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A Oneindia Venture

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Notes to Accounts of Avadh Sugar & Energy Ltd.

Mar 31, 2025

A. Measurement of fair values

little biological transformation has taken place since the initial cost was incurred (for example seedlings planted immediately before the balance sheet date), such biological assets are measured at cost i.e. the total expenses incurred on such plantation upto the balance sheet date (Level 3).

B. Risk management strategy related to agricultural activities

The Company is exposed to a number of risks related to its sugarcane plantations.

i. Regulatory and environmental risks

The Company has established environmental policies and procedures, aimed for compliance, with local environmental and other laws.

ii. Supply and demand risk

The Company is exposed to risks arising from fluctuations in the sale price and quantity of sugarcane produced. When possible the Company manages this risk by aligning its harvest volume to market supply and demand.

iii. Climate and other risks

The Company''s sugar cane plantations are exposed to the risk of damage from climatic changes, diseases, forest fires and other natural forces. The Company has extensive processes in place aimed at monitoring and mitigating those risks.

(a) No debt is due from directors or other officers of the Company or any of them either severally or jointly with any other person or no debt due from firms including limited liability partnerships (LLPs) or private limited companies respectively in which any director is a partner, a director or a member.

(b) Information about the Company''s exposure to credit risks and loss allowances related to trade receivables are disclosed in Note 43(C).

(b) Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares with par value of H10 per share. Accordingly, all equity shares rank equally with regard to dividends and share in the Company''s residual assets on winding up. The equity shareholders are entitled to receive dividend as declared by the Company from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company.

(ii) Nature of security

(a) Term loan / Rupee term loans of H38,518.72 lakhs (31 March 2024: H37.241.58 lakhs) are secured by first mortgage / charge created / to be created on all the property, plant and equipment of the Company, both present and future, ranking pari-passu amongst the various lenders.

(b) Term loan of H1,186.36 lakhs (31 March 2024: H3,548.70 lakhs) under the scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity (SEFASM 2018 -Central) is entitled for interest subvention from the Government of India upto 6% p.a. or 50% of rate of interest charged by banks as per terms of the scheme. [Note 42]

(c) Cash credit borrowing including Working capital demand loan (WCDL) from banks are secured by hypothecation of all current assets of the Company ranking pari-passu amongst the various lenders and also by 3^rd charge on all the property, plant and equipment of the Company, both present and future.

(a) Certain Inventories in the stock statements / returns submitted to lenders are computed on different methodology as specified in the sanction letter, while the inventories recorded in the books of accounts is valued according to the established accounting policy.

(b) Certain inventories are not reported in stock statements/ returns as per the terms and conditions specified in the sanction letter.

20. Lease As Lessee

The Company has lease contracts for various items of land, buildings (including godowns), vehicles and other equipment used it its operations. The Company''s obligation under its lease are secured by lessor''s title to the leased assets.

The Company also has certain leases of godowns and vehicles with lease term of twelve months or less and leases of office equipment with low value. The Company applies the ''short-term lease'' and ''lease of low-value assets'' recognition exemptions for these leases.

Defined benefits - Gratuity Plan

The Company has a defined benefit gratuity plan. Every employee who has completed continuously at least five years or more of service is entitled to Gratuity on terms as per the provisions of The Payment of Gratuity Act, 1972. The approved gratuity fund of erstwhile companies in respect of transferred business undertakings has been transferred to the Company and which has taken an insurance policy with Life Insurance Corporation of India (LIC) to cover the gratuity liabilities.

These defined benefit plans expose the Company to actuarial risks, such as interest risk and market (investment) risk. The Company expects to contribute H370.63 lakhs to Gratuity Fund in the next year.

Inherent risk

The plan is defined benefit in nature which is sponsored by the Company and hence it underwrites all the risk pertaining to the plan. In particular, this exposes the Company, to actuarial risk such as adverse salary growth, change in demographic experience, inadequate return on underlying plan assets. This may result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature, the plan is not subject to longevity risk.

The following tables analyse present value of defined benefit obligations, fair value of defined plan assets, actuarial gain / (loss) on plan assets, expense recognised in the Statement of Profit and Loss and Other Comprehensive Income, actuarial assumptions and other information:

a) The Company presented disaggregated revenue based on the type of goods sold to customers and type of customers. Further, the Company''s sales are made within India including export through third party and revenue is recognised for goods transferred at a point in time. The Company''s performance obligations are satisfied on delivery of goods to the customer. Delivery of goods completes when the goods have been dispatched or delivered to the specific location, of the customer, as the case may be.

The Company does not have any contracts where the period between the transfer of the promised goods to the customer and payments by the customer exceeds one year and hence, there are no significant financing component included in such contracts.

The Company believes that the above disaggregation depicts the nature, amount, timing and uncertainty of revenues and cash flows effected by industry, market and other economic factors.

b) For Contract balances i.e. trade receivables [Note 10] and advance from customers [Note 23].

c) The amount of H429.52 lakhs included in contract liabilities [Note 23] at 31 March 2024 has been recognised as revenue during the year ended 31 March 2025 (31 March 2024: H472.61 lakhs).

d) The amount of revenue from contracts with customers recognised in the statement of profit and loss is the contracted price.

36. Capital and Other Commitments

Estimated amount of contracts remaining to be executed and not provided for (net of advances) H4,717.91 lakhs (31 March 2024: H4,912.67 lakhs) including H3,633.64 lakhs (31 March 2024: H4,276.23 lakhs) related to Property, Plant and Equipment.

37. Contingent Liabilities (to the extent not provided for) Claims against the Company not acknowledged as debt (h n lakhs)
	As at 31 March 2025	As at 31 March 2024
(i) Excise duty and service tax	171.88	171.88
(ii) Sugarcane Society Commission pertaining to Sugar Season 2012-13, 2014-15 and partly for 2015-16	3,962.76	3,962.76
(iii) Sales tax	192.20	192.20
(iv) Duty under state acts	448.87	448.87
(v) Others	54.53	37.84
Total *	4,830.24	4,813.55

* Notes:

(1) Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgments / decisions pending with various forums / authorities.

(2) The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

(3) In case of Excise duty and service tax, amount does not include H53.33 lakhs (31 March 2024: H171.57 lakhs) and H122.62 lakhs (31 March 2024: H120.23 lakhs) in respect of Show Cause Notices and Remanded Cases to original adjudicating authority respectively pertaining to earlier years.

38. Regulatory fee @ H20 per quintals of molasses sales / inter-unit transfers imposed by the State Government of Uttar Pradesh w.e.f. 24 December 2021 has been accounted for. The matter is sub-judice.

40. Operating Segments

A. Basis for segmentation

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. ALL operating segments and its operating results are reviewed regularly by the Company''s Whole-Time Director (WTD) as the Company''s Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segments and assess their performance.

B. Information about reportable segments

Information related to each reportable segment is set-out below. The Company''s WTD reviews the results of each segment on a quarterly basis. The Company''s WTD uses Earning Before Interest and Tax (EBITA) to assess the performance of the operating segments. Segment is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within same industries. Inter-segment pricing is determined on an arm''s length basis.

The Company has common property, plant and equipment for producing goods for Indian and Overseas markets. Hence, no separate figures for property, plant and equipment / additions to property, plant and equipment / depreciation and amortisation on property, plant and equipment have been furnished.

* including through third parties.

D. Major customer

During the year, no customer contributed more than 10% of total revenue of the Company (31 March 2024: One Customer contributed 10.43%).

C. Details of loans, investments and guarantee covered under Section 186(4) of the Companies Act, 2013

(i) The Company has neither given any loan nor has advanced any amount either during the year ended 31 March 2025 or year ended 31 March 2024.

(ii) Particulars of investments as required under Section 186(4) of the Companies Act, 2013 have been disclosed in Note 7.

D. Terms and conditions of transactions with related parties

(i) The transactions with related parties have been entered at an amount which are not materially different from those on normal commercial terms.

(ii) The amounts outstanding are unsecured and will be settled in cash and cash equivalent. Neither guarantees have been given nor received.

(iii) For the year ended 31 March 2025, the Company has not recorded any impairment of receivables relating to amounts owed by the related parties. This assessment is undertaken in each financial year through examining the financial position of the related parties and the market in which the related party operates.

(iv) The remuneration of directors is determined by the Nomination & Remuneration Committee having regard to the performance of individuals and market trends.

42. Government Grants

The Company is eligible to receive various government grants by way of remission of society commission and interest subvention / grant on certain term loans. Accordingly, the Company has recognised these government grants in the following manner:

(a) As per U.P Sugarcane (Regulation on Supply and Purchase) Act, 1953 and its Rules 1954, society commission is payable on sugarcane purchased at the rate of three percent of Fair and Remunerative Price (F.R.P) fixed by the Government of India. However, the same was reduced by the Government of Uttar Pradesh for the sugar season 2022-23, 2023-24 and 2024-25 by H3.65, H3.95 and H 4.70 per quintal of sugarcane purchased respectively. The above reduction in society commission applicable on sugarcane purchased during the periods has been netted with the Cost of Raw Material Consumed.

On 25 February 2025, the Government of Bihar notified a reduction in the rate of cane commission to Zonal Development Council from 1.80% to 0.20% of cane price for the sugar season 2022-23 and 2023-24. Based on this notification, the reduction in cane commission liabilities provided is reversed and accounted for as "Cane Commission Remission" during the year.

(b) The Company has obtained certain term loans from banks under financial assistance schemes SEFASU 2018 by the State Government of Uttar Pradesh at below market rate of interest and SEFASM 2018 by the Central Government of India at subvention of interest. The difference between the fair value of the loans based on prevailing market interest rates and interest paid on such loans has been recognised in the Statement of Profit and Loss by netting with the related finance cost. Accordingly, in case of SEFASU 2018, deferred income on government grant recognised initially is being derecognised by netting with related finance cost systematically over the tenure of the respective loan under finance assistance scheme. The loan is subsequently measured as per accounting policy applicable to financial liabilities.

There has been no transfer between level 1 and level 2 during the period.

The management assessed that fair values of trade receivables, cash and cash equivalent, other bank balances, trade payable, loans and other financial assets and liabilities approximate their carrying amounts.

B. Measurement of fair values

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in forced or liquidation sale.

Valuation technique

Level 1 - Investment in equity instruments (Quoted)

The fair value of the quoted investments are based on market price at the respective reporting date.

Investments in quoted equity instruments, which are classified as FVOCI are based on market price at the respective reporting date.

Level 2 - Borrowings

Discounted cash flows: The valuation model considers the present value of expected payments, discounted using a risk-adjusted discount rate. The own non-performance risk was assessed to be insignificant.

C. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

(i) Credit risk

(ii) Liquidity risk

(iii) Market risk

Risk management framework

The Company''s principal financial liabilities includes borrowings, trade payable and other financial liabilities. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include trade receivables, cash and cash equivalents, other bank balances, investments, loans and other financial assets that derive directly from its operations.

The Company''s Board of Directors has overall responsibility for the establishment and oversight of the Company''s risk management framework.

The Company''s Risk Management Committee monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

The Company''s primary risk management focus is to minimise potential adverse effects of market risk on its financial performance. The Company''s risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities.

(i) Credit risk

Credit risk is the risk of financial loss of the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company receivables from customers and loans. The Company has no significant concentration of credit risk with any counterparty. The carrying amount of financial assets represent the maximum credit risk exposure. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

Trade receivables, Loans, Claims and Subsidies / Refunds and Other receivables

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry also has an influence on credit risk assessment. Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to the customer credit risk management. The Company uses financial information and past experience to evaluate credit quality of majority of its customers. Outstanding receivables and the credit worthiness of its counter parties are periodically monitored and taken up on case to case basis. There is no material expected credit loss based on the past experience. However, the Company assesses the impairment of trade receivables on case to case basis and has accordingly created loss allowance on trade receivables.

Exposure to credit risks

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry. The Company evaluates the concentration of risk with respect to trade receivables as low, as the Company sugar sales are mostly on cash. Power and Ethanol are sold to Government entities, thereby the credit default risk is significantly mitigated.

Trade receivables are primarily unsecured and are derived from revenue earned from customers. Credit risk is managed through credit approvals, establishing credit limits and by continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. As per simplified approach, the Company makes provision of expected credit loss on trade receivables using a provision matrix to mitigate the risk of default payments and makes appropriate provisions at each reporting date whenever is for longer period and involves higher risk. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain.

The Company''s management also pursue all legal option for recovery of dues, wherever necessary based on its internal assessment.

(ii) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. Processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through rolling forecasts on the basis of expected cash flows.

As disclosed in Note 19, the Company has secured bank loans that contains covenant. Any future breach of covenant may require the Company to repay the loan earlier than indicated in the table mentioned in risk management framework above. The covenant is monitored on a regular basis by the treasury department and regularly reported to management to ensure compliance with the agreement.

The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.

(iii) Market risk

Market risk is the risk of loss of future earnings, fair value or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, regulatory changes, equity prices and other market changes that effect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.

Foreign currency risks

All transactions of the Company are in Indian currency, consequently Company is not exposed to foreign currency risk. The Company has no outstanding foreign currency exposure or related derivative contract.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company exposure to the risk of changes in market interest rates relates primarily to the Company''s long term and short term borrowing with floating interest rates. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk.

Currently the Company''s borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.

Cash flow sensitivity analysis

Fixed rate instruments that are carried at amortised cost are not subject to interest rate risk for the purpose of sensitive analysis.

Equity risk

The Company''s quoted equity instruments are susceptible to market price risk arising from uncertainties about future values of the investment securities. The reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The senior management reviews and approves all equity investment decisions.

Sensitivity analysis

of equity instruments on the Company''s equity and profit for the year. The analysis is based on the assumption that the quoted price of equity instruments had increased / decreased by 10% with all other variables held constant:

Sugar industry, being cyclical in nature, is regulated by both Central Government as well as State Government policies. The Company is exposed to the risk of price fluctuations of its raw material (Sugarcane) as well as its finished goods (Sugar). To counter the raw material risk, the Company worked with development of various cane varieties with the objective to moderate the raw material cost and increase product functionality. The risk towards finished goods (Sugar) has been moderated through the various schemes of the Central Government including but not limited to introduction of Minimum Support Price (MSP), creation of buffer stock and export of excess inventory. The Company has further mitigated this risk by well integrated business model by diversifying into co-generation and distillation, thereby utilising its by-products.

44. Capital management

The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The management monitors the return on capital, as well as the level of dividends to equity shareholders.

The Company''s objective when managing capital are to:

(a) to maximise shareholders value and provide benefits to other stakeholders, and

(b) maintain an optimal capital structure to reduce the cost of capital.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. The Company has complied with these covenants and there have been no breaches in the financial covenants of any interest-bearing loans and borrowings.

For the purpose of the Company''s capital management, capital includes issued equity share capital and other equity reserves attributable to the equity holders.

The Company monitors capital using debt-equity ratio, which is disclosed in Note 46.

45 . The company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the software except that the audit trail feature is not enabled at the database level. The Company did not come across any instance of audit trail feature being tampered with in respect of this software.

Additionally, the audit trail of relevant prior year has been preserved by the Company as per the statutory requirements for record retention, to the extent it was enabled and recorded in the respective year.

With respect to Cane Purchase Software and Payroll Software, the audit trail feature is not mentioned in Service Organisation Controls Report (SOC Report) of Software Service Provider.

47 . The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

48. Recent accounting pronouncement

There are no standards that are notified and yet to be effective as on the date.

Mar 31, 2024

3.9 Provisions (other than for employee benefits)

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Expected future operating losses are not provided for.

3.10 Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from a past event, with the resolution of the contingency dependent on uncertain future events, or a present obligation where no outflow is possible. Major contingent liabilities are disclosed in the financial statements unless the possibility of an outflow of economic resources is remote. Contingent assets are not recognised in the financial statements but disclosed, where an inflow of economic benefit is probable.

3.11 Revenue from contract with customer

Sale of goods (excluding power)

Revenue from sale of product is recognised at the point in time when control of the goods is transferred to the customer.

At contract inception, the Company assess the goods promised in a contract with a customer and identify as a performance obligation each promise to transfer to the customer. Revenue from contracts with customers is recognized when control of goods are transferred to customers and the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold i.e. the Company''s performance obligation are satisfied on delivery of goods to customer. The timing of the transfer of control varies depending on individual terms of the sales agreements.

Revenue is measured at transaction price, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the Government, if applicable.

Sale of Power

The Company''s derives its power revenue from the production and sale of electricity based on long-term Power Purchase Agreements. Revenue is recognised upon delivery of electricity produced to the electricity grid based on the agreed tariff rate (net of discounts for prompt payment of bills). Delivery is deemed complete when all the risks and rewards associated with ownership have been transferred to the grid as contractually agreed, compensation has been contractually established and collection of the resulting receivable is probable.

3.12 Income from Renewable Energy Certificates (RECs)

Income from Renewable Energy Certificates (RECs) is recognised at estimated realisable value on confirmation of RECs by the concerned Authorities.

3.13 Recognition of Dividend Income, Interest Income or expense, Insurance Claim

Dividend Income

Dividend income is recognised in profit or loss on the date when the Company''s right to receive payment is established.

Interest income

Interest income or expense is recognised using the effective interest method.

The ''effective interest rate'' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

Â» - the gross carrying amount of the financial asset; or Â» - the amortised cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Interest is recognised on time proportion basis.

Interest income is included in "Other Income" in the Statement of Profit and Loss.

Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

3.14 Expenses

All expenses are accounted for on accrual basis.

3.15 Government grants

Grants from Government are recognised at their fair value where there is reasonable assurance that the grant will be received and the Company will comply with the conditions attached thereto.

Government grants related to revenue are recognised in the Statement of Profit and Loss on a systematic and rational basis in the periods in which the Company recognises the related costs for which the grants are intended to compensate and are netted off with the related expenditure. If not related to a specific expenditure, it is taken as income and presented under ''Other Operating Revenue''.

Government grants received relating to property, plant and equipment and other intangible assets are deducted from the gross value of the property, plant and equipment and other intangible assets concerned in arriving at the carrying amount of the related property, plant and equipment and other intangible assets. The grant is recognised in the statement of profit or loss over the life of the related depreciable asset as a reduced depreciation expense.

The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and is being recognised in the Statement of Profit and Loss by netting with the related finance cost. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.

3.16 Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

As a lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

(i) Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

The right-of-use assets are also subject to impairment (refer to Note 3.3).

The right-of-use assets are disclosed in Property, Plant and Equipment (see Note 4).

(ii) Lease Liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

Short-term lease and lease of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of twelve months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of offices, godowns, equipment, etc. that are of low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

3.17 Income tax

Income tax expense comprises of current tax and deferred tax. Current tax and deferred tax is recognised in the Statement of profit and Loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the end of the reporting period.

Current tax assets and current tax liabilities are off set only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not recognised for temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised.

Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised / reduced to the extent that it is probable / no longer probable respectively that the related tax benefit will be realised.

Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to off set current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

Minimum Alternative Tax (MAT) Credit

In case of tax payable as Minimum Alternative Tax (''MAT'') under the provisions of the Income-tax Act, 1961, the credit available under the Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognised as a deferred tax asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.

3.18 Segment reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segments and assess their performance. Refer Note 40 for segment information presented.

Operating segments are reported in manner consistent with the internal reporting provided to the chief operating decision maker.

The Company''s Whole-Time Director (WTD) has been identified as being the chief operating decision maker by the management of the Company.

3.19 Borrowing costs

Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

3.20 Cash and cash equivalents

Cash and cash equivalents include cash in hand and at bank, short-term deposits with an original maturity of three months or less and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

3.21 Cash flow statement

Cash flows are reported using the indirect method, whereby profit or loss for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

3.22 Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

3.23 Determination of fair values

Fair values have been determined for measurement and disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

i) Financial assets

Financial assets are initially measured at fair value. If the financial asset is not subsequently accounted for at fair value through profit or loss, then the initial measurement includes directly attributable transaction costs. These are measured at amortised cost or at FVTPL or at FVOCI.

Investments in equity instruments are measured at FVOCI and combination of different methodologies i.e. discounted cash flow method, comparable companies method and net assets method with different weightage has been used for fair valuations of investment in unquoted securities.

ii) Trade and other receivables

The fair values of trade and other receivables are estimated at the present value of future cash flows, discounted at the market rate of interest at the measurement date. Short-term receivables with no stated interest rate are measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and, for disclosure purposes, at each annual reporting date.

iii) Financial liabilities

Financial liabilities are measured at fair value, at initial recognition and for disclosure purposes, at each annual reporting date. Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the measurement date.

A. Measurement of fair values

The fair value of the sugarcane and other agriculture products at harvest is determined by the quantities harvested, it is valued at the rate fixed by the Uttar Pradesh Government (Level 1). The fair value of the harvested sugarcane is the cost of the raw material used in the production of sugar including captive consumption. For biological assets, where little biological transformation has taken place since the initial cost was incurred (for example seedlings planted immediately before the balance sheet date), such biological assets are measured at cost i.e. the total expenses incurred on such plantation upto the balance sheet date (Level 3).

B. Risk management strategy related to agricultural activities

The Company is exposed to a number of risks related to its sugarcane plantations.

i. Regulatory and environmental risks

The Company has established environmental policies and procedures, aimed for compliance, with local environmental and other laws.

ii. Supply and demand risk

iii. Climate and other risks

(ii) Nature of security

(a) Term loan / Rupee term loans of H37,241.58 lakhs (31 March 2023: H43.687.19 lakhs) are secured by first mortgage / charge created on all the property, plant and equipment of the Company, both present and future, ranking pari-passu amongst the various lenders.

(b) Term loan of H3,548.70 lakhs (31 March 2023: H5,897.20 lakhs) under the scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity (SEFASM 2018 -Central) is entitled for interest subvention from the Government of India upto 6% p.a. or 50% of rate of interest charged by banks as per terms of the scheme.

20.Lease

As Lessee

The carrying amount of right-of-use assets (non-cash investing activity) included in Note 4 and its movements during the year are as under:

40. Operating Segments

A. Basis for segmentation

There has been no transfer between level 1 and level 2 during the period.

B. Measurement of fair values

Valuation technique

Level 1 - Investment in equity instruments (Quoted)

The fair value of the quoted investments are based on market price at the respective reporting date.

Investments in quoted equity instruments, which are classified as FVOCI are based on market price at the respective reporting date.

Level 2 - Borrowings

C. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

(i) Credit risk

(ii) Liquidity risk

(iii) Market risk

Risk management framework

The Company''s Board of Directors has overall responsibility for the establishment and oversight of the Company''s risk management framework.

This note presents information about the Company''s exposure to each of the above risks, the Company''s objectives, policies and processes for measuring and managing risk, and the Company''s management of capital.

Trade receivables, Loans, Claims and Subsidies / Refunds and Other receivables

Exposure to credit risks

The Company''s exposure to credit risk for trade receivables, loans, claims and subsidies / refunds and other receivables and by type of counterparty and loss allowances are as follows.

The Company''s management also pursue all legal option for recovery of dues, wherever necessary based on its internal assessment.

(ii) Liquidity risk

The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.

Exposure to liquidity risks

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments:

Foreign currency risks

Interest rate risk

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk.

Sensitivity analysis

Investment in equity instruments of the Company are listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) in India. The table below summaries the impact of increase / decrease of the quoted price of equity instruments on the Company''s equity and profit for the year. The analysis is based on the assumption

Regulatory and Commodity price risk

44. Capital management

The Company''s objective when managing capital are to:

(a) to maximise shareholders value and provide benefits to other stakeholders, and

(b) maintain an optimal capital structure to reduce the cost of capital.

For the purpose of the Company''s capital management, capital includes issued equity share capital and other equity reserves attributable to the equity holders.

The Company monitors capital using debt-equity ratio, which is disclosed in Note 46.

45 . The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled for direct changes to data when using administrator access rights in SAP application and also not enabled at the database level for the Sugarcane Purchase Software. Further no instance of audit trail feature being tampered with was noted in respect of software.

(d) Change in Return on Investment is 948.56% as compared to the preceding year due to higher fair value gain on investment in equity shares.

48. Recent accounting pronouncement

There are no standards that are notified and yet to be effective as on the date.

The accompanying notes form an integral part of the financial statements

As per our report of even date For and on behalf of the Board of Directors of

For S. R. Batliboi & Co. LLP Devendra Kumar Sharma Chandra Shekhar Nopany

Chartered Accountants Whole-time Director Co-Chairperson

ICAI Firm''s Registration No.: 301003E/E300005 DIN: 06498196 DIN: 00014587

Sanjay Kumar Agarwal Vijaya Agarwala Dilip Patodia

Partner Company Secretary Chief Financial Officer

Membership No.: 060352 ACS - 38658

Place: Kolkata

Date: 13 May 2024

Mar 31, 2023

3.9 Provisions (other than for employee benefits)

3.10 Contingent liabilities and contingent assets

3.11 Revenue from contract with customer Sale of goods (excluding power)

Revenue from sale of product is recognised at the point in time when control of the goods is transferred to the customer.

Revenue is measured at transaction price, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the Government, if applicable.

Sale of Power

3.12 Income from Renewable Energy Certificates (RECs)

I ncome from Renewable Energy Certificates (RECs) is recognised at estimated realisable value on confirmation of RECs by the concerned Authorities.

3.13 Recognition of Dividend Income, Interest Income or expense, Insurance Claim Dividend Income

Dividend income is recognised in profit or loss on the date when the Company''s right to receive payment is established. Interest income

Interest income or expense is recognised using the effective interest method.

The ''effective interest rate'' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

- the gross carrying amount of the financial asset; or

- the amortised cost of the financial liability.

Interest is recognised on time proportion basis.

Interest income is included in "Other Income" in the Statement of Profit and Loss.

Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

3.14 Expenses

All expenses are accounted for on accrual basis.

3.15 Government grants

Grants from Government are recognised at their fair value where there is reasonable assurance that the grant will be received and the Company will comply with the conditions attached thereto.

3.16 Leases

As a lessee

(i) Right-of-use assets

The right-of-use assets are also subject to impairment (refer to Note 3.3).

The right-of-use assets are disclosed in Property, Plant and Equipment (see Note 4).

(ii) Lease Liabilities

Short-term lease and lease of low-value assets

3.17 Income tax

I ncome tax expense comprises of current tax and deferred tax. Current tax and deferred tax is recognised in the Statement of profit and Loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax

Deferred tax

Minimum Alternative Tax (MAT) Credit

3.18 Segment reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segments and assess their performance. Refer Note 40 for segment information presented.

Operating segments are reported in manner consistent with the internal reporting provided to the chief operating decision maker.

The Company''s Whole-Time Director (WTD) has been identified as being the chief operating decision maker by the management of the Company.

3.19 Borrowing costs

their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

3.20 Cash and cash equivalents

3.21 Cash flow statement

3.22 Earnings per share

3.23 Determination of fair values

i) Financial assets

I nvestments in equity instruments are measured at FVOCI and combination of different methodologies i.e. discounted cash flow method, comparable companies method and net assets method with different weightage has been used for fair valuations of investment in unquoted securities.

ii) Trade and other receivables

iii) Financial liabilities

3.24 Recent accounting pronouncement

Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31st March, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from 1st April, 2023, as below. Other amendments included in the notification does not have any significant impact on the financial statements.

-Ind AS 1 Presentation of Financial Statements

The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.

-Ind AS 12 Income Taxes

The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company does not expect this amendment to have any significant impact in its financial statements.

-Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors

The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty.

The Company does not expect this amendment to have any significant impact in its financial statements.

43. Financial instruments - fair values and risk management (Contd.)

B. Measurement of fair values

Valuation technique

Level 1 - Investment In equity Instruments (Quoted)

The fair value of the quoted investments are based on market price at the respective reporting date.

Investments in quoted equity instruments, which are classified as FVOCI are based on market price at the respective reporting date.

Level 2 - Borrowings

C. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

(i) Credit risk

(ii) Liquidity risk

(iii) Market risk

Risk management framework

The Company''s Board of Directors has overall responsibility for the establishment and oversight of the Company''s risk management framework.

43. Financial instruments - fair values and risk management (Contd.)

(i) Credit risk

Trade receivables, Loans and Other receivables

Exposure to credit risks

43. Financial instruments - fair values and risk management

(iii) Market risk

Foreign currency risks

Interest rate risk

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk.

Currently the Company''s borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.

46. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

As per our report of even date attached. For and on behalf of the Board of Directors

For S. R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm''s Registration No.: 301003E/E300005

Devendra Kumar Sharma Chandra Shekhar Nopany

Whole-time Director Co-Chairperson

DIN: 06498196 DIN: 00014587

Sanjay Kumar Agarwal

Partner

Membership No.: 060352

Devinder Kumar Jain Dilip Patodia

Place: Kolkata

^ , ,, Company Secretary Chief Financial Officer

Date: 8th May, 2023

Mar 31, 2018

1. Reporting entity

Avadh Sugar & Energy Limited is a public company domiciled and headquartered in India, having its registered office situated at Hargaon, District Sitapur in the state of Uttar Pradesh. The Company was originally incorporated on 19 March 2015 under the provisions of Indian Companies Act, 2013, as a joint venture of The Oudh Sugar Mills Limited (OSML) and Upper Ganges Sugar and Industries Limited (UGSIL). Consequent to a composite scheme of arrangement approved by the National Company Law Tribunal (NCLT) on 2 March 2017, and its filing with the Registrar of Companies, Kanpur on 23 March 2017, the residual OSML comprising of the business undertakings located at Hargaon District Sitapur, Dhadha Bujurg (Hata) District Kushinagar and Rosa District Shahjahanpur in the state of Uttar Pradesh and the residual UGSIL comprising of the business undertaking located at Seohara, District Bijnor in the state of Uttar Pradesh of OSML and UGSIL respectively had been transferred and amalgamated with the Company from the appointed date i.e. 1 April 2015. Its shares are listed on National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Calcutta Stock Exchange (CSE) with effect from 28 July 2017.

The Company is primarily engaged in the manufacture and sale of sugar and its By-products (Molasses and Bagasse), Spirits including Ethanol and Power. The Company has operations in India.

2. Basis of preparation

(a) Statement of compliance

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013 (''Act'') and other relevant provisions of the Act.

The financial statements upto and for the year ended 31 March 2017 were prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company had prepared the financial statements to comply in all material respects with the Accounting Standards notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016 on an accrual basis under the historical cost convention after giving the impact of scheme of arrangement as detailed in Note 47(C).

As these are the Company''s first financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101 First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 47(C).

The financial statements are authorised for issue by the Board of Directors of the Company at their meeting held on 14 May 2018.

Details of the Company''s accounting policies are included in Note 3.

(b) Functional and presentation currency

These financial statements are presented in Indian Rupees (Rs.), which is also the Company''s functional currency. All amounts have been rounded off to the nearest lakhs, unless otherwise indicated.

(c) Basis of measurement

The financial statements have been prepared on historical cost convention on the accrual basis, except for the following items:

Fair value is the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using another valuation technique. In determining the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

(d) Use of estimates and judgments

In preparing these financial statements, management has made judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Assumptions and estimation uncertainties Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the financial statements for the every period ended is included in the following notes:

- Note 4 and 6 - Useful life and residual value of property, plant and equipment and other intangible assets;

- Note 7 - Determining the fair values of investments;

- Note 9 - Determining the fair values of biological assets other than bearer plants on the basis of significant unobservable inputs;

- Note 15 - Recognition of deferred tax assets: availability of future taxable profit against which carried forward tax losses can be used;

- Notes 24 and 37 - Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;

- Note 40 - Measurement of defined benefit obligations: key actuarial assumptions;

- Note 45 - Impairment of financial assets: key assumptions used in estimating recoverable cash flows.

(e) Measurement of fair values

A number of the Company''s accounting policies and disclosures require the measurement of fair values, for financial assets and financial liabilities.

The Company has an established control framework with respect to the measurement of fair values. The management has overall responsibility for overseeing all significant fair value measurements and it regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

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

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in Note 2(c).

(a) Title deeds of freehold and leasehold land of Rs. 24,276.25 lakhs (31 March 2017: Rs.24,298.35 lakhs), transferred to the Company pursuant to the Scheme of Arrangement (refer Note 1),are in the name of erstwhile OSML and UGSIL and the Company is in the process of getting the title deeds transferred in its name.

(b) Title deeds of land of Rs.1,078.95 lakhs (31 March 2017: Rs.1,078.95 lakhs) are yet to be executed pending for registration in favour of the Company.

(d) Property, Plant and Equipment given as security for borrowings [Note 21].

* received under the Scheme [Note 47(C)(V)].

** the figures, being less than Rs.500, have been shown above as Rs.Nil.

*** Deposited / pledged with various Government authorities.

B. Equity shares designated at fair value through other comprehensive income (FVOCI)

As at 1 April 2016, the Company designated the investments shown below as equity instruments at FVOCI because these equity instruments represent investments that the Company intends to hold on long-term basis for strategic purposes.

a) The write-down of inventories to net realisable value during the year amounted to Rs.11,659.20 lakhs (31 March 2017: Rs.Nil; 1 April 2016: Rs.Nil). These are recognised as expenses during the respective period and included in changes in inventories of finished goods and work in progress.

b) Inventories of Rs.97,518.60 lakhs (31 March 2017: Rs.1,06,472.07 lakhs; 1 April 2016: Rs.84,319.33 lakhs) are hypothecated / pledged against borrowings [Note 21].

A. Measurement of fair values

B. Risk management strategy related to agricultural activities

The Company is exposed to a number of risks related to its sugarcane plantations.

i. Regulatory and environmental risks

The Company has established environmental policies and procedures, aimed for compliance, with local environmental and other laws.

ii. Supply and demand risk

iii. Climate and other risks

a) No trade or other receivables are due from directors or other officers of the Company either severally or jointly with any other person. Further, no trade or other receivables are due from firms or private companies respectively in which any director is a partner, a director or a member.

(b) Information about the Company''s exposure to credit risks and loss allowances related to trade receivables are disclosed in Note 45(C).

* includes Rs.12,000 lakhs and Rs.5,000 lakhs transferred from OSML and UGSIL respectively by virtue of the Scheme [Note 47(C)(II)].

** issued pursuant to the Scheme [Note 47(C)(II)].

*** after considering cancellation of 50,000 shares of Rs.10 each pursuant to the Scheme [Note 47(C)(I)].

17.00.000 12% Non-convertible Cumulative Redeemable Preference Shares of Rs.100 each issued are classified as financial liability. [Note 21]

4.87.00.000 8.5% Non-convertible Cumulative Redeemable Preference Shares of Rs.10 each issued are classified as financial liability. [Note 21]

(b) Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares with par value of Rs.10 per share. Accordingly, all equity shares rank equally with regard to dividends and share in the Company''s residual assets on winding up. The equity shareholders are entitled to receive dividend as declared by the Company from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company.

On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts, in proportion to the number of equity shares held.

The description, nature and purpose of each reserve within equity are as follows:

(a) Capital Reserve

The difference between the net fair value of assets and liabilities of the sugar business undertakings acquired and shares issued to the shareholders of OSML and UGSIL under the Scheme had been credited to Capital Reserve [Note 47(C)(IV)].

(b) Capital Redemption Reserve

The Company had created Capital Redemption Reserve on Non-convertible cumulative redeemable preference shares in accordance with the Companies Act, 2013.

Molasses Storage & Maintenance Reserve is a fund, which is required under Uttar Pradesh Sheera Niyantran Adhiniyam, 1964 read with Uttar Pradesh Sheera Niyantran Niyamavali, 1974. This fund may be utilised against the cost of construction / maintenance of molasses storage tanks under the requisite permission.

(d) Retained Earnings

It comprise of accumulated profit / (loss) of the Company. The movement is on account of following:

(e) Equity Instruments through other comprehensive income

The Company has elected to recognise changes in the fair value of certain non-current investments in equity securities in other comprehensive income. These changes are accumulated within the equity instruments through OCI shown under the head other equity. The Company transfers amounts therefrom to retained earnings when the relevant equity securities are derecognised.

A. Nature of Securities and Terms of repayment

(i) Term Loans

(a) Term loan from banks carry interest in the range of 10.25% to 14.83% p.a. and is repayable in 32 quarterly instalments by 30th June 2020. This loan is secured by first mortgage / charge created / to be created on all the fixed assets, present and future, of the Company''s Sugar & Co-generation Units at Hargaon, Seohara, Dhadha Bujurg (Hata) and Sugar Unit at Rosa, ranking pari-passu amongst the various lenders.

The above term loan are further secured as follows:

(i) Second charge on current assets of Sugar Unit at Dhadha Bujurg (Hata) ranking pari-passu amongst the various lenders;

(ii) Pledge of 25% of total issued equity shares of the Company held by the promoter group companies, ranking pari-passu amongst the various lenders.

(b) Rupee Term Loans from banks, carry interest in the range of 10.10% to 10.30% p.a. and are repayable in 14/28 quarterly installments starting from December 2018 and ending by March 2026. These Loans are secured by first mortgage / charge created / to be created on entire fixed assets, present and future, of the Company, ranking pari passu amongst the various lenders.

(c) Term loans from banks under Scheme for Extending Financial Assistance to Sugar Undertakings (SEFASU 2014) carry interest rate in the range of 11.05% to 12.00% p.a. and are repayable in monthly/quarterly installments by March 2019. The Company is entitled to Interest subvention from Government of India upto 12% p.a. as per the terms of Scheme and the same will be directly reimbursed to banks by the Department of Food & Public Distribution and hence, no liability towards interest has been provided for in these financial statements. The above loans are secured by first pari-passu charge created / to be created on all the fixed assets, both present and future, of the Company''s Sugar units at Seohara, Hargaon (including Co-generation plant), Dhadha Bujurg (Hata) (including Cogeneration plant) and Rosa, ranking pari-passu amongst the various lenders. The term loan from Punjab National Bank is further secured by 3rd pari-passu charge on all current assets of the sugar unit at Seohara.

Some of the above SEFASU loans are also secured by first pari-passu charge on all the fixed assets, both present and future, of Sugar units at Sidhwalia, Hasanpur and / or Narkatiaganj, and the term loan from Punjab National Bank is further secured by 3rd pari-passu charge on all current assets of the sugar units at Sidhwalia and Hasanpur, which are now part of Magadh Sugar and Energy Limited, pursuant to the Scheme. However, the company has requested the banks to modify / amend the security clause, as per the term of the scheme of arrangement.

(d) Term loan from a bank under Financial Assistance Scheme of the Government of India (SOFT Loan 2015), carry interest range of 10% to 11.75% p.a. and repayable in 20 equal quarterly instalments by 1st July, 2022. The Company had availed interest subvention from the Government of India upto 10% p.a. for the first year as per terms of the Scheme. The above loan is secured by first pari-passu charge created / to be created on all the fixed assets, both present and future, of the Company''s Sugar & Co-generation Units at Hargaon, Seohara, Dhadha Bujurg (Hata) and Sugar Unit at Rosa, ranking pari-passu amongst the various lenders.

(e) Medium Term loan (Unsecured) from a bank carry interest @ 9.10% p.a. and is repayable in 3 (three) quarterly instalments from October, 2018 to April, 2019.

(ii) Cash credit including working capital demand loan

(a) Cash credit from banks, other than from District Co-operative Banks, is secured by hypothecation of current assets of Sugar Units of the Company ranking pari passu amongst the various lenders and also by way of 1st / 2nd and 3rd charge created / to be created on the fixed assets of the Company.

Further, cash credit other than from District Co-operative Bank , DCB Bank and Punjab National Bank, is also secured by pledge of 25% of total issued equity shares of the Company held by promoter group companies, ranking pari-passu amongst the various lenders.

(b) Cash credit of Rs.24,043.88 lakhs (31 March 2017: Rs.33,968.26 lakhs, 1 April 2016: Rs.24,040.15 lakhs) from District Co-operative Banks is secured by pledge of the stock of sugar pertaining to Sugar units at Seohara, Hargaon and Rosa.

(c) Cash Credit borrowings including Working Capital Demand Loan (WCDL) carry interest in the range of 8.65% to 11.65% p.a.. However working capital demand loans are repayable within a period range from one month to six months.

(d) Short Term loan (Unsecured) from a bank carry interest @ 9.30% p.a. and is repayable in 3 (three) quarterly instalments from November, 2018 to January, 2019.

(e) Inter-corporate deposits carry interest range of 8% to 10.20% p.a. and are repayable on demand.

(iii) As per Composite Scheme of Arrangement, the Company has already initiated its process to create charge in favour of the respective lenders against borrowings, which were hitherto created by OSML and UGSIL.

B. Non-convertible Cumulative Redeemable Preference Shares

(i) Rights, preferences and restrictions attached to 12% Non-convertible cumulative redeemable preference shares of Rs.100 each

The Non-convertible Cumulative Redeemable Preference Shares (NCCRPS) of Rs.100 each carries dividend @ 12% per annum. NCCRPS were redeemable at par on 24 September 2019 being five years from the date of the original allotment i.e. 25 September 2014 with a right vested to the Board of Directors to redeem it earlier. The same has been redeemed during the year.

(ii) Rights, preferences and restrictions attached to 8.5% non-convertible cumulative redeemable preference shares of Rs.10 each

The Non-convertible Cumulative Redeemable Preference Shares (NCCRPS) of Rs.10 each carries dividend @ 8.50% per annum. NCCRPS shall be redeemable at par on 2 August 2023 being twelve years and one day from the date of the original allotment i.e. 1 August 2011 with a right vested to the Board of Directors to redeem it earlier, subject to consent of the lenders. The Dividend is payable at the time of redemption of the NCCRPS. However, the Board reserves the right to pay dividend earlier subject to the availability of the profit.

3. Earnings per equity share (EPS)

Basic and Diluted earnings per share

The calculations of profit attributable to equity shareholders and weighted average number of equity shares outstanding for purposes of basic and diluted earnings per share calculation are as follows:

4. Capital and Other Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.459.90 lakhs (31 March 2017: Rs.159.57 lakhs, 1 April 2016: Rs.62.42 lakhs).

* Notes:

a. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgments / decisions pending with various forums / authorities.

b. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

(c) A civil suit is pending against the Company''s sugar unit at Dhadha Bujurg (Hata), which is already in operation. The Company has been legally advised that the said civil suit is not tenable as per law.

5. The Central Government, pursuant to notification dated May 9, 2018 issued by Ministry of Consumer Affairs, Food and Public Distribution, has notified a Scheme for financial assistance of Rs.5.50 per quintal of actual sugarcane crushed during sugar season 2017-18 or the proportionate inter-se allocation of 28,000 lakhs quintals of sugarcane to be crushed (for sugar season 2017-18) on the basis of their average sugar production of last two sugar seasons and current season (upto February, 2018), whichever is lower. Such financial assistance is subject to fulfillment of certain eligibility conditions as specified therein. Pending compliance of such conditions, no accounting adjustment in this regard has been made in the books of account.

6. Operating Lease

Certain office premises, godowns, cane purchasing centre etc. are held on operating lease. The lease term is ranging up to 3 years and are renewable for further year either mutually or at the option of the Company. There are no escalation clause in the lease agreement. There are no restrictions imposed in lease agreements. There are no subleases. The leases are cancellable.

7. Assets and Liabilities relating to employee defined benefits Defined benefits - Gratuity Plan

The Company has a defined benefit gratuity plan. Every employee who has completed continuously at least five years or more of service is entitled to Gratuity on terms as per the provisions of The Payment of Gratuity Act, 1972. The approved gratuity fund of erstwhile companies (UGSIL & OSML) in respect of transferred business undertakings has been transferred to the Company and which has taken an insurance policy with Life Insurance Corporation of India (LIC) to cover the gratuity liabilities.

These defined benefit plans expose the Company to actuarial risks, such as currency risk, interest risk and market (investment) risk.

The Company expects to contribute Rs.262.56 lakhs to Gratuity Fund in the next year.

Inherent risk

8. Operating Segments

A. Basis for segmentation

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments and its operating results are reviewed regularly by the Company''s Whole-Time Director (WTD) as the Company''s Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segments and assess their performance.

The Company has three reportable segments as described below, which are the Company''s strategic business:

Reportable segments Operations

Sugar Manufacture and sale of sugar, molasses and bagasse

Distillery Manufacture and sale of industrial spirits (including ethanol), fusel oil

and bio-compost

Co-generation Generation and transmission of power

Others Trading of petroleum products business comprising of less than 10%

revenues.

B. Information about reportable segments

C. Geographical information

The Company at present, operates in India only and therefore the analysis of geographical segments is not applicable to the Company.

D. Major customer

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

(ii) Post employment benefits

The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits, as they are determined on an actuarial basis for the Company as a whole.

C. Details of loans, investments and guarantee covered under Section 186(4) of the Companies Act, 2013

(i) The Company has neither given any loan nor has advanced any amount either during the year ended 31 March 2018 or year ended 31 March 2017.

(ii) Particulars of investments as required under Section 186(4) of the Companies Act, 2013 have been disclosed in Note 7.

D. Terms and conditions of transactions with related parties

(i) The transactions with related parties have been entered at an amount which are not materially different from those on normal commercial terms.

(ii) The amounts outstanding are unsecured and will be settled in cash and cash equivalent. No guarantees have been given or received.

(iii) For the year ended 31 March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by a related parties. This assessment is undertaken in each financial year through examining the financial position of the related parties and the market in which the related party operates.

(iv) The remuneration of directors is determined by the Nomination & Remuneration Committee having regard to the performance of individuals and market trends.

Notes :

(a) As per U.P. Sugarcane (Regulation on Supply and Purchase) Act, 1953 and its Rules 1954, society commission is payable on sugarcane purchased at the rate of three percent of Fair and Remunerative Price (F.R.P.) fixed by the Government of India. However, the same was reduced by the Government of Uttar Pradesh for the sugar season 2015-16, 2016-17 and 2017-18 by Rs.3.90, Rs.2.40 and Rs.2.55 per quintal of sugarcane purchased respectively. In accordance with the accounting policy, the above reduction in society commission applicable on sugarcane purchased during the periods has been netted with the Cost of Material Consumed.

(b) The Government of Uttar Pradesh vide order dated 29 April 2016 has exempted purchase tax @ Rs.2/- per quintal of sugarcane purchased during the sugar season 2012-13. Accordingly, the Company has recognised income in 2016-17 towards sugarcane purchase tax paid in earlier years and the same has been disclosed as "Purchase Tax Remissionâ under the head Other Operating Revenue.

(c) The Government of India vide its Notification No. 1(10)/2015-SP-I dated 18 September 2015 announced Minimum Indicative Export Quota (MIEQ) under tradeable export scrip scheme in order to export surplus sugar inventory out of the country. Further, the Government of India vide its Notification No. 20(43)/2015-SP - 1 dated 2 December 2015 announced a scheme for extending production subsidy @ Rs.4.50 per quintal of actual sugarcane crushed during sugar season 2015-16 or the proportionate sugarcane crushed for the average sugar production of the Company''s each unit in last three sugar seasons, whichever is lower. Under the said scheme Rs.7.41 lakhs being net-off expenses has been disclosed as "Subsidy towards Export Quota (net)â under the head Other Operating Revenue.

(d) The Company has obtained certain term loans from banks under financial assistance schemes (SEFASU 2014 and SOFT 2015) and Sugar Development Fund at below market rate of interest. The difference between the fair value of the loans based on prevailing market interest rates and interest paid on such loans has been recognised in the Statement of Profit and Loss by netting with the related finance cost. The Loan is subsequently measured as per accounting policy applicable to financial liabilities.

The management assessed that trade receivables, cash and cash equivalent, other bank balances, trade payable, cash credits including working capital loan, inter corporate deposits and other financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.

The following methods and assumptions were used to estimate the fair values:

(a) The fair value of the quoted investments are based on market price at the respective reporting date.

(b) The fair value of the unquoted investments is determined using combination of different methodologies i.e. discounted cash flow method, comparable Companies method and net assets method with different weightage. The discount rate used is based on management estimates.

B. Measurement of fair values

The Company has established the following fair value hierarchy that categories the value into 3 levels.

Transfer out of Level 3

The Company holds an investment in equity shares of Magadh Sugar and Energy Limited, (MSEL) which is classified as FVOCI, with a fair value of Rs.1,271.73 lakhs at 31 March 2018 (31 March 2017: Rs.2,094.42 lakhs; 1 April 2016: Rs.1,295.29 lakhs). The fair value of this investment was categorised as Level 3 upto 27 July 2017 since equity shares were listed on 28 July 2017 in National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Calcutta Stock Exchange (CSE) and before such listing there were no recent observable arm''s length transactions in the shares.

B. Measurement of fair values (Contd.)

Since the equity shares of MSEL now have published price quotation in an active market, the fair value measurement has been transferred from Level 3 to Level 1 of the fair value hierarchy at 31 March 2018.

C. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

(i) Credit risk

(ii) Liquidity risk

(iii) Market risk

Risk management framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework.

The Company''s audit committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal auditor undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

(i) Credit risk

Trade receivables

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry also has an influence on credit risk assessment. Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to the customer credit risk management. The Company uses financial information and past experience to evaluate credit quality of majority of its customers. Outstanding receivables and the credit worthiness of its counter parties are periodically monitored and taken up on case to case basis. There is no material expected credit loss based on the past experience. However, the Company assesses the impairment of trade receivable on case to case basis and has accordingly created loss allowance on trade receivables.

Exposure to credit risks

During the period, the Company has made no write-offs of trade receivables. The Company''s management also pursue all legal option for recovery of dues, wherever necessary based on its internal assessment.

(ii) Liquidity risk

The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.

(iii) Market risk

Foreign currency risks

Interest rate risk

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk.

Currently the Company''s borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.

Exposure to interest rate risks

The interest rate profile of the Company''s interest bearing financial instruments at the end of the reporting period are as follows:

Interest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date, have been outstanding for the entire reporting period and all other variables.

Equity risk

Sensitivity analysis

Investment in equity instruments of the Company are listed on the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Calcutta Stock Exchange (CSE) in India. The table below summaries the impact of increase/decrease of the Nifty 50 index on the Company''s equity and profit for the period. The analysis is based on the assumption that the BSE had increased / decreased by 10% with all other variables held constant, and that all the Company''s equity instruments moved in line with the index.

Regulatory risk

Sugar industry is regulated both by Central Government as well as State Government. Central and State Governments policies and regulations affects the Sugar industry and the Company''s operations and profitability. Spirit business is also dependent on the Government policy.

However, with the removal of major regulatory control on sugar sales by the Central Government, the regulatory risk are moderated.

Commodity price risk

The Company is exposed to the risk of price fluctuations of raw material as well as finished goods. Sugar industry being cyclical in nature, realisations get adversely affected during downturn. Higher cane price or higher production than the demand ultimately affect profitability. The Company has mitigated this risk by well integrated business model by diversifying into co-generation and distillation, thereby utilizing the by-products. The Company manage its commodity price risk by maintaining adequate inventory of raw materials and finished goods considering future price movement.

Inventory sensitivity analysis (raw material, work-in-progress and finished goods)

A reasonably possible change of 10% in prices of inventory at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.

9. Capital management

The Company''s objective when managing capital are to:

(a) to maximise shareholders value and provide benefits to other stakeholders, and

(b) maintain an optimal capital structure to reduce the cost of capital.

For the purpose of the Company''s capital management, capital includes issued equity share capital and other equity reserves attributable to the equity holders.

10. Explanation of transition to Ind AS

As stated in Note 2(a), the Company has prepared its first financial statements in accordance with Ind AS. For the year ended 31 March 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2014 read with the Companies (Accounting Standards) Amendment Rules, 2016 notified under Section 133 of the Act and other relevant provisions of the Act (''previous GAAP'').

The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended 31 March 2018 including the comparative information for the year ended 31 March 2017 and the opening Ind AS balance sheet on the date of transition i.e. 1 April 2016.

In preparing its Ind AS balance sheet as at 1 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.

Optional exemptions availed and mandatory exceptions

In preparing the financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions.

A. Optional exemptions availed

(a) Property, plant and equipment and intangible assets

As per Ind AS 101 an entity may elect to:

(i) measure an item of property, plant and equipment at the date of transition at its fair value and use that fair value as its deemed cost at that date

(ii) use a previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of revaluation, provided the revaluation was, at the date of revaluation, broadly comparable to:

- fair value;

- or cost or depreciated cost under Ind AS adjusted to reflect.

The elections under (i) and (ii) above are also available for intangible assets that meets the recognition criteria in Ind AS 38, Intangible Assets, (including reliable measurement of original cost); and criteria in Ind AS 38 for revaluation (including the existence of an active market).

(iii) use carrying values of property, plant and equipment and intangible assets as on the date of transition to Ind AS (which are measured in accordance with previous GAAP and after making adjustments relating to decommissioning liabilities prescribed under Ind AS 101) if there has been no change in its functional currency on the date of transition.

As permitted by Ind AS 101, the Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment. The same election has been made in respect of intangible assets also. There is no decommissioning liabilities to be incurred by the Company relating to property, plant and equipment.

(b) Determining whether an arrangement contains a lease

Ind AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix C of Ind AS 17 for determining whether an arrangement existing at the date of transition contains a lease by considering the facts and circumstances existing at the date of transition (rather than at the inception of the arrangement).

The Company has elected to avail of above exemption.

Ind AS 101 permits an entity to designate particular equity investments (other than equity investments in subsidiaries, associates and joint arrangements) as at fair value through other comprehensive income (FVOCI) based on facts and circumstances at the date of transition to Ind AS (rather than at initial recognition). Other equity investments are classified at fair value through profit or loss (FVTPL).

The Company has opted to avail this exemption to designate certain equity investments as FVOCI on the date of transition i.e. 1 April 2016 on the basis of facts and circumstances existed at the date of transition to Ind AS.

(d) Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated, accordingly Company has elected not to apply Ind-AS 103 on the scheme of arrangement, the effective date of which was 1 April 2015 [Note 2(a)].

(e) Fair value measurement of financial assets or liabilities at initial recognition

The Company has applied the requirements of Ind AS 109, "Financial Instruments: Recognition and Measurementâ, wherever applicable.

B. Mandatory exceptions

(a) Estimates

As per Ind AS 101, an entity''s estimates in accordance with Ind AS at the date of transition to Ind AS at the end of the comparative period presented in the entity''s first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error.

However, the estimates should be adjusted to reflect any differences in accounting policies.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).

The Company''s estimates under Ind AS are consistent with the above requirement.

(b) Derecognition of financial assets and liabilities

As per Ind AS 101, an entity should apply the derecognition requirements in Ind AS 109, Financial Instruments, prospectively for transactions occurring on or after the date of transition to Ind AS. However, an entity may apply the derecognition requirements retrospectively from a date chosen by it if the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has elected to apply the derecognition principles of Ind AS 109 retrospectively as reliable information was available at the time of initially accounting for these transactions.

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

I. Equity Share Capital

50,000 equity shares of Rs.10 each of the Company, held by OSML and UGSIL stand cancelled and has been consequently credited to Capital Reserve.

II. Share Capital Suspense

The Company has issued the following shares to the shareholders of OSML and UGSIL:

i) 57,67,301 equity shares of Rs.10 each to the shareholders of OSML aggregating Rs.576.73 lakhs, in the ratio of 2 equity shares of face value of Rs.10 each of the Company for every 9 equity shares of face value of Rs.10 each held in OSML, and

ii) 42,41,909 equity shares of Rs.10 each to the shareholders of UGSIL aggregating Rs.424.19 lakhs, in the ratio of 11 equity shares of face value of Rs. 10 each of the Company for every 30 equity shares of face value of Rs.10 each held in UGSIL, and

iii) 4,87,00,000 fully paid up 8.5% Non-Convertible Cumulative Redeemable Preference Shares (NCCRPS) of Rs.10 each to the preference shareholders of OSML aggregating Rs.4,870.00 lakhs, in lieu of each original shares earlier issued by OSML [classified as financial liabilities (refer Note 19).

iv) 17,00,000 fully paid up 12% Non-Convertible Cumulative Redeemable Preference Shares (NCCRPS) of Rs.100 each to the preference shareholders of UGSIL aggregating Rs.1,700.00 lakhs, in lieu of each original shares earlier issued by UGSIL [classified as financial liabilities (refer Note 19).

Note: Rs.12,000 lakhs and Rs.5,000 lakhs has been added to the authorised share capital from OSML and UGSIL respectively by virtue of the scheme.

* Pending allotment, these have been shown as share capital suspense in the Balance sheet as at 1 April 2016 and the same have been subsequently allotted on 30 March 2017.

IV. Capital Reserve (included in other equity above)

i) Rs.5.00 lakhs has been credited to Capital Reserve towards cancellation of 50,000 equity shares of Rs.10 each of the Company, held by OSML and UGSIL pursuant to the scheme of arrangement.

ii) The difference of Rs.25,756.69 lakhs between the Net fair value of assets and liabilities of the sugar business undertakings and shares issued to the shareholders of OSML and UGSIL has been credited to Capital Reserve.

V. 10,61,539 equity shares of Magadh Sugar & Energy Limited was received under the scheme in lieu of slump sale of one business undertaking located at Narkatiaganj, District West Champaran in the state of Bihar of OSML.

Note :

The Previous GAAP figures as on 1 April 2016 and effect of scheme of arrangement have been reclassified to conform to Ind AS presentation requirements for the purpose of this note.

E. There were no significant reconciliation items between cash flows prepared under previous GAAP and those prepared under Ind AS.

F. Notes to the reconciliations of equity as at 1 April 2016 and 31 March 2017 and total comprehensive income for the year ended 31 March 2017:

(a) Investments:

In accordance with Ind AS, financial assets representing investment in equity shares of entities have been fair valued. The Company has designated equity investments as at fair value through other comprehensive income as permitted by Ind AS 109. Under the previous GAAP, the application of the relevant accounting standard resulted in these investments being carried at cost.

(b) Biological assets

Under the previous GAAP, biological assets was measured at cost. Ind AS requires biological assets other than bearer plants and agricultural produce within its scope to be measured at fair value less cost to sell at each balance sheet date and to be presented as separate line item on the face of the balance sheet with corresponding gain or loss to be recognized in the Statement of Profit and Loss.

Based on Ind AS 109, financial liabilities in the form of borrowings have been accounted at amortised cost using the effective interest rate method.

The impact arising from the change is summarised as follows:

(d) Excise duty

Under previous GAAP, revenue from sale of goods was presented net of the excise duty on sales. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. Excise duty is presented in the Statement of Profit and Loss as an expense. This has resulted in an increase in the revenue from operations and expenses for the year ended 31 March 2017. The total comprehensive income for the year ended and equity as at 31 March 2017 has remained unchanged.

(e) Actuarial gain and loss

Under Ind AS, all actuarial gains and losses are recognised in other comprehensive income. Under previous GAAP the Company recognised actuarial gains and losses in profit or loss. However, this has no impact on the total comprehensive income and total equity as on 1 April 2016 or as on 31 March 2017.

11. The financial statements of the previous years were audited by a firm of chartered accountants other than B S R & Co. LLP. The previous year''s including figures as at the date of transition have been reworked, regrouped, rearranged and reclassified wherever necessary on transition to Ind AS. Amounts and other disclosures for the preceding years including figures as at the date of transition are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.

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