Notes to Accounts of Kashipur Sugar Mills Ltd.

Sep 30, 2010

Note : (1) Cash Credit advance from Uttrakhand State Co-operative Bank Ltd. is secured by pledge of Sugar Stock, hypothecation of store inventory and a charge ranking 3rd in bank's favour on Land, Building, Plant & Machinery and other movable assets forming part of fixed assets of the Sugar the Company.

(2) Loan From Uttrakhand State Co.Operative Bank Limited (Governement of India Soft Loan) is Secured by Residual Charge on Fixed Assets of the Sugar Undertaking.

(3) Car loan from Punjab National Bank, is secured by hypothecation of respective cars financed by Bank.

(4) Term loan from Uttrakhand State Co-operative Bank Ltd. is secured by a charge on movable assets forming part of Block Assets of the company lot extent of Rs. 5.00 crores.

I CONTINGENT LIABILITIES AND NOTES ON ACCOUNTS : (Amount in Lacs)

PARTICULARS Current Year Previous Year 30.09.2010 30.09.2009

1 Contingent Liabilities :

(a) Claims not acknowledged as debts (Disputed) :

(i) Trade Tax / Central Sales Tax (Excluding Interest) 436.19 658.09

(ii) Income Tax 0.00 1.37

(iii) Demand against Cane price for the Year 1978-79 21.20 21.20

(iv) Excise duty 4.76 4.76

(b) The Company's claim for exemption of excise duty on account of expansion of production capacity as per government of India notification no.50/2003 dated 10.06.2003 is under adjudication The Commissioner of Central Excise Commissionerate , Meerut II has decided various cases up to 30.09.2008 and raised demand for excise duty aggregating for Rs. 2678.57 lacs along with interest due there on and penalty aggregating to Rs.2678.57 lacs The company has filed appeals with Hon'ble Customs, Excise and Service tax Appellate Tribunal. Pending final adjudication on the matter, no provision has been made in respect of excise duty of Rs. 3165.47 Lacs including Rs. 150.21 Lacs for the year. 3165.47 3015.26

(Amt Deposited under protest 271.54 lacs) (PY Rs. 120.66)

(c) Penalty levied by Commissioner of Central Excise Commissionerate - Meerut-II 2678.57 2678.57

(d) Arrears of Preference Share's Dividend 357.02 276.76

(e) The Company has challanged the validity of applicability of Entry Tax Act. With 00 00 Hon'ble Uttrakhand High Court pending decision of the Court, no liability has been ascertained and provided for.

2. Estimated amount of Contract remaining to be executed on capital account not provided for Nil Nil

3. Managerial Remuneration Payment to Whole Time Director

(i) Salary 414094.63 388296.40

(ii) Contribution to Prov. and Other Funds 36323.00 34670.00

450417.63 422966.40

4 Fees and Reimbursement of expenses to Statutory Auditors :

(i) Audit Fees 275750.00 276471.00

(ii) Taxation and other services 99013.00 89037.00

(iii) Reimbursement of Expenses 39676.00 29646.44

414439.00 395154.44

(Rs. in Lacs) (Rs. in Lacs)

5 Details of Deferred Liabilities

Extra realisation of Levy Sugar and Excise Duty along with accrued interest 2.86 2.86

2.86 2.86

6 Employees Benefits :

The required disclosures of employees benefits as per Accounting Standard-15 are given hereunder :-

(i) In respect of short term employee benefits :

The Company has at present only the Scheme of cumulative benefit of leave encashment payable at the end of each calendar year and the same have been provided for on accrual basis.

(ii) In respect of Defined Benefit Scheme (Based on Actuarial Valuation) of Gratuity :

A) Change in Obligation over the year ended 30.09.2010

Present Value of defined obligation as on 01-10-2009 362.04 345.82

Current Service Cost 15.87 15.54

Past Service Cost 4.15 0.00

Interest Cost 27.15 25.94

Actuarial Gains/Losses -0.43 5.00

Benefits Paid -29.31 -30.26

Present Value of defined obligation as on 30-09-2010 379.47 362.04

B) Expenses recognised during the year 2009-10

Current Service Cost 15.87 15.54

Past Service Cost 4.15 0.00

Interest Cost 27.15 25.94

Actuarial Gains/Losses -0.43 5.00

Total 46.74 46.48

C) Principal Actuarial Assumptions :

Mortality Table (LIC)

Discount Rate (per annum) 7.50% 7.50%

Rate of Escalation in Salary (per annum) 5.00% 5.00%

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors.

(iii) Defined Contribution Plan

Provision for contribution to defined contribution plan, recognised as expense during the year are as under

Employer's Contribution to Providend Fund 62.53 56.96

Employer's Contribution to Pension Fund 1.93 1.84

7. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act'2006 and hence disclosure relating to amounts unpaid as at the year end togather with the interest paid/payable under this Act have not been given.

NOTES : 1) Sugar issued for reprocess 96.0 (690.5 M.T.)

2) Reprocess loss of sugar 14.4 MT ( Previous Year 141.9 MT )

3) The actual production of sugar includes 81.6 MT ( Previous Year 548.6 MT) sugar produced out of reprocess.

4) Opening Stock of Sugar includes sugar in process 96.0(Previous Year 114.8M.T.)

5) Closing Stock of Sugar includes sugar in process 80.0 M.T. (Previous Year 96.0 M.T. )

8. The Company has Accounted for Cane Purchases for the Sugar Season 2007-2008 at Rs.110.00 per quintal, which was paid on the basis of Interim Order of The Hon'ble Supreme Court as against the price of Rs.127 per quintal fixed by the Uttarkhand Government such differential price aggregate to Rs. 622.66 Lacs. The necessary adjustments will be made in accordance with the Final Decision in the matter.

9. There are no separate reportable segments as prescribed in accounting standard on segment reporting issued by The Institute of Chartered Accountant of India.

10. Opening & Closing Stock of Sugar includes 1760 Bags of Sugar seized by Excise Department.

11. The stock of 1295 Bags of Sugar at Ludhiana Depot has been auctioned by District Food & Supply Department, Ludhiana and the sales proceeds are deposited with Hon'ble Punjab & Haryana High Court. In absense of complete details the sale has been recorded at an average sale price of Rs. 2710/- per bag. The difference if any shall be adjusted when the relevant details are available with the Company.

12. In absence of virtual certaintity the company has not recognised deferred tax assets in accordance with Para No.17 of the Accounting Standard-22 issued by The Institute of Chartered Accountants of India.

13. Figures for the previous year have been regrouped / recasted wherever considered necessary.

Signature to Schedule '1' to '17'.

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Sep 30, 2009

(Amount in Lacs)

PARTICULARS Current Year Previous Year

30.09.2009 30.09.2008

1 Contingent Liabilities:

(a) Claims not acknowledged as debts ( Disputed) :

(i) Trade Tax / Central Sales Tax (Excluding Interest) 658.09 577.71

(ii) Income Tax 1.37 00

(iii) Demand against Cane price for the Year 1978-79 21.20 21.20

(iv) Excise duty 4.76 76.22

(Amt Deposited under protest -Nil (PY. Rs. 8.00 lacs)

(b) The Companys claim for exemption of excise duty on account of expansion of production capacity as per government of India notification no.50/2003 dated 10.06.2003 is under adjudication The Commissioner of Central Excise Commissionerate , Meerut II has decided various cases up to 30.09.2008 and raised demand for excise duty aggregating for Rs. 2678.57 lacs along with interest due there on and penalty aggregating to Rs.2678.57 lacs The company has filed appeals with Honble Customs, Excise and Service tax Appellate Tribunal. Pending final adjudication on the matter, no provision has been made in respect of excise duty of Rs.301 5.26 Lacs including Rs. 253.67 Lacs for the year. 301 5.26 2761.59

(Amt Deposited under protest 120.46 lacs)

(c) Penalty levied by Commissioner of Central Excise Commissionerate -Meerut-ll 2678.57 191 1.78

(d) Arrears of Preference Shares Dividend 276.76 196.51

(e) The Company has challanged the validity of applicability of Entry Tax Act. With 00 00 Honble Uttrakhand High Court pending decision of the Court, no liability has been ascertained and provided for.

2. Estimated amount of Contract remaining to be executed on capital account not provided for Nil Nil

3. Managerial Remuneration Payment to Whole Time Director

(i) Salary 388296.40 611744.61

(ii) Contribution to Prov. and Other Funds 34670.00 60293.00

422966.40 672037.61

4 Fees and Reimbursement of expenses to Statutory Auditors :

(i) Audit Fees 276471.00 280900.00

(ii) Taxation and other services 89037.00 58989.00

(iii) Reimbursement of Expenses 29646.44 39281.00 395154.44 379170.00

(Rs. in Lacs) (Rs. in Lacs)

5 Details of Deferred Liabilities

Extra realisation of Levy Sugar and Excise Duty along with accrued interest 2.86 2.86

Employees Benefits :

The required disclosures of employees benefits as per Accounting Standard-15 are given hereunder :-

(i) In respect of short term employee benefits :

The Company has at present only the Scheme of cumulative benefit of leave encashment

payable at the end of each calendar year and the same have been provided for on accrual basis.

(ii) In respect of Defined Benefit Scheme (Based on Actuarial Valuation) of Gratuity :

A) Change in Obligation over the year ended 30.09.2009 Present Value of defined obligation as on 01-10-2008 345.82 310.20

Current Service Cost 15.54 14.44

6.Related Party Disclosure

(a)Name of related parties and nature of relationship

(i)Key Management Personnel Sri Gaurav Goel -Director Sri Rajeev Kumar Agarwat -Whole Time Director

(ii)Associate Concerns Dhampur Sugar Mills Limited Saraswati Properties Limited Associated Metals Company Limited Goel Investment Limited K.S.M.Holdings Limited Sudh Edible Products Pvt.Limited Sonitron Limited.

7.The Company has Accounted for Cane Purchases for the Sugar Season 2007-2008 at Rs.l 10.00 per quintal,which was paid on the basis of Interim Order of The Honble Supreme Court as against the price of Rs.l 27 per quintal fixed by the Uttarkhand Government such differential price aggregate to Rs.622.66 Lacs. The necessary adjustments will be made in accordance with the Final Decision in the matter.

8.There are no separate reportable segments as prescribed in accounting standard on segment reporting issued by The Institute of Chartered Accountant of India.

9.Opening &Closing Stock of Sugar includes 1 760 Bags of Sugar seized by Excise Department.

10.In absence of virtual certaintity the company has not recognised deferred tax assets in accordance with Para No.l 7 of the Accounting Standard-22 issued by The Institute of Chartered Accountants of India.

11.Figures for the previous year have been regrouped/recasted wherever considered necessary.