small and mediumenterprises.( Refer note 15 of Schedule 14). In the case of Steel Unit, in view of non-incorporation ofbalance sheets of Steel unit as on 31.03.2011 and 31.03.2010 on account of non-availability andconsequently non-incorporation of audited opening balances as on 01.04.2010 and 01.04.2009 respectivelyof assets, liabilities, contingent liabilities and quantitative details etc., the accounts do not give theinformation required by the Companies Act, 1956 in the manner so required for the Company as awhole.(Refer Note 4 of Schedule 14).

(v) On the basis of written representations received from the directors and taken on record by the Board ofDirectors, none of the directors is disqualified, as on 31st March, 2011, from being appointed as a directorin terms of Clause (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956.Further, the company has been legally advised that provisions of Section 274(1)(g) are prospective innature and the defaults made by it prior to 13th December, 2000, for non-payment of deposits/interest ondeposits on due dates and non-redemption of debentures on due dates, are not covered by Section274(1)(g) of the Companies Act, 1956, on which we have relied upon.

(D) (i) Understatement of accumulated losses on account of non-incorporation of impact of operational/working results/declaration of closure and post closure transactions of Steel Unit for the year 1992-93,amount/impact unascertained. (Refer Note 4 of Schedule 14 and Paragraph 3(A) above).(ii)Though the Company has incurred losses far in excess of paid-up capital/reserves and has beendeclared a sick company, the accounts have been prepared on a going concern basis for reasons statedin Note 20 of Schedule 14.(iii) Understatement of losses on account of: (1) Non-provision of earned leave encashment for Steel Unit, amount unascertained. (Note 28);

(2) Non-provision of interest on loans, obsolete inventories, doubtful debtors/loan and advances and impairment loss, etc. in Steel Unit as stated in Note 4(f) of Schedule 14 of Annual Accounts. Amount of non-provision not ascertained.

(iv) (1)Non-provision of interest ` 124.28 Lacs up to 31st March, 2011 on disputed price of levy sugar (Note 8); (2)(a) Non-provision of late payment surcharge/recovery charges`302.66Lacs (Previous year `302.66Lacs) {Notes 10} and

(b)Non-provision of demands of U.P.Power Corporation Ltd of `1311.49Lacs (Previous year `1311.49Lacs).{Note 4 f (vii)(c)}.

(3)Non-provision of disputed ESI demand `58.86Lacs (for the year `1.17Lacs)(Note 11); (4)Non-provision of disputed House-tax demand `188.63Lacs (Previous year `188.63Lacs) (Note 12); (5)Non-provision of Gratuity Liability on actuarial basis for the period up to 30th September, 1987, ‘ 84.82Lacs (Previous year ` 84.82Lacs) (Note 14a);

(6)Non-provision of simple, penal and compound interest of `17011.44Lacs (for the year ` 2771.11Lacs) on term loans/ debentures and public deposits (Note 21(a) and (f)) and interest/ bank charges ` 1883.78Lacs (for the year ` 226.24Lacs) on cash credit from banks (Note 21(d) & (e)); (7)Non-provision of: (i) Sales-tax ` 2455.78Lacs excluding interest (Previous year ` 2455.78Lacs) (Note 22(a)) and (ii) demands for sales-tax & penalty of ` 175.24Lacs (Note 1(c) of Schedule 14). Further, no due certificate of Sale-tax authorities is awaited for waiver of balance amount of interest and penalty as mentioned in Note 22(c);

(8)Non-provision of Wages ` 27.46 Lacs (Previous year ` 27.46 Lacs) for the lock-out period (Note 24); (9)Non-provision of of excise-duty `167.43Lacs (Previous Year `167.43Lacs). (Note 35). (10)Non-provision of interest of `77.37Lacs and recovery charges of ` 912.09 Lacs (Previous Year ` 649.50Lacs) in view of the reasons stated in Notes 31 and 41(a) & (b) of Schedule 14. (11)Non-provision of differential liability of ` 848.12Lacs (Previous year ` 848.12Lacs) of sugar cane price in view of reasons stated in note 42 of schedule 14. (12)Valuation of closing stock in Sugar Unit is higher by ` 623.10 (Previous Year `453.12Lacs. (Note 43).


Place: New Delhi

Dated: 29th August, 2011

for P.R. Mehra & Co.Chartered Accountants

Regn. No. 000051N

ASHOK MALHOTRAPARTNER

Membership No. 82648

(E) Subject to paragraph (D) above and change in the method of valuation of closing stock in Sugar Unit asstated in note 43 of Schedule 14, in our opinion, the Profit & Loss Account and Balance Sheet, so far asthey relate to the remaining units i.e. other than Steel Unit, comply with the requirements of the AccountingStandards referred to in Sub-Section (3c) of Section 211 of the Companies Act, 1956. However, in view ofnon-availability and consequently non-incorporation of audited (i) opening balances as on 01.04.2010 of assets,liabilities, contingent liabilities and quantitative details etc. and (ii) profit and loss account for 1992-93 of Steel Unit(Refer Paragraph 3(A) above), the accounts do not comply with the requirements of Accounting Standards referredto in Section 211(3c) of the Companies Act, 1956 for the Company as a whole.

(F) Confirmation of Debit/Credit balances of debtors/ creditors/certain banks and of parties who havediscounted sale bills of Sugar Unit were not obtained. (Note 33 of Schedule 14).

(G) The Company has not deposited unpaid unclaimed public deposits and interest accrued thereonamounting to `10.84Lacs with Investor Education & Protection Fund . Further, unpaid amount of suchunclaimed debentures ,if any, as on 31.03.2011 has not been identified.(Note 36)

(H) Cars costing `90.41Lacs (Previous Year `119.27Lacs) purchased in the name of employees/CorporateAdvisor are yet to be transferred to the name of the company. However, these persons have givendisclaimer in favour of the company. (Refer Foot-Note D of Schedule 4).

(I) We invite attention to:(i) Note no. 39 of Schedule 14 regarding entering into agreements to sell 215 (previous year 215)residential quarters, note 40 (a) regarding entering into lease, including perpetual lease agreementsfor 18428.46 Sq. Meters out of total area of 6.75Lac Sq. Meters approx. of factory land & buildings andnote 40 (b) regarding entering into perpetual lease agreement for 1584 Sq. Mtrs. of factory land forwhich the approvals of financial institutions, to whom these quarters and factory land & buildings aremortgaged, were not obtained.(ii) Note 5 of Schedule 14 regarding commencement of new business i.e. “Structural Fabricators”during the current year by Electrode Unit of the company for which approval of the members is beingsought post-facto at ensuing Annual General Meeting.(iii) Accounting treatment given to the manufacture and sale of Vodka by the Distillery unit of companyas stated in note no. 17 of Schedule 14 whereas it had no impact on the net profit for the year and netcurrent assets as on 31st March 2011 of the Company.

(J) We further report that, without considering items mentioned at 3 (D) (i) to (iii) and 3(F) to 3(I)(ii) above,the effect of which could not be determined, had the observations made by us in paragraphs 3D (iv) and3(I)(iii) above been considered, the profit for the year before appropriations of ` 467.58Lacs wouldhave been converted into loss of ` 2963.51Lacs, debit balance of Profit and loss Account would havebeen ` 33089.24Lacs (as against the reported figure of ` 6836.69Lacs), total loan funds would havebeen ` 32887.77Lacs (as against reported figure of ` 13992.55Lacs), Current Liabilities and provisionswould have been `21153.60Lacs (as against the reported figure of `14683.23Lacs), sales and serviceswould have been `40842.46Lacs (as against the reported figure of ` 41041.80Lacs), total expenseswould have been ` 68171.41Lacs (as against the reported figure of ` 42118.20Lacs) and current assetswould have been ` 15400.94Lacs (as against the reported figure of ` 16287.90Lacs).

(K) In view of the significance of our observations in paragraphs 1 and 3(A) to (J) above and especially inview of the fact that the state of affairs would change substantially in case the profit & loss account forthe financial year 1992-93 and balance sheet as on 31st March, 2011 of Steel Unit were included, whichwe are unable to quantify, we are of the opinion, the said accounts DO NOT give a true and fair view: (a)In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011, (b) in thecase of Profit & Loss Account, of the profit for the year ended 31st March, 2011 and (c) in the case ofCash Flow Statement, of the cash flows for the year ended on that date.


ANNEXURE REFERRED TO IN PARA (3B) OF OUR MAIN REPORT OF EVEN DATE

As required by the Companies (Auditors’ Report) Order, 2003 and on the basis of such checks as were consideredappropriate and according to the information and explanations given to us, we further state that in our opinion:

(A) The following matters reported at paragraphs (B) 2,6,9,11,12,15 and 16 do not cover Steel Unit since (i) theaccounts of the Steel Unit for the year 1992-93 has not been incorporated and consequently the audit of whichhas not been carried out and (ii) the balance sheets of Steel Unit for 1993-94 to 2010-11 have not beenincorporated due to non-availability of audited opening balances as on 01.04.1993. (Refer Note 4 of Schedule14 and paragraphs 1 & 3A of our main audit report).

(B) Subject to our comments in paragraph (A) above:(1) (a) Company’s Sugar Unit since inception and other Units since November, 1968, have generally maintained

proper records including quantitative details and situation of their major fixed assets except for : (i) locations incase of furniture and fixture and (ii) recording of additions/deletions of certain previous years in Sugar &Distillery units . Fixed asset register of Steel Unit has not been produced to us. No physical verification ofassets have been conducted by the Management since 1989 in sugar, steel and distillery Units and ofCorporate office and since 2001-02 in respect of other units.(b) The Company has not disposed off substantial part of Fixed Assets during the year.

(2) (a) The inventory of the company, except in respect of stores and spare parts in paint unit has been physicallyverified during the year by the management. In respect of stocks lying with C&F/ Consignee Agents, these havesubstantially been confirmed.(b) Subject to foregoing, the procedures of physical verification of inventory followed by the management werefound reasonable and adequate in relation to the size of the Company and the nature of its business.(c) On the basis of our examination of records of inventory, the company has maintained proper records ofinventory and the discrepancies noticed on verification between the physical stocks and book records werenot material.

(3) The Company has not given/taken any loans, secured or unsecured to/from companies, firms or other partiescovered in the register maintained u/s 301 of the Companies Act, 1956 except for : (i) unsecured interest freeloan given to a company of ` 4.01Lacs (net) during the previous years, the terms and conditions of which areprima facie not prejudicial to the interest of the Company and repayment of the principal amount will be as per theterms of sanctioned rehabilitation scheme of that company and (ii) unsecured loan of ` 7.25 Lacs taken fromtwo subsidiaries of the company, the rate of interest and terms and conditions of which are prima facie notprejudicial to the interest of the Company, have been repaid fully during the current year. We are unable tocomment on the rate of interest and terms and conditions with the two companies covered in the registermaintained u/s 301 of the Companies Act, 1956 in view of pending execution of terms of settlement with thosecompanies to whom Punjab National Bank, IDBI and IFCI have agreed to assign their debts in view of the onetime settlement of their dues. (Refer note 4(f)(i) of schedule 14 of annual accounts). The company has takeninterest free loan of `149.88 Lacs from a company covered in the register maintained under section 301 of theCompanies Act, 1956, the terms and conditions of which are not prejudicial to the interests of the company.

(4) There are generally adequate internal control procedures commensurate with the size and nature of theCompany’s business for the purchase of inventory and fixed assets and for the sale of goods. Some of the keyareas including recovery from customers and balance confirmation of customers/suppliers/parties who havediscounted sale bills of Sugar Unit of the company needs to be strengthened. During the course of our audit,except as stated above, we have not observed any continuing failure to correct major weaknesses in internalcontrols.

(5) (a) To the best of our knowledge and belief and according to the information and explanations given to us, weare of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act readwith note 4(f)(i) (b & c) of schedule 14 of annual accounts have been entered in the register maintained underthat section.(b) In our opinion and according to the information and explanations given to us, the transactions made inpursuance of contracts or arrangements entered in the register maintained under section 301 of the CompaniesAct, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been madeat prices which are reasonable having regard to prevailing market prices at the relevant time (refer paragraph3 above).

(6) In our opinion and according to the information and explanations given to us, the Company has complied with theprovisions of Sections 58A, 58AA or any other relevant provisions of the Act and the Rules framed there underexcept that due to accumulated losses, deposits outstanding as on 31st March, 2011 are in excess of the limitand matured/claimed and unclaimed deposits amounting to `95.14Lacs and interest accrued are outstandingas on 31st March, 2011. (Refer paragraph 3 (G) of our main report).The Company Law Board (CLB) vide itsorder dated 13th December,1991,inter-alia, directed the company to pay principal amount of the depositscommencing from April, 1992 with a moratorium of 3 years from the date of the original maturity of the deposits.Against the above order, the company filed writ petition before Hon’ble Allahabad High Court and vide its orderdated 25th February1992, the court directed that no penal action shall be taken against the company inpursuance of the order of CLB. We are informed that the matter is still pending for final adjudication of thecourt.

(7) In our opinion, the company has an Internal Audit System commensurate with the size and nature of its businessexcept in respect of corporate office and Steel Unit where no internal audit is being conducted.


(8) (a) We have broadly reviewed the books of account and other records maintained by the Company in respectof manufacture of Sugar, Gas and Distillery Units pursuant to the Rules made by the Central Government for themaintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and we are of the opinion thatprima facie, the prescribed accounts and records have been made and maintained. We have not, however,made a detailed examination of the records with a view to determining whether they are accurate or complete.(b) To the best of our knowledge and according to the information given to us, the Central Government has notprescribed maintenance of cost records under section 209(1)(d) of the Companies Act,1956, for any otherproduct of the company. Further, Vanaspati and Steel Units are lying closed and hence no cost records arerequired to be maintained.

(9) (i) During the current year, the company was regular in depositing with the appropriate authorities undisputedstatutory dues except in following cases:(a) Sugar and Distillery units of the company were not regular in deposit of Provident Fund (PF) and FamilyPension Scheme(FPS) dues and interest on overdue PF/FPS.(b) In respect of excise-duty and Tax Deducted at source, these have been regularly deposited though therehave been delays generally in Sugar Unit and in a few cases of tax deducted at source in Distillery unit. Inrespect of tax collection at source, there have been few delays in Distillery and Sugar Units. In respect ofsales-tax/ vat, these have been regularly deposited though there has been a slight delay in few cases in sugarunit of the Company.(c) Investor Education and protection fund :As on 31stMarch, 2011, there were public deposits amounting to `8.35 Lacs which has remained unclaimedand unpaid for a period of more than seven years and interest accrued but not paid on these unclaimeddeposits till the date of maturity amounts to ` 2.49 Lacs. Details of unclaimed and unpaid debentures for aperiod of more than seven years have not been ascertained. These amounts have not been deposited withInvestor Education and Protection Fund (Refer Note 36 of Schedule 14 of Annual Accounts).(ii) On the basis of such checks as were considered appropriate and according to the information and explanations given to us, Statement of Arrears of unpaid Undisputed Statutory Dues (excluding of Steel Unit) outstanding for more than six months as on 31st March, 2011 as per books of account are as under:

Nature of dues ( ` In Lacs)Provident Fund/FPS 24.80Interest on Provident Fund/FPS 107.80Tax deducted at source /Tax collection at source 11.76Interest on TCS/Water Cess 1.48Excise duty 4.28U.P. Trade Tax/CST 1287.05

(iii) According to the records of the company and based on information and explanations furnished to us, the following customduty, Excise duty, Wealth-tax and Sales-tax dues (excluding unascertainable amounts and of Steel Unit) were not deposited onaccount of disputes pending at various forums:

Name of Statute Nature of the DuesAmount of dues

( ` in Lacs)Amount deposited under

protest ( ` in Lacs)Period to Which the

amount relatesForum where dispute

is pending

U. P. VAT Act VAT Tax, Penalty, Interest,Exemption to New Units 2609.35 5.98 1987-88, 1989-90 to 1991-92,

May 91 to March 96 Allahabad High Court

State Tax

VAT Tax and Penalty 68.24 0.24 1986 - 87 +Interest and 2007-08 Jt. Commr.(A) Ghaziabad

Central Sales Tax 213.14 36.40

2005-06 and 2009-10

VAT Tax and Penalty @732.80 377.081982-83 to 1986-87,1988-89,1992-93, 1994-95 to 1997-98,1999-2000 to 2001-02

Commercial Tax TribunalGhaziabad

Supreme Court of India

@ Provided for ` 82.60 Lacs in the Accounts. * Provided for in the Accounts. ** Provided for ` 32.20 Lacs in the Accounts.

VAT Tax 0.56 0.44 Dy. Commr.(Assessment)Modinagar

Excise Duty 0.70 _ 2002-03 and 2003-04

Central Sales Tax Act

Central Sales Tax 1.01 _ 2005 - 06 Dy. Commr.(Assessment)Modinagar


1985 -86 , 1988-89, 1992-93,1994-95 to 1997-98,1999-2000 to 2000 -01

State Sales Tax Act

0.49 2004-050.25 Allahabad High Court

State Tax 10.56 0.20 1992-93 Addl. Commr. Sales Tax, Delhi

1991-92Penalty(HGST) 0.30 _ Tribunal Sales Tax, Chandigarh

15.79 1.79 Dy. Commissioner(A) States1989-90 to 1993-94,1998-99and 2006-07

1988-89 to 1992-93Central Sales TaxAct (States) Central Sales Tax 1.92 0.29 Appellate Authority/

DC(Appeals)

Wealth Tax Act 2007-08Wealth Tax 1.16 0.59 Commissioner of Wealth Tax(Appeals)

_ 1-3-2001 to 25-04-2001 Civil Court, GhaziabadCentral Excise &Custom Act *43.91Custom Duty

0.25 2009-10Excise Penalty _ Commr. of Centra l Excise , G h a z i a b a d

167.43 1985-86 Delhi High Court50.00Excise Duty

**73.00 _ Feb.1981-Feb.1987, 1997-98,1999-2000, 2001-02 to 2008 -09 CESTAT

229.68 2.87 2010-11 Dy. Commr.(A), ModinagarEntry Tax

5.00 _ Information Not Available Information Not Available


(10)In our opinion, after considering the effect of the qualifications on the figures of cash/accumulated losses asper Profit & Loss Account , the accumulated losses of the Company at the end of the Financial Year exceedsits net worth and the company was declared a sick industrial undertaking on 14th March,1991 and theCompany has incurred cash losses in this Financial Year and in immediately preceding financial year.

(11) In our opinion, and according to the information and explanations given to us, the Company has defaulted inrepayment of dues to Financial Institutions, banks and debenture-holders of the Company. The details ofdefaults and period of defaults are as under:

* excluding amount relating to Steel Unit but including dues of IDBI/IFCI relating to other units. Refer note 4f(b) ofSchedule 14 & paragraph A above.

(12) According to the information and explanations given to us, the company has not granted loans and advances on

the basis of any security by way of pledge of shares, debentures and other securities.

(13) The provisions of any special statute as specified under Clause 4 (xiii) of the Order are not applicable to the Company.

(14) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly

the provision of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(15) In our opinion, and according to the information and explanations given to us, during the current year, the Company has not

given any guarantee for loans taken by others from Banks or Financial Institutions. However, in the past, the Company had

given guarantees/ undertakings as mentioned in Note 6 of Schedule 14 of Annual Accounts in respect of certain Companies

(which presently have become Sick Industrial Undertakings) to financial Institutions.

(16) In our opinion, and according to the information and explanations given to us, term loans were applied for the

purpose for which loans were raised.

(17) According to the information and explanation given to us and on an overall examination of the balance sheet of the

company, we report that the no funds raised on short-term basis have been used for long-term investment.

(18)The Company has not made any preferential allotment of shares during the year.

(19) The Company has created security in respect of debentures issued in the past.

(20) The Company has not raised any money by way of public issue during the year.

(21) According to the information and explanations given to us, no fraud on or by the company has been noticed or

reported during the course of audit.

for P.R. Mehra & Co.Chartered AccountantsRegn. No. 000051N



( ` in Lacs)

Particulars Loan Amount Interest including Total dues* Period of default of principalunprovided interest amount

Loans from 423.13 9797.69 10220.82 Loan amounts due for 19 yearsFinancial Institutions i.e. since 1991-92Loan from Banks 40.55 1883.78 1924.33 Entire amount due. Refer note 21(c)( Cash Credit /Overdraft) of Schedule 14

537.32 6953.10 7490.42 ` 53.00 Lacs due since August 1990Debentures ` 30.00 Lacs due since December 1994

` 454.32 Lacs due sinceFebruary 1995 to February 1997.

Total 1001.00 18634.57 19635.57

Place: New Delhi

Dated: 29th August, 2011


BALANCE SHEET AS AT 31ST MARCH, 2011

DESCRIPTION PER SCHEDULE AS AT AS AT31.3.2011 31.3.2010

SOURCES OF FUNDS ` Lacs ` Lacs ` Lacs

Shareholders’ Funds

(a) Share Capital 1 371.42 371.42(b) Reserves & Surplus 2 2703.10 44224.28

3074.52 4595.70

Loan Funds 3

(a) Secured Loans 8366.36 8302.60(b) Unsecured Loans 5591.08 4782.40(c) Deferred Credits 35.11 35.11

13992.55 13120.11

17067.07 17715.81APPLICATION OF FUNDS

Fixed Assets 4

(a) Gross Block 16145.81 17275.36

(b) Less: Depreciation 8398.29 7928.96

7747.52 9346.40

Capital Work in Progress 69.01 111.88

Investments 5 798.11 798.11

Net Current Assets

(a) Current Assets,

Loans and Advances 6 16287.90 17735.65

(b) Less:Current Liabilities

& Provisions 7 14683.23 17586.54

1604.67 149.11

Miscellaneous Expenditure

(to the extent not written off or adjusted)

Deferred Revenue Expenditure 11.07 11.07

Profit & Loss Account 6836.69 7299.24

17067.07 17715.81

Accounting Policies,

Contingent Liabilities & Notes. 14

As per our report attachedfor P.R. Mehra & Co.Chartered AccountantsRegn. No. 000051N Rakesh Kumar Modi

Suraj Parkash ModiAbhishek Modi

Ashok Malhotra Mahendra Kumar Modi Santosh Kumar AggarwalPartner Ajay PS Saini Umesh Kumar Modi Krishna KumarJainMembership No.82648 Company Secretary Managing Directors Directors

Dated:29th August, 2011New Delhi


PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011

DESCRIPTION PER SCHEDULE This Year Previous Year

INCOME ` Lacs ` Lacs ` Lacs

Sales & Services 8 41041.80 23786.21

Less: Excise Duty 6617.49 2282.4534424.31 21503.76

Other Income 9 727.87 726.22

35152.18 22229.98EXPENDITURE

Materials, Manufacturing & Others 10 28518.51 14975.10Excise duty on stock (128.52) 77.62Personnel 11 2765.46 2613.60Administration & Selling 12 2574.65 2099.42Managerial Remuneration 13 14.38 16.37

33744.48 19782.11

PROFIT before Interest, Depreciation & Exceptional Items 1407.70 2447.87Interest {Notes 4(f) (i), 21, 25 of Schedule 14} 1191.77 789.41Depreciation 564.46 528.24

1756.23 1317.65Profit/(Loss) before Exceptional Items, (348.53) 1130.22EXCEPTIONAL ITEMS:

Interest income on Income Tax Refund(Note 9) 816.11 —

Electricity Expenses for earlier years {Note 4(f)(vii)} — (243.37)

Amount written back — 472.65

Excess provision for interest written back — 735.18

816.11 964.46PROFIT FOR THE YEAR BEFORE APPROPRIATION: 467.58 2094.68

Profit from continuing operations 619.75 1927.50Profit /(Loss) from discontinuing (152.17) 167.18 operations {Notes 4(e)}

Profit before Taxation 467.58 2094.68

Less: Fringe Benefit Tax Paid — 0.53Profit after Taxation 467.58 2094.15Less: Transfer to Molasses Storage Fund 5.03 3.24

PROFIT FOR THE YEAR AFTER APPROPRIATION 462.55 2090.91

Less:Loss brought forward from last year 7299.24 9390.15

Loss carried over to balance Sheet 6836.69 7299.24

Earnings per share (` ) (Note 38) 13.95 63.10






SCHEDULE 1: SHARE CAPITAL

DESCRIPTION AS AT AS AT31.3.2011 31.3.2010

` Lacs ` Lacs ` LacsAUTHORISED

40,00,000 Equity Shares of ` 10/- each 400.00 400.001,00,000 Redeemable Cumulative 100.00 100.00

Preference Shares of ` 100/- each500.00 500.00

ISSUED & SUBSCRIBED33,09,214 Equity Shares of ` 10/- 330.92 330.92

each fully paid-upLess: Calls in Arrears 0.24 0.24(See note 1 below)

330.68 330.6840,741 15% Redeemable Cumulative Preference Shares

of ` 100/- each fully paid-up. 40.74 40.74(Note 18 of Schedule 14)

371.42 371.42

1. Of the above Equity Shares :

(a) 2,40,000 and 6,28,370 Equity Shares are allotted as fully paid-up by way of Bonus Shares by capitalisation of

share premium account and reserves respectively.

(b) 1,09,896 Equity Shares are allotted as fully paid-up otherwise than for cash pursuant to a scheme of arrangement

for the Amalgamation of Modi Food Products Company Limited and Modi Supplies Corporation Limited with this

Company.

(c) 12,59,800 Equity Shares as fully paid-up issued on conversion of a portion of Debentures.

(d) ` 1.29 Lacs were adjusted against dividend payable to the Shareholders and ` 17.48 Lacs were adjusted

against earlier deposits and other dues owing by the Company to the allottees of shares.

SCHEDULE 2: RESERVES & SURPLUS

DESCRIPTION AS AT ADDITIONS TRANSFER OR BALANCE31.3.2010 ADJUSTMENT AS AT

31.3.2011

` Lacs ` Lacs ` Lacs ` Lacs

Capital Reserve 459.34 — — 459.34

Capital Redemption Reserve 25.11 — — 25.11

Share Premium Account 22.57 — — 22.57

Revaluation Reserve @ 3538.72 — 1526.21 2012.51

Debenture Redemption Reserve 113.00 — — 113.00

Molasses Storage Fund 65.54 5.03 — 70.57

4224.28 5.03 1526.21 2703.10

Previous Year 4221.04 3.24 — 4224.28

@ Refer Note 19 of Schedule 14.


SCHEDULE 3: LOAN FUNDSDESCRIPTION AS AT AS AT

31.3.2011 31.3.2010

SECURED ` Lacs ` Lacs ` LacsDebentures {Note 1below & Note 21 (a) (i) of Schedule 14} 538.32 538.36

Less: Calls in Arrears 1.00 1.00537.32 537.36

Interest accrued and due {Note 21 (a) (i) of Schedule 14} 3052.50 3052.74Banks (Note 2)

Cash Credits/Term Loan/Overdraft 1544.62 1480.58Interest/other charges accrued and due 17.61 17.61

Others (Note 3) 1506.85 1506.85Interest accrued and due 1707.46 1707.46

8366.36 8302.60UNSECURED

Fixed Deposits 95.14 122.24Interest accrued and due 289.47 298.44Short Term Loans and Advances :

(a) From Others 4410.24 3710.77(b) Interest accrued and due 793.24 647.96

Interest accrued and due (others) 2.99 2.99

5591.08 4782.40

DEFERRED CREDITS (See Note 7 of Schedule 14) 35.11 35.11

13992.55 13120.11

NOTES :(1) DEBENTURES

(a) (i) 5,300-15% Mortgage Debentures of ` 1000/- each redeemable upto 20th August, 1990 and due forpayment.1,000 Debentures redeemed during the year 1998-99 for which discharged debenture certificatesnot yet received.

(ii) 30,000-15% Mortgage Debentures of ` 100/- each redeemable at 5% premium on the expiry of seventhyear from the date of allotment i.e. 18th December, 1987 and due for payment.

*(iii)2,27,660(Previous Year 2,27, 680) -12.5% Mortgage Debentures (Non-Convertible part of ` 200/- each)redeemable in three yearly instalments of ` 65.00, ` 65.00 and ` 70.00 respectively commencing from theexpiry of seventh year from the date of allotment i.e. 29th Feb 1988 and due for payment.

(b) The above debentures are secured by Joint Mortgage of all fixed assets present and future byhypothecation of the said assets and by deposit of title deeds relating to company’s immovable properties,floating charges on all movable/current assets, other than assets referred in foot notes 2,3 (b, c and d)below.

(2) BANKS(i) Cash Credits of ` 1480.58 Lacs and interest accrued and due of 17.61 Lacs are secured by hypothecation

of Stock of Raw Materials, Stocks-in-Process, Finished Goods, Stores and Spares and Book Debts andguaranteed by a Managing Director {Refer Note 4(f)(i)(a) of Schedule 14}.

(ii) Term Loan of ` 64.04 Lacs is secured by hypothecation of vehicle.(3) OTHERS

(a) Loans aggregating to ` 1,377.87 Lacs (IDBI ` 627.74 Lacs, ICICI ` 235.00 Lacs, IFCI ` 287.66 Lacs, LIC` 138.97 Lacs, GIC and its subsidiaries ` 88.50 Lacs) are secured against securities as mentioned in 1(b)above {Refer Note 4(f)(i) (b & c)of Schedule 14}.

(b) Loan of ` 8.08 Lacs from Government of Uttar Pradesh under the Industrial Subsidised Housing Scheme issecured by 1st Mortgage of Land and tenaments constructed under the Scheme.

(c) Loan from IDBI under Technical Development Fund Scheme amounting to ` 74.70 Lacs is secured againstElectrolyser and Copper Electrodes Machine {Refer Note 4(f)(i) (b)(i)of Schedule 14}.

(d) Loan from IFCI under Equipment Finance Scheme amounting to ` 46.20 Lacs is secured against EffluentTreatment Plant {Refer Note 4(f)(i) (b)(ii) of Schedule 14}.

* Including ` 0.02 Lacs from Directors (As at 31st March, 2010 ` 0.02 Lacs)

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SCHEDULE 5: INVESTMENTS (Net of Provisions)DESCRIPTION FACE VALUE COST

AS AT AS AT AS AT31.3. 2011 31.3. 2011 31.3. 2010

OTHER THAN TRADE ` Lacs ` Lacs ` Lacs(LONG TERM)(1) QUOTED : AT COST* 75551.226 Units of 10/-each in UTI 25.84 25.84 25.84Infrastructure Fund Growth PlanEQUITY SHARESUnder the Same Management700000 Fully paid-up Shares of 10/- 70.00 20.00 20.00

each in Modipon Limited1999960 Fully paid-up Shares of

`10/- each in Bihar 200.00 200.00 200.00Sponge Iron Limited

Others800000 Fully paid-up Shares of 80.00 80.00 80.00

`10/- each in ModiRubber Limited

62755 Fully paid-up Shares of 6.28 — —`10/- each in Lords ChloroAlkali Ltd(LCAL).(Net of provisionfor diminution in Value of ` 6.28 lacs)

4 Fully paid-up Shares — 0.01 0.01of `10/- each in Mukand Ltd.

1 Pref. Share in Mukund Ltd.of ` 10/- each — — —Aggregate Amount 382.12 325.85 325.85

Aggregate Market Value ` 831.98 Lacs (Previous Year ` 365.23 Lacs)

(2) UNQUOTED : AT COST GOVERNMENT SECURITIES:**Government Securities 0.11 0.11 0.11 (Lodged as Security)EQUITY SHARESUnder the same ManagementSubsidiary Companies21450 Fully paid-up Shares of 21.45 21.45 21.45

`100/- each in YourInvestment (India) Limited

13200 Fully paid-up Shares of 13.20 13.20 13.20`100/- each in OwnInvestment (India) Limited


`10/- each in IndofilIndustries Limited

1200 Partly paid-up Shares of 0.12 0.07 0.07`10/- each (`3.50 paid-up)in Vital Chemicals Pvt. Ltd.(Transfer refused by theBoard-matter in dispute before the Court)Aggregate Amount 139.88 472.26 472.26

522.00 798.11 798.11* Corporate Lien marked on these Infrastructure Fund Units.* *U. P. State ElectricityBoard Bonds 6% 1982 Face Value of 0.11 Lacs listed but not quoted.

SCHEDULE 6: CURRENT ASSETS, LOANS AND ADVANCESDESCRIPTION AS AT AS AT

31.3.2011 31.3.2010

(A) INVENTORIES ` Lacs ` LacsSTORES & SPARES, STOCK-IN-TRADEAS PER INVENTORIES TAKEN, VALUEDAND CERTIFIED BY THE MANAGEMENT :Stores & Spares Parts (Note1 below) 842.99 819.02Loose Tools 24.52 24.60STOCK-IN-TRADEFinished Goods 2858.62 8485.36

SCHEDULE 6: (Contd.)DESCRIPTION AS AT AS AT

31.3. 2011 31.3. 2010` Lacs ` Lacs

Goods-in-Process 406.61 474.48Raw Materials 376.17 383.69Raw Material( in Transit) 15.50 76.33

4524.41 10263.48(B)SUNDRY DEBTORS

(a) DEBTS OUTSTANDING FOR A PERIODEXCEEDING SIX MONTHSFully Secured 5.28 5.87Unsecured Good 610.82 409.19Unsecured Doubtful (Note 2 below) 496.58 490.56

(b) OTHER DEBTSFully Secured 101.23 110.31Unsecured Good 4651.14 2619.53Unsecured Doubtful 0.26 —

5865.31 3635.46Less: Provision for Doubtful Debts 496.84 490.56

5368.47 3144.90(C) CASH AND BANK BALANCES

Cash in hand 58.42 15.52Cheques and drafts in handand for collection 97.02 149.10With Scheduled Banks inCurrent Accounts 601.85 300.53FDR/Savings Account 68.95 63.33(Molasses Storage Fund)(Note 3 below)Fixed Deposits (Pledged as 1847.89 1692.75Security /Margin Money ` 293.63Lacs.(PreviousYear ` 311.02Lacs)

2674.13 2221.23(D) OTHER CURRENT ASSETS

Interest accrued (Note 4 below) 33.35 27.81(E)LOANS AND ADVANCES

Unsecured GoodAdvances recoverable in cash or 1049.49 1104.79in kind or for value to be received(including `160.74 Lacs considered doubtful-Previous Year ` 159.41Lacs)(Note 5 below)Inter Unit balances (Note 4 of Schedule 14) 960.76 326.27Loans to others (including employees) 27.39 27.62Deposits with Excise Authorities 180.96 63.96(including unutilised CENVAT balance)Security Deposits(including `10.19 Lacs 521.81 407.19considered doubtful-Previous Year `10.38 Lacs)(Note 6 below)

Interest Income Recoverable on Income Tax Refund 816.11 —(Note 9 of Schedule 14)

Advance Income-tax including 301.95 318.19Tax deducted at source 3858.47 2248.02

Less: Provision for doubtful advances 170.93 169.793687.54 2078.23

16287.90 17735.65Notes:(1) Stores & Spares include materials given on loan

on returnable basis against security deposit as under:(a) With Companies under the same Management:

Modipon Limited 6.27 6.27(6.18) (6.18)

(b) Others 11.28 11.28(Figures in bracket represent the amount of security) (16.75) (16.75)

(c) Stores in Transit — 1.62(2) Includes due from a Company under the same

Management (Modipon Ltd.) 3.78 3.78(Maximum Balance during the year) 3.78 3.78

(3) These FDRs are in the joint name of Modi Sugar Millsand Sub Inspector, Molasses(Excise)

(4) Includes interest on :Investment 0.07 0.07Deposits with Banks 33.28 27.74

(5) (a) Includes due from a company under the samemanagement(Modipon Ltd.) 13.02 10.63(Maximum balance during the year) 13.02 18.69(b) Includes due from a subsidiary company — 0.39(Maximum balance during the year) 0.41 0.46(c)Includes due from Managing Directors 6.33 —(Recovered Subsequently)

(6) Includes security given against quarters 146.20 66.65


SCHEDULE 7: CURRENT LIABILITIES AND PROVISIONS


(A)CURRENT LIABILITIES ` Lacs ` LacsAcceptances 33.05 33.05Sundry Creditors (Note 15 & 23 of Schedule 14) 9825.40 12509.51Interest Accrued but not due on loans 61.69 61.45Statutory Liabilities 2042.46 2020.62Employees dues 655.83 665.80Security from Employees 0.38 0.40Due to Managing Directors/Directors 1.47 1.46Advance against Quarters(Note 39 ) 504.50 504.50

TOTAL ‘A’ 13124.78 15796.79(B)PROVISIONS

For Taxation(a) — 68.08*For GratuityAs per last Balance Sheet 1184.04 1085.25Add: Provided during the year 109.75 179.57Less:Paid during the year 120.01 80.78Sub Total(b) 1173.78 1184.04For Leave EncashmentAs per last Balance Sheet 145.51 128.75Add: Provided during the year 26.22 38.05Less:Paid during the year 39.25 21.29Sub Total(c) 132.48 145.51For Excise Duty on Closing Stock(d) 214.86 343.30For Fringe Benefit TaxAs per last Balance Sheet — 12.12Provided during the year — —Less:Paid during the year — 12.12Sub Total(e) — —For IncentivesAs per last Balance Sheet 48.82 59.98Add: Provided during the year 46.08 88.67Less:Paid during the year 24.63 78.69Less:Excess provision written back 32.94 21.14Sub Total(f) 37.33 48.82

TOTAL ‘B’(a) to (f) 1558.45 1789.75 TOTAL (“A” +“B”) 14683.23 17586.54

* Includes for Managing Directors. 3.35 3.35

SCHEDULE 8: SALES & SERVICES

DESCRIPTION THIS PREVIOUSYEAR YEAR

` Lacs ` LacsGross Sales(Net of trade discounts & rebates) 39945.38 23176.52Add: Sales of By-product 1104.99 644.88

41050.37 23821.40Less: Returns 105.87 64.51Net Sales 40944.50 23756.89Hire of Gas Cylinders 29.62 19.84Processing Charges & Others 67.68 9.48

41041.80 23786.21

SCHEDULE 9: OTHER INCOMEDESCRIPTION THIS PREVIOUS

YEAR YEAR

` Lacs ` LacsRent Realised (Note 1 below) 221.97 153.16Interest (Note 2 below) 129.95 122.02Dividend Income from Investments(Note 3 below) 89.25 21.00Profit on :

Sale of Raw Materials & Stores 3.81 1.21Sale of Fixed Assets 12.76 4.81

Miscellaneous 148.16 118.60Dharmada Received 7.20 2.93Claims Received 26.27 11.92Excess Provision/Unclaimed Balances/ 68.54 263.59 Amount Written backCommission/ Royality received 19.96 26.98

727.87 726.22Notes:(1) Includes tax deducted at sources 21.58 4.31(2) (a) Consists of

Bank Deposits 117.75 104.66Staff Loans 2.67 2.45Others 9.53 14.91

(b) Tax deducted at source 12.59 9.33

(3) Includes From Subsidiaries 57.75 —

SCHEDULE 10: MATERIALS, MFG. & OTHERS


` Lacs `Lacs ` LacsRAW MATERIALS CONSUMED 19587.42 17362.23GOODS PURCHASED FOR SALES 154.26 141.34MANUFACTURING

Stores & Spares 1393.88 908.25Power, Coal & Fuel 522.28 371.01Carriage & Siding 13.55 18.42Repairs to Plant & Machinery 908.63 564.29Cane Development Expenses 8.41 27.12Repairs to Buildings 138.99 154.01Processing Charges & Others 96.48 40.14

3082.22 2083.24DECREASE/INCREASE IN STOCKS

OPENING STOCKSFinished Goods 8485.36 4033.39Goods-in-Process 474.48 314.74

8959.84 4348.13

LESS:CLOSING STOCKSFinished Goods 2858.62 8485.36Goods-in-Process 406.61 474.48

3265.23 8959.845694.61 (4611.71)

28518.51 14975.10SCHEDULE 11 : PERSONNELDESCRIPTION THIS PREVIOUS

YEAR YEAR` Lacs ` Lacs

Salaries and Wages 1994.37 1847.96Gratuity* 115.54 177.00Bonus 206.14 194.50Contribution to Provident Fund etc. 168.93 148.27Staff and Labour Welfare Expenses 280.47 244.34Workmen Compensation 0.01 1.53

2765.46 2613.60* Includes for Steel Unit 5.79 (2.57)

SCHEDULE 12: ADMINISTRATION & SELLINGDESCRIPTION THIS PREVIOUS

YEAR YEAR

Rent 106.89 32.13Rates & Taxes 71.99 43.58Insurance 30.13 29.72General Office Expenses 526.65 491.52(Including Telephone, Printing & Stationery,

Car Expenses, Electricity, Advertisement etc.)

Legal & professional Expenses 356.91 308.41Directors’ Sitting Fee 0.61 0.41Travelling Expenses 326.21 250.38Auditor’s Remuneration (Note 1) 17.46 11.93Sales-Tax paid 0.14 6.56Freight/Transport Forwarding etc. 543.19 406.66Commission to Selling/C&F/Consignee Agents* 316.38 350.16Donation & Dharmada Disbursed 3.00 3.30Discounts & Sales Promotion 173.08 143.78Trade Marks Licence & Marketing Fee 79.06 —Bad Debts Written OffClaims/Amount written off

Less:Adjusted against existingProvision for Doubtful Debts and Advances

5.02 3.42Provision for Doubtful Debts and Advances 8.16 10.10Assets Written Off (Net) (Note 2) 0.22 4.62Loss on Sale of Assets (Note 3) 9.55 2.74

2574.65 2099.42* includes commision to C&F/ Consignee Agents 48.56 55.76

` Lacs` Lacs ` Lacs` Lacs

1.963.515.47

2.05

5.440.325.76

0.74


SCHEDULE 14 : ACCOUNTING POLICIES,CONTINGENT LIABILITIES AND NOTES

(A) ACCOUNTING POLICIES:(1) INVENTORY VALUATION :

(a) Stocks of raw materials and stores and spares arevalued at weighted/moving average cost. (Net ofCenvat benefits/input tax credit of U.P. VAT) ornet realisable value whichever is less.

(b) Loose tools are valued at depreciated cost.(c) Cost of machinery spares, which can be used only

in connection with an item of fixed assets and whoseuse is expected to be irregular, are charged torevenue over useful life of the principal item.

(d) Goods-in-transit are valued at cost.(e) Finished goods/Goods-in-Process are valued at lower of

cost and net realisable value except by-product i.e.molasses which is valued at net realisable value. Costinter-alia, includes direct cost, depreciation, excise duty,lease rentals and factory overheads but excludes generaladministration and selling expenses, Corporate Officeadministration expenses and Interest.The closing stocksout of inter divisional transfer of goods, is beingtreated as finished goods instead of raw materials/stores and valued accordingly.

(2) FIXED ASSETS:(i) Major improvements to fixed assets that increases

the future benefits from the existing assetsbeyond its previously assessed standard ofperformance is included in the gross block and isdepreciated over the remaining life of the originalassets.

(ii) Financing cost (upto the date the assets are readyto be put to use for commercial production) relatingto borrowed funds attributable to acquisition of


` Lacs ` LacsN o t e s :(1) Auditors Remuneration

(a) As Auditors 6.06 4.69(b) Taxation including Tax Audit 3.36 1.65(c ) Company Law Matters 1.59 1 . 5 0(d) Management Services/Certification 5.25 3.00(e) Expenses reimbursed 1.20 1.09

(2) Assets Written Off(a) Raw Materials, Stores & Loose Tools 0.06 2.89(b) Fixed Assets 0.16 1 . 7 3

(3) Loss on Sale of(a) Raw Materials and Stores 2.20 0 . 2 5(b) Fixed Assets 7.35 2.49

SCHEDULE 12 : (Contd.) construction of fixed assets are included in the gross

book value of fixed assets to which they relate.(3) DEPRECIATION:

(a) Depreciation on Plant & Machinery is provided onStraight Line Method except in Corporate Office. Inrespect of other assets including office equipments,depreciation is provided on Written Down ValueMethod in all units except Sugar and Steel Unitswhere it is provided on Straight Line Method.(Alsorefer accounting Policy No. 2(i) above)

(b) Assets for which Straight Line Method basis isadopted and acquired prior to 2nd April, 1987,are depreciated at rates prevailing in the yearof acquisition.

(c) Depreciation on additions/deletions is chargedon prorata basis and in accordance with ScheduleXIV of the Companies Act, 1956.

(4) INTANGIBLE ASSETS:Intangible Assets are stated at cost of acquisitionless accumulated amortisation. Computer Softwareis amortised over a period of five years.

(5) REVENUE RECOGNITION:(i) Export incentives under the duty entitlement pass

book scheme is recognised on accrual basis.(ii)Revenue arising by use of company’s properties

by others yielding rent is recognised when nosignificant uncertainty as to measureability orcollectability exists.

(iii)Sale of Goods is recognised at the point ofdispatch of goods to customers.

(6) INVESTMENTS:Long term investments are valued at cost lessprovision for diminution, other than temporary, in thevalue of investments.

(7) RETIREMENT BENEFITS:(a) Contribution to Provident Fund is made at a

predetermined rate to the Provident Fund Trustand charged to the Profit & Loss Account.

(b) Gratuity Liability is accounted for on accrualbasis, computed actuarially, except for Steel Unitupto 31st March, 2002 which is accounted for oncash basis.

(c) Leave encashment is accounted for on accrualbasis,computed actuarially.

(8) OPERATING LEASE:Rentals are expensed with reference to lease terms andother considerations.

(B) CONTINGENT LIABILITIES AND NOTES:AS AT AS AT

31.3.2011 31.3.2010

` Lacs ` Lacs

1.(a) Claims against the Companynot acknowledged as debts:

( i) Workmen (excluding

unascertainable amounts) 168.58 172.36

(ii) Others 438.29 288.29

(b) Partly paid-up Equity Shares of

Vital Chemicals Private Limited 0.08 0.08

(c ) Disputed Liability for Excise duty,Sales-tax,

Entry Tax matters and liquidated damages 1399.28 1141.96

on Provident Fund dues {excluding interest

unascertainable and undisputed Sales Tax/

penalty demands (net of provision made of

` 62.21 Lacs) of ` 175.24 Lacs}

(d) Wealth Tax 1.16 —(e) Bil ls discounted 914.96 818.19

SCHEDULE 13: MANAGERIAL REMUNERATION


Remuneration to Managing Director{See Note 27(b) of Schedule 14}Salary 13.58LESS:Reversal of Excess Remuneration PaidFor the Previous Year —For Current Year —

—13.87 13.58

Contribution to Provident Fund —LESS:Reversal of Excess Remuneration PaidFor the Previous Year —For Current Year —

—1 . 6 7 1.63

Medical Expenses (0.06) 0.06Fee to Clubs (Recovery) (1.10) 1.10

14.38 16.37

` Lacs ` Lacs` Lacs

21.36

2.205.297.49

2.56

0.260.630.89

SCHEDULE 14 : (Contd.)


SCHEDULE 14 : (Contd.)2. Estimated amount of contracts remaining to be executed on Capital

Account ` 140.77 Lacs (Previous Year ` 145.22 Lacs).3. Guarantees given to Sales-tax/Excise Departments on behalf

of Companies in the same group amounts to ` 139.42 Lacs(Previous Year `139.42 Lacs).Information regarding outstandingposition is not available.This excludes guarantees of ` 109.63Lacs (Previous year ` 109.63 Lacs) vacated by Sales TaxDepartment for which guarantee bonds not yet received back.

4.(a)The Steel Unit is lying closed since 24th January, 1993due to strike/lock-out and thereafter closure was declaredwith effect from 24th November, 1993, as the unit wasfound to be unviable. The company has not been able toobtain access to the accounting, financial and productionrecords of the unit necessary for updating the said booksof accounts/compiling the data to prepare the annualaccounts as well as for finalising the audit for the yearended 31st March, 1993. Transactions subsequent to theclosure of the unit could not be incorporated in the annualaccounts of 1992-93 and onwards in view of pendingaccess to the earlier accounts viz., 1st April, 1992 to 24thJanuary, 1993, the absence of which would leave thebooks still incomplete. However, the Profit & Loss accountsfor the current financial year 2010-11 and from 1993-94 to2009-10 have been incorporated in current financial yearand in various previous financial years respectively. Asan interim measure, ` 960.76 Lacs (Previous year ` 326.27lacs) which represents (i) ` 1021.52 lacs (Previous year` 237.63 lacs) being net cumulative inter-unit debit balanceon account of transactions of other units of the companywith Steel Unit during 1st April,1992 to 31st March, 2011,(ii) Payment of unsecured loan of ` 45.00 Lacs (ReferNote (c) below} and (iii) net loss of ` 105.76 lacs for theyears 1993-94 to 2010-11 (before inter unit rental income,write-back of ` 278.95 lacs and provision for depreciationof ` 662.52 Lacs) have been clubbed with Current Assetsof the Company as on 31st March, 2011 and 31st March,2010 respectively as “Inter-Unit Balances” pendingincorporation of (i) Annual Accounts for the period 1st April, 1992 to 31st March, 1993 and (ii) assets and liabilities includinginter unit balances arising on account of transactions forthe period 1st April, 1993 to 31st March, 2011.

(b) The financial results for the years 1992-93 would beincorporated as soon as the company is able to obtainaccess to/ reconstruct the financial, accounting andproduction records.

(c) In view of above, as per past practice, the audited openingbalances of Assets and Liabilities, quantitative details,contingent liabilities {Excluding old electricity dues -ReferNote 4f(vii)} and notes of the Steel Unit as on 1st April,1992, subject to (i) reduction of unsecured loans taken by` 278.95 Lacs in view of write back on account of one timesettlement (OTS) of dues with Hong Kong and ShanghaiBanking Corporation Limited (HSBC), during the year 2004-05 and further reduction of ` 45.00 Lacs on account ofpayment during 2005-06 of OTS to HSBC.;(ii) reduction of fixed assets (net) by ` 662.52 Lacs beingdepreciation provided during 1993-94 to 2010-11 on fixed assetsand (iii) decrease in Inter-Unit balance by 150.76 Lacs whichrepresents; the sum of net loss of 105.76 Lacs for the years1993-94 to 2010-11 (before inter-unit rental income, write backof above amount of 278.95 Lacs and provision for depreciationof 662.52 Lacs) and repayment of unsecured loan of 45.00Lacs. The above inter-unit balance will actually represent eithernet increase in assets or net decrease in liabilities as on 31stMarch, 2011 over balances as on 31st March, 1993 of the Steelunit.

( f ) The Profit & Loss Accounts of Steel Unit for the years 1993-94 to 2010-11 are subject to the following notes on accounts:Shri U.K. Modi stated that:-“(i)(a) During the year 2006-07, an agreement dated 22nd

January, 2007 for One Time Settlement (OTS) of dues ofPunjab National Bank(PNB) was entered into between theCompany, PNB, Shri U.K. Modi(as Guarantor) and SBECSugar Limited (SSL), on the terms as contained in thePNB’s letter dated 28th September, 2006. Under the saidagreement, PNB has agreed to assign all its claims againstSteel Unit of the company together with all securities andcharges created by the company to SSL. Acting uponthe said agreement, SSL made payment of ` 2810.60Lacs as OTS amount together with interest to PNB. Inview of the above agreement to assign debt by PNB toSSL, the said debt is now payable by the company toSSL.The Company proposes to enter into revised termsof payment of this debt with SSL.

(d) Assets and Liabilities of the Steel Unit incorporated inthe Balance Sheet of the Company as on 31.03.2010and 31.03.2011 are as under: (` in Lacs)

Liabi l i t ies As on As on Assets As on As on31.03.2011 31.03.2010 31.03.2011 31.03.2010

Secured Loans 3,421.08 3,421.08 Fixed Assets (Net) 463.57 470.34

Investments 0.11 0.11

Current Liabilities 2,838.28 2,838.28 Current Assets & Advances :

& ProvisionsAccumulated Profits/( Losses) (net): (489.33) (337.16) Inventories 1,340.14 1,340.141993-94 to Sundry Debtors 1,199.25 1,199.25

1995-96 (687.81) Cash and Bank Balances 150.78 150.78

1996-97 and

1997-98 (58.56) Loans and Advances 249.70 249.70

1998-99 to Miscellaneous Expenditure 11.07 11.07

2000-01 (29.83) (to the extent not written

2001-02 to off or adjusted)

2003-04 56.53 Inter-unit Balances 1,568.19 1,713.59

2004-05 300.90 Loss for year 1991-92 787.22 787.22

2005-06 (36.67)

2006-07 (18.94)

2007-08 (10.86)

2008-09 (24.40)

2009-10 172.48

2010-11 (152.17)

TOTAL 5,770.03 5,922.20 TOTAL 5,770.03 5,922.20

(e) Profit & Loss Account of the Steel Unit for the year ended 31stMarch, 2011 & 31st March, 2010 (Excluding inter-unit rental incomeof ` 46.99 Lacs) (Previous Year ` 43.09 Lacs)

(` in Lacs)

PARTICULARS 2010-11 2009-10

INCOME:Rental Income: 177.92 122.86

177.92 122.86EXPENDITURE:

Repairs to buildings 12.66 16.00

Personnel 74.22 45.09

Administration & Selling 97.39 71.45

Interest 139.05 40.57

Depreciation 6.77 330.09 6.55 179.66

Loss for the year before exceptional items 152.17 56.80

Exceptional Items:

Add:Electricity Expenses for earlier years{ Note 4 f(vii)} — 243.37

Less:Amounts written back — 472.65

Profit/(Loss) for the year (152.17) 172.48


SCHEDULE 14: (Contd.)(b)(i) With reference to the settlement of dues of IDBI Limited,

a settlement agreement was concluded between theCompany, IDBI Limited and SBEC Bio-Energy Limited(SBEL) on 6th October, 2007. This settlement agreementwas in terms of IDBI’s letter dated 9th February, 2007.Under the said agreement IDBI agreed to assign its entiredebt due and payable by the company to SBEL. Acting onthe said agreement, SBEL made a payament of `1232.20Lacs together with interest from 1st July, 2006 to IDBI. Thesaid payament of `1232.20 Lacs along with interest to IDBIwas completed on 6th October, 2007. In view of the aboveagreement to assign debt by IDBI to SBEL, the said debt isnow payable by this company to SBEL.The Companyproposes to enter into fresh terms of payment of this debtwith SBEL.

(ii) With reference to the outcome of the settlement ofdues of IFCI Ltd., settlement agreement was concludedbetween this company, IFCI Ltd. and SBEC Bio-EnergyLtd.(SBEL). This settlement agreement was in termsof IFCI’s letter dated 30th December, 2009. Under thesaid agreement IFCI agreed to assign its entire debtdue and payable by the company to SBEL.Acting onthe said agreement, SBEL made a payment of ` 775.00lacs to IFCI on 30th December, 2009. In view of theabove agreement to assign debt by IFCI to SBEL, thesaid debt is payable by this company to SBEL. TheCompany proposes to enter into fresh terms ofpayment of this debt with SBEL.

(c) As reported last year, Shri M.K. Modi had filed petitionsbeing OMP No. 411/2007 and AA No. 287/07 and OMP No.95/2010 in the Delhi High Court to enforce an agreementdated 17th November, 2006 entered into with Shri UmeshKumar Modi. In the above mentioned petitions, Shri M.K.Modi interalia claimed that the OTS settlements as statedabove are contrary to the aforesaid agreement. The DelhiHigh Court by its order dated 19th May, 2010 held that ShriM.K. Modi is not entitled to relief in any of the aboveproceedings filed by him, with regard to agreement dated17th November, 2006, and are accordingly dismissed thePetitions with cost.Shri M.K. Modi has challenged the order dated 19.05.2010of Delhi High Court and has filed a Special Leave Petition inthe Supreme Court on 27th July, 2010. The Hon’ble SupremeCourt vide its order dated 27th August, 2010 held that “theparties are directed to maintain status quo with regard to themanagement of the Company, but we make it clear that thiswill not in any way affect the proceedings pending beforethe Board for Industrial and Financial Reconstruction andalso the Appellate Authority(AAIFR)”.According to Shri M.K. Modi, “The said settlements/proposedassignments of debt by IDBI,IFCI and PNB are neitherlegal nor binding and are without the approval of the Board.The same are also contrary to the 1989 MOU and the BoardResolution dated 8th December, 2006.”As per Shri U.K. Modi, “The above contentions of ShriM.K.Modi are not correct. These issues were part ofthe writ petition filed by Shri M.K. Modi in Delhi HighCourt. The Hon’ble Delhi High Court dismissed the writpetition fi led by Shri M.K. Modi vide its order dated19th May,2010.Though a Special Leave Petition has been filled before theSupreme Court by Shri M.K. Modi against the judgementand order dated 19th May, 2010 of the Hon’ble Delhi Courtthe Supreme Court has not granted any stay of the saidjudgement of the Delhi High Court.Shri M.K. Modi had also challenged the order dated12.03.2007 passed by the BIFR by fi l ing an Appealbefore the AAIFR (Appeal No.167/2007). In the Appeal,Shri M.K. Modi sought to inform the terms of the MOUdated 17th November, 2006. This contention was notaccepted and the Appeal fi led by Shri M.K. Modi hasbeen rejected by the AAIFR vide order dated 22ndJune, 2011 and the AAIFR has directed as follows:-

I ) Promoters of MIL to submit their proposals within 30days of communication of the order of AAIFR to OA;

ii) OA to prepare a revival scheme within a further periodof 60 days;

iii) BIFR to consider and decide rehabilitation proposalssubmitted by the parties and sanction a rehabilitationscheme within 60 days.Pursuant to the order passed by AAIFR, Shri U.K.Modi and Shri M.K. Modi have now submitted theirseparate Draft Rehabilitation proposal to the IDBI.”

(d) In view of non-availability of book balance of liabilitiestowards PNB, IDBI and IFCI in the books of Steel Unitof the Company on account of non-incorporation ofannual accounts and balance sheets of Steel Unit {ReferNote 4 (a to c) of Schedule 14 of Annual Accounts}.The difference between OTS amounts and bookbalances could not be ascertained.As per Shri U.K. Modi, these liabilit ies will now be

quantified with the assignees of PNB, IDBI and IFCIdebts .As per Shri M.K. Modi, the above contention of ShriU.K. Modi is incorrect.

(e) No-provision of interest, amount unascertained, isrequired to be made, on loans from other FinancialInstitutions as the existing amounts appearing in thebooks of accounts of the company will be more thansufficient in view of in-principle approval/ discussionsbeing held for one time settlement of dues with theFinancial Institutions.

( f ) In view of clear cut delineation of responsibitit ies ofthe two Managing Directors of the Company, theaccounts of two divisions of six units and three unitsof the company are being prepared and finalizedindependently and accordingly Shri M.K.Modi and ShriU.K.Modi are certifying the accounts as relate to thetwo divisions of the company i.e six units and threeunits respectively, the management whereof is lookedafter by them.

(ii) The impact, if any, on account of non-availability andconsequently non incorporation of audited openingbalances of assets and liabilities of the Steel Unit as on1st April, 2010;

(iii) Non-provision of obsolete/damaged stocks and fixedassets, if any, in view of non-incorporation of earlier year’saccounts and non-physical verification of inventories andfixed assets as on 31st March 2011;

(iv) Non-confirmation/reconciliation of balances of debtors,creditors, banks, financial institutions etc. and impact, ifany, on the Profit and Loss Account;

( v ) Non-provision of doubtful debts and loans & advances,amount unascertained;

(v i ) Non-provision of impairment of Assets, if any, of thefixed assets as per Accounting Standard (AS 28) i.e.Impairment of Assets, amount unascertained.

(vii)(a) Uttar Pradesh Electricity Board (Now U.P. PowerCorporation Ltd.) raised various demand notices againstelectricity dues and late payment surcharge amounting to` 2435.48 Lacs on the Steel unit of the Company.(b) In terms of One Time Settlement with U.P. Power CorporationLtd. regarding arrears of electricity dues, the Steel Unit paidduring the previous year `563.90 lacs against the demand of`1123.99 lacs included in (vii)(a) above. Accordingly shortfall inprovisions of ` 243.37 Lacs has been charged to revenueduring the previous year.(c)The company filed writ petition in Allahabad High Courtchallenging the said demand notices. The Hon’ble AllahabadHigh Court dismissed the writ petitions filed by theCompany.The company filed Special Leave Petition (SLP)with the Hon’ble Supreme Court of India, who has grantedinterim stay on 14th March, 2005 for stay of recovery byway of sale of property which is still continuing.In view of the above and pending incorporation of annualaccounts of Steel Unit for 1992-93, no provision isconsidered necessary against the balance demand of`1311.49 Lacs at this stage.

5 . The company commenced new business of ‘StructuralFabricators’, which is covered under the sub clause 3(34) ofthe Memorandum of Association of the Company, during thecurrent year in respect of which approval of Shareholdersunder Section 149(2A) of the Companies Act, 1956 is beingsought in the ensuing Annual General Meeting.

6 . Undertakings given to Financial Institutions on behalf ofLords Chloro Alkali Limited, Modi Rubber Limited and BiharSponge Iron Limited :(a) To procure funds jointly/severally with other promoters to

meet any shortfall in the resources of the Company forcompleting their projects and/or for working capital. Thefunds made available/to be made available can only bewithdrawn with the prior approval of Financial Institutions andshall not involve any charge or lien on the assets of thesaid Companies.

(b) That the Company shall not transfer, assign, pledge,hypothecate or otherwise dispose of in any manner itsholding in their capital without Institutions’ prior approvalin writing.

7 . Deferred Credit including liability for interest payable forunexpired period have been guaranteed by the Bankers of theCompany against hypothecation of Gas Cylinders andMachinery purchased under the Scheme in Steel Unit.

8 . The Company has disputed the price of levy sugar fixedduring the year 1970-71 to 1974-75 and recoveredamount of ` 37.73 Lacs in excess of control price whichwas paid subsequently in pursuance of Supreme CourtOrder dated 22nd September, 1993. However, thecompany obtained Stay order from Hon’ble Allahabad


SCHEDULE 14: (Contd.)High Court against demand of interest made by the FoodCorporation of India which is still continuing.However, during the current year, the Food Corporation ofIndia has adjusted a sum of `124.28 Lacs towards interestdues from the differential amount recoverable by SugarUnit of the Company on account of price increase in levysugar supplied for season 2009-10.The above adjustmenthas been done without prejudice to the right and contentionof the company.In view of the above, interest on excess realisations forthe years 1970-71 to 1974-75 amounting to ` 124.28 Lacs,as adjusted by the FCI, will be accounted for as expensesin the year of disposal of the above writ petition.

9 . In accordance with an Interim Order dated27th April, 1981 of the Delhi High Court, the Company hadavailed higher quota of free sale sugar and concessionalexcise duty on provisional basis as New Unit. The Hon’bleDelhi High Court vide its order dated 28th February, 2005decided the matter in favour of the Company.The Company had filed application for reference of a questionof law to the Delhi High Court against the orders of theIncome Tax Appellate Tribunal for assessment year 1982-83.The Hon’ble Delhi High Court vide its order dated 18thAugust, 2010 has decided the issue in favour of the company.Consequently, the interest amount received of ` 816.11Lacs on refund from the Income Tax Department pertainingto the period upto 31st March, 2011 has been recognized asincome in the financial year ended on 31st March, 2011.

10 . The Company has entered into an agreement with U.P. PowerCorporation Limited for its Residental Feeder SC No. 2005 on29th March, 2000. In pursuance of that agreement, theCompany has paid for the existing authorised occupants onlyafter 1st July, 1998 computed prorata based on covered areaof quarters occupied by the employees. In view of the above,no provision has been made for electricity charges of ` 131.46Lacs upto the period of permanant disconnection of residentialfeeder SC. No. 2005 i.e. 31st May, 2001 (Previous Year Rs.131.46 Lacs) for the unauthorised occupants and late paymentsurcharge/ recovery charges amounting to ` 302.66 Lacs upto31st May, 2001 (Previous Year ` 302.66 Lacs). In accordancewith the agreement, matter regarding waiver of late paymentsurcharge and recovery charges after 1st July, 1998 will bereferred to the Government.

11. ESI authorities had raised a demand on the Company for` 58.86 Lacs (upto previous year `57.69 Lacs)(inclusive ofinterest) towards Company’s liability for ESI for the years1968 to 1986. The demand is disputed by the companyand no provision has been made against this liability.

12. Modinagar Municipal Committee had determined the basis/liability of house-tax payable by the Company for the years1982-83 to 2006-07 at ` 213.98 Lacs. The said liability/demand/basis is disputed by the company at various levels and hasdeposited `16.51 Lacs on account upto 31st March, 2011.Pending final decision of the Court/settlement and after takinginto account the provision/payment already made by theCompany, there is a net liability of `188.63 Lacs (upto theprevious year ` 188.63 lacs), which has not been provided forin the accounts.

13. Excise Duty on uncleared manufactured finished goodsand custom duty in respect of imported goods lying inbond in respect of Steel Unit amounting to ` 43.09 lacsand ` 24.35 lacs respectively is accounted for as andwhen such goods are cleared. However, this has no impacton the loss of the Company.

14 . (a) In respect of Steel Unit, gratuity liability upto 30thSeptember, 1987 amounting to ` 84.82 Lacs has not beenprovided in the books on accrual basis. However, the saidliability has subsequently been paid/deposited.(b) The Gratuity Liability of continuing employees in SteelUnit was being accounted for on cash basis from 1993-94 to 2001-02. During 2002-03 past Gratuity Liability ofcontinuing employees amounting to ` 14.96 Lacs wasprovided on accrual basis computed on actual basis andw.e.f. 2003-04, Gratuity liability is computed on actuarialbasis and provided for in the books of account.

(c) The Company has adopted Accounting Standard 15(Revised) on employees benefits with effect from 1st April2007 in respect of provision for Gratuity Liability.

The Company has unfunded scheme for payment of gratuityto all eligible employees calculated at specified number of daysof last drawn salary depending upon tenure of service for eachyear of completed service subject to minimum five years ofservice payable at the time of seperation upon superannuationor on exit otherwise.

(d) (i) The company has adopted Accounting Standard 15(Revised) on employees benefits with effect from 1stApril, 2008 in respect of Earned Leaves.

(ii)Details in respect of Earned Leave are as under: Liability to be recognised in Balance Sheet

Present value of Obligations 135.15 148.02Fair value of Plan Assets — —Net Liability (135.15) (148.02)Reconciliation of Opening and ClosingBalances of ObligationObligation as at beginning of the year 148.02 133.18Current Service Cost 14.33 14.48Interest Cost 11.84 9.99Actuarial Losses/(Gain) 0.94 12.06Benefits Paid (39.99) (21.69)Obligations as at the end of the year 135.15 148.02Expenditure to be recognised during the yearCurrent Service Cost 14.33 14.48Interest Cost 11.84 9.99Expected return on Plan Assets — —Net Actuarial Losses/(Gains) Recognised during the year 0.94 12.06Total expenditure included in “Employees’ Emoluments” 27.11 36.53AssumptionsDiscount Rate( per annum) 8.00% 7.50%Expected rate of return on Assets (per annum) 0% 0%Salary Escalation Rate 8.50% 8.00%

15. The Company has not received information from vendorsregarding their status under the Micro, Small and MediumEnterprises Development Act, 2006 and hence disclosurerelating to amounts unpaid as at the year end together withinterest paid/payable under this act has not been provided.

16. Government of India has issued guidelines dated 15thJanuary, 1987 which requires companies raising resourcesthrough issue of Debentures to create a DebentureRedemption Reserve. The Company has not created sucha reserve in view of the accumulated losses.

17. (a) During the current year, the Distillery unit of thecompany (Bottler) has entered into an agreement i.e. a“Bottling Agreement” with MI Spirit India Private Ltd (MISIP)whereby the parties i.e. bottler and MISIP have agreed tothe blending, manufacturing and bottling of the products by

Details in respect of Gratuity are as under:Liability to be recognised in Balance Sheet

Present value of Obligations 1,094.72 1,100.59Fair value of Plan Assets — —Net Liability (1,094.72) (1,100.59)Reconcilition of Opening and Closing Balances of ObligationObligation as at beginning of the year 1,100.59 1,004.36Current Service Cost 57.88 56.39Interest Cost 88.05 75.33Actuarial Losses/(Gain) (35.42) 41.80Benefits Paid (116.38) (77.29)Obligations as at the end of the year 1,094.72 1,100.59Expenditure to be recognised during the yearCurrent Service Cost 57.88 56.39Interest Cost 88.05 75.33Expected return on Plan Assets — —Net Actuarial Losses/(Gains) Recognised during the year (35.42) 41.80Total expenditure included in “Employees’ Emoluments” 110.51 173.52Assumpt ionsDiscount Rate( per annum) 8.00% 7.50%Expected rate of return on Assets (per annum) 0% 0%Salary Escalation Rate 8.50% 8.00%

( ` in Lacs )As on

31.03.2011As on

31.03.2010

As at31.03.2010

As at31.03.2011

( ` in Lacs )


SCHEDULE 14: (Contd.)the bottler. Bottling agreement inter-alia includes: (i) thebottler shall manufacture the products in accordance withthe quality standards, standard manufacturing procedures,the process and other specifications laid down by MISIPfrom time to time and in such quantities as may bespecified by MISIP from time to time (ii) the bottler shallprocure the materials i.e. concentrates, spirit, flavouringagents, de-mineralised water, packages and levels fromMISIP or from the suppliers suggested or recommended byMISIP (iii) products manufacturing by the bottler shall besupplied, dispatched or sold by the bottler as per thepurchase orders procured by MISIP and bad-debts fromdirect indenters supplied on credit upon request by MISIPare to MISIP’s Account (iv) MISIP will be responsible forworking capital financing. Bottler shall open a bank account(“Account”) which is to be operated jointly by the bottlerand MISIP and all funds in the account shall belong toMISIP notwithstanding that the account may be in thename of the bottler (v) MISIP will reimburse themanufacturing expenses and pay manufacturing margin(i.e. 10% of the aggregate of the manufacturing expensesas reduced by statutory charges, taxes and duties andselling and distribution expenses) from the above account(vi) all payments received by the bottler for sale ofproducts shall be credited to the account andmanufacturing expenses incurred by the bottler,manufacturing margin shall be reimbursed by MISIP tobottler. Any surplus remaining in the account shall thereforebe paid to the company as fee.(b) In the opinion of the management, since the productsare being manufactured and sold in the name of the bottler,the purchase invoices in respect of raw material, packingmaterial and consumables and sales invoices for the finishedgoods are being issued in the name of the bottler, necessarycompliances under various tax laws are also being done bythe bottler and special bank account is also in the name ofthe bottler, the transactions of the above business ofmanufacture and sale of “Vodka” have been treated as partof books of account of the bottler and these have beenincluded in sales, expenses, assets and liabil it ies of thebottler as stated in paragraph (c) below.(c) Balance Sheet and profit & Loss account of the bottlerfor the financial year ended 31st March, 2011 includes thefollowing items relating to the above activities of manufactureand sale of “Vodka”:

(d)The Expert Advisory Committee of Institute ofChartered Accountants of India in an almost similar casedo not agree with the above mentioned accountingtreatment. The opinion is governed by the substance ofthe transaction and not by the legal form i.e. sales,

purchases, assets and liabilities relating to such businesscontrolled by the brand owners should not be recordedin the books of account of the company even thoughsupporting vouchers are in the name of the company andthe correct accounting treatment of the transactions inthe books of account of the company would be torecognize only the fixed margin/charge received by itrather than to recognize sales and purchases of thebusiness of manufacturing IMFL and also should notrecognize any current assets or l iabil it ies of the saidbusiness in its books of account. Further, the brandowners entitlement paid by the company should bebooked as a mere cash outflow. Further the ExpertAdvisory Committee had clarified that the opinionexpressed by the committee is purely from theaccounting point of view without consideration of anyimplication thereof, from the point of view of theprovisions of TDS/TCS the Income Tax Act 1961 or anyother legal / statutory requirement.

18. (a)Cumulative Preference Shares were due forredemption on 31st December, 2010. The companymoved Misc. Application (MA) u/s 22(3) of the SICAbefore Hon’ble BIFR, whereby it had sought extensionand suspension of obligation in relation to the 15%Preference Shares concerning Preference Shareholdersfor two years. The Hon’ble BIFR vide its order dated18th January, 2011 dismissed the application of theCompany. Consequent to the order, the company hadwritten letters to the Institutional Preference Shareholdersfor settlement and redemption of Preference Shares.Further, negotiations are pending and preference sharesare overdue for redemption as on 31st March, 2011.

(b) Arrears of dividend on Cumulative Preference Sharesamounts to `123.73 Lacs (upto 31st March, 2010`117.62 Lacs.

19. No depreciation was provided on appreciated value of Buildingsconsequent to their revaluation in the books of accounts ofthe company on 31st March, 1992. In view of lapse of 19years since last revaluation on 31st March, 1992 and closureof Steel, Vanaspati, Lantern ans Soap Units after 31stMarch,1992, earlier appreciation on revaluation in buildings of` 1526.21 Lacs has been reversed and adjusted fromrevaluation reserve during the current financial year to bringthese buildings at historical cost.

20. Consequent to the losses, the Company had been declareda Sick Industrial Company on 14th March, 1991 in terms ofSection 3(1)(o) of the Sick Industrial Companies (SpecialProvisions) Act, 1985. Further proceedings before the BIFRare pending.Pending final orders of BIFR, the accounts ofthe company have been prepared on a going concernbasis.

21. (a) No provision has been made for penal / delayed/simple/compound interest amounting to `16,750.79Lacs upto 31st March, 2011 (for the year ` 2,749.68Lacs) on term borrowings of Financial Institutions andDebentures pending final order of BIFR.

(b) Interest payable by Vanaspati Unit of the Companyto Financial Institutions since the date of disbursementof the loan on simple rate of interest basis amountsto `1190.40 Lacs upto 31st March, 2011 and the unitholds total interest provision of ` 732.41 Lacs as on31st March, 2011 resulting in the short provision of` 457.99 Lacs on simple interest basis.

(c) The Sugar and Distillery Units of the Company havegiven a proposal for settlement of their dues withAllahabad Bank of ` 227.00 Lacs against which anupfront payment of ` 50.00 Lacs has already beenmade under “No Lien Account” and included under‘Loans and Advances’and to pay the balance amountof `177.00 Lacs into equal monthly instalments afterthe receipt of sanction from the bank. The shortfallin interest provision amounting to ` 168.84 Lacs willbe provided in the books of account in the year ofapproval of OTS proposal by the Bank.

(d) The Sugur Unit of the Company has not madeprovision for interest/ bank charges amounting to

Balance SheetParticularsSundry Debtors 127.08Bank Balances 41.33Security Deposits 27.40Closing Stock 46.83Advance Recoverable 32.56Total Current Assets 275.20Less : Current Liabilities 91.02 Credit balance of MISIP 172.84 263.86Net current Assets 11.34Recognised as net profit for the yearinstead of Manufacturing margin 11.34IMPACT ON NET PROFIT NILProfit & Loss AccountTurnover (net of discount) 210.68Excise duty paid 13.89Material, Manufacturing & others. 39.36Personnel Expenses 4.99Administrative Expenses 141.10Total Expenses 199.34Net Profit for the year 11.34Recognised as net profit for the yearinstead of Manufacturing margin 11.34IMPACT ON NET PROFIT NIL

(` in Lacs)


SCHEDULE 14: (Contd.)

` 1717.72 Lacs (for the year ` 195.33 Lacs) on cashcredit loan taken from Allahabad Bank in view ofPara(c)above.

(e) No provision has been made for interest on CashCredit from Allahabad bank amounting to ` 166.06Lacs (for the year ` 30.91 Lacs) in Distillery Unit inview of Para (c) above.

( f ) Till 31st March, 2000, simple interest on matured fixeddeposits and interest upto date of maturity wasprovided in the books of account. With effect from1st April, 2000 , no provision has been made forinterest of ` 260.65 Lacs, upto 31st March, 2011 (forthe year ` 21.43 Lacs), computed as per pastpractice, on these fixed deposits in view of a legalopinion received by the Company to the effect thatas per terms and conditions of Fixed Deposit Scheme,deposits do not carry any interest beyond due datesunless these are renewed. Since these deposits werenever renewed after their due dates as such, thequestion of payment of interest after due dates doesnot arise at all. However, as a prudent measure, theprovision made of ` 289.47 Lacs in the past (net ofpayments) has been retained in the books of accountas on 31st March, 2011.

22. (a) The Vanaspati Unit had applied for Sales-Tax relief/exemption to U.P. Government in terms of Section 4Aof U.P. Sales Tax Act. Consequent to rejection, theCompany has filed a writ petition in Lucknow Bench ofAllahabad High Court and Court granted Stay. Pendingdisposal of the case, no provision has been made forsales-tax ` 2455.78 lacs relating to the period May,1991to July,1994 (Prevoius Year ` 2455.78 Lacs).

(b) The Vanaspati Unit had preferred an application fordeferment of Sales-tax with effect from July, 1994under Section 38 of the U.P. Sales Tax Act and thesame has been rejected by the State Government.The Company has also filed Writ Petition against therejection and consequent to the orders of the Court, therecovery of Sales-tax has been kept in abeyance.Accordingly, Sales-tax amounting to ` 440.46 Lacs(previous year ` 440.46 Lacs) relating to the periodAugust, 1994 to March, 1996 has not been deposited withthe authorities.The above writ petition filed by the company waslisted for hearing on 2nd May, 2008 at High Court,Lucknow Bench. The Company had filed an affidavitwith the court that BIFR had passed an order dated26th March, 2008 by virtue of which the Benchpermitted the Commercial Tax Department,Government of U.P. to recover its outstanding dues,due after 30th June, 2007. The Company had alsostated in the said affidavit that the Hon’ble SupremeCourt of India had affirmed the order of the BIFR andtherefore in view of the said orders of BIFR asaffirmed by the Hon’ble Supreme Court, the saidWrit Petition may be dismissed as infructuous.Accordingly the High Court, Lucknow Bench hasdismissed the said writ petition as infructuous.

(c) In accordance with the scheme announced by U.P.Government regarding Waiver of interest & penalty onSales Tax, the Distillery Unit of the Company has paidand provided interest during 2005-06 of ` 54.77 Lacsi.e. 10% of the total interest as per the scheme. Nodues certificate of sales tax authorities is awaited.

23 . Fixed Assets of Modi Sugar Mills (MSM) as on 31st March,2011 includes Boiler and Turbine acquired under financelease. Details are as under. (` in Lacs)

2 4 . (a) The Distillery Unit declared cessation and lock out ofthe Unit with effect from 19th December, 1991 and 5thJanuary, 1992 respectively. The lockout has since been lifted.The U.P. Government, suo moto, has referred the matter tothe Industrial Tribunal to decide the legality of the lockout.Pending final decision, no provision has been made for wages` 27.46 Lacs for the lockout period.(b) Distillation Department was under lay-off with effectfrom 1st July, 2010 and restarted with effect from 1stSeptember, 2010

2 5 . Interest expenses on fixed loans ` 820.07 Lacs (Previous Year` 688.20 Lacs) and on others ` 367.91 Lacs (Previous Year` 101.21 Lacs).

2 6 . Income and Expenditure pertaining to previous year includedunder relevant heads amounts to ` Nil and ` 30.55 Lacs(Administration & Selling ` 15.81 Lacs, Interest ` 10.68 Lacs,Personnel ` 1.57 Lacs, Returns, Rebates & Discount ` 2.30Lacs and Mfg. & Others ` 0.19 Lacs) respectively.

2 7 . (a)Provision/payments (including value of perquisites) hasbeen made to Managing Directors for the remuneration of` 80.68 Lacs in terms of Shareholders resolution, which issubject to approval of the Financial Institutions.(b) The remuneration w.e.f. 1st November, 2009 of Dr.Mahendra Kumar Modi, Managing Director, was subject tothe approval of Central Government. Pending approval, asper the legal advice obtained, the company has madepayment amounting to ` 35.05 lacs towards remunerationfor the period 1st November, 2009 to 31st March, 2011,as per the approval of the Shareholders. Further, anundertaking was obtained from the Managing Directorstating that in the event the Central Government notaccording its approval or approving lower remunerationthen the excess amount paid, if any, shall be refunded tothe company and till the approval is accorded by theCentral Government, the amount received will be held intrust for the company. In view of the approval receivedsubsequently, the excess remuneration of ` 9.54 Lacs andrent of ` 5.24 Lacs has now been recovered/deducted fromthe Managing Director.

2 8 . No provision has been made for Earned Leave for SteelUnit, upto 1991-92, amount unascertained.

2 9 . The Sugar Unit of the Company has discounted salesbills raised on SBEC Sugar Limited amounting to` 3,525.31 Lacs (Previous year ` 2,600.05 Lacs) fromcertain persons/limited companies etc. and the same (netof discounting charges borne by drawee) has beencredited to the account of SBEC Sugar Limited. Theabove includes ` 2,837.67 Lacs (Previous year ` 1,789.44Lacs) being bil ls discounted from individual persons/HUF/Firms. Balance outstanding of bil ls discounted ason 31st March, 2011 amounts to ` 766.37 Lacs (PreviousYear ` 669.61 Lacs) (paid fully subsequently by thedrawees) and has been shown in Note 1(e) of Schedule14 of Annual Accounts as Bil ls Discounting.

3 0 . Allahabad Bank had filed a recovery suit for recovery of` 21.41 Crores against Modi Industries Limited and othersbefore the Debt Recovery Tribunal (DRT), Lucknow in April,2005 The Company challenged the recovery suit on thegrounds that bank required prior permission under section 22(1) of the Sick Industrial Companies (Special Provisions) Act,1985 for filing recovery suit. Debt Recovery Tribunal,Lucknow, allowed continuation of recovery suit against whichcompany filed appeal with Debt Recovery Appellate Tribunal,(DRAT) Allahabad. The DRAT had stayed further proceedingsby DRT in the matter. A writ petition was filed by theCompany before the Lucknow Bench of Allahabad High Courtchallenging the orders of the DRT, Lucknow and DRAT,Allahabad. The Lucknow Bench of Allahabad High Court notingthe contention of the Company has disposed off the WritPetition by its order dated 18th July, 2008. The Company hasfiled review petition against the said order seeking thequashing of the Allahabad Bank’s suit before the DRT.

31. Recovery Certificate (RC) was issued on 20th April, 2011 onaccount of non-payment of cane price/commission/interestdue to Co-operative Societies for the sugar season 2010-11.The above RC also includes interest of ` 115.96 lacs upto20thApril, 2011 on cane price/ commission payable to societieswhich has been provided for in the books of accountandrecovery charges of ` 268.25 lacs (upto 31st March, 2011` 262.59 Lacs) which has not been provided for in the booksof account as stay granted by Hon’ble Allahabad High Court.Further proceedings are pending.

Part iculars Boiler Turbine

Lease Period 4 yrs 5yrsLease Amount 200.00 398.55Interest Amount 77.36 170.88Total Lease rental Payable 277.36 569.43Payable as on 31st March, 2011 24.40 23.40 294.86 243.21Payable during 2011-12 24.40 23.40 114.14 83.23Payable during 2012-13 to Ni l Ni l 180.72 159.98note later than 5 yearsOption of purchase at the end of Lease Yes Yes

PresentValue

PresentValue


SCHEDULE 14: (Contd.)32. Previous year’s figures have been regrouped wherever

necessary.33. No confirmation letters were sent to debtors/creditors and to

parties who have discounted sale bills. In the absence of suchconfirmations, the balances in respect of Sundry Debtors/Creditors/Bills discounted(Contingent Liability), Loans taken/given and Advances and other accounts are taken as shownby the books of accounts and are subject to adjustments andreconciliation, if any.

34. In view of non-viability of the Vanaspati Unit, which was aseperate business segment as per AS-17, Segment reporting,the company declared closure of the Unit with effect from3rd February, 2003 and prior information, as required underlaw, was given to the State Government on 04th December,2002. The closure is consistent with the company’s strategyto focus on its other viable manufacturing activities.

35. Delhi Excise Authorities issued Show Cause Notices and raiseddemand for `167.43 Lacs towards Risk-Purchase of Country Liquorin view of non-supply of the same by Distillery Unit of theCompany. Company has disputed the above demand and a WritPetition was filed before the Hon’ble Delhi High Court who orderedcase to be referred back to Collector of Excise for taking finaldecision. The Collector of Excise vide its order dated 27th June,2003 has confirmed the above demand against which the companyhas filed a writ petition before the Hon’ble Delhi High Court. On thebasis of orders of Hon’ble Delhi High Court, the company deposited` 50.00 Lacs till date against the above demand. No provision isconsidered necessary at this stage since the matter is sub-judice.

36. As on 31st March, 2011, there were 162 Public Depositsamounting to ` 8.35 Lacs which have remained unclaimedand unpaid for a period of more than seven years and interestaccrued but not paid on these unclaimed deposits till the dateof maturity amounts to `2.49 Lacs. Details of unclaimed andunpaid debentures for a period of more than seven years arepresently not available.

The Company has filed a return dated 14th June, 2002 withthe Registrar of Companies duly certified by practicingCompany Secretary stating that the Company is a SickIndustrial Company as per orders of BIFR dated 14thMarch,1991 and rehabilitation proposal for payment in respectof debentures and fixed deposits etc. is pending before theIDBI (as the operating agency)/BIFR for consideration. TheCompany will pay/ credit the amount as per final orders ofBIFR. Accordingly, no amount was credited/ paid to Investor’sEducation and Protection Fund till date.

37 . Deferred Tax:

Deferred Tax Assets are ` 1,758.19 Lacs as on 31stMarch, 2011 (Previous year ` 1,836.22 Lacs) constitutingmainly of unabsorbed depreciation, unabsorbed losses, provisionfor doubtful debts, provisions disallowed and interest on termloans disallowed in Income tax. Deferred Tax Liabilities is `

601.48 Lacs as on 31st March, 2011 (Previous Year ` 644.37Lacs) on account of higher depreciation claimed in Income Tax.On conservative basis as required by the Accounting Standard22, the net Deferred Tax Assets have not been recognised andposition will be re-assessed at next balance sheet date.However, the estimated Deferred Tax Assets and Liabilitiesdetails are given as under:

38. Earnings per Share (EPS) computed in accordance withAccounting Standard-20: (` in Lacs)

Particulars 2010-11 2009-10Profit for the year as per accounts 467.58 2094.15Less:Dividend on Preference Shares 6.11 6.11

Total (A) 461.47 2088.04

Number of Equity Shares issued (B) 33,09,214 33,09,214Earning per share (in `) (A)/(B) 13.95 63.10Face Value of Equity Share in (`) 1 0 1 0

39. Till 31st March, 2011, Certain Quarters of the Company areoccupied unauthorisedly by ex-employees/outsiders. Thecompany has entered into “Agreement to Sell” for 215 (PreviousYear 215), such residential quarters with such parties. Saleconsideration amounting to ` 504.50 Lacs (Previous Year `. 504.50Lacs) has been received as interest free advance. These“agreements” clearly stipulates that final sale of such quartersare subject to approval of Financial Institutions to whom thesequarters have been mortgaged and the company proposes toseek the same before affecting final sale of such quarters.Accordingly the sale of such quarters will be accounted for onlyon receipt of approval of Financial Institutions. Further theCompany has been legally advised that it can enter into such“Agreements to Sell”.

40. (a)The Steel unit of the company has entered into few leases,including perpetual leases, agreements for certain portion of thefactory land and building(18428.46 Sq.Mtrs.) (Previous Year 18428.46 Sq. mtrs) for which approval of financial institution, to whomthe factory land and buildings are mortgaged, is yet to beobtained. However, the company has been legally advised that itcan enter into such lease agreements. Further, the lease moneyhas mainly been utilised for payment of workers dues.(b)The company has entered into a perpetual lease agreement forcertain portion of closed Soap factory, land & building(1584 sq.mtrs) to a related party. As the said land and building is mortgagedwith the financial institutions therefore the company had soughtthe approval of IDBI Limited (the lead financial institution) to thesaid transaction vide its letter dated 6th September, 2006. SinceIDBI Limited did not respond, therefore the Company again wrotea letter to IDBI Limited on 5th April, 2007 requesting for itsapprovalto the said transaction. The company in the letter underreference also mentioned that if IDBI does not respond to thecompany’s request, it will be deemed that the company’s requesthas been approved by IDBI Limited and the company will goahead with the said leasing agreement. The IDBI has so far notresponded to the company’s letter.

41. (a)Recovery Certificate (RC) was issued on 1st May, 2004 onaccount of non-payment of cane price / commission / interestdue to Co-operative societies. The Hon’ble High Court hasstayed the recovery proceedings against the company subjectto payment of dues upto 31st July, 2004. The Company hascomplied with the conditions regarding payment of cane priceand commission on basic SMP upto 31st July, 2004. However,the company has disputed the payment of interest of `142.00Lacs and recovery charges of ` 236.00 Lacs in the Hon’bleAllahabad High Court which is still pending. On considerationof prudence, the company has made provision for interesto f `142.00 Lacs dur ing the year 2004-05.

(b)Recovery Certificate (RC) was issued on 18th March, 2008on account of non payment of cane price/commission/interestdue to Co-operative societies for the sugar season 2007-08.The above RC also includes interest of ` 77.37 Lacs upto 15thMarch, 2008 on cane price/ commission payable to societiesand recovery charges of ` 413.50 Lacs which has not beenprov ided fo r in the books o f account .

` Lacs ` Lacs

Description As at As at 31.3.2011 31.3.2010

(a) Deferred Tax Assets:(i) Disallowances under the

Income Tax Act. 1410.83 1445.16(ii) Provision for Doubtful Debts 161.05 162.96(iii) Unabsorbed Depreciation 186.31 228.10

Total 1758.19 1836.22

(b) Deferred Tax Liabilities :

Related to Fixed Assets 601.48 644.37

(c) Deferred Tax Assets (Net) (a-b) 1156.71 1191.85



(c) Recovery Certificate (RC) was issued on 10th August, 2007 on account of non paymeny of cane price/ commission /

interest due to co-operative societies for the sugar season 2006-07. The above RC also includes interest of ` 340.66 Lacs

upto 7th August, 2007 on cane price/commission payable to societies and recovery charges of ` 426.95 Lacs which has not

beenprovided for in the books of account. As per the interim order dated 27th February, 2008 of Hon’ble Supreme Court, there

shall not be any recovery charges or interest for delayed payment at this stage.

42. The Company, in compliance of the interim order of the Lucknow bench of Hon’ble Allahabad High Court dated 15th

November, 2007 and subsequently confirmed by Hon’ble Supreme Court vide its order dated 15th May, 2008 has paid

cane price of ` 110/- per Qtl. for the crushing season 2007-08 and has accordingly accounted for the liability. The

Lucknow bench of Hon’ble Allahabad High Court by a subsequent order dated 7th July, 2008 upheld the validity of State Advised

Price (` 130/- per qtl. for Early variety and ` 125/- per qtl. for General variety) fixed by State Government. Aggrieved by the

said order, the company has filed Special Leave Petition with Hon’ble Supreme Court. The differential liability of the sugar cane

price of ` 848.12 Lacs (Previous Year ` 848.12 Lacs) for sugar season 2007-08, if so ordered, will be accounted for in the

books at the time of final disposal of the matter by the Hon’ble Supreme Court.

43. As per the past practice, the closing stock of finished goods in Sugar Unit has been valued at cost or Net Realizable

Value (NRV) whichever is lower.

Upto 2008-09, for computing NRV, the closing stock of finished goods, to the extent of levy obligation pending as

at the year end, was valued at levy sale price and balance quantity was valued at prevailing free market prices.

However, with effect from financial year 2009-10, for computing NRV, the closing stock, to the extent of levy quantity

quota alloted to the Sugar Unit for the period from April, 2011 to August, 2011, has been valued at levy, sale price

and balance quantity has been valued at prevailing free market prices.Had the NRV been computed as per past practice

as stated above, the value of closing stock would have been lower by ` 623.10 Lacs (Previous Year ` 453.12 Lacs).

44. The following are the particulars of dues on account of sales tax, excise duty, income tax and others as at 31st March,

2011 that have been disputed by the Company in appeals pending before appellate authorities.

Name of Statute Nature of the Dues Amount of dues( ` in Lacs)

Amount deposited underprotest ( ` in Lacs)

Period to Which theamount relates

Forum where disputeis pending

U. P. VAT Act VAT Tax, Penalty, Interest,Exemption to New Units 2609.35 5.98 1987-88, 1989-90 to 1991-92,

May 91 to March 96 Allahabad High Court

State Tax

VAT Tax and Penalty 68.24 0.24 1986 - 87 +Interest and 2007-08 Jt. Commr.(A) Ghaziabad

Central Sales Tax 213.14 36.40

2005-06 and 2009-10

VAT Tax and Penalty @732.80 377.081982-83 to 1986-87,1988-89,1992-93, 1994-95 to 1997-98,1999-2000 to 2001-02


Supreme Court of India

@ Provided for ` 82.60 Lacs in the Accounts. * Provided for in the Accounts. ** Provided for ` 32.20 Lacs in the Accounts.

VAT Tax 0.56 0.44 Dy. Commr.(Assessment)Modinagar

EXCISE DUTY 0.70 _ 2002-03 and 2003-04

Cen t ra l Sa les

Ta x A c t

Central Sales Tax 1.01 _ 2005 - 06 Dy. Commr.(Assessment)Modinagar


1985 -86 , 1988-89, 1992-93,1994-95 to 1997-98,1999-2000 to 2000 -01

State Sales Tax Act

0.49 2004-050.25 Allahabad High Court

State Tax 10.56 0.20 1992-93 Addl. Commr. Sales Tax, Delhi

1991-92Penalty(HGST) 0.30 _ Tribunal Sales Tax, Chandigarh

15.79 1.79 Dy. Commissioner(A) States1989-90 to 1993-94,1998-99and 2006-07

1988-89 to 1992-93Central Sales TaxAct (States) Central Sales Tax 1.92 0.29 Appellate Authority/

DC(Appeals)

Wealth Tax Act 2007-08Wealth Tax 1.16 0.59

_ 1-3-2001 to 25-04-2001 Civil Court, GhaziabadCentral Excise &Custom Act *43.91CUSTOM DUTY

0.25 2009-10EXCISE PENALTY _ Commr. of Centra l Excise , G h a z i a b a d

167.43 1985-86 Delhi High Court50.00EXCISE DUTY

229.68 2.87 2010-11 Dy. Commr.(A), Modinagar

Commissioner of Wealth Tax(Appeals), New Delhi

5.00 _ Information Not Available Information Not Available

to 2008-09**73.00

_ Feb.1981-Feb.1987, 1997-98,1999-2000, 2001-02 CESTAT

ENTRY TAX



45. RELATED PARTIES DISCLOSURE01 Entities under the Control of the Company:

Subsidiaries:Own Investment (India) Limited. Your Investment (India) Limited.

02 Key Management Personnel:Shri Mahendra Kumar Modi Managing DirectorShri Umesh Kumar Modi Managing Director

03 Other Related parties with whom the Company had transactions etc.

Enterprises over which the key Management Personnel and their relatives areable to exercise significant influence:

04 Disclosure of transactions between the company and related parties andthe status of outstanding balances as at 31st March, 2011 :(A) Transactions with the enterprises over which the key Management personnel and their relatives are able to excercise significant influence:

Modipon LimitedMorgardshammar India Ltd.Modi Motors Pvt. Ltd.H.M. Tubes & Containers Pvt. Ltd.Ashoka Mercantile Limited

Bihar Sponge Iron LimitedModi Mundipharma Pvt. Ltd.Modi Line Travel Services Pvt. Ltd.Modi Senator (I) Pvt. Ltd.Weld Excel India Limited

SBEC Sugar LimitedWin-Medicare Pvt. LimitedModi Revlon Pvt. Ltd.A to Z Holding Pvt. Ltd.

(`. in Lacs)

Sale of GoodsSBEC Sugar Limited (Note 29) 7461.19 2720.56Weld Excel India Limited 253.78 239.57

7714.97 2960.13Purchase of Goods/Raw MaterialsWeld Excel India Limited 335.71 115.48Others 17.25 27.10

352.96 142.58Purchase of AssetsModipon Limited — 8.84Ashoka Mercantile Limited 1.65 3.26

1.65 12.10Rental IncomeWin Medicare Private Limited 58.15 54.47Weld Excel India Limited 19.90 6.86Modi Motors Pvt. Ltd. 12.15 12.23Others 15.66 9.52

105.86 83.08

Payment of Rent — 0.79

Expenses reimbursedWeld Excel India Limited 67.40 —SBEC Sugar Limited — 11.26Others 0.46 1.44

67.86 12.70Expenses realizedWeld Excel India Limited 5.78 —Modipon Limited 3.09 —Others 3.03 5.79

11.90 5.79Amount Written backBihar Sponge Iron Limited — 472.65Services rendered — 4.20Royalty Fee receivedWeld Excel India Limited 22.14 29.76Commission paid for sale promotionAshoka Merchantile Ltd. 15.44 12.70Receiving of ServicesWeld Excel India Limited 20.40 24.53Others 1.34 4.24

21.74 28.77

2009-10Year

2010-11


* This excludes amount of Steel Unit in view of non- incorporation of Balance Sheets for these years on account of non-availability of opening audited balances as on 01-04-1993( Refer Note 4 of Schedule 14)# Unsecured interest free advance given ` 500 lacs pursuant to an agreement for commitment to supply electrode which is being adjusted from supply of goods @ 20.00% (Previous year 33.33%) of invoice value.

` Lacs ` LacsSecurity deposits givenModipon Limited 97.95 9.15Advance received against sale of goodsSBEC Sugar Limited 450.00 —Interest Paid on above advance 17.23 —Loans and Advances given# Weld Excel India Limited — 500.00* Amount recoverable Good 1831.19 49.31 Doubtful 3.78 3.78# Loans and Advance recoverable 399.58 461.85Security deposit for cylinders 39.00 39.00Security deposit recoverable for quarters 146.20 66.65* Amount payable 77.63 83.63Unsecured Loan Outstanding 149.88 149.88Lease rent payable 23.40 83.61

Year

2010-11 2009-10

(B) Disclosure of transactions with subsidiaries: (` in Lacs)

2010-11 2009-10Loan repaidOwn Investment (India) Ltd. 1.25 —Your Investment (India) Ltd. 6.00 —

Balance of Loan takenOwn Investment (India) Ltd. — 1.25Your Investment (India) Ltd. — 6.00

Dividend IncomeOwn Investment (India) Ltd. 27.72 —Your Investment (India) Ltd. 30.03 —

Interest payable on Loan — 1.21

Interest expense 0.47 0.51

Year

(C) Payment to the Key Management Personnel: (` in Lacs)

(i) Managerial Remuneration(Net of Recovery)

Shri Mahendra Kumar Modi 14.38 16.37

ii) Amount recoverable 6.33 —

Shri Mahendra Kumar Modi (Recovered subsequently)

(iii) Amount Payable (Provision for gratuity) 3.35 3.35

Year2010-11 2009-10




46. Additional Information as required by Part II of Schedule VI of the Companies Act, 1956.A. PARTICULARS OF LICENSED CAPACITY, PRODUCTION, STOCKS AND SALES FOR THE YEAR ENDED 31ST MARCH, 2011.

CLASS OF GOODS UNITS C A P A C I T I E S * *QUANTITY L I C E N S E D I N S T A L L E D

2011 2010 2011 2010

Sugar M.T. per day of * * 5000 5000Sugarcane Crushing

Vanaspati M.T. per day 120 120 20000 20000 (M.T. per annum)

Dissolved Acetylene Gas Cu.Mtr. per year 292351 292351 292351 292351

Spirit K.Ltr. per year 4842.5 4842.5 4842.5 4842.5

Carbon-di-oxide Gas Kg. per year * * 2520000 2520000

Paint & Varnish M.T. per year * * 7000 5000

Welding Electrodes M.T. per year * * 22680 22680

Steel Castings** M.T. per year 6000 6000 2000 2000

Rods, Flats,Sections, Wires ** M.T. per year 75760 75760 90000 90000

(Rolling) (Rolling)36000 36000

(Drawing) (Drawing)Oxygen Gas ** Cu.Mtr. per year 1036800 1036800 1036800 1036800*Industry delicensed * * Steel Unit figures as on 31st March,1992. (Refer Note 4 of Schedule 14). @ Based on triple shift basis

@ @

@ @

CLASS OF GOODS UNITS/QUANTITY PRODUCTION TURNOVER *VALUE Lacs 2011 2010 2011 2010

Sugar M.T. 56959 45542 76006 32603Value — — 22488.11 10560.09

Molasses (By Product) M.T. 32144 22739 19476.00 1032513600.00 11407

Value — — 459.38 522.43Bagasse(By product) M.T. 199497 148950 159461 143958

37646 4992Value — — 633.59 109.79

Dissolved Acetylene Gas Cu.Mtr. 157840 155296 266 196157262 155552

Value 296.66 286.99Spirit K.Ltr.in B.L. 4048 2387 3853.93 1050

1060 1152Value — — 302.70 373.67

ENA K.Ltr.in B.L. 610 11 585.91 0.50Value — — — —

I.M.F.L. K.Ltr.in B.L. 61.98 — 53.19 —Value — — 210.72 —

Country Liquor K.Ltr.in B.L. 3535.88 809 3519 868Value — — 5525.81 1171.72

Bio-Organic Manure M.T. 3558.63 1833 1958.63 1933Value — — 12.02 12.65

Special Denature Spirit K.Ltr. 3204.51 716 3204.51 716Value — — 792.66 190.97

667Carbon-di-Oxide Gas K.G. 1411661 1184265 1406440 1186996

Value — — 124.20 102.31

Paint & Varnish M.T. 6313.07 5516.30 1.10 9.506283.12 5422.68

Value — — 2492.08 2139.53

Welding Electrodes M.T. 7743 8337 27.50 0.207631.50 8454.80

Value — — 7197.23 7893.78Flux M.T. 188 274 188 274

Value — — 118.67 148.35Total (Value) — — 40653.83 23512.28

* Inclusive of Excise Duty but excludes rebate and trade discounts. T Transfers represent material used for self consumption / further processing/ Inter Unit Transfer.$ Includes 503 MT (Previous Year 203 M.T.) Co2 wire Electrodes purchased in semi packed condition {Value 327.40 Lacs( previous Year value 123.41 Lacs)}

T

TT

T

T T

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T T

$ $$$

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TT



CLASS OF GOODS UNITS/QUANTITY STOCKS OF GOODS MANUFACTURED

VALUE ` Lacs OPENING CLOSING

2011 2010 2011 2010

Sugar M.T. 23340 10401 4293 23340Value 6550.02 1755.75 1014.71 6550.02

Molasses M.T. 8928 7708 7996 8928Value 265.80 413.44 157.03 265.80

Bagasse( By Product) M.T. — — 2390 —Value — — 35.85 —

Vanaspati Others M.T. 1.575 1.415 1.575 1.575Value 0.02 0.02 0.02 0.02

Dissolved Acetylene Gas Cu.Mtr. 2032 2484 2344 2032Value 2.94 3.35 3.42 2.94

Carbon di-oxide Gas K.G. 4528 7926 6463 4528Value 0.30 0.42 0.38 0.30

Spirit K.L. in B.L. 897 712 31.07 897Value 217.63 206.01 6.59 217.63

ENA K.Ltr.in B.L. 11.50 1.00 35.59 11.50Value 3.03 0.19 7.62 3.03

I.M.F.L. K.L. — — 8.79 —

Value — — 9.89 —

Country Liquor K.Ltr.in B.L. — 59 16.88 —

Value — 78.93 30.49 —

Bio-Organic Manure M.T. 1100 1200 2700 1100Value 3.96 4.50 9.72 3.96

Paint & Varnish M.T. 402.80 318.67 431.65 402.80Value 135.57 123.77 168.79 135.57

Welding Electrodes M.T. 467 585 551 467Value 406.36 547.00 514.72 406.36

Wires * M.T. 2425 2425 2425 2425Value 442.63 442.63 442.63 442.63

Rods, Flats, Sections * M.T. 2552 2552 2552 2552Value 398.25 398.25 398.25 398.25

Oxygen Gas * Cu.Mtr. 1061 1061 1061 1061Value 0.05 0.05 0.05 0.05

Scrap & Others * Value 54.81 54.81 54.81 54.81

Total (Value) 8481.37 4029.12 2854.97 8481.37

* This represents figures of Steel Unit as at 31st March, 1992. (Refer Note 4 of Schedule 14).



TRADING OPERATIONS:

CLASS OF GOODS UNITS/QTY PURCHASES OPENING CLOSING SALES

VALUE 2011 2010 2011 2010 2011 2010 2011 2010 ` .Lacs

T2416 T2385

Oxygen Gas Cylinders 100951 97327 104 186 119 104 98520 95024

Value 68.85 59.39 0.08 0.15 0.09 0.08 114.24 96.05

Hydrogen Gas Cylinders 8901 13960 556 449 349 556 9108 13853

Value 16.49 23.65 1.03 0.81 0.63 1.03 26.24 35.06

Argon Gas Cylinders 12626 7485 174 286 231 174 12569 7597

Value 31.10 20.46 0.54 1.10 0.72 0.54 75.73 47.62

CO2 Gas Cylinders 4945 5490 22` 39 16 19 4939 5510

Value 9.37 11.36 0.05 0.08 0.03 0.05 16.46 18.47

N2H2 Mixture Cylinders 3499 711 33 55 32 33 3500 733

Value 2.88 1.13 0.04 0.06 0.03 0.04 8.16 1.46

T 6

Nitrogen Gas Cylinders 14923 15821 203 344 142 203 14978 15957

Value 14.81 16.32 0.23 0.39 0.17 0.23 30.17 30.29

Zero Air Gases Cylinders 475 284 21 37 32 21 464 300

Value 0.69 0.44 0.03 0.06 0.05 0.03 1.74 1.13

Glowlite Putty Kgs. 24640 13100 2590 770 560 2590 26670 11280

10 kg. Value 3.88 1.98 0.38 0.11 0.09 0.38 8.20 3.44

Glowlite Putty Kgs. 2600 — — — 990 — 1610 —

1 kg. Value 0.36 — — — 0.14 — 0.57 —

Satina Uni Stainer Kgs. 2827 3451 847 807 838 847 2836 3411

Value 5.83 6.61 1.61 1.51 1.70 1.61 9.16 11.09

Total (Value) 154.26 141.34 3.99 4.27 3.65 3.99 290.67 244.61

T 12

B. RAW MATERIALS CONSUMED

PARTICULARS UNITS QUANTITY VALUE

2011 2010 2011 2010

Sugarcane Qtls. 6344997 4858900 13930.98 12237.48Oils M.T. 168.263 154.382 90.28 80.01Calcium Carbide M.T. 494.55 515.80 183.87 180.08Acetone M.T. 12.836 10.838 8.74 6.82Carbon di Oxide Gas M.T. 1485.888 1269.640 64.07 59.22Molasses M.T. — — 4.72 2.64Chemicals M.T. 8584.594 8125.283 2456.51 2381.03Wires* M.T. 5746.169 6154.073 2606.33 2414.11Scotch B.L. 7 4 0.01 0.01Grain E.N.A. B.L. 35447.90 1803.40 14.52 0.74E.N.A. B.L. 791704.30 — 225.85 —Natural Mineral Water B.L. 37159.20 200.80 1.54 0.09

19587.42 17362.23

` Lacs ` Lacs

* Wires includes 503 MT (previous Year 203 M.T.) Co2 wire electrodes purchased in semi packed condition { Value ` 311.34 Lacs ( Previous Year value ` 100.61 Lacs)}



C. ADDITIONAL INFORMATION

2011 2010PARTICULARS

` Lacs %AGE ` Lacs % AGE(A) Value of Imports on CIF Basis

(i) Raw Materials (Cost of Material acquired) 69.62 119.31(ii) Components & Spare Parts — 1.10

(B) Expenditure in Foreign CurrencyTravelling 3.98 5.03Stores Purchased 1.00 —Other Matters 0.04 —

(c) Value of Imported/Indigenous Raw Materials,Spare Parts and Components consumed

(a) (i) Raw Material Imported 49.28 0.25 94.06 0.54 (ii) Raw Material Indigenous 19538.14 99.75 17268..17 99.46

TOTAL 19587.42 100.00 17362.23 100.00(b) (i) Spare Parts and Components Imported 0.01 0.00 1.33 0.52 (ii) Spares Parts and Components Indigenous 380.95 100.00 256.87 99.48

TOTAL 380.96 100.00 258.20 100.00

Notes:(1) Delicensed/Licensed and installed capacity is as certified by officials of the Company.(2) Where one class of goods is used in the manufacture of another, consumption of materials has been arrived at without deducting

internal transfer during the year.(3) The quantity sold has been derived from the quantitative details available in respect of opening, closing stocks and productions.(4) As segregation between spare parts and components is not possible, the value of consumption of spare parts and components

has been aggregated. The figures given in C(b) above are as certified by the officials of the Company.

Rakesh Kumar ModiSuraj Parkash ModiAbhishek Modi

Mahendra Kumar Modi Santosh Kumar AggarwalAjay PS Saini Umesh Kumar Modi Krishna KumarJainCompany Secretary Managing Directors Directors

Dated: 29th August, 2011New Delhi

i . Registration Details :Registration No. 469 State Code : 20Date of Balance Sheet : 31.03.2011

i i Capital Raised during the year Amount in `.’000Public Issue Ni lRight Issue (Conversion of Warrants) Ni lBonus Issue Ni lPrivate Placement Ni l

i i i Position of Mobilisation and Deployment of Funds(Refer Note 4 of Schedule 14) Amount in `’000Total Liabilities 1706707Total Assets 1706707(including accumulated losses)Sources of Funds :Paid Up Capital 37142Reserves & Surplus 270310Secured Loans 836636Unsecured Loans 559108Deferred Credits 3511Application of Funds :Net Fixed Assets 774752Capital Work in Progress 6901

Investments 79811Net Current Assets 160467Miscellaneous Expenditure 1107Accumulated Losses 683669

iv Performance of the Company:Amount in `’000

Turnover(including other income and exceptional incomebut excluding Excise Duty) 3596829Total Expenditure (Including exceptional expenses) 3550071Profit before Tax 46758Profit after Tax 46758Earning per Share(in Rupees) 13.95Dividend Rate (%) Ni l

v Generic Names of Three Principal Products/Services ofCompany (as per monetary terms)Item Code No. (ITC Code) 17011190Product Description Cane Sugar (others)Item Code No. (ITC Code) 32081010Product Description Enamel (Paint)Item Code No. (ITC Code) 831110Product Description Coated Electrodes of Base Metal

Balance Sheet Abstract and Company’s General Business Profile as required under Part IV of Schedule VI to the Companies Act, 1956.







` Lacs ` Lacs

(A)CASH FLOW FROM OPERATING ACTIVITIES :

Profit before Tax 467.58 2094.68Add: Adjustments for:

i) Depreciation 564.46 528.24ii) Assets/Investment written off/ 9.77 7.36

Loss on Sale of Fixed Assets/storesiii) Interest Expenses 1191.77 789.41

iv ) Provision for Doubtful Debts & Advances 8.16 10.10v ) Amounts/ Claims/Bad Debts written off 5.02 3.42

(Net of provisions)1779.18 1338.53

2246.76 3433.21

Less: Adjustments for :i) Interest Income 129.95 122.02ii) Profit on sale of Fixed Assets 12.76 4.81iii) Excess Provision written back 68.54 263.59

iv ) Excess Provision for Interest written back — 735.18

v ) Amount Written Back — 472.65v i ) Interest income on Income Tax refund 816.11 —vii) Profit on sale of stores 3.81 1.21viii) Dividend Income 89.25 21.00

1120.42 1620.46Operating Profit before WorkingCapital Changes 1126.34 1812.75

Adjustments for :

Trade Receivables (2235.29) (434.01)Inventories 5740.54 (4726.29)Trade Payable (2507.73) 4316.86Loans & Advances (148.40) (602.35)Cash Generated from Operations 1975.46 366.96Interest Paid (Note 1) (1052.64) (598.05)

Fringe Benefit Tax — (12.65)Net Cash from Operating Activities (A) 922.82 (243.74)

(B) CASH FLOW FROM INVESTING ACTIVITIES :

` Lacs ` Lacs

Purchase of Fixed Assets (885.30) (445.23)Sale of Fixed Assets 45.68 14.57Decrease in Term Deposits — 200.00Interest Received 124.41 138.42Dividend Received 89.25 21.00

Net Cash Flow from Investing Activities (B) (625.96) (71.24)


` Lacs ` Lacs

(C) CASH FLOW FROM FINANCING ACTIVITIES :

Unsecured Loan from Others(Net) (Note 1below) 699.47 940.78

Unsecured Fixed Deposits paid (27.10) (4.64)

Debentures redeemed (0.04) (200.00)

Cash Credits/ Term Loan 64.04 (444.55)

Net Cash from Financing Activities (C) 736.37 291.59

* Inter Unit Balances (Net) (D) (Note 2 below) (634.88) 172.90

Net increase/(decrease) in cash and

Cash Equivalents (A+B+C+D) 398.35 149.51

Opening Cash and Cash Equivalents 1501.88 1352.37

Closing Cash and Cash Equivalents 1900.23 1501.88

Notes:

1 . (a) Interest credited to accounts of Suppliers, C&F Agents

and dealers etc. is treated as paid.

(b) Interest paid & increase in Unsecured Loans includes

` 633.60 Lacs (Previous Year ` 451.76 Lacs) each being

Interest accrued & due on 31.03.2010 converted into Loan.

2 . In view of non availability of audited balance sheet as on

31.03.2010 and 31.03.2011 of Steel unit, cash flow from

investing/ financing activities and changes in current assets

and liabilities of Steel Unit are not included in the Cash Flow

Statement except for inclusion of net inflow of ` 634.88 Lacs

on account of net increase in inter unit balances appearing in

Schedule 6 i.e. Current Assets, Loans & Advances (Refer

Note 4 of Schedule 14)

3 . Figures in brackets represents outflows.

4 . Cash and cash equivalents excludes Fixed Deposits pledged

as Security/lying in No Lien Account/Molasses Storage Fund.

5 . Previous year figures have been rearranged/regrouped

wherever considered necessary.

` Lacs

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011

As per our report attachedfor P.R. Mehra & Co.Chartered Accountants Rakesh Kumar ModiRegn. No. 000051N Suraj Parkash Modi

Abhishek ModiAshok Malhotra Mahendra Kumar Modi Santosh Kumar AggarwalPartner Ajay PS Saini Umesh Kumar Modi Krishna KumarJainMembership No.82648 Company Secretary Managing Directors Directors



AUDITORS’ REPORT

to the Board of Directors on the Consolidated Financial Staements of Modi Industries Limited(1) We have audited the attached Consolidated Balance Sheet of the group, comprising of MODI INDUSTRIES LIMITED

(‘the Company’) and its two subsidiaries as at 31st March, 2011 and also the consolidated Profit & Loss Accountand the Consolidated Cash Flow Statement for the year ended on that date, both annexed thereto. The attachedConsolidated Balance Sheet does not include Assets and Liabilities including Contingent Liabilities andquantitative details of Steel Unit of the company as at 31st March, 2011 but includes balances as on 31st March,1992 except for reduction of: (i) unsecured loans by ` 323.95 Lacs in view of write-back of ` 278.95 Lacsduring the financial year 2004-05 and payment of ` 45.00 Lacs during 2005-06 on account of one-timesettlement of dues of a bank and (ii) net fixed assets by ` 662.52 Lacs (Previous year ` 655.75 Lacs) onaccount of provision for depreciation for the period 01.04.1993 to 31.03.2011 on fixed assets as stated in Note4(c) of Schedule 14. The consolidated Profit and Loss Account does not include: (i) certain provisions asstated in Note 4(f) of Schedule 14 and (ii) loss, amount unascertained, of the Steel Unit for the year 1992-93 inview of non-incorporation of annual accounts of the Steel Unit for the above year. The Consolidated Cash FlowStatement, except for certain adjustments made as stated in foot-note 2 of cash flow statement, does notinclude adjustments for Cash Flows from investing/financing activities and changes in current assets andliabilities of Steel Unit of the company in view of non-availability of audited Balance Sheets of the Unit as on31.03.2010 and 31.03.2011 (Refer Note 4 of Schedule 14). These financial statements are the responsibility ofthe Company’ management and have been prepared by the management on the basis of seperate financialstatements of the components. Our responsibility is to express an opinion on these financial statements basedon our audit.

(2) Subject to paragraphs 1 & 3 of this report, we conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis forour opinion.

(3) We did not audit the financial statements of both the subsidiaries, whose financial statements reflect total assets (net) of` 47.98 Lacs as at 31st March, 2011, the total revenue of ` 75.71 Lacs and cash flows (net) amounting ` 15.70 Lacs forthe year then ended. These financial statements and other financial information have been audited by other auditor whosereports have been furnished to us and our opinion is based solely on the report of other auditor.

(4) We report that the consolidated financial statements have been prepared by the company’ management in accordance withthe requirements of Accounting Standards (AS) 21, Consolidated financial statements and Accounting Standard (AS) 23,Accounting for Investments in Associates in the Consolidated Financial Statements notified pursuant to the Companies(Accounting Standards) Rules, 2006, (as amended). (Note 40 of Schedule 14).

(5) We report that the books of accounts, vouchers and other documents of the Steel Unit of the company for 1992-93 were not made available to us and consequently audit could not be conducted in respect of the same (Note4 of Schedule 14 to Consolidated Annual Accounts). Therefore, as stated in Para 1 above, the attachedConsolidated Balance Sheet, Consolidated Profit & Loss Account and Consolidated Cash Flow Statementdoes not include: (a) the financial data/impact of working results and of declaration of closure/post-closuretransactions, which includes realization of depot sales/dues from debtors, provision/payment of final dues ofemployees and payments to various parties and manufacturing/personnel/administration expenses etc., of theSteel Unit of the company for the year 1992-93 during which the Unit had operated for ten months the exclusionof which, in our opinion, substantially impairs the presentation of above Consolidated financial statements ofthe Group especially in view of the fact that (i) the assets and liabilities of Steel Unit constituted 28% and 43%respectively of the total Assets & Liabilities of the Company as at 31st March, 1992 and the Income &Expenditure of the Steel Unit constituted 30% and 32% respectively of the total Income & Expenditure of theCompany for the said year which resulted in a loss of ` 787.22 Lacs for the Unit and (b) impact on assets,liabilities and cash flows on account of non-incorporation of balance sheets for the years 1993-94 to 2010-11as stated in note 4(c) of Schedule14.

(6) (i) Understatement of accumulated losses on account of non-incorporation of impact of operational/working results/declaration of closure and post closure transactions of Steel Unit for the year 1992-93, amount/impact unascertained.(Refer Note 4 of Schedule 14 and paragraph above).

(ii) Though the Company has incurred losses far in excess of paid-up capital/reserves and has been declared a sickcompany, the accounts have been prepared on a going concern basis for reasons stated in Note 20 of Schedule 14.

(iii) Understatement of losses on account of:(1)Non-provision of earned leave encashment for Steel Unit, amount unascertained.(Note 25);(2)Non-provision of interest on loans, obsolete inventories, doubtful debtors/loan and advances and impairmentloss, etc. in Steel Unit as stated in Note 4(f) of Schedule 14 of Annual Accounts. Amount of non-provision notascertained.(3) Non-provision for diminution in market value (book value amounting to ` 8.67Lacs) of quotedinvestments and in the book value (amount unascertained) of unquoted investments as required byAS- 13 i.e. Accounting for Investments as issued by the Institute of Chartered Accountants of India.


iv. (1) Non-provision of interest `124.28 Lacs up to 31st March, 2011 on disputed price of levy sugar (Note 8);(2) (a)Non-provision of late payment surcharge/recovery charges ` 302.66 Lacs (Previous year ` 302.66

Lacs) {Notes 10} and(b) Non-provision of demands of U.P.Power Corporation Ltd of `1311.49 Lacs (Previous year` 1311.49 Lacs).{Note 4 f (vii)(c)}.

(3) Non-provision of disputed ESI demand ` 58.86 Lacs (for the year `1.17Lacs)(Note 11);(4) Non-provision of disputed House-tax demand ` 188.63 Lacs (Previous year ` 188.63 Lacs) (Note 12);(5) Non-provision of Gratuity Liability on actuarial basis for the period up to 30th September, 1987, ` 84.82

Lacs (Previous year ` 84.82 Lacs) (Note 14a);(6) Non-provision of simple, penal and compound interest of `17011.44 Lacs (for the year ` 2771.11 Lacs)

on term loans/ debentures and public deposits (Note 21(a) and (f)) and interest/ bank charges `1883.78Lacs (for the year ` 226.24 Lacs) on cash credit from banks (Note 21(d) & (e));

(7) Non-provision of: (i) Sales-tax ` 2455.78 Lacs excluding interest (Previous year ` 2455.78 Lacs) (Note22(a)) and (ii) demands for sales-tax & penalty of ` 175.24Lacs (Note 1(c) of Schedule 14). Further, nodue certificate of Sale-tax authorities is awaited for waiver of balance amount of interest and penalty asmentioned in Note 22(c);

(8) Non-provision of Wages ` 27.46 Lacs (Previous year ` 27.46 Lacs) for the lock-out period (Note 23);(9) Non-provision of excise-duty `167.43Lacs (Previous Year ` 167.43 Lacs).(Note 29).(10) Non-provision of interest of ` 77.37Lacs and recovery charges of ` 912.09 Lacs (Previous Year

` 649.50 Lacs) in view of the reasons stated in Notes 26 and 34(a) & (b) of Schedule 14.(11) Non-provision of differential liability of ` 848.12 Lacs (Previous year ` 848.12 Lacs) of sugar cane price

in view of reasons stated in note 35 of schedule 14.(12) Valuation of closing stock in Sugar Unit is higher by ` 623.10 (Previous Year ` 453.12 Lacs.) (Note 36).

(7) Confirmation of Debit/Credit balances of debtors/ creditors/certain banks and of parties who havediscounted sale bills of Sugar Unit were not obtained. (Note 28 of schedule 14).

(8) Cars costing ` 90.41Lacs (Previous Year ` 119.27 Lacs) purchased in the name of employees/CorporateAdvisor are yet to be transferred to the name of the company. However, these persons have givendisclaimer in favour of the company. (Refer Foot-Note D of Schedule 4).

(9) We invite attention to:(i) Note 32 regarding entering into agreements to sell 215 (Previous year 215) residential quarters, note 33

(a) regarding entering into lease, including perpetual lease agreements for 18428.46 Sq. Meters out oftotal area of 6.75 Lac Sq. Meters approx. of factory land & buildings and note 33(b) regarding enteringinto perpetual lease agreement for 1584 Sq. Mtrs. of factory land for which the approvals of financialinstitutions, to whom these quarters and factory land & buildings are mortgaged, were not obtained.

(ii) Note 5 of Schedule 14 regarding commencement of new business i.e. “Structural Fabricators” during thecurrent year by Electrode Unit of the company for which approval of the members is being sought post-facto at ensuing Annual General Meeting.

(iii) Accounting treatment given to the manufacture and sale of Vodka by the Distillery unit of company asstated in note no. 17 of Schedule 14 whereas it had no impact on the net profit for the year and netcurrent assets as on 31st March 2011 of the Company.

(10) We further report that, without considering items mentioned at 6 (i) to (iii) and 7 to 9(ii) above, the effectof which could not be determined, had the observations made by us in paragraphs 6(iv) and 9(iii) abovebeen considered, the profit for the year before appropriations and minority interest of ` 484.87 Lacswould have been converted into loss of ` 2946.22 Lacs, debit balance of Profit and loss Account wouldhave been ` 33087.95 Lacs (as against the reported figure of ` 6835.40 Lacs), total loan funds wouldhave been ` 32887.77 Lacs (as against reported figure of ` 13992.55 Lacs), Current Liabilities andprovisions would have been ` 21154.02 Lacs (as against the reported figure of ` 14683.65 Lacs), salesand other operating income would have been ` 40917.41 Lacs (as against the reported figure of` 41116.75 Lacs), total expenses would have been ` 68171.23 Lacs (as against the reported figure of` 42118.02 Lacs) and current assets would have been `15417.41 Lacs (as against the reported figure of` 16304.37 Lacs).

(11) In view of the significance of our observations in paragraphs 1 and 3 to 10 above and especially in viewof the fact that the state of affairs would change substantially in case the profit & loss account for thefinancial year 1992-93 and balance sheet as on 31st March, 2011 of Steel Unit of the company wereincluded, which we are unable to quantify, we are of the opinion, the said consolidated accounts DO NOTgive a true and fair view: (a) In the case of the consolidated Balance Sheet, of the state of affairs of theGroup as at 31st March, 2011, (b) in the case of consolidated Profit & Loss Account, of the profit for theyear ended 31st March, 2011 and (c) in the case of consolidated Cash Flow Statement, of the cash flowsfor the year ended on that date.


for P.R. Mehra & Co.Chartered Accountants

Regn. No. 000051N




CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2011

DESCRIPTION PER SCHEDULE AS AT AS AT31.3.2011 31.3.2010

SOURCES OF FUNDS ` Lacs ` Lacs ` Lacs

Shareholders’ Funds

(a) Share Capital 1 371.42 371.42(b) Reserves & Surplus 2 2715.09 44228.68

3086.51 4600.10Minority Interest 0.07 0.05Loan Funds 3

(a) Secured Loans 8366.36 8302.60(b) Unsecured Loans 5591.08 4775.15(c) Deferred Credits 35.11 35.11

13992.55 13112.86

17079.13 17713.01APPLICATION OF FUNDS

Fixed Assets 4

(a) Gross Block 16145.81 17275.36

(b) Less: Depreciation 8398.29 7928.96

7747.52 9346.40

Capital Work in Progress 69.01 111.88

Investments 5 795.41 795.41

Net Current Assets

(a) Current Assets,

Loans and Advances 6 16304.37 17736.05

(b) Less:Current Liabilities

& Provisions 7 14683.65 17585.78

1620.72 150.27

Miscellaneous Expenditure

(to the extent not written off or adjusted)

Deferred Revenue Expenditure 11.07 11.07

Profit & Loss Account 6835.40 7297.98

17079.13 17713.01

Accounting Policies,

Contingent Liabilities & Notes. 14

As per our report of even date attachedfor P.R. Mehra & Co.Chartered Accountants Rakesh Kumar ModiRegn. No. 000051N Suraj Parkash Modi




CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011

DESCRIPTION PER SCHEDULE This Year Previous Year

INCOME ` Lacs ` Lacs ` Lacs

SALES & OTHER OPERATING INCOME 8 41116.75 23786.21

Less: Excise Duty 6617.49 2282.4534499.26 21503.76

Other Income 9 670.12 726.23

35169.38 22229.99EXPENDITURE

Materials, Manufacturing & Others 10 28518.51 14975.10Excise duty on stock (128.52) 77.62Personnel 11 2765.60 2613.74Administration & Selling 12 2575.04 2099.73Managerial Remuneration 13 14.38 16.37

33745.01 19782.56

PROFIT before Interest, Depreciation & Exceptional Items 1424.37 2447.43Interest {Notes 4(f) (i), 21 of Schedule 14} 1191.06 788.90Depreciation 564.46 528.24

1755.52 1317.14PROFIT / (Loss) before Exceptional Items (331.15) 1130.29

Interest income on Income Tax Refund(Note 9) 816.11 —Electricity Expenses for earlier years {Note 4(f)(vii)} — (243.37)

Amount Written Back — 472.65

Excess provision for interest written back — 735.18

816.11 964.46PROFIT FOR THE YEAR BEFORE APPROPRIATION 484.96 2094.75

Profit from continuing operations 637.13 1927.57Profit /(Loss) from discontinuingoperations {Notes 4(e)} (152.17) 167.18Profit before Taxation 484.96 2094.75Less: Provision for tax/ Fringe Benefit Tax Paid 0.09 0.59Profit after Taxation 484.87 2094.16Less: Minority Interest 0.02 —

PROFIT FOR THE YEAR BEFORE APPROPRIATION 484.85 2094.16Less:Transfer to General Reserve 7.59 —Less:Interim Dividend 0.05 —Less:Dividend Distribution Tax 9.60 —

Less:Transfer to Molasses Storage fund 5.03 3.24

PROFIT FOR THE YEAR AFTER APPROPRIATION 462.58 2090.92

Less:Loss brought forward from last year 7297.98 9388.90Loss carried over to Balance Sheet 6835.40 7297.98

Earnings per share (` ) (Note 31) 14.47 63.10

As per our report of even date attachedfor P.R. Mehra & Co.Chartered Accountants Rakesh Kumar ModiRegn. No. 000051N Suraj Parkash Modi




SCHEDULE 1: SHARE CAPITAL


` Lacs ` Lacs ` LacsAUTHORISED

40,00,000 Equity Shares of `10/- each 400.00 400.001,00,000 Redeemable Cumulative 100.00 100.00

Preference Shares of `100/- each500.00 500.00

ISSUED & SUBSCRIBED33,09,214 Equity Shares of ` 10/- 330.92 330.92

each fully paid-upLess: Calls in Arrears 0.24 0.24

330.68 330.6840,741 15% Redeemable Cumulative Preference Shares

of ` 100/- each fully paid-up. 40.74 40.74(Note 18 of Schedule 14)

371.42 371.42

SCHEDULE 2: RESERVES & SURPLUS

DESCRIPTION AS AT ADDITIONS TRANSFER OR BALANCE31.3.2010 ADJUSTMENT AS AT

31.3.2011

` Lacs ` Lacs ` Lacs ` Lacs

Capital Reserve 459.34 — — 459.34

Capital Redemption Reserve 25.11 — — 25.11

Share Premium Account 22.57 — — 22.57

Revaluation Reserve @ 3538.72 — 1526.21 2012.51

Debenture Redemption Reserve 113.00 — — 113.00

Molasses Storage Fund 65.54 5.03 — 70.57

General Reserve 3.31 7.59 — 10.90

Special Reserve 1.09 — — 1.09

4228.68 12.62 1526.21 2715.09

Previous Year 4225.44 3.24 — 4228.68

@ Refer Note 19 of Schedule 14.


SCHEDULE 3: LOAN FUNDSDESCRIPTION AS AT AS AT

31.3.2011 31.3.2010

SECURED ` Lacs ` Lacs ` LacsDebentures {Note 1below & Note 21 (a) (i) of Schedule 14} 538.32 538.36

Less: Calls in Arrears 1.00 1.00537.32 537.36

Interest accrued and due {Note 21 (a) (i) of Schedule 14} 3052.50 3052.74Banks (Note 2)

Cash Credits/Term Loan/Overdraft 1544.62 1480.58Interest/other charges accrued and due 17.61 17.61

Others (Note 3) 1506.85 1506.85Interest accrued and due 1707.46 1707.46

8366.36 8302.60UNSECURED

Fixed Deposits 95.14 122.24Interest accrued and due 289.47 298.44Short Term Loans and Advances :

(a) From Others 4410.24 3703.52(b) Interest accrued and due 793.24 647.96

Interest accrued and due (others) 2.99 2.99

5591.08 4775.15

DEFERRED CREDITS (See Note 7 of Schedule 14) 35.11 35.11

13992.55 13112.86

NOTES :(1) DEBENTURES

(a) (i) 5,300-15% Mortgage Debentures of ` 1000/- each redeemable upto 20th August, 1990 and due forpayment.1,000 Debentures redeemed during the year 1998-99 for which discharged debenture certificatesnot yet received.

(ii) 30,000-15% Mortgage Debentures of ` 100/- each redeemable at 5% premium on the expiry of seventhyear from the date of allotment i.e. 18th December, 1987 and due for payment.

*(iii)2,27,660(Previous Year 2,27, 680) -12.5% Mortgage Debentures (Non-Convertible part of ` 200/- each)redeemable in three yearly instalments of ` 65.00, ` 65.00 and ` 70.00 respectively commencing from theexpiry of seventh year from the date of allotment i.e. 29th February 1988 and due for payment.

(b) The above debentures are secured by Joint Mortgage of all fixed assets present and future byhypothecation of the said assets and by deposit of title deeds relating to company’s immovable properties,floating charges on all movable/current assets, other than assets referred in foot-notes 2,3 (b, c and d)below.

(2) BANKS(i) Cash Credits of 1480.58 Lacs and interest accrued and due of 17.61 Lacs are secured by hypothecation

of Stock of Raw Materials, Stocks-in-Process, Finished Goods, Stores and Spares and Book Debts andguaranteed by a Managing Director {Refer Note 4(f)(i)(a) of Schedule 14}.

(ii) Term Loan of ` 64.04 Lacs is secured by hypothecation of vehicle.(3) OTHERS

(a) Loans aggregating to ` 1,377.87 Lacs (IDBI ` 627.74 Lacs, ICICI ` 235.00 Lacs, IFCI ` 287.66 Lacs, LIC` 138.97 Lacs, GIC and its subsidiaries ` 88.50 Lacs) are secured against securities as mentioned in 1(b)above {Refer Note 4(f)(i) (b & c)of Schedule 14}.

(b) Loan of ` 8.08 Lacs from Government of Uttar Pradesh under the Industrial Subsidised Housing Scheme issecured by 1st Mortgage of Land and tenaments constructed under the Scheme.

(c) Loan from IDBI under Technical Development Fund Scheme amounting to ` 74.70 Lacs is secured againstElectrolyser and Copper Electrodes Machine. {Refer Note 4(f)(i) (b)(i)of Schedule 14}.

(d) Loan from IFCI under Equipment Finance Scheme amounting to ` 46.20 Lacs is secured against EffluentTreatment Plant {Refer Note 4(f)(i) (b)(ii) of Schedule 14}.

* Including ` 0.02 Lacs from Directors (As at 31st March, 2010 ` 0.02 Lacs)

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SCHEDULE 5: INVESTMENTS (Net of Provisions)DESCRIPTION FACE VALUE COST

AS AT AS AT AS AT31.3. 2011 31.3. 2011 31.3. 2010

OTHER THAN TRADE ` Lacs ` Lacs ` Lacs(LONG TERM)(1) QUOTED : AT COST* 75551.226 Units of 10/-each in UTI 25.84 25.84 25.84Infrastructure Fund Growth PlanEQUITY SHARESUnder the Same Management700000 Fully paid-up Shares of 10/- 70.00 20.00 20.00

each in Modipon Limited1999960 Fully paid-up Shares of

`10/- each in Bihar 200.00 200.00 200.00Sponge Iron Limited


`10/- each in Modi Rubber Limited62755 Fully paid-up Shares of 6.28 — —

`10/- each in Lords ChloroAlkali Ltd(LCAL).(Net of provisionfor diminution in Value of ` 6.28 lacs)

4 Fully paid-up Shares — 0.01 0.01of `10/- each in Mukand Ltd.

86750 Fully Paid-up Shares of `10/- 8.68 8.68 8.68each in Modi Spg. & Wvg. Mills Co. Ltd.

67 Pref. Shares of `100/- each 0.07 0.07 0.07Fully Paid-up in Modi Spg. & Wvg. Mills Co. Ltd.

1 Pref. Share in Mukund Ltd.of ` 10/- each — — —Aggregate Amount 390.87 334.60 334.60

Aggregate Market Value ` 831.98 Lacs (Previous Year ` 365.23 Lacs)

(2) UNQUOTED : AT COST GOVERNMENT SECURITIES:**Government Securities 0.11 0.11 0.11 (Lodged as Security)EQUITY SHARESAssociates Companies (Note 40 of Schedule 14)

20000 Fully Paid-up Shares 2.00 2.00 2.00of `10/- each i nModi Santa Fe (India) Pvt. Ltd.

4000 Fully Paid-up Shares 0.40 0.40 0.40of ` 10/- each inBekaert Engg. Pvt. Ltd.


`10/- each in Indofil Industries Limited1200 Partly paid Shares of 0.12 0.07 0.07

`10/- each (`3.50 paid-up) in Vital Chemicals Pvt. Ltd.1500 Fully Paid-up Shares 1.50 1.50 1.50

of ` 100/- each in Associated Tube wells (India) Ltd.95000 Fully Paid-up Shares 9.50 9.50 9.50

of ` 10/- each in Xerox India Ltd.40000 Fully Paid-up Shares 4.00 4.00 4.00

of ` 10/- each in Morgardshammer India Ltd.48000 Fully Paid-up Shares 4.80 4.80 4.80

of ` 10/- each in Win Medicare Pvt. Ltd.10000 Fully Paid-up Shares 1.00 1.00 1.00

of ` 10/- each in Modi Garh Chemicals Pvt. Ltd.17350 Fully Paid-up Shares 1.73 — —

of ` 10/- each in Rajputana Fertilizers Ltd.(Note 39 of Schedule 14)

17350 Fully Paid-up Shares 1.73 — —of ` 10/- each in Haryana Distillery Ltd.(Note 39 of Schedule 14)

Aggregate Amount 131.89 460.81 460.81

522.76 795.41 795.41* Corporate Lien marked on these Infrastructure Fund Units. * *U. P. State ElectricityBoard Bonds 6% 1982 Face Value of 0.11 Lacs listed but not quoted.@ (Transfer refused by the Board-matter in dispute before the Court)

SCHEDULE 6: CURRENT ASSETS, LOANS AND ADVANCESDESCRIPTION AS AT AS AT

31.3.2011 31.3.2010

(A) INVENTORIES ` Lacs ` LacsSTORES & SPARES, STOCK-IN-TRADE

AS PER INVENTORIES TAKEN, VALUED

AND CERTIFIED BY THE MANAGEMENT :

Stores & Spares Parts 842.99 819.02Loose Tools 24.52 24.60STOCK-IN-TRADEFinished Goods 2858.62 8485.36Goods-in-Process 406.61 474.48Raw Materials 376.17 383.69Raw Material( in Transit) 15.50 76.33

4524.41 10263.48(B)SUNDRY DEBTORS

(a) DEBTS OUTSTANDING FOR A PERIODEXCEEDING SIX MONTHSFully Secured 5.28 5.87Unsecured Good 610.82 409.19Unsecured Doubtful 496.58 490.56

(b) OTHER DEBTSFully Secured 101.23 110.31Unsecured Good 4651.14 2619.53Unsecured Doubtful 0.26 —

5865.31 3635.46Less: Provision for Doubtful Debts 496.84 490.56

5368.47 3144.90(C) CASH AND BANK BALANCES

Cash in hand 58.42 15.52Cheques and drafts in handand for collection 97.02 149.10With Scheduled Banks inCurrent Accounts 603.86 300.84FDR/Savings Account 68.95 63.33(Molasses Storage Fund)Fixed Deposits (Pledged as 1861.89 1692.75Security /Margin Money ` 293.63Lacs)(PreviousYear ` 311.02 Lacs)

2690.14 2221.54(D) OTHER CURRENT ASSETS

Interest accrued (Note 4 below) 33.42 27.81

(E)LOANS AND ADVANCESUnsecured GoodAdvances recoverable in cash or 1049.51 1104.42in kind or for value to be received(including `160.74 Lacs considered doubtful-Previous Year ` 159.41Lacs)Inter Unit balances (Note 4 of Schedule 14) 960.76 326.27Loans to others (including employees) 27.39 27.62Deposits with Excise Authorities 180.96 63.96(including unutilised CENVAT balance)

Security Deposits(including `10.19 Lacs 521.81 407.19considered doubtful-Previous Year `10.38 Lacs)

Interest Income Recoverable on Income Tax Refund 816.11 —(Note 9 of Schedule 14)Advance Income-tax including 302.32 318.65Tax deducted at source 3858.86 2248.11

Less: Provision for doubtful advances 170.93 169.793687.93 2078.32

16304.37 17736.05

@


SCHEDULE 10: MATERIALS, MFG. & OTHERS


` Lacs `Lacs ` LacsRAW MATERIALS CONSUMED 19587.42 17362.23GOODS PURCHASED FOR SALES 154.26 141.34MANUFACTURING

Stores & Spares 1393.88 908.25Power, Coal & Fuel 522.28 371.01Carriage & Siding 13.55 18.42Repairs to Plant & Machinery 908.63 564.29Cane Development Expenses 8.41 27.12Repairs to Buildings 138.99 154.01Processing Charges & Others 96.48 40.14

3082.22 2083.24DECREASE/INCREASE IN STOCKS

OPENING STOCKSFinished Goods 8485.36 4033.39Goods-in-Process 474.48 314.74

8959.84 4348.13

LESS:CLOSING STOCKSFinished Goods 2858.62 8485.36Goods-in-Process 406.61 474.48

3265.23 8959.845694.61 (4611.71)

28518.51 14975.10SCHEDULE 11 : PERSONNELDESCRIPTION THIS PREVIOUS

YEAR YEAR` Lacs ` Lacs

Salaries and Wages 1994.51 1848.10Gratuity* 115.54 177.00Bonus 206.14 194.50Contribution to Provident Fund etc. 168.93 148.27Staff and Labour Welfare Expenses 280.47 244.34Workmen Compensation 0.01 1.53

2765.60 2613.74* Includes for Steel Unit 5.79 (2.57)

SCHEDULE 12: ADMINISTRATION & SELLINGDESCRIPTION THIS PREVIOUS

YEAR YEAR

Rent 106.89 32.13Rates & Taxes 71.99 43.58Insurance 30.13 29.72General Office Expenses 526.66 491.52(Including Telephone, Printing & Stationery, Car Expenses, Electricity, Advertisement etc.)Legal & professional Expenses 357.07 308.53Directors’ Sitting Fee 0.67 0.46Travelling Expenses 326.21 250.38Auditor’s Remuneration 17.62 12.07Sales-Tax paid 0.14 6.56Freight/Transport Forwarding etc. 543.19 406.66Commission to Selling/C&F/Consignee Agents* 316.38 350.16Donation & Dharmada Disbursed 3.00 3.30Discounts & Sales Promotion 173.08 143.78Trade Marks Licence & Marketing Fee 79.06 0.00Bad Debts Written OffClaims/Amount written off

Less:Adjusted against existing Provision for Doubtful

Debts and Advances

Provision for Doubtful Debts and Advances 8.16 10.10Assets Written Off (Net) 0.22 4.62Loss on Sale of Assets 9.55 2.74

2575.04 2099.73

* includes commision to C&F/ Consignee Agents 48.56 55.76

1.96 3.51

5.440.325.76

0.74 5.02 3.42

5.47

2.05

SCHEDULE 7: CURRENT LIABILITIES AND PROVISIONS


(A)CURRENT LIABILITIES ` Lacs ` LacsAcceptances 33.05 33.05Sundry Creditors (Note 15 of Schedule 14) 9825.56 12508.44Interest Accrued but not due on loans 61.69 61.45Statutory Liabilities 2042.46 2020.62Employees dues 655.83 665.80Security from Employees 0.38 0.40Due to Managing Directors/Directors 1.47 1.46Advance against Quarters 504.50 504.50(Note 32 of Schedule 14) TOTAL ‘A’ 13124.94 15795.72

(B)PROVISIONSFor Taxation(a) 0.26 68.39*For GratuityAs per last Balance Sheet 1184.04 1085.25Add: Provided during the year 109.75 179.57Less:Paid during the year 120.01 80.78Sub Total(b) 1173.78 1184.04For Leave EncashmentAs per last Balance Sheet 145.51 128.75Add: Provided during the year 26.22 38.05Less:Paid during the year 39.25 21.29Sub Total(c) 132.48 145.51For Excise Duty on Closing Stock(d) 214.86 343.30For Fringe Benefit TaxAs per last Balance Sheet — 12.12Provided during the year — —Less:Paid during the year — 12.12Sub Total(e) — —For IncentiveAs per last Balance Sheet 48.82 59.98Add: Provided during the year 46.08 88.67Less:Paid during the year 24.63 78.69Less:Excess provision written back 32.94 21.14Sub Total(f) 37.33 48.82

TOTAL ‘B’(a) to (f) 1558.71 1790.06 TOTAL (“A” +“B”) 14683.65 17585.78

* Includes for Managing Directors. 3.35 3.35

SCHEDULE 8: SALES & OTHER OPERATING INCOME


` Lacs ` LacsGross Sales(Net of trade discounts & rebates) 39945.38 23176.52Dividend Income from Investments 74.88 —Interest 0.07 —Add: Sales of By-product 1104.99 644.88

41125.32 23821.40Less: Returns 105.87 64.51Net Sales 41019.45 23756.89Hire of Gas Cylinders 29.62 19.84Processing Charges & Others 67.68 9.48

41116.75 23786.21

SCHEDULE 9: OTHER INCOMEDESCRIPTION THIS PREVIOUS

YEAR YEAR

` Lacs ` LacsRent Realised 221.97 153.16Interest 129.95 122.02Dividend Income from Investments 31.50 21.00Profit on :

Sale of Raw Materials & Stores 3.81 1.21Sale of Fixed Assets 12.76 4.81

Miscellaneous 148.16 118.60Dharmada Received 7.20 2.93Claims Received 26.27 11.92Excess Provision/Unclaimed Balances/ 68.54 263.60Amount Written backCommission/ Royality received 19.96 26.98

670.12 726.23

` Lacs` Lacs ` Lacs` Lacs


2(A) ACCOUNTING POLICIES:(1) INVENTORY VALUATION :

(a) Stocks of raw materials and stores and sparesare valued at weighted/moving average cost.(Net of Cenvat benefits/input tax credit of U.P.VAT) or net realisable value whichever is less.

(b) Loose tools are valued at depreciated cost.(c) Cost of machinery spares, which can be used only

in connection with an item of fixed assets and whoseuse is expected to be irregular, are charged torevenue over useful life of the principal item.

(d) Goods-in-transit are valued at cost.(e) Finished goods/Goods-in-Process are valued at lower

of cost and net realisable value except by-producti.e. molasses which is valued at net realisable value.Cost inter-alia, includes direct cost, depreciation,excise duty, lease rentals and factory overheads butexcludes general administration and selling expenses,Corporate Office administration expenses andInterest.The closing stocks out of inter divisionaltransfer of goods, is being treated as finishedgoods instead of raw materials/ stores and valuedaccordingly.

(2) FIXED ASSETS:(i) Major improvements to fixed assets that increases

the future benefits from the existing assets beyondits previously assessed standard of performance isincluded in the gross block and is depreciated over theremaining life of the original assets.

(ii) Financing cost (upto the date the assets are readyto be put to use for commercial production) relatingto borrowed funds attributable to acquisition ofconstruction of fixed assets are included in the grossbook value of fixed assets to which they relate.

(3) DEPRECIATION:(a) Depreciation on Plant & Machinery is provided on

Straight Line Method except in Corporate Office ofthe company. In respect of other assets includingoffice equipments, depreciation is provided onWritten Down Value Method in all units except Sugarand Steel Units of the company, where it isprovided on Straight Line Method.(Also referaccounting Policy No. 2(i) above)

(b) Assets for which Straight Line Method basis isadopted and acquired prior to 2nd April, 1987,are depreciated at rates prevailing in the yearof acquisition.

(c) Depreciation on additions/deletions is chargedon prorata basis and in accordance with ScheduleXIV of the Companies Act, 1956.

(4) INTANGIBLE ASSETS:Intangible Assets are stated at cost of acquisitionless accumulated amortisation. Computer Softwareis amortised over a period of five years.

(5) REVENUE RECOGNITION:(i) Export incentives under the duty entitlement pass

book scheme is recognised on accrual basis.(ii)Revenue arising by use of company’s properties

by others yielding rent is recognised when nosignificant uncertainty as to measureability orcollectability exists.

(iii)Sale of Goods is recognised at the point ofdispatch of goods to customers.

(6) INVESTMENTS:Long-term investments held by the company arevalued at cost less provision for diminution, other thantemporary, in the value of investments.

(7) RETIREMENT BENEFITS:(a) Contribution to Provident Fund is made at a

predetermined rate to the Provident Fund Trustand charged to the Profit & Loss Account.

(b) Gratuity Liability is accounted for on accrualbasis, computed actuarially, except for Steel Unitof the company upto 31st March, 2002 which isaccounted for on cash basis.

(c) Leave encashment is accounted for accrual basis,computed actuarially.

(8) OPERATING LEASE:Rentals are expensed with reference to lease terms andother considerations.

SCHEDULE 14 : ACCOUNTING POLICIES, CONTINGENTLIABILITIES AND NOTES

1 BASIS OF PREPARATION(i) The Consolidated Financial Statements are prepared

inaccordance with Accounting Standard (AS) 21 onConsolidated Financial Statements notified pursuant to theCompanies (Accounting Standards) Rules, 2006 (asamended). The Consolidated Financial Statements comprisethe financial statements of Modi Industries Limited (theCompany), and its subsidiaries. The Company, and itssubsidiaries constitute the Group. Reference in these notesto the ‘Company’ or ‘Group’ shall mean to include ModiIndustries Limited and/or any of its subsidiaries, consolidatedin these financial statements unless otherwise stated

(ii) The list of Companies which are included in consolidationand the Parent Company’s holdings therein are as under:

Each of the above Companies is incorporated in India andfinancials statements are drawn up to the same reporting dateas that of the parent company i.e. 31st March, 2011.

(iii) The Consolidated Financial Statements have been prepared to complyin all material respect with the Accounting Standards notified byCompanies (Accounting Standards) Rules, 2006 (as amended) andthe relevant provisions of the Companies Act, 1956.

(iv) The Consolidated Financial Statements have been preparedunder the historical cost convention on an accrual basis, exceptwhere revaluation/impairment is made.

(v) The Accounting Policies have been consistently applied by theCompany and are consistent with those used in the previous year.

(vi) The Consolidated Financial Statements of the Company andits Subsidiary Companies have been consolidated on a line-by-line basis by adding together the book value of like items ofassets, liabilities, income and expenses, after fully eliminatingintra-group balances and intra-group transactions resulting inunrealized Profits/Losses.

(vii) The Consolidated Financial Statements have been preparedusing uniform accounting policies for like transactions and otherevents in similar circumstances and are presented, to the extentpossible, in the same manner as the Company’s separatefinancial statements except as stated in notes on accounts.

(viii)Minority Interest in the net assets of consolidated subsidiaries isidentified and presented in the consolidated Balance Sheet separatelyfrom liabilities and equity of the Company’s shareholders. Minorityinterest in the net assets of consolidated subsidiaries consists of:(a)The amount of equity attributable to minority at the date onwhich investment in a subsidiary is made; and(b)The minority share of movements in equity since the dateparent subsidiary relationship came into existence.

(ix) Minority Interest’s share of Net Profit/(Loss) for the year ofconsolidated subsidiaries is identified and adjusted against theprofit after tax of the group.

Name of the Company Percentage Holding

2011 2010

Own Investment (India) Limited 99.89% 99.89%

Your Investment (India) Limited 99.93% 99.93%

SCHEDULE 13: MANAGERIAL REMUNERATION


Remuneration to Managing Director{See Note 27(b) of Schedule 14}Salary 13.58LESS:Reversal of Excess Remuneration PaidFor the Previous Year —For Current Year —

—13.87 13.58

Contribution to Provident Fund —LESS:Reversal of Excess Remuneration PaidFor the Previous Year —For Current Year —

—1 . 6 7 1.63

Medical Expenses (0.06) 0.06Fee to Clubs (Recovery) (1.10) 1.10

14.38 16.37

` Lacs ` Lacs` Lacs

21.36

2.205.297.49

2.56

0.260.630.89


SCHEDULE 14 : (Contd.)

(B) CONTINGENT LIABILITIES AND NOTES:AS AT AS AT

31.3.2011 31.3.2010

1. (a) Claims against the Companynot acknowledged as debts:( i) Workmen (excluding

unascertainable amounts) 168.58 172.36(ii) Others 438.29 288.29

(b) Partly paid-up Equity Shares ofVital Chemicals Private Limited 0.08 0.08

(c ) Disputed Liability for Excise-duty,Sales-tax,Entry-tax matters and liquidated damages on1399.28 1141.96Provident Fund dues {excluding interestunascertainable and undisputed Sales Tax/penalty demands (net of provision made of` 62.21 Lacs) of ` 175.24 Lacs}

(d) Wealth Tax 1.16 —(e) Bills discounted 914.96 818.19

2. Estimated amount of contracts remaining to be executed on CapitalAccount ` 140.77 Lacs (Previous Year ` 145.22 Lacs).

3. Guarantees given to Sales-tax/Excise Departments on behalfof Companies in the same group amounts to ` 139.42 Lacs(Previous Year `139.42 Lacs). Information regarding outstandingposition is not available.This excludes guarantees of ` 109.63Lacs (Previous year ` 109.63 Lacs) vacated by Sales TaxDepartment for which guarantee bonds not yet received back.

4.(a)The Steel Unit of the company is lying closed since 24thJanuary, 1993 due to strike/lock-out and thereafter closurewas declared with effect from 24th November, 1993, asthe unit was found to be unviable. The company has notbeen able to obtain access to the accounting, financial andproduction records of the unit necessary for updating thesaid books of accounts/compiling the data to prepare theannual accounts as well as for finalising the audit for theyear ended 31st March, 1993. Transactions subsequent tothe closure of the unit could not be incorporated in theannual accounts of 1992-93 and onwards in view ofpending access to the earlier accounts viz., 1st April, 1992to 24th January, 1993, the absence of which would leavethe books still incomplete. However, the Profit & Lossaccounts for the current financial year 2010-11 and from1993-94 to 2009-10 have been incorporated in currentfinancial year and in various previous financial yearsrespectively. As an interim measure, ` 960.76 Lacs(Previous year ` 326.27 lacs) which represents (i)` 1021.52 lacs (Previous year ` 237.63 lacs) being netcumulative inter-unit debit balance on account oftransactions of other units of the company with Steel Unitduring 1st April,1992 to 31st March, 2011, (ii) Payment ofunsecured loan of ` 45.00 Lacs {Refer Note (c) below} and(iii) net loss of ` 105.76 lacs for the years 1993-94 to2010-11 (before inter unit rental income, write-back of` 278.95 lacs and provision for depreciation of ` 662.52Lacs) have been clubbed with Current Assets of theCompany as on 31st March, 2011 and 31st March, 2010respectively as “Inter-Unit Balances” pending incorporationof (i) Annual Accounts for the period 1st April, 1992to 31stMarch, 1993 and (ii) assets and liabilities including inter unitbalances arising on account of transactions for the period1st April, 1993 to 31st March, 2011.

(b) The financial results for the years 1992-93 would beincorporated as soon as the company is able to obtainaccess to/ reconstruct the financial, accounting andproduction records.

(c) In view of above, as per past practice, the audited openingbalances of Assets and Liabilities, quantitative details,contingent liabilities {Excluding old electricity dues-ReferNote 4f(vii)} and notes of the Steel Unit as on 1st April,1992, subject to (i) reduction of unsecured loans taken by` 278.95 Lacs in view of write back on account of one timesettlement (OTS) of dues with Hong Kong and ShanghaiBanking Corporation Limited (HSBC), during the year 2004-05 and further reduction of ` 45.00 Lacs on account ofpayment during 2005-06 of OTS to HSBC.;

( f ) The Profit & Loss Accounts of Steel Unit for the years 1993-94 to 2010-11 are subject to the following notes on accounts:Shri U.K. Modi stated that:-“(i)(a) During the year 2006-07, an agreement dated 22nd

January, 2007 for One Time Settlement (OTS) of dues ofPunjab National Bank(PNB) was entered into between theCompany, PNB, Shri U.K. Modi(as Guarantor) and SBECSugar Limited (SSL), on the terms as contained in thePNB’s letter dated 28th September, 2006. Under the saidagreement, PNB has agreed to assign all its claims againstSteel Unit of the company together with all securities andcharges created by the company to SSL. Acting uponthe said agreement, SSL made payment of ` 2810.60Lacs as OTS amount together with interest to PNB. Inview of the above agreement to assign debt by PNB toSSL, the said debt is now payable by the company toSSL.The Company proposes to enter into revised termsof payment of this debt with SSL.

(ii) Reduction of fixed assets (net) by ` 662.52 Lacs beingdepreciation provided during 1993-94 to 2010-11 on fixed assetsand (iii) decrease in Inter-Unit balance by `150.76 Lacs whichrepresents; the sum of net loss of ` 105.76 Lacs for the years1993-94 to 2010-11 (before inter-unit rental income, write-backof above amount of ` 278.95 Lacs and provision for depreciationof ` 662.52 Lacs) and repayment of unsecured loan of ` 45.00Lacs. The above inter-unit balance will actually represent eithernet increase in assets or net decrease in liabilities as on 31stMarch, 2011 over balances as on 31st March, 1993 of the Steelunit.

(d) Assets and Liabilities of the Steel Unit incorporated inthe Balance Sheet of the Company as on 31.03.2010and 31.03.2011 are as under: (` in Lacs)

Liabi l i t ies As on As on Assets As on As on31.03.2011 31.03.2010 31.03.2011 31.03.2010

Secured Loans 3,421.08 3,421.08 Fixed Assets (Net) 463.57 470.34Investments 0.11 0.11

Current Liabilities 2,838.28 2,838.28 Current Assets & Advances :& ProvisionsAccumulated Profits/(Losses)(net):(489.33) (337.16) Inventories 1,340.14 1,340.141993-94 to Sundry Debtors 1,199.25 1,199.251995-96 (687.81) Cash and Bank Balances 150.78 150.781996-97 and1997-98 (58.56) Loans and Advances 249.70 249.701998-99 to Miscellaneous Expenditure 11.07 11.072000-01 (29.83) (to the extent not written2001-02 to off or adjusted)2003-04 56.53 Inter-unit Balances 1,568.19 1,713.592004-05 300.90 Loss for the year 1991-92 787.22 787.222005-06 (36.67)2006-07 (18.94)2007-08 (10.86)2008-09 (24.40)2009-10 172.482010-11 (152.17)

TOTAL 5,770.03 5,922.20 TOTAL 5,770.03 5,922.20

(e) Profit & Loss Account of the Steel Unit for the year ended 31stMarch, 2011 & 31st March, 2010 (Excluding inter-unit rental incomeof ` 46.99 Lacs) (Previous Year ` 43.09 Lacs)

(` in Lacs)


INCOME:Rental Income: 177.92 122.86

177.92 122.86EXPENDITURE:Repairs to building 12.66 16.00Personnel 74.22 45.09Administration & Selling 97.39 71.45Interest 139.05 40.57Depreciation 6.77 330.09 6.55 179.66Loss for the year before exceptional items 152.17 56.80Exceptional Items:Add:Electricity Expenses for earlier years{ Note 4 f(vii)} — 243.37Less:Amounts written back — 472.65Profit/(Loss) for the year (152.17) 172.48

` Lacs ` Lacs


SCHEDULE 14: (Contd.)(b)(i) With reference to the settlement of dues of IDBI Limited,

a settlement agreement was concluded between theCompany, IDBI Limited and SBEC Bio-Energy Limited(SBEL) on 6th October, 2007. This settlement agreementwas in terms of IDBI’s letter dated 9th February, 2007.Under the said agreement IDBI agreed to assign its entiredebt due and payable by the company to SBEL. Acting onthe said agreement, SBEL made a payament of `1232.20Lacs together with interest from 1st July, 2006 to IDBI. Thesaid payament of `1232.20 Lacs along with interest to IDBIwas completed on 6th October, 2007. In view of the aboveagreement to assign debt by IDBI to SBEL, the said debt isnow payable by this company to SBEL.The Companyproposes to enter into fresh terms of payment of this debtwith SBEL.

(ii) With reference to the outcome of the settlement ofdues of IFCI Ltd., settlement agreement was concludedbetween this company, IFCI Ltd. and SBEC Bio-EnergyLtd.(SBEL). This settlement agreement was in termsof IFCI’s letter dated 30th December, 2009. Under thesaid agreement IFCI agreed to assign its entire debtdue and payable by the company to SBEL.Acting onthe said agreement, SBEL made a payment of ` 775.00lacs to IFCI on 30th December, 2009. In view of theabove agreement to assign debt by IFCI to SBEL, thesaid debt is payable by this company to SBEL. TheCompany proposes to enter into fresh terms ofpayment of this debt with SBEL.

(c) As reported last year, Shri M.K. Modi had filed petitionsbeing OMP No. 411/2007 and AA No. 287/07 and OMP No.95/2010 in the Delhi High Court to enforce an agreementdated 17th November, 2006 entered into with Shri UmeshKumar Modi. In the above mentioned petitions, Shri M.K.Modi interalia claimed that the OTS settlements as statedabove are contrary to the aforesaid agreement. The DelhiHigh Court by its order dated 19th May, 2010 held that ShriM.K. Modi is not entitled to relief in any of the aboveproceedings filed by him, with regard to agreement dated17th November, 2006, and are accordingly dismissed thePetitions with cost.Shri M.K. Modi has challenged the order dated 19.05.2010of Delhi High Court and has filed a Special Leave Petition inthe Supreme Court on 27th July, 2010. The Hon’ble SupremeCourt vide its order dated 27th August, 2010 held that “theparties are directed to maintain status quo with regard to themanagement of the Company, but we make it clear that thiswill not in any way affect the proceedings pending beforethe Board for Industrial and Financial Reconstruction andalso the Appellate Authority(AAIFR)”.According to Shri M.K. Modi, “The said settlements/proposedassignments of debt by IDBI,IFCI and PNB are neitherlegal nor binding and are without the approval of the Board.The same are also contrary to the 1989 MOU and the BoardResolution dated 8th December, 2006.”As per Shri U.K. Modi, “The above contentions of ShriM.K.Modi are not correct. These issues were part ofthe writ petition filed by Shri M.K. Modi in Delhi HighCourt. The Hon’ble Delhi High Court dismissed the writpetition fi led by Shri M.K. Modi vide its order dated19th May,2010.Though a Special Leave Petition has been filled before theSupreme Court by Shri M.K. Modi against the judgementand order dated 19th May, 2010 of the Hon’ble Delhi Courtthe Supreme Court has not granted any stay of the saidjudgement of the Delhi High Court.Shri M.K. Modi had also challenged the order dated12.03.2007 passed by the BIFR by fi l ing an Appealbefore the AAIFR (Appeal No.167/2007). In the Appeal,Shri M.K. Modi sought to inform the terms of the MOUdated 17th November, 2006. This contention was notaccepted and the Appeal fi led by Shri M.K. Modi hasbeen rejected by the AAIFR vide order dated 22ndJune, 2011 and the AAIFR has directed as follows:-

I ) Promoters of MIL to submit their proposals within 30days of communication of the order of AAIFR to OA;

ii) OA to prepare a revival scheme within a further periodof 60 days;

iii) BIFR to consider and decide rehabilitation proposalssubmitted by the parties and sanction a rehabilitationscheme within 60 days.Pursuant to the order passed by AAIFR, Shri U.K.Modi and Shri M.K. Modi have now submitted theirseparate Draft Rehabilitation proposals to the IDBI.”

(d) In view of non-availability of book balance of liabilitiestowards PNB, IDBI and IFCI in the books of Steel Unitof the Company on account of non-incorporation ofannual accounts and balance sheets of Steel Unit {ReferNote 4 (a to c) of Schedule 14 of Annual Accounts}.The difference between OTS amounts and book

balances could not be ascertained.As per Shri U.K. Modi, these liabilities will now be quantifiedwith the assignees of PNB, IDBI and IFCI debts.As per Shri M.K. Modi, the above contention of ShriU.K. Modi is incorrect.

(e) No-provision of interest, amount unascertained, isrequired to be made, on loans from other FinancialInstitutions as the existing amounts appearing in thebooks of accounts of the company will be more thansufficient in view of in-principle approval/ discussionsbeing held for one time settlement of dues with theFinancial Institutions.

( f ) In view of clear cut delineation of responsibitit ies ofthe two Managing Directors of the Company, theaccounts of two divisions of six units and three unitsof the company are being prepared and finalizedindependently and accordingly Shri M.K. Modi and ShriU.K. Modi are certifying the accounts as relate to thetwo divisions of the company i.e six units and threeunits respectively, the management whereof is lookedafter by them.

(ii) The impact, if any, on account of non-availability andconsequently non incorporation of audited openingbalances of assets and liabilities of the Steel Unit as on1st April, 2010;

(iii) Non-provision of obsolete/damaged stocks and fixedassets, if any, in view of non-incorporation of earlieryear’s accounts and non-physical verification ofinventories and fixed assets as on 31st March 2011;

( iv) Non-confirmation/reconciliation of balances of debtors,creditors, banks, financial institutions etc. and impact,if any, on the Profit and Loss Account;

( v ) Non-provision of doubtful debts and loans & advances,amount unascertained;

(v i ) Non-provision of impairment of Assets, if any, of thefixed assets as per Accounting Standard (AS 28) i.e.Impairment of Assets, amount unascertained.

(vii)(a) Uttar Pradesh Electricity Board (Now U.P. PowerCorporation Ltd.) raised various demand notices againstelectricity dues and late payment surcharge amountingto ` 2435.48 Lacs on the Steel unit of the Company.(b) In terms of One Time Settlement with U.P. PowerCorporation Ltd. regarding arrears of electricity dues,the Steel Unit paid during the previous year ` 563.90lacs against the demand of `1123.99 lacs included in(vii)(a) above. Accordingly shortfall in provisions of` 243.37 Lacs has been charged to revenue during theprevious year.(c)The company fi led writ petition in Allahabad HighCourt challenging the said demand notices. The Hon’bleAllahabad High Court dismissed the writ petitions filedby the Company.The company filed Special LeavePetition (SLP) with the Hon’ble Supreme Court of India,who has granted interim stay on 14th March, 2005 forstay of recovery by way of sale of property which isstil l continuing.In view of the above and pending incorporation of annualaccounts of Steel Unit for 1992-93, no provision isconsidered necessary against the balance demand of`1311.49 Lacs at this stage.

5 . The company commenced new business of ‘StructuralFabricators’, which is covered under the sub clause 3(34) ofthe Memorandum of Association of the Company, duringthe current year in respect of which approval of Shareholdersunder Section 149(2A) of the Companies Act, 1956 is beingsought in the ensuing Annual General Meeting.

6 . Undertakings given to Financial Institutions on behalf ofLords Chloro Alkali Limited, Modi Rubber Limited andBihar Sponge Iron Limited :(a) To procure funds jointly/severally with other promoters to

meet any shortfall in the resources of the Company forcompleting their projects and/or for working capital. Thefunds made available/to be made available can only bewithdrawn with the prior approval of Financial Institutionsand shall not involve any charge or lien on the assetsof the said Companies.

(b) That the Company shall not transfer, assign, pledge,hypothecate or otherwise dispose of in any mannerits holding in their capital without Institutions’ priorapproval in writing.

7 . Deferred Credit including liability for interest payable forunexpired period have been guaranteed by the Bankers of theCompany against hypothecation of Gas Cylinders andMachinery purchased under the Scheme in Steel Unit.


SCHEDULE 14: (Contd.)8 . The Company has disputed the price of levy sugar fixed

during the year 1970-71 to 1974-75 and recoveredamount of ` 37.73 Lacs in excess of control price whichwas paid subsequently in pursuance of Supreme CourtOrder dated 22nd September, 1993. However, thecompany obtained Stay order from Hon’ble AllahabadHigh Court against demand of interest made by the FoodCorporation of India, which is stil l continuing.However, during the current year, the Food Corporationof India has adjusted a sum of `124.28 Lacs towardsinterest dues from the differential amount recoverableby Sugar Unit of the Company on account of priceincrease in levy sugar supplied for season 2009-10.Theabove adjustment has been done without prejudice to theright and contention of the company.In view of the above, interest on excess real isat ionsfor the years 1970-71 to 1974-75 amounting to` 124.28 Lacs, as adjusted by the FCI, wi l l beaccounted for as expenses in the year of disposal ofthe above wri t pet i t ion.

9 . In accordance with an Inter im Order dated27th April, 1981 of the Delhi High Court, the Companyhad avai led higher quota of f ree sale sugar andconcessional excise duty on provisional basis as aNew Unit. The Hon’ble Delhi High Court vide its orderdated 28th February, 2005 decided the matter infavour of the Company.The Company had filed application for reference of a questionof law to the Delhi High Court against the orders of theIncome Tax Appellate Tribunal for assessment year 1982-83.The Hon’ble Delhi High Court vide its order dated 18thAugust, 2010 has decided the issue in favour of the company.Consequently, the interest amount received of ` 816.11Lacs on refund from the Income Tax Department pertainingto the period upto 31st March, 2011 has been recognized asincome in the financial year ended on 31st March, 2011.

10 . The Company has entered into an agreement with U.P. PowerCorporation Limited for its Residental Feeder SC No. 2005 on29th March, 2000. In pursuance of that agreement, theCompany has paid for the existing authorised occupants onlyafter 1st July, 1998 computed prorata based on covered areaof quarters occupied by the employees. In view of the above,no provision has been made for electricity charges of ` 131.46Lacs upto the period of permanant disconnection of residentialfeeder SC. No. 2005 i.e. 31st May, 2001 (Previous Year` 131.46 Lacs) for the unauthorised occupants and latepayment surcharge/ recovery charges amounting to ` 302.66Lacs upto 31st May, 2001 (Previous Year ` 302.66 Lacs). Inaccordance with the agreement, matter regarding waiver of latepayment surcharge and recovery charges after 1st July, 1998will be referred to the Government.

11. ESI authorities had raised a demand on the Company for` 58.86 Lacs (upto previous year `57.69 Lacs)(inclusiveof interest) towards Company’s liability for ESI for theyears 1968 to 1986. The demand is disputed by thecompany and no provision has been made against thisl iabil i ty.

12. Modinagar Municipal Committee had determined the basis/liability of house-tax payable by the Company for the years1982-83 to 2006-07 at ` 213.98 Lacs. The said liability/demand/basis is disputed by the company at various levelsand has deposited `16.51 Lacs on account upto 31st March,2011. Pending final decision of the Court/settlement and aftertaking into account the provision/payment already made bythe Company, there is a net liability of `188.63 Lacs (uptothe previous year ` 188.63 lacs), which has not been providedfor in the accounts.

13. Excise Duty on uncleared manufactured finished goodsand custom duty in respect of imported goods lying inbond in respect of Steel Unit amounting to ` 43.09 lacsand ` 24.35 lacs respectively is accounted for as andwhen such goods are cleared. However, this has no impacton the loss of the Company.

14. (a) In respect of Steel Unit, gratuity liability upto 30thSeptember, 1987 amounting to ` 84.82 Lacs has not beenprovided in the books on accrual basis. However ,this saidliability has subsequently been paid/deposited.(b) The Gratuity Liability of continuing employees in SteelUnit was being accounted for on cash basis from 1993-94 to 2001-02. During 2002-03 past Gratuity Liability ofcontinuing employees amounting to ` 14.96 Lacs wasprovided on accrual basis computed on actual basis andw.e.f. 2003-04, Gratuity liability is computed on actuarialbasis and provided for in the books of account.

(c) The Company has adopted Accounting Standard 15(Revised) on employees benefits with effect from 1st April2007 in respect of provision for Gratuity Liability.

The Company has unfunded scheme for payment of gratuityto all eligible employees calculated at specified number of daysof last drawn salary depending upon tenure of service for eachyear of completed service subject to minimum five years ofservice payable at the time of seperation upon superannuationor on exit otherwise.

(d) (i) The company has adopted Accounting Standard 15(Revised) on employees benefits with effect from 1stApril, 2008 in respect of Earned Leaves.

(ii)Details in respect of Earned Leave are as under:Liability to be recognised in Balance Sheet

Present value of Obligations 135.15 148.02Fair value of Plan Assets -- --Net Liability (135.15) (148.02)Reconciliation of Opening and ClosingBalances of ObligationObligation as at beginning of the year 148.02 133.18Current Service Cost 14.33 14.48Interest Cost 11.84 9.99Actuarial Losses/(Gain) 0.94 12.06Benefits Paid (39.99) (21.69)Obligations as at the end of the year 135.15 148.02Expenditure to be recognised during the yearCurrent Service Cost 14.33 14.48Interest Cost 11.84 9.99Expected return on Plan Assets -- --Net Actuarial Losses/(Gains) Recognised during the year 0.94 12.06Total expenditure included in “Employees’ Emoluments” 27.11 36.53AssumptionsDiscount Rate( per annum) 8.00% 7.50%Expected rate of return on Assets (per annum) 0% 0%Salary Escalation Rate 8.50% 8.00%

15. The Company has not received information from vendorsregarding their status under the Micro, Small and MediumEnterprises Development Act, 2006 and hence disclosurerelating to amounts unpaid as at the year end together withinterest paid/payable under this act has not been provided.

16. Government of India has issued guidelines dated 15thJanuary, 1987 which requires companies raising resourcesthrough issue of Debentures to create a DebentureRedemption Reserve. The Company has not created sucha reserve in view of the accumulated losses.

17. (a) During the current year, the Distillery Unit of thecompany (Bottler) has entered into an agreement i.e. a“Bottling Agreement” with MI Spirit India Private Ltd (MISIP)whereby the parties i.e. bottler and MISIP have agreed tothe blending, manufacturing and bottling of the products bythe bottler. Bottling agreement inter-alia includes: (i) thebottler shall manufacture the products in accordance withthe quality standards, standard manufacturing procedures,the process and other specifications laid down by MISIPfrom time to time and in such quantities as may be

Details in respect of Gratuity are as under:Liability to be recognised in Balance Sheet

Present value of Obligations 1,094.72 1,100.59Fair value of Plan Assets — —Net Liability (1,094.72) (1,100.59)Reconcilition of Opening and Closing Balances of ObligationObligation as at beginning of the year 1,100.59 1,004.36Current Service Cost 57.88 56.39Interest Cost 88.05 75.33Actuarial Losses/(Gain) (35.42) 41.80Benefits Paid (116.38) (77.29)Obligations as at the end of the year 1,094.72 1,100.59Expenditure to be recognised during the yearCurrent Service Cost 57.88 56.39Interest Cost 88.05 75.33Expected return on Plan Assets — —Net Actuarial Losses/(Gains) Recognised during the year (35.42) 41.80Total expenditure included in “Employees’ Emoluments” 110.51 173.52Assumpt ionsDiscount Rate( per annum) 8.00% 7.50%Expected rate of return on Assets (per annum) 0% 0%Salary Escalation Rate 8.50% 8.00%

As on31.03.2011

As on31.03.2010

( ` in Lacs)

As at31.03.2010

As at31.03.2011

(` in Lacs)


SCHEDULE 14: (Contd.)specified by MISIP from time to time (ii) the bottler shallprocure the materials i.e. concentrates, spirit, flavouringagents, de-mineralised water, packages and levels fromMISIP or from the suppliers suggested or recommended byMISIP (iii) products manufacturing by the bottler shall besupplied, dispatched or sold by the bottler as per thepurchase orders procured by MISIP and bad-debts fromdirect indenters supplied on credit upon request by MISIPare to MISIP’s Account (iv) MISIP will be responsible forworking capital financing. Bottler shall open a bank account(“Account”) which is to be operated jointly by the bottlerand MISIP and all funds in the account shall belong toMISIP notwithstanding that the account may be in thename of the bottler (v) MISIP will reimburse themanufacturing expenses and pay manufacturing margin(i.e. 10% of the aggregate of the manufacturing expensesas reduced by statutory charges, taxes and duties andselling and distribution expenses) from the above account(vi) all payments received by the bottler for sale ofproducts shall be credited to the account andmanufacturing expenses incurred by the bottler,manufacturing margin shall be reimbursed by MISIP tobottler. Any surplus remaining in the account shall thereforebe paid to the company as fee.(b) In the opinion of the management, since the productsare being manufactured and sold in the name of the bottler,the purchase invoices in respect of raw material, packingmaterial and consumables and sales invoices for the finishedgoods are being issued in the name of the bottler, necessarycompliances under various tax laws are also being done bythe bottler and special bank account is also in the name ofthe bottler, the transactions of the above business ofmanufacture and sale of “Vodka” have been treated as partof books of account of the bottler and these have beenincluded in sales, expenses, assets and liabilit ies of thebottler as stated in paragraph (c) below.(c) Balance Sheet and profit & Loss account of the bottlerfor the financial year ended 31st March, 2011 includes thefollowing items relating to the above activities of manufactureand sale of “Vodka”:

(d)The Expert Advisory Committee of Institute ofChartered Accountants of India in an almost similar casedo not agree with the above mentioned accountingtreatment. The opinion is governed by the substance ofthe transaction and not by the legal form i.e. sales,purchases, assets and liabilities relating to such businesscontrolled by the brand owners should not be recordedin the books of account of the company even thoughsupporting vouchers are in the name of the company andthe correct accounting treatment of the transactions inthe books of account of the company would be torecognize only the fixed margin/charge received by itrather than to recognize sales and purchases of the

business of manufacturing IMFL and also should notrecognize any current asset or l iabilit ies of the saidbusiness in its books of account. Further, the brandowners entitlement paid by the company should bebooked as a mere cash outflow. Further the ExpertAdvisory Committee had clarified that the opinionexpressed by the committee is purely from theaccounting point of view without consideration of anyimplication thereof, from the point of view of theprovisions of TDS/TCS of the Income Tax Act 1961 orany other legal / statutory requirement.

18. (a)Cumulative Preference Shares were due forredemption on 31st December, 2010. The companymoved Misc. Application (MA) u/s 22(3) of the SICAbefore Hon’ble BIFR, whereby it had sought extensionand suspension of obligation in relation to the 15%Preference Shares concerning Preference Shareholdersfor two years. The Hon’ble BIFR vide its order dated18th January, 2011 dismissed the application of theCompany. Consequent to the order, the company hadwritten letters to the Institutional Preference Shareholdersfor settlement and redemption of Preference Shares.Further, negotiations are pending and preference sharesare overdue for redemption as on 31st March, 2011.(b) Arrears of dividend on Cumulative Preference Sharesamounts to `123.73 Lacs (upto 31st March, 2010`117.62 Lacs.)

19. No depreciation was provided on appreciated value of buildingsconsequent to their revaluation in the books of account of thecompany on 31st March, 1992. In view of lapse of 19 yearssince last revaluation on 31st March, 1992 and closure ofSteel, Vanaspati, Lantern and Soap Units after 31st March,1992,earlier appreciation on revaluation in buildings of ` 1526.21Lacs has been reversed and adjusted from revaluationreserve during the current financial year to bring thesebuildings at historical cost.

20. Consequent to the losses, the Company had been declareda Sick Industrial Company on 14th March, 1991 in terms ofSection 3(1)(o) of the Sick Industrial Companies (SpecialProvisions) Act, 1985. Further proceedings before the BIFRare pending.Pending final orders of BIFR, the accounts ofthe company have been prepared on a going concernbasis.

21. (a) No provision has been made for penal / delayed/simple/compound interest amounting to `16,750.79Lacs upto 31st March, 2011 (for the year ` 2,749.68Lacs) on term borrowings of Financial Institutions andDebentures pending final order of BIFR.

(b) Interest payable by Vanaspati Unit of the Company toFinancial Institutions since the date of disbursement ofthe loan on simple rate of interest basis amounts to`1190.40 Lacs upto 31st March, 2011 and the unit holdstotal interest provision of ` 732.41 Lacs as on 31stMarch, 2011 resulting in the short provision of ` 457.99Lacs on simple interest basis.

(c) The Sugar and Distillery Units of the Company havegiven a proposal for settlement of their dues withAllahabad Bank of ` 227.00 Lacs against which anupfront payment of ` 50.00 Lacs has already beenmade under ‘No Lien Account’ and included under‘Loans and Advances’and to pay the balance amountof `177.00 Lacs into equal monthly instalments afterthe receipt of sanction from the bank. The shortfallin interest provision amounting to ` 168.84 Lacs willbe provided in the books of account in the year ofapproval of OTS proposal by the Bank.

(d) The Sugur Unit of the Company has not madeprovision for interest/ bank charges amounting to` 1717.72 Lacs (for the year ` 195.33 Lacs) on cashcredit loan taken from Allahabad Bank in view ofPara(c)above.

(e) No provision has been made for interest on CashCredit from Allahabad bank amounting to ` 166.06Lacs (for the year ` 30.91 Lacs) in Distil lery Unitin view of Para (c) above.

( f ) Till 31st March, 2000, simple interest on maturedfixed deposits and interest upto date of maturity wasprovided in the books of account. With effect from

Balance SheetParticulars

Sundry Debtors 127.08Bank Balances 41.33Security Deposits 27.40Closing Stock 46.83Advance Recoverable 32.56Total Current Assets 275.20Less : Current Liabilities 91.02Credit balance of MISIP 172.84 263.86Net current Assets 11.34Recognised as net profit for the yearinstead of Manufacturing margin 11.34IMPACT ON NET PROFIT NIL

Profit & Loss AccountTurnover (net of discount) 210.68Excise duty paid 13.89Material, Manufacturing & others. 39.36Personnel Expenses 4.99Administrative Expenses 141.10Total Expenses 199.34Net Profit for the year 11.34Recognised as net profit for the yearinstead of Manufacturing margin 11.34IMPACT ON NET PROFIT NIL

(` in Lacs)



1st April, 2000 , no provision has been made forinterest of ` 260.65 Lacs, upto 31st March, 2011 (forthe year ` 21.43 Lacs), computed as per pastpractice, on these fixed deposits in view of a legalopinion received by the Company to the effect thatas per terms and conditions of Fixed DepositScheme, deposits do not carry any interest beyonddue dates unless these are renewed. Since thesedeposits were never renewed after their due dates assuch, the question of payment of interest after duedates does not arise at all. However, as a prudentmeasure, the provision made of ` 289.47 Lacs in thepast (net of payments) has been retained in thebooks of account as on 31st March, 2011.

22. (a) The Vanaspati Unit had applied for Sales-Tax relief/exemption to U.P. Government in terms of Section4A of U.P. Sales Tax Act. Consequent to rejection,the Company has filed a writ petition in LucknowBench of Allahabad High Court and Court grantedStay. Pending disposal of the case, no provision hasbeen made for sales-tax ` 2455.78 lacs relating tothe period May,1991 to July,1994 (Prevoius Year` 2455.78 Lacs).

(b) The Vanaspati Unit had preferred an application fordeferment of Sales-tax with effect from July, 1994under Section 38 of the U.P. Sales Tax Act and thesame has been rejected by the State Government.The Company has also filed Writ Petition against therejection and consequent to the orders of the Court,the recovery of Sales-tax has been kept in abeyance.Accordingly, Sales-tax amounting to `440.46 Lacs(previous year ` 440.46 Lacs) relating to the periodAugust, 1994 to March, 1996 has not been depositedwith the authorities.The above writ petition fi led by the company waslisted for hearing on 2nd May, 2008 at High Court,Lucknow Bench. The Company had filed an affidavitwith the court that BIFR had passed an order dated26th March, 2008 by virtue of which the Benchpermitted the Commercial Tax Department,Government of U.P. to recover its outstanding dues,due after 30th June, 2007. The Company had alsostated in the said affidavit that the Hon’ble SupremeCourt of India had affirmed the order of the BIFRand therefore in view of the said orders of BIFR asaffirmed by the Hon’ble Supreme Court, the saidWrit Petition may be dismissed as infructuous.Accordingly the High Court, Lucknow Bench hasdismissed the said writ petition as infructuous.

(c) In accordance with the scheme announced by U.P.Government regarding Waiver of interest & penalty onSales Tax, the Distillery Unit of the Company has paidand provided interest during 2005-06 of ` 54.77 Lacs i.e.10% of the total interest as per the scheme.

No dues certificate of sales tax authorities is awaited.

23. The Distillery Unit declared cessation and lock out of theUnit with effect from 19th December, 1991 and 5thJanuary, 1992 respectively. The lockout has since been lifted.The U.P. Government, suo moto, has referred the matter tothe Industrial Tribunal to decide the legality of the lockout.Pending final decision, no provision has been made for wages` 27.46 Lacs for the lockout period.

24. Provision/payments (including value of perquisites) hasbeen made to Managing Directors for the remuneration of` 80.68 Lacs in terms of Shareholders resolution, which issubject to approval of the Financial Institutions.

25. No provision has been made for Earned Leave for SteelUnit upto 1991-92, amount unascertained.

26. Recovery Certificate (RC) was issued on 20th April, 2011 onaccount of non-payment of cane price/commission/interestdue to Co-operative Societies for the sugar season 2010-11.The above RC also includes interest of ` 115.96 Lacs upto20th April, 2011 on cane price/ commission payable tosocieties which has been provided for in the books of accountand recovery charges of ` 268.25 lacs (upto 31st March, 2011` 262.59 Lacs) which has not been provided for in the booksof account as stay granted by Hon’ble Allahabad High Court.Further proceedings are pending.

27. As per AS-21 i.e. Consolidated Financial Statements, thetransitional provisions allows that comparative figures for theprevious year need not be presented. However, for betterpresentation and comparison purposes, previous year fuguresare being presented even though the same were not certifiedduring the previous year by the Statutory Auditors of theCompany,as no consolidated financial statements wereprepared for the year ended 31st March, 2010.

28. No confirmation letters were sent to debtors/creditors and toparties who have discounted sale bills. In the absence of suchconfirmations, the balances in respect of Sundry Debtors/Creditors/Bills discounted(Contingent Liability), Loans taken/given and Advances and other accounts are taken as shownby the books of accounts and are subject to adjustments andreconciliation, if any.

29. Delhi Excise Authorities issued Show Cause Notices and raiseddemand for ` 167.43 Lacs towards Risk-Purchase of CountryLiquor in view of non-supply of the same by Distillery Unit of theCompany. Company has disputed the above demand and a WritPetition was filed before the Hon’ble Delhi High Court who orderedcase to be referred back to Collector of Excise for taking finaldecision. The Collector of Excise vide its order dated 27th June,2003 has confirmed the above demand against which the companyhas filed a writ petition before the Hon’ble Delhi High Court. Onthe basis of orders of Hon’ble Delhi High Court, the companydeposited ` 50.00 Lacs till date against the above demand. Noprovision is considered necessary at this stage since the matteris sub-judice.

30. Deferred Tax Assets of the company are ` 1,758.19 Lacs ason 31st March, 2011 (Previous year ` 1,836.22 Lacs) constitutingmainly of unabsorbed depreciation, unabsorbed losses, provision fordoubtful debts, provisions disallowed and interest on term loansdisallowed in Income tax. Deferred Tax Liabilities is ` 601.48 Lacsas on 31st March, 2011 (Previous Year `644.37 Lacs) on accountof higher depreciation claimed in Income Tax. On conservative basisas required by the Accounting Standard 22, the net Deferred TaxAssets have not been recognised and position will be re-assessedat next balance sheet date. However, the estimated Deferred TaxAssets and Liabilities details are given as under:

` Lacs ` Lacs

Description As at As at 31.3.2011 31.3.2010

(a) Deferred Tax Assets:(i) Disallowances under the

Income Tax Act. 1410.83 1445.16(ii) Provision for Doubtful Debts 161.05 162.96(iii) Unabsorbed Depreciation 186.31 228.10

Total 1758.19 1836.22(b) Deferred Tax Liabilities:

Related to Fixed Assets 601.48 644.37(c) Deferred Tax Assets (Net) (a-b) 1156.71 1191.85


SCHEDULE 14: (Contd.)35. The Company, in compliance of the interim order of the Lucknow

bench of Hon’ble Allahabad High Court dated 15th November,2007 and subsequently confirmed by Hon’ble Supreme Courtvide its order dated 15th May, 2008 has paid cane price of ` 110/- per Qtl. for the crushing season 2007-08 and has accordinglyaccounted for the liability. The Lucknow bench of Hon’bleAllahabad High Court by a subsequent order dated 7th July,2008 upheld the validity of State Advised Price (` 130/- per qtl.for Early variety and `125/- per qtl. for General variety) fixed byState Government. Aggrieved by the said order, the companyhas filed Special Leave Petition with Hon’ble Supreme Court.The differential liability of the sugar cane price of ` 848.12 lacs(Previous Year ` 848.12 Lacs) for sugar season 2007-08, if soordered, will be accounted for in the books at the time of finaldisposal of the matter by the Hon’ble Supreme Court.

36. As per past practice, the closing stock of finished goodsin Sugar Unit has been valued at cost or Net RealizableValue (NRV) whichever is lower.

Upto 2008-09, for computing NRV, the closing stock offinished goods, to the extent of levy obligation pendingas at the year end, was valued at levy sale price andbalance quantity was valued at prevailing free marketprices. However, with effect from financial year 2009-10, for computing NRV, the closing stock, to the extentof levy quantity quota allotted to the Sugar Unit for theperiod from April, 2011 to August, 2011, has been valuedat levy, sale price and balance quantity has been valuedat prevailing free market prices. Had the NRV beencomputed as per past practice as stated above, thevalue of closing stock would have been lower by `

623.10 Lacs (Previous Year ` 453.12 Lacs).

37. No provision has been made for fall in the market/bookvalue of the investments in the books of subsidiarycompanies.

38. Pursuant to directions received from Reserve Bank ofIndia, Main object clauses of both the subsidiarycompanies were amended as on 16th September, 2000that the Company would not carry on the business ofNon-Banking Financial Institution within the meaning ofSection 45 I A of the Reserve Bank of India Act, 1934.Accordingly the company has not acquired any freshinvestments .

39. Modi Spinning & Weaving Mills Company Limited, one ofinvestee companies, in compliance of BIFR sanctionedscheme has allotted following shares during the current yearfree of cost to the company (one share against 5 (five)Equity Shares held by the Shareholders of MSWM as onrecord date i.e. 12th November, 2009) to both the subsidiariesas under :

40. Investments in two associates i.e. Bekaert Engineering(India) Pvt. Ltd. and Modi Santa Fe India Pvt. Ltd. have not

been accounted for in Consolidated Financial Statementsunder the Equity method as prescribed in Accounting

Standard-23 i.e. Accounting for investment in associates asthese associates are operating under severe long term

restrictions that significantly impair its ability to transferfunds to the investor. Accordingly these investments are

accounted for at cost.

31. Earnings per Share (EPS) computed in accordance withAccounting Standard-20: (` in Lacs)

Particulars 2010-11 2009-10Profit for the year as per accounts 484.85 2094.16Less:Dividend on Preference Shares 6.11 6.11

Total (A) 478.74 2088.05

Number of Equity Shares issued (B) 33,09,214 33,09,214Earning per share (in `) (A)/(B) 14.47 63.10Face Value of Equity Share in ` 1 0 1 0

32. Till 31st March, 2011, Certain Quarters of the Company are occupiedunauthorisedly by ex-employees/outsiders. The company hasentered into “Agreement to Sell” for 215 (Previous Year 215), suchresidential quarters with such parties. Sale consideration amountingto ` 504.50 Lacs (Previous Year ` 504.50 Lacs) has been receivedas interest free advance. These “agreements” clearly stipulatesthat final sale of such quarters are subject to approval of FinancialInstitutions to whom these quarters have been mortgaged and thecompany proposes to seek the same before affecting final saleof such quarters. Accordingly the sale of such quarters will beaccounted for only on receipt of approval of Financial Institutions.Further the Company has been legally advised that it can enterinto such “Agreements to Sell”.

33. (a)The Steel unit of the company has entered into few leases,including perpetual leases, agreements for certain portion of thefactory land and building(18428.46 Sq.Mtrs.) (Previous Year18428.46 Sq. mtrs) for which approval of financial institution, towhom the factory land and buildings are mortgaged, is yet to beobtained. However, the company has been legally advised that itcan enter into such lease agreements. Further, the lease moneyhas mainly been utilised for payment of workers dues.(b)The company has entered into a perpetual lease agreement forcertain portion of closed Soap factory, land & building(1584 sq.mtrs) to a related party. As the said land and building is mortgagedwith the financial institutions therefore the company had soughtthe approval of IDBI Limited (the lead financial institution) to thesaid transaction vide its letter dated 6th September, 2006. SinceIDBI Limited did not respond, therefore the Company again wrotea letter to IDBI Limited on 5th April, 2007 requesting for its approvalto the said transaction. The company in the letter under referencealso mentioned that if IDBI does not respond to the company’srequest, it will be deemed that the company’s request has beenapproved by IDBI Limited and the company will go ahead with thesaid leasing agreement. The IDBI has so far not responded to thecompany’s letter.

34.(a) Recovery Certificate (RC) was issued on 1st May, 2004on account of non-payment of cane price / commission /interest due to Co-operative societies. The Hon’ble HighCourt has stayed the recovery proceedings against thecompany subject to payment of dues upto 31st July,2004. The Company has complied with the conditionsreagarding payment of cane price and commission onbasic SMP upto 31st July, 2004. However, the companyhas disputed the payment of interest of `142.00 Lacs andrecovery charges of ` 236.00 Lacs in the Hon’bleAllahabad High Court which is still pending. On considerationof prudence, the company has made provision for interestof `142.00 Lacs during the year 2004-05.

(b)Recovery Certificate (RC) was issued on 18th March,2008 on account of non payment of cane price/commission/interest due to Co-operative societies for the sugar season2007-08. The above RC also includes interest of ` 77.37Lacs upto 15th March, 2008 on cane price/ commissionpayable to societies and recovery charges of ` 413.50 Lacswhich has not been provided for in the books of account.

(C) Recovery Certificate (RC) was issued on 10thAugust, 2007 on account of non paymeny of cane price/commission /interest due to co-operative societies for thesugar season 2006-07. The above RC also includes interestof ` 340.66 Lacs upto 7th August, 2007 on cane price/commission payable to societies and recovery charges of` 426.95 Lacs which has not been provided for in thebooks of account. As per the interim order dated 27thFebruary, 2008 of Hon’ble Supreme Court, there shall notbe any recovery charges or interest for delayed paymentat this stage

Subsidiaries of the Company Shares received of

Own Investment (India) Limited 8233 8233

Your Investment (India) Limited 9117 9117

HaryanaDistillery Ltd.

RajputanaFertilizers Ltd.



41. RELATED PARTIES DISCLOSURE01 Key Management Personnel:

Shri Mahendra Kumar Modi Managing DirectorShri Umesh Kumar Modi Managing Director

02 Other Related parties with whom the Company had transactions etc.

Enterprises over which the key Management Personnel and their relatives areable to exercise significant influence:

03 Disclosure of transactions between the company and related parties andthe status of outstanding balances as at 31st March, 2011 :(A) Transactions with the enterprises over which the key Management personnel and their relatives are able to excercise significant influence:

(`. in Lacs)

Sale of GoodsSBEC Sugar Limited (Note 29) 7461.19 2720.56Weld Excel India Limited 253.78 239.57

7714.97 2960.13Purchase of Goods/Raw MaterialsWeld Excel India Limited 335.71 115.48Others 17.25 27.10

352.96 142.58Purchase of AssetsModipon Limited — 8.84Ashoka Mercantile Limited 1.65 3.26

1.65 12.10Rental IncomeWin Medicare Private Limited 58.15 54.47Weld Excel India Limited 19.90 6.86Modi Motors Pvt. Ltd. 12.15 12.23Others 15.66 9.52

105.86 83.08Payment of Rent — 0.79

Expenses reimbursedWeld Excel India Limited 67.40 —SBEC Sugar Limited — 11.26Others 0.46 1.44

67.86 12.70Expenses realizedWeld Excel India Limited 5.78 —Modipon Limited 3.09 —Others 3.03 5.79

11.90 5.79Amount Written backBihar Sponge Iron Limited — 472.65Services rendered — 4.20Royalty Fee receivedWeld Excel India Limited 22.14 29.76Commission paid for sale promotionAshoka Merchantile Ltd. 15.44 12.70Receiving of ServicesWeld Excel India Limited 20.40 24.53Others 1.34 4.24

21.74 28.77

2009-102010-11

Modipon LimitedMorgardshammar India Ltd.Modi Motors Pvt. Ltd.H.M. Tubes & Containers Pvt. Ltd.Ashoka Mercantile Limited

Bihar Sponge Iron LimitedModi Mundipharma Pvt. Ltd.Modi Line Travel Services Pvt. Ltd.Modi Senator (I) Pvt. Ltd.Weld Excel India Limited

SBEC Sugar LimitedWin-Medicare Pvt. LimitedModi Revlon Pvt. Ltd.A to Z Holding Pvt. Ltd.


* This excludes amount of Steel Unit in view of non- incorporation of Balance Sheets for these years on account of non-availability of opening audited balances as on 01-04-1993( Refer Note 4 of Schedule 14)# Unsecured interest free advance given ` 500.00 lacs pursuant to an agreement for commitment to supply electrode which is being adjusted from supply of goods @ 20.00% (Previous year 33.33%) of invoice value.

Security deposits givenModipon Limited 97.95 9.15Advance received against sale of goodsSBEC Sugar Limited 450.00 —Interest Paid on above advance 17.23 —Loans and Advances given# Weld Excel India Limited — 500.00* Amount recoverable Good 1831.19 49.31 Doubtful 3.78 3.78# Loans and Advance recoverable 399.58 461.85Security deposit for cylinders 39.00 39.00Security deposit recoverable for quarters 146.20 66.65* Amount payable 77.63 83.63Unsecured Loan Outstanding 149.88 149.88Lease rent payable 23.40 83.61

(` in Lacs)

2010-11 2009-10

(B) Payment to the Key Management Personnel: (` in Lacs)

(i) Managerial Remuneration(Net of Recovery)

Shri Mahendra Kumar Modi 14.38 16.37

ii) Amount recoverable 6.33 —

Shri Mahendra Kumar Modi (Recovered subsequently)

(iii) Amount Payable (Provision for gratuity) 3.35 3.35

2010-11 2009-10

42. SEGMENT REPORTING

( i) The Management has identified six reportable Business Segments for the current year namely:

Sugar comprising of Cane Sugar:

Gas comprising of gases.

Distillery comprising of liquors and spirit.

Paint comprising of Paints & Varnish.

Electrodes comprising of Welding Electrodes

Investment Operations

(ii) The Vanaspati Unit of the Company, which is lying closed since 2003, has not been treated as business segment.

(iii) The Steel Unit is lying closed since 24th January, 1993 due to strike/lock-out. In the meanwhile, opening balances (Assets and

Liabilities) of the unit as on 1st April, 1992 subject to certain modifications as per Note 4(c) of Schedule 14 have been incorporated

as Assets & Liabilities of Steel Unit. (Refer Note 4 of Schedule 14).




NOTES:* Refer Note 41 (iii) above. ** Includes Administrative Offices i.e. MD Office and Corporate Office of the Company.

01 The Business operations are concentrated in India only. 02 External Revenue is exclusive of Excise Duty realised.

03 Inter segment revenues between operating segments are accounted for at market price.

@ Includes revaluation of Fixed Assets also. # This excludes ` 960.76 Lacs being unreconciled debit balance of

Steel Unit included in Loan and Advances i.e. Schedule 6.

Other Information : (` in Lacs)

Particulars Sugar Gas Distillery Paint Electrode Investment Total operations

Segment Assets 8087.23 264.35 1276.39 958.75 3721.24 16.46 14324.42Steel Unit * 3403.81

Investments 795.41

FD with Banks &Interest Accrued 90.79 2.38 32.28 4.77 1254.02 — 1384.24Other unallocable assets ** 5019.49Total Assets # 24927.37Segment Liabilities 5871.17 204.15 1310.70 666.80 1242.35 0.42 9295.59Steel Unit * 2839.59

Other unallocable liabilities** 2448.48Total Liabilities 14583.66Secured/ Unsecured Loan/DPG(Including interest accrued) 13992.54 Capital Expenditure:(Including Under Erection 63.68 0.12 66.69 17.24 233.80 — 381.53and acquired under finance lease)on Segment AssetsDepreciation 361.72 7.79 43.85 16.34 122.22 — 551.92

(iv) Segmentwise Information(Primary Segments) for the current year : (` in Lacs)


REVENUE:Total External Sales/Services 22650.96 676.45 2122.56 2257.77 6716.57 74.95 34499.26Inter-Segment Sales 450.88 3.42 — 6.30 0.32 0.76 461.68Total Sales 23101.84 679.87 2122.56 2264.07 6716.89 75.71 34960.94

Less:Inter Segment Sales 450.88 3.42 — 6.30 0.32 0.76 461.68Total Sales 22650.96 676,45 2122.56 2257.77 6716.57 74.95 34499.26

34499.26RESULTS:Segment Result 358.37 129.19 (87.74) 32.39 797.14 16.67 1246.02Add:(i) Profit of Steel Unit # 33.86(ii) Interest Income 91.64(iii) Exceptional Items $ 816.11

2187.63Less:Interest Expenses 1191.06Unallocable Expenses(Net) ** 511.61Profit before tax 484.96Less : Provision for Tax 0.09 Fringe Benefit Tax —

Profit after Tax 484.87

# Including inter-unit rental income of ` 46.99 Lacs. $ Refer Note No.9 (f)(vii),(viii) and 21(a)(i) & (f) of Schedule 14.


Other Information : (` in Lacs)


Segment Assets 12023.67 254.48 1074.42 740.52 3530.89 9.24 17633.22Steel Unit* 3410.19

Investments 795.41

FD with Banks &Interest Accrued 83.04 1.48 28.61 3.84 1105.16 — 1222.13Other Unallocable Assets** 4948.71Total Assets #28009.66Segment Liabilities 9291.60 200.00 925.55 574.04 1170.57 0.85 12162.61

Steel Unit* 2839.59Other Unallocable Liabilities** 2585.18Total Liabilities 17587.38Secured/ Unsecured Loan/DPG(Including interest accrued) 13120.11Capital Expenditure:(Including Under Erection and acquired under finance lease)On Segment Assets 36.44 0.97 114.96 5.90 102.88 — 261.15Depreciation 368.91 6.74 32.30 13.59 95.16 — 516.70NOTES: * Refer Note 41 (iii) above. ** Includes Administrative Offices i.e. MD Office and Corporate Office of the Company.01 The Business operations are concentrated in India only. 02 External revenue is exclusive of Excise duty realised. 03 Intersegment revenues between operating segments are accounted for at market price.@ Includes revaluation of Fixed Assets also.# This excludes ` 326.27 Lacs being unreconciled debit balance of Steel Unit included in Loan and Advances i.e. Schedule 6.

(IV) Segmentwise Information(Primary Segments) for the previous year : (` in Lacs)


REVENUE:Total External Sales/Services 10724.32 612.92 757.40 1973.99 7435.13 — 21503.76

Inter-Segment Sales 425.71 3.37 — 7.40 0.24 0.52 437.24Total Sales 11150.03 616.29 757.40 1981.39 7435.37 0.52 21941.00

Less :Inter Segment Sales 425.71 3.37 — 7.40 0.24 0.52 437.24Total Sales 10724.32 612.92 757.40 1973.99 7435.13 — 21503.76

21503.76

RESULTS:Segment Result 996.22 89.55 (199.08) 73.31 1453.19 0.07 2413.26Add: (i) Profit of Steel Unit # 26.86 (ii) Interest Income 65.76 (iii) Exceptional Items 964.46

3470.34Less: Interest Expenses 789.41Unallocable Expenses ( Net)** 586.18Profit Before Tax 2094.75

Less: Provision for Tax 0.06

Fringe benefit Tax 0.53

Profit after Tax 2094.16


# Including inter-unit rental income of ` . 43.08 Lacs.

As per our report of even date attachedfor P.R. Mehra & Co.Chartered AccountantsRegn. No. 000051N Rakesh Kumar Modi






` Lacs ` Lacs

(A)CASH FLOW FROM OPERATING ACTIVITIES :

Profit before Tax 484.96 2094.75Add: Adjustments for:

i) Depreciation 564.46 528.24

ii) Assets/Investment written off/ 9.77 7.36Loss on Sale of Fixed Assets/stores

iii) Interest Expenses 1191.06 788.90

iv ) Provision for Doubtful Debts & Advances 8.16 10.10

v ) Amounts/ Claims/Bad Debts written off 5.02 3.42(Net of provisions)

1778.47 1338.02

2263.43 3432.77

Less: Adjustments for :i) Interest Income 130.02 122.02

ii) Profit on sale of Fixed Assets 12.76 4.81

iii) Excess Provision written back 68.54 263.60

iv ) Excess Provision for Interest written back — 735.18

v ) Amount Written Back — 472.65

v i ) Interest income on Income Tax refund 816.11 —vii) Profit on sale of stores 3.81 1.21viii) Dividend Income 31.50 21.00

1062.74 1620.47Operating Profit before Working 1200.69 1812.30Capital Changes

Adjustments for :

Trade Receivables (2235.29) (434.01)

Inventories 5740.54 (4726.29)

Trade Payable (2440.18) 4315.39

Loans & Advances (148.70) (601.03)

Cash Generated from Operations 2117.06 366.36

Interest Paid (Note 1) (1051.93) (597.54)

Income Tax Paid 0.14 —

Fringe Benefit Tax — (12.65)

Net Cash from Operating Activities (A) 1064.99 (243.83)

(B) CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (885.30) (445.23)

Sale of Fixed Assets 45.68 14.57

Decrease in Term Deposits — 200.00

Interest Received 124.41 138.42

Dividend Received 31.50 21.00

Net Cash Flow from Investing Activities (B) (683.71) (71.24)


` Lacs ` Lacs

(C) CASH FLOW FROM FINANCING ACTIVITIES :

Unsecured Loan from Others(Net) (Note 1b below) 706.72 940.78

Unsecured Fixed Deposits paid (27.10) (4.64)

Dividend Paid (Including Divedend distribution Tax) (9.65) —

Debentures redeemed (0.04) (200.00)

Cash Credits/ Term Loan 64.04 (444.55)

Net Cash from Financing Activities (C) 733.97 291.59

* Inter Unit Balances (Net) (D) (Note 2 below) (634.88) 172.90

Net increase/(decrease) in cash and

Cash Equivalents (A+B+C+D) 480.37 149.42

Opening Cash and Cash Equivalents 1502.19 1352.77

Closing Cash and Cash Equivalents 1982.56 1502.19

Notes:

1 . (a) Interest credited to accounts of Suppliers, C& F Agents

and dealers etc. is treated as paid.

(b) Interest paid & increase in Unsecured Loans includes

` 633.60 Lacs (Previous Year ` 451.76 Lacs) each being

Interest accrued & due on 31.03.2010 converted into Loan.

2 . In view of non availability of audited balance sheet as on

31.03.2010 and 31.03.2011 of Steel unit of the Company,

cash flow from investing/ financing activities and changes in

current assets and liabilities of Steel Unit are not included in

the Cash Flow Statement except for inclusion of net outflow

of ` 634.88 Lacs on account of net increase in inter unit

balances appearing in Schedule 6 i.e. Current Assets, Loans

& Advances (Refer Note 4 of Schedule 14)

3 . Figures in brackets represents outflows.

4 . Cash and cash equivalents excludes Fixed Deposits pledged

as Security/lying in No Lien Account/Molasses Storage Fund.

5 . Previous year figures are unaudited and have been

re-arranged/re-grouped wherever considered necessary.

` Lacs

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011

As per our report of even date attachedfor P.R. Mehra & Co.Chartered AccountantsRegn. No. 000051N Rakesh Kumar Modi





FORM OF PROXYMODI INDUSTRIES LIMITED

REGD. OFFICE: MODINAGAR 201204 (U.P.)

I/We .......................................................................... of ..............................................................................

in the district of ........................................................................................................... being a Member(s)

of MODI INDUSTRIES LIMITED hereby appoint ......................................................................................

of .............................................................................. in the district of ........................................................

or failing him ...............................................................................................................................................

of .............................................................................. in the district of ........................................................

as my/our proxy to attend and vote for me/us and on my/our behalf at the 77th Annual General Meeting

of the Company to be held on Thursday, the 29th September, 2011 at 12.30 P. M. and at any adjournment

thereof.

Signed at ........................................................ this ................ day of September, 2011

Signature ...................................................................................

Ledger Folio No. .......................................................................

Number of Equity Shares held .................................................

NOTE :-(i) The Proxy need not be a member.(ii) The Proxy duly signed across ` 1.00 revenue stamp should reach at the Registered Office of the

Company not less than 48 hours before the time fixed for the meeting.

....................................................................... TEAR HERE ......................................................................

MODI INDUSTRIES LIMITEDRegd. Office; Modinagar-201204 (U.P.)

ATTENDANCE SLIP

I hereby record my presence at the 77th Annual General Meeting held at Modi Industries Transit House(Modi Industries Complex), Modinagar 201204, Distt. Ghaziabad (U.P.) on Thursday, the 29thSeptember, 2011 at 12.30 P.M.

1. Full Name of the Shareholder ................................................................................. (in Block Letters)

2. L.F. No. ...................................................................................................................................................

3. No. of Equity Shares held .....................................................................................................................

4. Signatures of the Shareholder or proxy attending ...............................................................................

To be used only when First named shareholder is not attending.

Please give full name of the 1st Joint Holder

Mr./Mrs./Miss. ..............................................................................................................................................

Note: Please fill-in this attendance slip and hand it over at the ENTRANCE OF THE TRANSIT HOUSE.

Affix a1.00 RupeeRevenue

Stamp

M O D IE N T E R P R I S E S

BOOK POST

ANNUAL REPORT 2010-11

To,

If undelivered please return to :MODI INDUSTRIES LIMITEDREGISTERED OFFICEMODINAGAR - 201204 (U.P.)

modi annual report part-1 -2009...56, darya ganj, new delhi. stock exchanges up stock exchange...

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