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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 KM Sugar Mills Ltd.

Mar 31, 2025

2.18 Provisions, Contingent Liabilities and Contingent Assets

(a) Provision is recognized in respect of obligations where,
based on the evidence available, their existence at the
Balance Sheet date is considered probable.

(b) Provision is recognized in the accounts in respect of present
probable obligations, the amount of which can be reliably
estimated.

(d) Contingent Liabilities are disclosed in respect of possible
obligations that arise from past events but their existence is
confirmed by the occurrence or non occurrence of one or

more uncertain future events not wholly within the control
of the Company.

(e) A contingent asset is not recognized in the financial
statements, however, is disclosed, where an inflow of
economic benefits is probable.

(f) Provisions and contingent liabilities are reviewed at each
balance sheet date.

2.19 Investment Property

Investment property is property (land or a buildingâor part
of a buildingâor both) held (by the owner or by the lessee
under a finance lease) to earn rentals or for capital appreciation
or both, rather than for:

(a) use in the production or supply of goods or services or for
administrative purposes; or

(b) sale in the ordinary course of business. Owner-occupied
property is property held (by the owner or by the lessee
under a finance lease) for use in the production or supply
of goods or services or for administrative purposes.
Investment properties are accounted for in the books at
cost. However, fair value of such property is required to be
disclosed only in accordance with Ind AS 40.

2.20 Segment Reporting

Operating segments are identified and reported taking into
account the different risk and return, organisational structure
and internal reporting system.

2.21 Earnings Per Share

Basic earnings per share is computed by dividing the profit/
(loss) after tax (including the post tax effect of extra ordinary
items, if any) by the weighted average number of equity shares
outstanding during the year.

Diluted earnings per share is computed by dividing the profit/
(loss) after tax (including the post tax effect of extra ordinary
items, if any) by the weighted average number of equity shares
considered for deriving basic earnings per share and also the
weighted average number of equity shares which could be
issued on the conversion of all dilutive potential equity shares.

2.22 Cash and Cash Equivalents

Cash and cash equivalents Cash and cash equivalents in the
Balance sheet comprise cash on hand, cheques on hand,
balance with banks on current accounts and short term, highly
liquid investments with an original maturity of three months or
less and which carry insignificant risk of changes in value.

For the purpose of the Cash Flow Statement, Cash and
cash equivalents consist of Cash and cash equivalents, as
defined above and net of outstanding book overdrafts as
they are considered an integral part of the Company''s cash
management.

2.23 Cash Flow Statement

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

2.26 Leases

Effective April 01,2019, the Company has adopted lnd AS 116
"Leases", applied to all lease contracts existing on April 01,2019
using the modified retrospective method. Accordingly, the
Company recognizes right-of-use asset at the date of initial
application. The right-of-use asset is measure equal to the lease
liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognized in the balance
sheet immediately before the date of initial application.

The Company evaluates if an arrangement qualifies to be a
lease as per the requirements of Ind AS 116. Identification
of a lease requires significant judgment. The Company uses
significant judgment in assessing the lease term (including
anticipated renewals) and the applicable discount rate.

The Company determines the lease term as the non-cancellable
period of a lease, together with both periods covered by an
option to extend the lease if the Company is reasonably certain
to exercise that option; and periods covered by an option to
terminate the lease if the Company is reasonably certain not
to exercise that option. In assessing whether the Company
is reasonably certain to exercise an option to extend a lease,
or not to exercise an option to terminate a lease, it considers
all relevant facts and circumstances that create an economic
incentive for the Company to exercise the option to extend the
lease, or not to exercise the option to terminate the lease. The
Company revises the lease term if there is a change in the nonÂ¬
cancellable period of a lease.

The discount rate is generally based on the incremental
borrowing rate specific to the lease being evaluated or for a
portfolio of leases with similar characteristics

A lease that transfers substantially all the risks and rewards
incidental to ownership to the lessee is classified as a finance
lease. All other leases are classified as operating leases.

Company as a lessee

The Company accounts for each lease component within the
contract as a lease separately from non-lease components of
the contract and allocates the consideration in the contract to
each lease component on the basis of the relative stand-alone
price of the lease component and the aggregate stand-alone
price of the non-lease components.

The Company recognises right-of-use asset representing
its right to use the underlying asset for the lease term at the
lease commencement date. The cost of the right-of-use

asset measured at inception shall comprise of the amount
of the initial measurement of the lease liability adjusted for
any lease payments made at or before the commencement
date less any lease incentives received, plus any initial direct
costs incurred and an estimate of costs to be incurred by the
lessee in dismantling and removing the underlying asset or
restoring the underlying asset or site on which it is located. The
right-of-use assets is subsequently measured at cost less any
accumulated depreciation, accumulated impairment losses, if
any and adjusted for any remeasurement of the lease liability.
The right-of-use assets is depreciated using the straight-line
method from the commencement date over the shorter of
lease term or useful life of right-of-use asset. The estimated
useful lives of right-of-use assets are determined on the same
basis as those of property, plant and equipment. Right-of-
use assets are tested for impairment whenever there is any
indication that their carrying amounts may not be recoverable.
Impairment loss, if any, is recognised in the statement of profit
and loss.

The Company measures the lease liability at the present value
of the lease payments that are not paid at the commencement
date of the lease. The lease payments are discounted using
the interest rate implicit in the lease, if that rate can be readily
determined. If that rate cannot be readily determined, the
Company uses incremental borrowing rate. For leases with
reasonably similar characteristics, the Company, on a lease by
lease basis, may adopt either the incremental borrowing rate
specific to the lease or the incremental borrowing rate for the
portfolio as a whole. The lease payments shall include fixed
payments, variable lease payments, residual value guarantees,
exercise price of a purchase option where the Company is
reasonably certain to exercise that option and payments of
penalties for terminating the lease, if the lease term reflects the
lessee exercising an option to terminate the lease. The lease
liability is subsequently remeasured by increasing the carrying

amount to reflect interest on the lease liability, reducing the
carrying amount to reflect the lease payments made and
remeasuring the carrying amount to reflect any reassessment
or lease modifications or to reflect revised in-substance fixed
lease payments. The company recognises the amount of the
re-measurement of lease liability due to modification as an
adjustment to the right-of-use asset and statement of profit
and loss depending upon the nature of modification. Where
the carrying amount of the right-of-use asset is reduced to
zero and there is a further reduction in the measurement of the
lease liability, the Company recognises any remaining amount
of the re-measurement in statement of profit and loss.

The Company has elected not to apply the requirements of Ind
AS 116 to short-term leases of all assets that have a lease term
of 12 months or less and leases for which the underlying asset
is of low value. The lease payments associated with these leases
are recognized as an expense on a straight-line basis over the
lease term.

Company as a lessor

At the inception of the lease the Company classifies each of
its leases as either an operating lease or a finance lease. The
Company recognises lease payments received under operating
leases as income on a straight- line basis over the lease term. In
case of a finance lease, finance income is recognised over the
lease term based on a pattern reflecting a constant periodic
rate of return on the lessor''s net investment in the lease.
When the Company is an intermediate lessor it accounts for
its interests in the head lease and the sub-lease separately. It
assesses the lease classification of a sub-lease with reference
to the right-of-use asset arising from the head lease, not with
reference to the underlying asset. If a head lease is a short term
lease to which the Company applies the exemption described
above, then it classifies the sub-lease as an operating lease.

As per our report of even date attached

For Mehrotra & Mehrotra For and on behalf of Board of Directors

Chartered Accountants
F.R. No 0226C

CA. Sanjay K. Rai S. C. Agarwal Aditya Jhunjhunwala

Partner Executive Director Managing Director

M.No.507946 (DIN-02461954) (DIN-01686189)

A. K. Gupta Pooja Dua

Chief Financial Officer Company Secretary

Place : Lucknow

(M. No. A50996)

Date : 26th May, 2025

Mar 31, 2024

i) Rights, preferences and restrictions attached to the equity shares

The Company has only one class of Issued, subscribed and paid up equity shares having a par value of Rs. 2/- each per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential dues. The distribution will be in proportion to the number of equity shares held by the shareholders.

i. General reserve represents the statutory reserve, this is in accordance with Indian corporate law wherein a portion of profit is appropriated to general reserve. Under the erstwhile Companies Act 1956, it was mandatory to transfer amount before a company can declare dividend, however Companies Act 2013, transfer of any amount to general reserve is at the discretion of the Company.

ii. The storage fund for molasses has been created to meet the cost of construction of molasses storage tank as required under Uttar Pradesh Sheera Niyantran (Sansodhan) Adesh, 1974. The said storage fund is represented by investment in the form of fixed deposits with banks amounting to Rs.31.96 lakhs (Previous year: Rs.24.94 lakhs). [Refer Note No.6 and 12A].

iii. Sugar Price Equalisation Reserve: Refer note no.38.13

iv. Securities premium: securities premium is credited when shares are issued at premium. It is utilised in accordance with the provisions of the Act, to issue bonus shares, to provide for premium on redemption of shares, write off equity related expenses like underwriting cost etc.

v. Retained earnings represents the undistributed profit / amount of accumulated earnings of the Company.

vi. Other comprehensive income (OCI) represents the balance in equity relating to re-measurement gain/(loss) of defined benefit obligation, gain or loss on equity investments and revaluation of fixed assets in earlier years prior to compliance of Ind AS and revaluation of land.

Details of securities offered

(1) Rupee Term Loan of State Bank of India (U.P. Govt. SEFASU Loan) is secured by first charge on entire fixed assets of the company, present and future, on pari passu basis with other term lenders.

(2) Rupee Term Loan of State Bank of India (GECL) is secured by second charge on entire fixed assets and second charge on current assets of the company, present and future, on pari passu basis with other term lenders.

(3) Rupee Term Loan of State Bank of India and HDFC Bank are secured by exclusive first charge on refinery assets and pari passu first charge on entire fixed assets and second charge on current assets of the company, present and future, on pari passu basis with other term lenders and personal guarantee of a director.

Summary of short term borrowings

Secured borrowings.

Nature of Securities

Working capital loans from State Bank of India, Punjab National Bank, HDFC Bank Ltd. and Yes bank Ltd. are secured by way of hypothecation and first pari passu charge on stocks of sugar, molasses, consumable stores / spares, industrial alcohal, book debts and other current assets of the company and second pari passu charge with other working capital lenders on entire fixed assets and all other movable and immovable assets of the company (existing & future) and personal guarantee of two Directors.

38.1 Financial risk management objectives and policies

The Company''s principal financial liabilities include Borrowings, Trade payables 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, Bank balances other than cash and cash equivalents and Other financial assets that arise directly from its operations.

The Company is exposed to credit risk, liquidity risk and market risk. The Company''s senior management oversees the management of these risks and the appropriate financial risk governance framework for the Company. The senior management provides assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives.

The Board of Directors reviewed policies for managing each of below mentioned risks, which are summarized below:

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other risks, such as regulatory risk and commodity price risk.

(i) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s borrowings obligations with floating interest rates. To mitigate the interest rate risks, the Company has established a periodical review procedure and ensures long term relations with the lenders to raise adequate funds at competitive rates.

(ii) Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. This foreign currency risk is covered by using foreign exchange forward contracts and currency swap contracts. The Company does not have substantial transactions during the year in foreign currency so the Company does not have such kind of risk

As the amount of foreign exchange fluctuation is not material during past period so the Company has not hedged the foreign currency.

(iii) Regulatory risk

Sugar industry is regulated both by central government as well as state government. Central and state government''s policies and regulations affect the Sugar industry and the Company''s operations and profitability. Distillery business is also dependent on the Government policy.

(iv) Commodity price risk

Sugar industry being cyclical in nature, realizations get adversely affected during downturn. Higher cane price or higher production than the demand ultimately affects profitability. The Company has mitigated this risk by well integrated business model by diversifying into cogeneration and distillation, thereby utilizing the by-products.

Credit risk

CCredit risk is the risk that counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company''s sugar sales are mostly on cash. Power and ethanol are sold to state government entities; thereby the credit default risk is significantly mitigated. The Central Govt. has fixed the minimum sale price of sugar w.e.f. 14.02.2019 at Rs.3,100 per Qtl. which has mitigated the price risk to the some extent. Similarly, ethanol is sold to the Govt. undertakings/Oil manufacturing companies and power is sold to the Govt. undertaking at fixed prices as per Govt. orders / regulatory guidelines.

The impairment for financial assets is based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each balance sheet date. Financial assets are written off when there is no reasonable expectation of recovery, however, the Company continues to attempt to recover the receivables. Where recoveries are made, these are recognized in the Statement of Profit and Loss.

(i) Trade receivables

Trade receivables are non-interest bearing and are generally on credit terms of 3 to 60 days. An impairment analysis is performed at each balance sheet date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the balance sheet date is the ageing analysis of the receivables has been considered from the date the invoice falls due:

The management has made provision for expected credit loss amounting to Rs. 15.94 lakhs (Rs. 15.94 lakhs) and management is of view that although certain amounts are beyond credit period but they are in fact recoverable and will be received in due course so balance amount is not liable to expected credit loss.

The maximum exposure to credit risk at the balance sheet date is the carrying value of each class of financial assets disclosed under Note No. 11. The following table summarizes the change in the loss allowances measured using life time expected credit loss method for trade receivables:

Liquidity Risk

The Company''s objectives are to meet the funding requirements and maintain flexibility in this respect through the use of cash credit facilities and term loans.

38.2 Capital Management (I) Risk Management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company''s capital management is to maximize the shareholders value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company''s policy is to keep the gearing ratio under control except for the first quarter of the financial year due to nonpayment of cane dues. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and short-term deposits.

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. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing during the current period.

38.3 Earnings per Share

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding.

Diluted EPS amounts are calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

(I) Defined benefits plans

Long term employee benefits in the form of gratuity and leave encashment are considered as defined benefit plans. The present value of obligation is determined based on actuarial valuation using projected Unit credit method as at the balance sheet date. The amount of defined benefits recognized in the balance sheet represent the present value of obligation as adjusted for unrecognized past service cost as reduced by the fair value of plan assets. Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit & Loss for the year in which the related service is rendered.

The Company is exposed to various risks in providing the above gratuity benefit which are as follows:

Interest rate risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Salary escalation risk: The present value of the defined benefit plan is calculated with the assumption of salary increase 5% per annum of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Actual mortality & disability: Deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

Sensitivity Analysis: Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate and expected salary increase rate. Effect of change in mortality rate is negligible. Please note that the sensitivity analysis presented below may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumption would occur in isolation of one another as some of the assumptions may be correlated. The results of sensitivity analysis are given below:

38.5 Contingent liabilities and commitments (to the extent not provided for) Contingent liabilities: (Rs. in lakhs)
Particulars	As at 31st March, 2024	As at 31st March, 2023
(i) Claims against the Company not acknowledged as debts in respect of pending cases of employees under Labour laws	84.37	82.37
(ii) Claims against the Company not acknowledged as debts in respect of Criminal and Civil Cases	25.34	25.34
(iii) Bank guarantees given to the Central Government and oil manufacturing companies	183.68	138.79
(iv) Corporate guarantee given by the Company for loans sanctioned to Sonar Casting Ltd. State Bank of India (Lead Bank for consortium of banks).	6113.96	6895.88
(v) Disputed Entry Tax cases under appeal*	-	-
(vi) Income Tax cases under appeal	690.73	657.31
(vii) Penalty levied by Competition Commission of India and Commissioner Excise, UP	50.23	50.23
* Amount after deducting Rs.1.34 lakhs (As on 31st March 2023 Rs.1.34 lakhs) paid under protest.

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals filed by the Company.

The Cane Commissioner, Uttar Pradesh has passed an order dated 17.12.2021 for payment of 12% interest on late cane payment of sugar season 2013-14. The company has filed appeal before Cane Commissioner, Uttar Pradesh. No impact has been considered in financial results as the interest amount is indeterminate and pending appeal.

The amount shown above represent the best possible estimates arrived at on the basis of available information. The uncertainties and timing of the cash flows are dependent on the outcome of different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be ascertained accurately. The Company does not expect any reimbursements in respect of above contingent liabilities.

Capital Commitments		(Rs. in lakhs)
Particulars	As at 31st March, 2024	As at 31st March, 2023
Estimated amount of contracts remaining to be executed on capital account and not provided for	398.90	416.33
Less: Advances paid against above	75.73	23.77
Net Amount	323.17	392.56

38.6 Leases Company as lessee

The Company has taken commercial properties on cancellable operating lease. The lease agreement provides for an option to the Company to renew the lease period at the end of cancellable period.

The Company has adopted Ind AS-116 "Leases" w.e.f. 01.04.2019 and applied the standard to lease contracts existing on 1st April, 2019 using the modified retrospective method.

Consequent to this, such assets have been recognised as "Right-of-use" (ROU) assets and have been amortized over the term of the lease.

The same has been shown under note no.3 of financial statements. Depreciation charge for ROU assets is included under depreciation and amortization expense in the Statement of Profit and Loss under note no.35.

Further, to above, the Company has certain lease agreement on short term basis, expenditure on which has been recognized under rent (other expenses).

The effect of adoption of Ind AS -116 "Leases" is not material on the profit before tax, profit for the year and earnings per share.

Company as lessor

The Company has given certain portion of factory premises on cancellable operating lease. The rent received on the same has been grouped under other income. The rent received during the year is Rs.5.84 lakhs (previous year Rs.5.79 lakhs).

Note: The value of perquisites shown above is as per the Income Tax provisions.

The transactions with related parties have been entered at an amount, which are not materially different from those on normal commercial terms. No amount has been written back/written off during the year in respect to due to/due from related parties.

Transactions with Related Parties are made on the terms equivalent to those that prevail in arm''s length transactions.

The remuneration to the Key Managerial Personnels are in line with the service rules of the Company.

The aforementioned related party transactions have been recommended by Audit Committee and approved by the Board in their respective meetings held during the year.

38.9 Segment Reporting: Information on the Segment Reporting is as under:

The company has identified three primary business segments viz. Sugar, Distillery and Power. Segments have been identified and reported taking into account the nature of products, the differing risks and returns, the organizational structure and internal business reposting system as defined in Ind AS 108 - Operating Segments.

*Capital expenditure includes fixed assets capitalized during the year and net increase/decrease in capital work-in-progress.

Inter-segment revenues are eliminated upon consolidation and reflected in the inter-segment sales column. Current taxes and deferred taxes are not allocated to individual segments as the same are dealt with at company level.

The transactions between segments are primarily for materials which are transferred at market determined prices. Common costs are apportioned on a reasonable basis.

Information about Secondary Geographical Segment: There is no secondary segment.

38.10 Fair value

Set out below, is a comparison by class of the carrying amounts and fair value of the Company''s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

38.13 In view of the decision of Hon''ble Supreme Court, extra price and excise duty realized on levy sugar in earlier years amounting to Rs.67.11 lakhs for funding under the Sugar Price Equalization Fund Act, 1976 was transferred to Sugar Price Equalization Reserve Account. Later on as per the order dated 22.09.1993 of Hon''ble Supreme Court, a sum of Rs. 17.90 lakhs was paid to the Government out of bank guarantee furnished by the Company and further, during the year 1998-99 a sum of Rs.1.00 lakhs were paid towards Excise Duty on the above. The Company has further made a payment of Rs.35.81 lakhs during the year 2005-06 to the Government of India against the bank guarantee furnished by it along with interest of Rs. 118.25 lakhs thereon. Still a sum of Rs.12.40 lakhs is lying in the Sugar Price Equalization Reserve as on 31st March, 2023 shown under Note 17 of "Other equity".

38.14 Certain balances in account of trade receivables, advances, deposit accounts and trade payables are subject to reconciliation and confirmation by the respective parties. The management reviewed these advances from time to time, the required provisions have been considered in the accounts. The management is of the view that the realization from these assets in the ordinary course of business would not be less than the amount at which they are stated in the books of account.

38.15 Other non-current liabilities (Note No.21) includes a loan from U.P. Government amounting to Rs.14.50 lakhs. The issue relating to interest payable thereon is under dispute and the matter is sub-judice before the Hon''ble Allahabad High Court. However, as per the interim order of the Court, a fixed deposit of Rs.14.50 lakhs has been kept with the District Magistrate, Ayodhya. In opinion of the management, the amount of interest accrued on this fixed deposit is adequate to meet the interest obligation liability of the Company on the said loan and therefore, no interest is being provided for in these financial statements.

38.16 As per Bihar State Government directions, the operations of country liquor bottling unit remain discontinued during the year. However, the plant and machinery of that unit was moved in earlier years to the Distillery Unit for manufacturing of country liquor. Thus, depreciation due to obsolescence has been provided on building amounting to Rs. Nil in the current year. (Previous year Nil).

38.17 Since, the sugar industry is a seasonal industry; the cost of production of sugar is worked out on annualized basis considering prime cost, factory overhead and administrative overhead closely related to manufacturing of output.

38.18 The Company has a subsidiary company namely K M Spirits and Allied Industries Ltd.

38.19 The management is of the view that dividend payment is most probable to receive from the investments in the preference shares amounting to Rs.338.92 lakhs in K. M. Energy (P) Ltd., and Rs.385.00 lakhs in Brahma Properties (P) Ltd. considering dividend at 9% and in preference shares of Sonar Casting Ltd. considering dividend at 12.50% and this fact has been taken into account while determining the fair value of these investments. However, no dividend received on these investment since amount invested.

38.20 The Central Government pursuant to Notification No. 1 (1)/2022-Trade dated 5th November, 2022 issued by the Hon''ble Ministry of Consumer Affairs, Food and Public Distribution (Department of Food and Public Distribution) has notified sugar mill wise export quantity of sugar for export in sugar season 2022-23 in order to prevent uncontrolled export of sugar and with a view to ensure sufficient availability of sugar for domestic consumption at a reasonable price. The notification also provides facility to export sugar themselves or through merchant exporter or exchange their export quota with domestic quota of any other sugar mill.

Pursuant to above notification, the Company has sold its export quota for exchange with domestic quota of any other sugar mill. The amount received on sale of export quota of Rs. Nil (Previous year Rs.879.05 lakhs) has been shown as line item "Export quota sale receipt" under Revenue from operations.

38.24 The company has taken SBI SEFASU Loan from Government amounting to Rs.4775.94 lakhs bearing 5% Interest rate. Fair value of loan has been determined using discount rate 10.50% as the bank''s fund is available at this rate and difference between actual amount and present value is amortised over the loan tenure and same has been considered as deferred government grant.

38.25 The company has lease hold land from U P Government and out of which 3 hectare land has been sub-leased to K M Particle Boards Pvt. Ltd. vide sub-lease deed dated 23.01.2024 executed by U. P. Government, K M Sugar Mills Ltd. and K M Particle Boards Pvt. Ltd. and registered on 03.02.2024.

*Shares held by Prakash Chandra Dwarkadas Jhunjhunwala-HUF, Uma Devi jhunjhunwala and Madhu Prakash Jhunjhunwala classified under promoter group category were reclassified to Public category vide approval letter No. NSE/LIST/218 dated 26.09.2022 of National Stock Exchange of India Ltd. and letter No. LIST/COMP/YG/272/2022-23 dated 26.09.2022 of BSE Ltd.

38.34 Other statutory information

i. i. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company.

ii. The Company does not have any transactions with companies struck off.

iii. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

iv. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

v. The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

vi. 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:

(a) 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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

vii. 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 Group shall:

(a) 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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

viii. The Company has not any such transaction which is not recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

38.35 Events occurring after the balance sheet date:

No adjusting or significant non adjusting events have occurred between the reporting date and the date of authorization of financial statements.

38.36 Figures in brackets pertain to previous year.

38.37 The previous year''s figures have been regrouped, reclassified, reworked and rearranged wherever necessary to correspond with the current year.

Mar 31, 2023

2.18 Provisions, Contingent Liabilities and Contingent Assets

(a) Provision is recognized in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable.

(b) Provision is recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

(d) Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.

(e) A contingent asset is not recognized in the financial statements, however, is disclosed, where an inflow of economic benefits is probable.

(f) Provisions and contingent liabilities are reviewed at each balance sheet date.

2.19 Investment Property

Investment property is property (land or a buildingâor part of a buildingâor both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for:

(a) use in the production or supply of goods or services or for administrative purposes; or

(b) sale in the ordinary course of business. Owner-occupied property is property held (by the owner or by the lessee under a finance lease) for use in the production or supply of goods or services or for administrative purposes. Investment properties are accounted for in the books at cost. However, fair value of such property is required to be disclosed only in accordance with Ind AS 40.

2.20 Segment Reporting

Operating segments are identified and reported taking into account the different risk and return, organisational structure and internal reporting system.

2.21 Earnings Per Share

Basic earnings per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extra ordinary items, if any) by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extra ordinary items, if any) by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity shares.

2.22 Cash and Cash Equivalents

Cash and cash equivalents Cash and cash equivalents in the Balance sheet comprise cash on hand, cheques on hand, balance with banks on current accounts and short term, highly liquid investments with an original maturity of three months or less and which carry insignificant risk of changes in value.

For the purpose of the Cash Flow Statement, Cash and cash equivalents consist of Cash and cash equivalents, as defined above and net of outstanding book overdrafts as they are considered an integral part of the Company''s cash management.

2.23 Cash Flow Statement

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

cash flows operating, investing and financing activities of the company are segregated.

2.26 Leases

Effective April 01, 2019, the Company has adopted lnd AS 116 "Leases", applied to all lease contracts existing on April 01, 2019 using the modified retrospective method. Accordingly, the Company recognizes right-of-use asset at the date of initial application. The right-of-use asset is measure equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the balance sheet immediately before the date of initial application.

The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgment in assessing the lease term (including anticipated renewals) and the applicable discount rate.

The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the noncancellable period of a lease.

The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics

A lease that transfers substantially all the risks and rewards incidental to ownership to the lessee is classified as a finance lease. All other leases are classified as operating leases.

Company as a lessee

The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the

underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment

or lease modifications or to reflect revised in-substance fixed lease payments. The company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.

The Company has elected not to apply the requirements of Ind AS 116 to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.

Company as a lessor

At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease payments received under operating leases as income on a straight- line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor''s net investment in the lease. When the Company is an intermediate lessor it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

For Mehrotra & Mehrotra For and on behalf of Board of Directors

Chartered Accountants F.R. No 0226C

CA. Sanjay K. Rai S. C. Agarwal Aditya Jhunjhunwala

Partner Executive Director Managing Director

M.No.507946 (DIN-02461954) (DIN-01686189)

A. K. Gupta Pooja Dua

Place : Lucknow Chief Financial Officer Company Secretary

Date : 30th May, 2023 (M. No. A50996)

ii. The storage fund for molasses has been created to meet the cost of construction of molasses storage tank as required under Uttar Pradesh Sheera Niyantran (Sansodhan) Adesh, 1974. The said storage fund is represented by investment in the form of fixed deposits with banks amounting to Rs.24.94 lakhs (Previous year: Rs.20.96 lakhs). [Refer Note No.12A].

iii. Sugar Price Equalisation Reserve: Refer note no.38.13

v. Retained earnings represents the undistributed profit / amount of accumulated earnings of the Company.

Details of securities offered

(1) Rupee Term Loan of State Bank of India (U.P. Govt. SEFASU Loan) is secured by first charge on entire fixed assets of the company, present and future, on pari passu basis with other term lenders.

(3) Rupee Term Loan of Punjab National Bank (Car Loan) is secured by first charge on car financed.

(4) Rupee Term Loan of State Bank of India and HDFC Bank are secured by exclusive first charge on refinery assets and pari passu first charge on entire fixed assets and second charge on current assets of the company, present and future, on pari passu basis with other term lenders and personal guarantee of a director.

38.1 Financial risk management objectives and policies

The Board of Directors reviewed policies for managing each of below mentioned risks, which are summarized below:

Market risk

(i) Interest rate risk

(ii) Foreign currency risk

(iii) Regulatory risk

(iv) Commodity price risk

Sugar industry being cyclical in nature, realizations get adversely affected during downturn. Higher cane price or higher production than the demand ultimately affects profitability. The Company has mitigated this risk by well integrated business model by diversifying into co-generation and distillation, thereby utilizing the by-products.

Credit risk

Credit risk is the risk that counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company''s sugar sales are mostly on cash. Power and ethanol are sold to state government entities; thereby the credit default risk is significantly mitigated. The Central Govt. has fixed the minimum sale price of sugar w.e.f. 14.02.2019 at Rs.3,100 per Qtl. which has mitigated the price risk to the some extent. Similarly, ethanol and power are sold to the Govt. undertakings at fixed prices as per Govt. orders / regulatory guidelines.

(i) Trade receivables

(I) Risk Management

company as lessee

The Company has taken commercial properties on cancellable operating lease. The lease agreement provides for an option to the Company to renew the lease period at the end of cancellable period.

The Company has adopted Ind AS-116 "Leases" w.e.f. 01.04.2019 and applied the standard to lease contracts existing on 1st April, 2019 using the modified retrospective method.

Consequent to this, such assets have been recognised as "Right-of-use" (ROU) assets and have been amortized over the term of the lease.

Further, to above, the Company has certain lease agreement on short term basis, expenditure on which has been recognized under rent (other expenses).

38.8 Related Party Disclosures: -

Pursuant to compliance of Ind AS 24 on "Related Party Disclosures", the relevant information is provided here below:-

I. Subsidiaries where control exist

K M Spirits and Allied Industries Ltd.

II. Related Parties with whom there were transactions during the year:

a) Related party where control exist:

â¢ Shri L. K. Jhunjhunwala -Chairman

â¢ Shri Aditya Jhunjhunwala -Managing Director

â¢ Shri Sanjay Jhunjhunwala -Joint Managing Director

b) Details of the related parties:

i. Key Management Personnel (Group A)

â¢ Shri L. K. Jhunjhunwala -Chairman

â¢ Shri Aditya Jhunjhunwala -Managing Director

â¢ Shri Sanjay Jhunjhunwala -Joint Managing Director

â¢ Shri S. C. Agarwal -Executive Director

â¢ Ms. Pooja Dua -Company Secretary

â¢ Shri Arvind Kumar Gupta -Chief Financial Officer

â¢ Mrs. Madhu Mathur -Independent Director

â¢ Shri S. K. Gupta -Independent Director

â¢ Shri Sushil Solomon -Independent Director

â¢ Shri Bibhash Kumar Srivastava* -Independent Director

â¢ Dr. Bakshi Ram** -Independent Director

ii. Relatives of Key Management Personnel (Group B)

â¢ Late P C. Jhunjhunwala

â¢ L. K. Jhunjhunwala (HUF)

â¢ P C. Jhunjhunwala (HUF)

â¢ Smt. Naina Jhunjhunwala (Wife of Shri L.K. Jhunjhunwala)

â¢ Shri Vatsal Jhunjhunwala (Son of Shri Aditya Jhunjhunwala)

iii. Enterprises/ Parties over which Key management personnel or their relatives have substantial interest/ significant influence (Group C)

â¢ Benares Inorganics Pvt. Ltd.

â¢ Brahma Properties Pvt. Ltd.

â¢ Indian Sugar Exim Corporation Ltd.

â¢ Jhunjhunwala Securities Pvt. Ltd.

â¢ K M Energy Pvt. Ltd.

â¢ K M Vyapar Ltd.

â¢ K M Strategic Investments and Holdings Pvt. Ltd.

â¢ K M Particle Boards Pvt. Ltd.

â¢ Marvel Business Pvt. Ltd.

â¢ Shri Shakti Credits Ltd.

â¢ Sonar Casting Ltd.

â¢ Shri Laxmi Public Charitable Trust

â¢ Zar International Pvt. Ltd.

38.18 The Company has a subsidiary company namely K M Spirits and Allied Industries Ltd.

Pursuant to above notification, the Company has sold its export quota for exchange with domestic quota of any other sugar mill. The amount received on sale of export quota of Rs.879.05 lakhs (Previous year Rs.Nil) has been shown as line item "Export quota sale receipt" under Revenue from operations.

38.21 The Central Government pursuant to Notification No. 1 (6)/2020-SPâI dated 29th December, 2020 issued by the Hon''ble Ministry of Consumer Affairs, Food and Public Distribution (Department of Food and Public Distribution) has notified a scheme for assistance to sugar mills to facilitate export of sugar during sugar season 2020-21 thereby improving the liquidity position of sugar mills enabling them to clear cane price dues for sugar season 2020-21.

Pursuant to above notification, the Central Government vide Notification No. 1 (6)/2020-SPâ I dated 31st December, 2020 issued by the Hon''ble Ministry of Consumer Affairs, Food and Public Distribution (Department of Food and Public Distribution) allocated factory wise Maximum Admissible Export Quota (MAEQ). The Company was allocated MAEQ of 23765 MT. The Company got exported Nil (Previous year 5125 MT) sugar through merchant exporter. The assistance receivable against such MAEQ export of Rs.Nil (Previous year Rs.307.50 lakhs) has been shown as line item "Assistance on sugar quota export" under Revenue from operations and export facilitation charges payable to merchant exporter amounting to Rs.Nil (Previous year Rs. 151.19 lakhs) has been shown as line item MAEQ expenses under other expenses.

38.35 Other statutory information

i. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company.

ii. The Company does not have any transactions with companies struck off.

iii. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

iv. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

v. The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

vi. 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:

(a) 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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(a) 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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

38.36 Events occurring after the balance sheet date:

No adjusting or significant non adjusting events have occurred between the reporting date and the date of authorization of financial statements.

38.37 Figures in brackets pertain to previous year.

38.38 The previous year''s figures have been regrouped, reclassified, reworked and rearranged wherever necessary to correspond with the current year.

For Mehrotra & Mehrotra For and on behalf of Board of Directors

Chartered Accountants F.R. No 0226C

CA. Sanjay K. Rai S. C. Agarwal Aditya Jhunjhunwala

Partner Executive Director Managing Director

M.No.507946 (DIN-02461954) (DIN-01686189)

A. K. Gupta Pooja Dua

Place : Lucknow Chief Financial Officer Company Secretary

Date : 30th May, 2023 (M. No. A50996)

Mar 31, 2018

35. Explanation of transition to Ind AS

These financial statements, for the year ended 31st March, 2018, are the first financial statements, the Company has prepared in accordance with Ind AS. Accordingly, the Company has prepared financial statements which comply with IndAS applicable for year ended 31st March, 2018, together with the comparative figures for the year ended 31stMarch, 2017, as described in the summary of significant accounting policies.

In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1st April, 2016, i.e. the date of transition to Ind AS.

This note explains the principal adjustments made by the Company and an explanation on how the transition from the previous GAAP to Ind AS has affected its financial statements, including the Balance Sheet as at 1st April, 2016 and the financial statements for the year ended 31st March, 2017. Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from the previous GAAP to Ind AS:

(a) The Company has elected to continue with carrying value of all Property, plant and equipment under the previous GAAP as deemedcost as at the transition date i.e. 1st April, 2016. Under the previous GAAP, Property, plant and equipment were stated at their original cost(net of accumulated depreciation, amortization and impairment), if any, adjusted by revaluation of certain assets.

(b) The Company has elected to continue with the carrying value of Capital work in progress as recognized under the previous GAAP asdeemed cost as at the transition date.

(c) The Company has elected to continue with the carrying value for intangible assets (computer software) as recognized under theprevious GAAP as deemed cost as at the transition date. Under the previous GAAP, Computer Software was stated at its original cost, netof accumulated amortization.

(d) Appendix C to IndAS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with IndAS17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101exemption and assessed all arrangements for embedded leases based on conditions in place as at the date of transition.

(e) The Company has elected to apply previous GAAP carrying amount of its investment in its subsidiary as deemed cost as at the date of transition. Under Ind AS 109, at initial recognition of a financial asset, an entity may make an irrevocable election to present subsequent changes in the fair value of an investment in an equity instrument in other comprehensive income. Ind AS101 allows such designation of previously recognized financial assets, as ''FVTOCI'' on the basis of the facts and circumstances that existed at the date of transition to Ind AS. Accordingly, the Company has designated its investments in certain equity instruments at fair value through other comprehensive income on the basis of the facts and circumstances that existed as at the date of transition to Ind AS.

(f) The estimates as at 1st April, 2016 and as at 31st March 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies).

(g) The Company uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks respectively. Under the previous GAAP, there is no mandatory standard that deals with hedge accounting, which has resulted in the adoption of varying practices. The Company has not applied for hedge accounting on or after the transition date.

(h) Ind AS 101 requires the de-recognition requirements of Ind AS 109 to be applied prospectively to transactions occurring on or after the date of transition. Therefore, the Company has not recognized financial assets and liabilities under Ind AS which were derecognized under the previous GAAP as a result of a transaction that occurred before the date of transition.

(i) The Company has applied the requirements in Ind AS 109 and Ind AS 20 retrospectively to government loans existing as at the date of transition to Ind AS.

35.1.Financial risk management objectives and policies

The Company''s principal financial liabilities include

Borrowings, Trade payable and Other financial \ government as well as state government. Central and state governments policies and regulations affect the Sugar industry and the Company''s operations and profitability. Distillery 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.

(iv) Commodity price risk

Sugar industry being cyclical in nature, realizations 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. Credit risk Credit risk is the risk that counterparty will not meet its Obligation sunder a financial instrument or customer contract, leading to a financial loss. The company''s sugar sales are mostly on cash. Power and ethanol are sold to state government entities; thereby the credit default risk is significantly mitigated.

The impairment for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each balance sheet date. Financial assets are written off when there is no reasonable expectation of recovery, however, the Company continues to attempt to recover the receivables. Where recoveries are made, these are recognized in the Statement of Profit and Loss.

(v) Trade receivables

Trade receivables are non-interest bearing and are generally on cash basis. An impairment analysis is performed at each balance sheet date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the balance sheet date is the carrying value of each class of financial assets disclosed under.

(vi) Liquidity Risk

Liquidity risk refers to the probability of loss arising from a situation where there will not be enough cash and/or cash equivalents to meet the needs of depositors and borrowers, sale of illiquid assets will yield less than their fair value and illiquid assets will not be sold at the desired time due to lack of buyers. 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 and Other financial assets that derive directly from its operations. The Company is exposed to credit risk, liquidity risk and market risk. The Company''s senior management oversees the management of these risks and the appropriate financial risk governance framework for the Company. The senior management provides assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives.

The Board of Directors reviewed policies for managing each of below mentioned risks, which are summarized below:

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other risks, such as regulatory risk and commodity price risk.

(i) 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''s exposure to the risk of changes in market interest rates relates primarily to the Company''s borrowings obligations with floating interest rates. Financial implication will not adversely affect the businesses as the management has established a periodical review procedure to consider the changes taken place in market.

(ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s foreign currency denominated borrowings. This foreign currency risk is covered by using foreign exchange forward contracts and currency swap contracts. The company does not have substantial transactions during the year in foreign currency so the company does not have such kind of risk.

(iii) Regulatory risk

Sugar industry is regulated both by central

balance sheet represent the present value of obligation as adjusted for unrecognized past service cost *as reduced by the fair value of plan assets. Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit & Loss for the year in which the related service is rendered.

In accordance with the Ind AS-19, actuarial valuation was done in respect of gratuity and encashment given below

The primary objective of liquidity management is to provide for sufficient cash and cash equivalents at all times and any place in the world to enable us to meet our payment obligations. The company is maintaining cash credit limit to a reasonable level to meet out the current obligation.

35.2. Earnings per Share

Basic and Diluted EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the company by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares

35.3. Employee benefits in the form of Provident Fund are considered as defined contribution plan. The contribution to defined contribution plan, recognized the following amounts in the Statement of Profit & Loss :

35.4. Defined benefits plans

(Gratuity)

* Amount after deducting Rs. 4.09 lakhs(As on 31st March 2017 Rs.2.06 lakhs and as on 1st April 2016 Rs. 3.59Lakhs) paid under protest.

The amount shown above represent the best possible estimates arrived at on the basis of available information. The uncertainties and timing of the cash flows are dependent on the outcome of different legal processes which have been invoked by the company or the claimants as the case may be and therefore cannot be ascertained accurately. The company does not expect any reimbursements in respect of above contingent liabilities.

35.11. Since, the sugar industry is a seasonal industry; the cost of production of sugar is worked out on annualized basis considering prime cost, factory overhead and administrative overhead closely related to manufacturing of output.

35.12. The company has disposed of entire equity shareholding during the year held in a subsidiary company K M Energy Pvt. Ltd.

35.13. State Government had issued orders for waiver of interest on delayed cane payment to farmers for the sugar seasons 2012-13 to 2014-15. The Hon''ble High Court of Allahabad, Luck now Bench vide order dated

09.03.2017 in PIL No.67617 of 2014 connecting with other PIL and cases has quashed the waiver of interest for these years and remanded to Cane Commissioner for consideration of interest payment to farmers within four months on account of delayed cane payment. In view of the court order, provision for interest amounting to Rs.1213.53 lakhs on delayed cane payment as per demand raised by cane societies was provided during the financial year 2016-17 for the sugar seasons 2012-13 to 2016-17. Cane Commissioner has not taken any action in this regard and not decided the matter within the prescribed time limit. Moreover, the liability is not ascertainable in view of further development and in view of an expert''s opinion sought by the company in this regard. Thus, the liability provided of Rs.1213.53 lakhs in previous year has been reversed during the year.

35.14. As per Bihar State Government directions, the operation of country liquor bottling unit in Bihar remain discontinued during the year. Depreciation due to obsolescence has been provided on fixed assets amounting to Rs.61.17 lakhs (Previous year -Rs.61.17 lakhs) in current year. The carrying amount of assets amounting to Rs. 505.14 lakhs(Previous year -Rs.561.92 lakhs)and liabilities amounting to Rs.829.27 lakhs(Previous year -Rs.1175.05 lakhs)stand in the books as on 31.03.18 and further, revenue of Rs.12.31 lakhs(Previous year -Rs.19.19 lakhs)(Interest) earned against which a sum of Rs.2.92 lakhs(Previous year -Rs.82.85 lakhs) expended.

35.15. The company had set up a cogeneration power plant of 25 MW at factory premises in the financial year 2006-07 and is continuously operating since then. This power generation plant qualifies under Section 80IA of the Income Tax Act, 1961 for deduction of its entire profits from such business for 10 consecutive years out of 15 years. The company has availed the option to treat the financial year 2011-12

35.7. Other Current Assets shown under Notes 12.7 includes certain advances given to suppliers of raw material and revenue purchases, which are adjustable against the supply of goods/services. The management is of the opinion that these balances are recoverable/adjustable in future and accordingly, provision against the same has not been considered at this stage.

35.8. In view of the decision of Hon''ble Supreme Court, extra price and excise duty realized on levy sugar in earlier years amounting to Rs.67.11 lakhs for funding under the Sugar Price Equalization Fund Act, 1976 was transferred to Sugar Price Equalization Reserve Account. Later on as per the order dated 22.09.1993 of Hon''ble Supreme Court, a sum of Rs.17.90 lakhs was paid to the Government out of bank guarantee furnished by the Company and further, during the year 1998-99 a sum of Rs.1.00 lakhs were paid towards Excise Duty on the above. The company has further made a payment of Rs.35.81 lakhs during the year 2005-06 to the Government of India against the bank guarantee furnished by it along with interest of Rs.118.25 lakhs thereon. Still a sum of Rs.12.40 lakhs is lying in the Sugar Price Equalization Reserve as on 31.03.18 shown under Note 14 of "Reserve & Surplus".

35.9. Certain balances in account of Trade receivables, advances, deposit account, and Trade payable are subject to reconciliation and confirmation by the respective parties. The management carries out review of these advances from time to time from realization point of view and based on the same, the required provisions have been considered in the accounts. The management is of the view that the realization from these assets in the ordinary course of business would not be less than the amount at which they are stated in the books of account.

35.10. Long term liabilities (Note No17) includes a loan from U.P. Government amounting to Rs.14.50 lakhs. The issue relating to interest payable thereon is under dispute and the matter is sub-judice before the Hon''ble Allahabad High Court. However, as per the interim order of the Court, a fixed deposit of Rs.14.50 lakhshave been kept with the District Magistrate, Faizabad. In opinion of the management, the interest due on fixed deposit is sufficient to meet out the interest liability of the Company on the said loan and as such, no interest is being provided for in these financial statements.

- Shri Aditya Jhunjhunwala - Managing Director

- Shri Sanjay Jhunjhunwala - Joint Managing Director

b)Details of the related parties:

i. Key Management Personnel (Group A)

- Shri L. K. Jhunjhunwala - Chairman

- Shri Aditya Jhunjhunwala - Managing Director

- Shri Sanjay Jhunjhunwala - Joint Managing Director

- Shri S. C. Agarwal - Executive Director

- Shri Rajeev Kumar - Company Secretary

- Shri Arvind Kumar Gupta - Chief Financial Officer

- A K Mishra - Independent Director

- H P Singhania - Independent Director

- Madhu Mathur - Independent Director

- R S Shukla - Independent Director

- S K Gupta - Independent Director

ii. Relatives of Key Management Personnel (Group B)

- Shri P. C. Jhunjhunwala

- L. K. Jhunjhunwala (HUF)

- A. K. Jhunjhunwala (HUF)

- S. K. Jhunjhunwala (HUF)

- Smt. Naina Jhunjhunwala (Wife of Shri L.K. Jhunjhunwala)

- Smt. Priti Jhunjhunwala

(Wife of Shri Aditya Jhunjhunwala)

- Smt. Priti Jhunjhunwala

(Wife of Shri Sanjay Jhunjhunwala)

- Shri Vatsal Jhunjhunwala

(Son of Shri A. K. Jhunjhunwala)

- Smt. Reena Agarwal (Wife of Shri S. C. Agarwal)

- Shri Ayush Agarwal (Son of Shri S. C. Agarwal)

- Shri Payoush Agarwal (Son of Shri S. C. Agarwal)

iii. Enterprises/ Parties over which Key management personnel or their relatives have substantial interest/ significant influence (Group C)

- K.M. Plantations (P) Ltd.

- Marvel Business (P) Limited

- Francoise Commerce (P) Limited

- Nidhi Financial Services (P) Limited

- Shree Shakti Credits Limited

- Prakash Properties Limited

- Promissing Logistics (P) Ltd.

- Shailja Properties (P) Ltd.

- Zar International (P) Ltd.

- Shivam Trust

- Palak Jhunjhunwala Trust

- Shri Laxmi Public Charitable Trust

35.17. Related Party Disclosures: -

Pursuant to compliance of Indian Accounting Standard (Ind AS 24) on related party disclosure, the relevant information is provided here below:-

a) Related party where control exist

- Shri L. K. Jhunjhunwala - Chairman

as the first year of deduction but it could not claim any deduction till now due to brought forwarded losses. Now, the company intends to claim deduction from this year onwards in view of set off of all brought forwarded losses.

Note: The value of perquisites shown above is as per the income tax provisions.

i. The transactions with related parties have been entered at an amount, which are not materially different from those on normal commercial terms. No amount has been written back/written off during the year in respect to due to/due from related parties.

ii. The amount due from related parties are good and hence no provision for doubtful debts in respect of dues from such related parties is required.

35.18. Segment Reporting: Information on the Segment Reporting for the year ended 31.03.2018 :

35.24. Equity Reconciliation

Equity reconciliation of company as on 1st April,16 and 31st March,17 are given below:

Disclosures as required by Ind AS -101 -First Time Adoption of Indian Accounting Standards - Reconciliation between Previous GAAP and Ind AS.

(a) Reconciliation of equity as at 1st April, 2016 (date of transition to Ind AS): (In Rs.)

35.23. Capital Management

of the Company''s capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company''s policy is to keep the gearing ratio under control except for the first quarter of the financial year due to non-payment of cane dues. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and short-term deposits.

(d) Footnotes to the reconciliation of equity as at 1st April,

2016 and 31st March, 2017 and Statement of Profit and Loss for the year ended 31st March, 2017:

A. Property, plant and equipment :

Under Ind AS, the Company has elected to opt for cost model with respect to property, plant and equipment, capital work in progress and computer software.

B &D. Loan:

Under the previous GAAP, security deposit given to parties were classified under loan and advances. Now, under Ind AS, refundable security deposit to be classified as loan given to parties and covered under Ind As 32 and 109 and required to be amortized to their fair value. Difference between carrying amount and its fair value is shown under deferred rent and amortized over the tenure of agreement. C. Investments in equity instruments:

Under the previous GAAP, investment in equity instruments were classified as long-term investments or current investment based on the intended holding period and reliability. The Company accounted for long term investments in equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments, if any. Under Ind AS, the Company has the option to designate such investments either as FVTOCI or FVTPL investments under Ind As 109 and 32. In case of other long-term investments in unquoted equity shares, the Company has designated investments as FVTOCI investments as at the date of transition. Ind AS requires FVTOCI investments to be measured at fair value. Difference between Carrying value of investments as per Ind AS and carrying value of investments as per previous GAAP aggregating to Rs. 6.27lakhs at the date of transition and subsequent changes of 0.24 lakhs for the year ended 31st March, 2017 has been deferred and has been shown as "Deferred gain on changes in fair value of financial assets" under Other Non-Current Liabilities.

Investment in preference share (Unquoted)

Under GAAP investment in preference share were shown as investment. Under Ind AS 109 and 32 if they are issued less than market rate of interest and unquoted then should be amortized to bring them at their fair value. Difference between carrying value of Investment as per previous GAAP and Ind AS amounting to Rs.30.35 lakhs adjusted with retained earnings as on 01.04.16 and subsequent changes amounting to Rs. 50.14 lakhs routed through profit / loss account for the year ended 31.03.17.

E. Borrowings:

Ind AS requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. Under previous GAAP, transaction costs incurred in connection with borrowings are accounted upfront and charged to Statement of Profit and Loss for the period in which such transaction costs are incurred. Accordingly, borrowings as at the transition date aggregating to Rs.18.49 Lakhs have been reduced with a corresponding adjustment to retained earnings, net of tax. Unsecured loan at interest free taken from promoters are amortized using effective interest Rate and Difference between carrying amount under previous GAAP and Ind As was amounting to Rs.36.47 lakhs adjusted with retained earnings as on 01.04.16 and subsequent changes, if any, operating to the year ended 31.03.17 amounting to Rs.

17.04 lakhs were transferred to statement of Profit / Loss account for the year ended 31.03.17.

F. Deferred tax: Previous GAAP required deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the year. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which were not required under the previous GAAP. Moreover, carry forward of unused tax credits are to be treated as deferred tax assets which was earlier considered as Other non-current non-financial assets. In addition, the various transitional adjustments lead to temporary differences and consequently deferred tax adjustments have been recognized in correlation to the underlying transaction in retained earnings. The net impact on deferred tax liabilities has reduced by Rs.10.59 lakhs as at the date of transition and Rs. 594.99 lakhs for the year ended on 31st March, 2017 respectively.

Retained earnings as at the transition date has been adjusted consequent to the above Ind AS transitional adjustments.

G. Government Grant

Under Previous GAAP, Loan taken from government was not considered as government grant. Now, under Ind AS 20 loans received from government at concessional rate would be considered as government grant and its value will be determined under Ind As 109 and 32. Difference between amount under GAAP was transferred to deferred Income amounting to Rs.295.63 lakhs pertain to the period prior to 01.04.16 was transferred to retained earnings and Subsequent amount Rs.108.05 lakhs was transferred to statement of profit / loss account for the year ended 31.03.17.

H. Capital Reserve

Certain government grant was received by the Company in past years as grant in the nature of promoter''s contribution and recognized under Capital reserve as required under the previous GAAP. Ind AS does not permit recognition of government grant in the nature of promoter contribution to capital reserve. Under Ind AS, such government grants are required to be treated as an asset related grant and to be presented in the balance sheet by setting up the grant as deferred income. The grant set up as deferred income is to be recognized in the Statement of Profit and Loss on a systematic basis over the useful life of the related asset. Accordingly, to comply with Ind AS 20 the Company has reclassified and transferred an appropriate amount Rs.48.33 lakhs from capital reserve to retained earnings as at the transition date as the period and term attached to grant is already satisfied.

I. Corporate Guarantee Given by Holding Company to Subsidiary.

The company has given guarantee to its subsidiary company (K.M. Energy (P) Ltd.) amounting to Rs.2,433.00 lakhs and the same was accounted for in the books at fair value of corporate guarantee for the year ended 31.03.17 as Investment in equity of subsidiary company and corresponding financial liability is created in the books that will be transferred to statement of Profit / Loss account over the period of corporate guarantee. K.M. Energy (P) Ltd. is not a subsidiary as at 31.03.2018.

J. Revenue from sale of goods

Under the previous GAAP, revenue from sale of goods was presented as net of excise duty on sales. However, under Ind AS, revenue from sale of goods includes excise duty and such excise duty is separately presented as an expense on the face of the Statement of Profit and Loss. Thus, under Ind AS, sale of goods for the year ended 31st March, 2017 has been increased by Rs1684.34 lakhs with a corresponding increase in "Total expense".

Interest Income

The previous GAAP required the recognition of revenue from interest on time proportion basis. However, Ind AS requires interest on financial assets to be recognized using the effective interest rate method.

K. Defined benefit liabilities:

As under the previous GAAP, under Ind AS, also the Company continues to recognize costs related to its postemployment defined benefit plan on an actuarial basis. The entire cost, including actuarial gains and losses, was charged to the Statement of Profit and Loss. Under Ind AS, re-measurements of defined benefit plan are recognized in the Balance Sheet with a corresponding debit or credit to equity through Other Comprehensive Income (OCI). Thus, the employee benefit cost is reduced by Rs.6.52 lakhs and re-measurement losses on defined benefit plans has been recognized in the OCI, net of tax as at the transition date. Under Ind AS, an entity is permitted to transfer amounts recognized in Other Comprehensive Income within equity. The Company has taken recourse of the said provision and has transferred as at the date of transition to Ind AS, all measurement costs relating to prior period to the transition date to Retained earnings.

L. Finance cost

Unwinding effect related to Financial Liability is recognized as Finance cost. It is mainly related to borrowing taken from government at concessional rate.

M. Total comprehensive income and other comprehensive income:

Under the previous GAAP, the company did not present

total comprehensive income and other comprehensive income. Hence, it has reconciled the previous GAAP profit to profit as per Ind AS. Further, the previous GAAP profit is reconciled to other comprehensive income and total comprehensive income as per Ind AS. The company has accounted for difference between carrying amount of equity instrument as per GAAP and Ind As adjusted with retained earnings and classified as comprehensive income amounting to Rs. 13.23 lakhs as at 01.04.16 and subsequent changes on account of the same items amounting to Rs.20.48 lakhs were routed through comprehensive income.

35.26. The previous year''s figures have been regrouped, reclassified, reworked and rearranged wherever necessary to correspond with the current year classification / disclosures. Amounts and other disclosures for the preceding period 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 current year.

Mar 31, 2016

a. Nature of Securities

i. Rupee Term Loan of State Bank of India (SEFASU), Punjab National Bank (SEFASU) and Punjab National Bank (Soft Loan) are secured by residual charge on entire fixed assets and current assets of the company, present and future, on pari passu basis with other term lenders.

ii. Rupee Term Loan of Punjab National Bank and Allahabad Bank are secured by 4th charge on entire fixed assets of the company on pari passu basis with other term lenders, personal guarantee of two directors, pledge of shares and and corporate guarantee of a company.

iii. FITL of Punjab National Bank and Allahabad Bank are secured by first charge on entire fixed assets of the company on pari passu basis with other term lenders, personal guarantee of two directors, pledge of shares and corporate guarantee of a company.

iv. Rupee Term Loan from SDF are secured by second charge on Company''s immovable and movable properties both present and future.

v. Unsecured loan from related parties represent promoters contribution as per CDR approval.

a. Rate of interest has been disclosed for loans which are outstanding on balance sheet date and in case of default, penal interest are charged as per sanction.

b. Interest sub-vention to the extent of 12% on SEFASU loan from State Bank of India and Punjab National Bank is to be funded by Central Government. State Bank of India SEFASU Loan is at 12.75%.

c. Interest sub-vention to the extent of 10% on Soft loan from Punjab National Bank is to be funded by Central Government for one year.

Summary of short term borrowings

Secured borrowings

Nature of Securities

i. Working capital loans from State Bank of India is secured by way of hypothecation and first pari passu charge on stocks of sugar, molasses, consumable stores / spares, industrial alcohal, book debts and other current assets of the company, third pari passu charge with other working capital lenders on entire fixed assets and all other movable and immovable assets of the company (existing & future), personal guarantee of three Directors, pledge of shares and corporate guarantee of a company.

ii. Working capital loan from Punjab National Bank is secured by pledge of stock of Crystal sugar, third pari passu charge with other working capital capital lenders on entire fixed assets and all other movable and immovable assets of the company (existing & future), personal guarantee of two Directors, pledge of shares and corporate guarantee of a company.

iii. Working capital loans from The Federal Bank Ltd. is secured by way of hypothecation and first pari passu charge on stocks of sugar, molasses, consumable stores / spares, industrial alcohal, book debts and other current assets of the company, third pari passu charge with other working capital lenders on entire fixed assets and all other movable and immovable assets of the company (existing & future), personal guarantee of two Directors, pledge of shares and corporate guarantee of a company.

1. Other Disclosures:

2. Contingent liabilities and commitments (to the extent not provided for and as certified by the management)

(a) Contingent liabilities

(i) Claims against the Company not acknowledged as debts in respect of pending cases of employees under labour laws -Rs.161.60 lacs (Previous Year- Rs.150.14 lacs).

(ii) Claims against the company not acknowledged as debts in respect of criminal and Civil Cases Rs.33.71 lacs (Previous Year-Rs.35.43 lacs).

(iii) Bank guarantees given to the Central Government, Excise Department and Indian Oil Corporation Ltd., aggregating to Rs.587.11 lacs (Previous Year Rs.373.76lacs).

(iv) Interest recompense payable to lenders under CDR scheme estimated amounting to Rs. 214.14 Lacs (Previous Year Rs.676.43 lacs). It is stipulated that minimum 75% of the recompense amount should be recovered by the lenders in terms of CDRcircular.

v) As per the amended provision of the Bonus Act, differential amount of bonus liability of Rs.16.93 lacs for F.Y. 2014-2015.

(vi) Disputed sales tax, income tax and excise duty cases under appeal - Rs.33181.82 lacs (Previous Year Rs.24603.80 lacs)

The amount shown above represent the best possible estimates arrived at on the basis of available information. The uncertainties and timing of the cash flows are dependent on the outcome of different legal processes which have been invoked by the company or the claimants as the case may be and therefore cannot be ascertained accurately. The company does not expect any reimbursements in respect of above contingent liabilities.

(b) Commitments:

(i) Estimated amount of contracts remaining to be executed on capital account and not provided for-Nil (Previous Year- Nil).

(ii) Advances paid against above- Nil (Previous Year-Nil).

3. Employee Benefits

As per Accounting Standard -15 ''Employees Benefits'' the disclosure of Employee Benefits as defined in the Accounting Standard are as follow:

a. Defined contribution plans

Employee benefits in the form of Provident Fund are considered as defined contribution plan. The contribution to defined contribution plan, recognized the following amounts in the Statement of Profit & Loss:

b. Defined benefits plans

Long term employee benefits in the form of gratuity and leave encashment are considered as defined benefit plan. The present value of obligation is determined based on actuarial valuation using projected unit credit method as at the balance sheet date. The amount of defined benefits recognized in the balance sheet represent the present value of obligation as adjusted for unrecognized past service cost as reduced by the fair value of plan assets.

In accordance with the Accounting Standard 15, actuarial valuation was done in respect of gratuity and leave encashment defined benefits plans and details of the same are given below:

Note: The Company funded the gratuity liability through a separate Gratuity Fund. The fair value of the plan assets is based on the information certified by the management.

3. Short term loans and advances shown under Notes 2.18 includes certain advances given to suppliers of raw material and revenue purchases, which are adjustable against the supply of goods/services. The management is of the opinion that these balances are recoverable/adjustable in future and accordingly, provision against the same has not been considered at this stage.

4. Certain bank accounts shown in Notes 2.17 of Cash and Bank balances under sub-head ''Balance with Banks'' are non-operating for last some period and are also subject to reconciliation and receipt of confirmation. As such, the balance of Rs.1.99 lacs shown in respect of those bank accounts in the financial statements is as per books of account only.

5. In view of the decision of Hon''ble Supreme Court, extra price and excise duty realized on levy sugar in earlier years amounting to Rs.67.11 lacs for funding under the Sugar Price Equalization Fund Act, 1976 was transferred to Sugar Price Equalization Reserve Account. Later on as per the order dated 22.09.1993 of Hon''ble Supreme Court, a sum of Rs.17.90 lacs was paid to the Government out of bank guarantee furnished by the Company and further, during the year 199899 a sum of Rs.1.00 lac was paid towards Excise Duty on the above. The company has further made a payment of Rs.35.81 lacs during the year 2005-06 to the Government of India against the bank guarantee furnished by it along with interest of Rs.118.25 lacs thereon. Still a sum of Rs.12.40 lacs is lying in the Sugar Price Equalization Reserve as on 31.03.16 shown under Note 2.2 of "Reserve & Surplusâ.

6. Certain balances in account of debtors, advances, deposit account, and creditors are subject to reconciliation and confirmation by the respective parties. In some of the cases, the amount is overdue for last some years and consequential revenue impact, if any, is not ascertainable. However, management has reviewed these advances from its realization point of view and based on the management''s working, the required provisions in respect thereof has been considered in these financial statements, wherever necessary. As far as other balances are concerned, the management is of the opinion that these balances are recoverable/adjustable and accordingly, provision against the same has not been considered at this stage and these balances are disclosed in the financial statements as per books of account only. The management is of the view that the realization from these assets in the ordinary course of business would not be less than the amount at which they are stated in the books of account. Further, there is no system of charging interest as per market tradition on amount due from sundry debtors and the parties to whom advances extended in the ordinary course of business.

7. Long term liabilities (Note No.2.5) includes a loan from U.P Government amounting to Rs.14.50 lacs. The issue relating to interest payable thereon is under dispute and the matter is sub-judice before the Hon''ble Allahabad High Court. However, as per the interim order of the Court, a fixed deposit of Rs.14.50 lacs has been kept with the District Magistrate, Faizabad. In opinion of the management, the interest due on fixed deposit is sufficient to meet out the interest liability of the Company on the said loan and as such, no interest is being provided for in these financial statements.

8. For the purpose of computing deferred tax liability, amount of brought forward losses as claimed in the income tax returns filed has been considered for recognizing deferred tax assets. On the basis of future projections taken on record by the management after considering improved performance of Sugar and Co-gen divisions, the management is confident that there is a virtual certainty that sufficient taxable income will be available in the forthcoming financials years against which, the deferred tax assets can be realized in the normal course of business of the company.

9. Cost of material consumed for the year ended 31st March, 2016 is net of financial assistance of Rs.1819.64 lacs received for sugar season 2014-15 lacs from the State Government.

10. Since, the sugar industry is a seasonal industry; the cost of production of sugar is worked out on annualized basis.

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

ii. No amount has been written back/written off during the year in respect to due to/due from related parties.

iii. The amount due from related parties are good and hence no provision for doubtful debts in respect of dues from such related parties is required.

12. Segment Reporting: Information on the Segment Reporting of the company for the year ended 31.03.2016:

The company has identified three primary business segments viz. Sugar, Distillery and Co-generation. Segments have been identified and reported taking into account the nature of products, the differing risks and returns, the organizational structure and internal business reposting system.

*Capital expenditure includes fixed assets capitalized during the year and net increase/decrease in capital work-in-progress.

The transactions between segments are primarily for materials which are transferred at market determined prices. Common costs are apportioned on a reasonable basis.

Information about Secondary Geographical Segment: There is no secondary segment.

13. Following are the relevant disclosures as required under the Micro, Small & Medium Enterprises Development Act, 2006

a. Sundry creditors include a sum aggregating Rs.Nil (Rs.12.59 lacs) due to micro & small enterprises is on account of principal only.

b. The Amount of interest paid by the Company in terms of Section 16, along with the amount of payment made to the micro & small enterprises beyond the appointed date during the year Rs. Nil.

c. The amount of interest due and payable for the period of delay in making payment which have been paid but beyond the appointed day during the year but without adding the interest specified under this Act. Rs. Nil.

d. The amount of interest accrued and remaining unpaid Rs. Nil.

e. The amount of further interest remaining due and payable even in succeeding year Rs. Nil

The above mentioned outstanding are in normal course of business and the information regarding micro & small enterprises have been determined to the extent such parties have been identified on the basis of information available with the company.

17. Depreciation has been aligned to meet the requirements of Schedule -II to the Companies Act, 2013 and accordingly an amount of Rs.35.06 lacs in relation to the assets whose useful life has already exhausted has been adjusted with Retained Earnings.

Had the Company continued to charge depreciation based on rates and manner as specified under the erstwhile Schedule XIV to the Companies Act, 1956, the Profit before Tax for the year ended 31st March, 2016 would have been lower by Rs.147.09lacs.

18. The borrowings from banks were restructured under Corporate Debt Restructuring Mechanism (CDR) vide letter of approval dated 27.03.2012 issued by CDR EG. The company has proposed to exit from CDR and accordingly has made provision of Rs.642.42 lacs towards interest recompense considering cut-off date 29.02.2016 as per CDR guidelines.

19. As per Bihar State Government directions, the operation of country liquor bottling unit in Bihar shall get discontinued after 31.03.2016. The carrying amount of assets amounting to Rs. 631.80 lacs and liabilities amounting to Rs.1278.36 lacs stand in the books as on 31.03.16 and further, revenue of Rs.2639.11 lacs earned during the year against which a sum of Rs.3755.34 expended during the year.

20. The previous year figures are for the period from 01.10.2013 to 31.03.2015 i.e. for 18 months and the current financial year of the company is for 12 months. As such, the figures of current year are not comparable with previous period''s figures.

21. The company has received demand notices of Rs.729.67 lacs towards state excise duty, VAT and fee including penalty in respect to the discontinued bottling operations in Bihar State and the said liability has been provided for in books on the basis of legal opinion taken by the company.

22. The previous period''s figures have been regrouped, reclassified, reworked and rearranged wherever necessary to correspond with the current year classification/disclosures. Amounts and other disclosures for the preceding period 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 current year.

Mar 31, 2015

1. Other Disclosures:

1. Contingent liabilities and commitments (to the extent not provided for and as certified by the management)

(a) Contingent liabilities

(i) Claims against the Company not acknowledged as debts in respect of pending cases of employees under labour laws - Rs.150.14 lacs (Previous Year - Rs.128.72 lacs).

(ii) Claims against the company not acknowledged as debts in respect of criminal and Civil Cases Rs.35.43 lacs (Previous Year -Rs.31.17 lacs).

(iii) Bank guarantees given to the Central Government, Excise Department and Indian Oil Corporation Ltd., aggregating to Rs.373.76 lacs (Previous Year Rs.132.96 lacs).

(iv) Company has given guarantee to the banks, which provided vehicle loans to the employees of the company, outstanding loan as on 31.03.2015 NIL (Previous Year Rs. 0.42 lacs).

(v) Interest recompense payable to lenders under CDR scheme estimated amounting to Rs.676.43 lacs (Previous Year Rs.409.81 lacs). It is stipulated that minimum 75% of the recompense amount should be recovered by the lenders in terms of CDR circular.

(vi) Disputed sales tax, income tax and excise duty cases under appeal - Rs.24603.80 lacs (Previous Year Rs.8935.20 lacs)

The amount shown above represent the best possible estimates arrived at on the basis of available information. The uncertainties and timing of the cash flows are dependent on the outcome of different legal processes which have been invoked by the company or the claimants as the case may be and therefore cannot be ascertained accurately. The company does not expect any reimbursements in respect of above contingent liabilities.

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals filed by the company.

(b) Commitments :

(i) Estimated amount of contracts remaining to be executed on capital account and not provided for-Nil (Previous Year - Rs.211.33 lacs).

(ii) Advances paid against above- Nil (Previous Year -Rs.96.38 lacs).

2. Employee Benefits

As per Accounting Standard -15 'Employees Benefits' the disclosure of Employee Benefits as defined in the Accounting Standard are as follow :

a. Defined contribution plans

Employee benefits in the form of Provident Fund are considered as defined contribution plan. The contribution to defined contribution plan, recognized the following amounts in the Statement of Profit & Loss:

b. Defined benefits plans

Long term employee benefits in the form of gratuity and leave encashment are considered as defined benefit plan. The present value of obligation is determined based on actuarial valuation using projected unit credit method as at the balance sheet date. The amount of defined benefits recognized in the balance sheet represent the present value of obligation as adjusted for unrecognized past service cost as reduced by the fair value of plan assets.

In accordance with the Accounting Standard 15, actuarial valuation was done in respect of gratuity and leave encashment defined benefits plans and details of the same are given below:

Note: The Company funded the gratuity liability through a separate Gratuity Fund. The fair value of the plan assets is based on the information certified by the management. However, the gratuity liability of Rs.23,60,274/- of Co-Gen Division is not funded.

3. Short term loans and advances shown under Notes 2.18 includes certain advances given to suppliers of raw material and revenue purchases, which are adjustable against the supply of goods/services but are running due in the books since long. The management is of the opinion that these balances are recoverable/adjustable in future and accordingly, provision against the same has not been considered at this stage.

4. Certain bank accounts shown in Notes 2.17 of Cash and Bank balances under sub-head 'Balance with Banks' are non- operating for last some period and are also subject to reconciliation and receipt of confirmation. As such, the balance of Rs.1.99 lacs shown in respect of those bank accounts in the financial statements is as per books of account only.

5. In view of the decision of Hon'ble Supreme Court, extra price and excise duty realized on levy sugar in earlier years amounting to Rs.67.11 lacs for funding under the Sugar Price Equalization Fund Act, 1976 was transferred to Sugar Price Equalization Reserve Account. Later on as per the order dated 22.09.1993 of Hon'ble Supreme Court, a sum of Rs.17.90 lacs was paid to the Government out of bank guarantee furnished by the Company and further, during the year 1998- 99 a sum of Rs.1.00 lac was paid towards Excise Duty on the above. The company has further made a payment of Rs.35.81 lacs during the year 2005-06 to the Government of India against the bank guarantee furnished by it along with interest of Rs.118.25 lacs thereon. Still a sum of Rs.12.40 lacs is lying in the Sugar Price Equalization Reserve as on 31.03.15 shown under Note 2.2 of "Reserve & Surplus".

6. Certain balances in account of debtors, advances, deposit account, and creditors are subject to reconciliation and confirmation by the respective parties. In some of the cases, the amount is overdue for last some years and consequential revenue impact, if any, is not ascertainable. However, management has reviewed these advances from its realization point of view and based on the management's working, the required provisions in respect thereof has been considered in these financial statements, wherever necessary. As far as other balances are concerned, the management is of the opinion that these balances are recoverable/adjustable and accordingly, provision against the same has not been considered at this stage and these balances are disclosed in the financial statements as per books of account only. The management is of the view that the realization from these assets in the ordinary course of business would not be less than the amount at which they are stated in the books of account. Further, there is no system of charging interest as per market tradition on amount due from sundry debtors and the parties to whom advances extended in the ordinary course of business and which remains due for a substantial period.

7. Long term liabilities (Note No.2.5) includes a loan from U.P. Government amounting to Rs.14.50 lacs. The issue relating to interest payable thereon is under dispute and the matter is sub- judice before the Hon'ble Allahabad High Court. However, as per the interim order of the Court, a fixed deposit of Rs.14.50 lacs has been kept with the District Magistrate, Faizabad. In opinion of the management, the interest due on fixed deposit is sufficient to meet out the interest liability of the Company on the said loan and as such, no interest is being provided for in these financial statements.

8. For the purpose of computing deferred tax liability, amount of brought forward losses as claimed in the income tax returns filed has been considered for recognizing deferred tax assets.

On the basis of future projections taken on record by the management after considering improved performance of Cogen and Distillery Divisions, the management is confident that there is a virtual certainty that sufficient taxable income will be available in the forthcoming financials years against which, the deferred tax assets can be realized in the normal course of business of the company.

9. The Commissioner, Central Excise and Service Tax, Lucknow has passed the orders on 31.03.2015 in consequence to show cause notices issued earlier and raised a demand of Rs.13,55,29,759 on account of exemption of excise duty claimed on molasses consumed in house for distillery operations and also cenvat credit availed during the period from July, 2007 to March, 2013. Accordingly a provision of Rs.1154.18 lacs after adjusting brought forward provision has been made in the Statement of Profit & Loss.

10. Cost of material consumed for the 18 months period ended 31st March, 2015 is net of financial assistance of Rs.6/- per qtl. of cane purchased during sugar season 2013-14 amounting to Rs.555.19 lacs extended by the State Government. Further for the sugar season 2014-15, the Government of Uttar Pradesh has announced certain financial assistance including Rs.8.60 per qtl of cane linked to average selling price of sugar and its by products during the period 01.10.14 to 31.05.15 which is to be recommended by the Committee constituted by the Government of Uttar Pradesh as the average selling price of sugar is significantly lower than the thresh hold specified in the above announcement. Accordingly, the company has accounted for the above financial assistance of Rs.782.45 lacs for sugar season 2014-15 lacs and adjusted the same against the cost of material.

11. Since, the sugar industry is a seasonal industry; the cost of production of sugar is worked out on annualized basis.

c. The amount of interest due and payable for the period of delay in making payment which have been paid but beyond the appointed day during the year but without adding the interest specified under this Act. Rs. Nil.

d. The amount of interest accrued and remaining unpaid Rs. Nil.

e. The amount of further interest remaining due and payable even in succeeding year Rs. Nil.

The above mentioned outstanding are in normal course of business and the information regarding micro & small enterprises have been determined to the extent such parties have been identified on the basis of information available with the company.

12. Statement of additional information:-

a) Expenditure in Foreign Currency:

Traveling Expenses Rs.44.33 lacs (P.Y.-Rs.10.16 lacs)

Others Rs. 5.42 lacs (P.Y.- Rs.2.97 lacs)

b) Receipt of interest in Foreign Currency of old dues: Rs. 113.94 lacs (P.Y.- Nil)

13. The borrowings from banks were restructured under Corporate Debt Restructuring Mechanism (CDR) vide letter of approval dated 27.03.2012 issued by CDR EG. This CDR package has since been implemented and necessary effect to the extent allowed by the banks has been considered in the financial statements. Accordingly, interest refunded by the lenders has been adjusted against the finance cost of the period.

14. The company would be able to realize a sum of Rs.365.79 lacs against a debtor for which provision has been made in past on account of doubtful nature of the same. As the amount is realizable, the excess provision has been reversed.

15. There is no liability for the period ended on 31st March, 2015 towards Corporate Social Responsibility based on the performance of last 3 years as there is net loss computed for last 3 years.

15. Pursuant to the provisions of Companies Act, 2013, the company is required to close its financial year only on 31st March and accordingly to align its financial year as per amended provisions, the current financial year of the company has been extended till 31.03.2015 covering the period from 01.10.2013 to 31.03.2015 i.e. for 18 months and necessary compliance has been made in this regard. As such, the figures of current period are not comparable with previous year's figures.

16. The previous year's figures have been regrouped, reclassified, reworked and rearranged wherever necessary to correspond with the current period classification/disclosures. Amounts and other disclosures for the preceding year are included as an integral part of the current period financial statements and are to be read in relation to the amounts and other disclosures relating to current period.

Sep 30, 2013

Note: The Company funded the gratuity liability through a separate Gratuity Fund. The fair value of the plan assets is based on the information certified by the management. However, the gratuity liability of Rs.8,71,882/- of Distillery Division and Rs. 19,01,562/- of Co-Gen Division is notfunded.

1. Short term loans and advances shown under Notes 2.18 includes certain advances given to suppliers of raw material and revenue purchases, which are adjustable against the supply of goods/services but are running due in the books since long. The management is of the opinion that these balances are recoverable/adjustable in future and accordingly, provision against the same has not been considered at this stage.

This advance also includes an amount of Rs.Nil (Previous year Rs.99.00 lacs) due from U.P. State Government as per order of the Hon''ble Allahabad High Court on account of claim lodged by the Company for compensation towards acquisition by the State Government of one of the sugar mills owned by the company. The matter was sub-judice and was pending for execution before the Commissioner, Lucknow. Now, the matter has been settled and amount has been received during the year along with interest of Rs.116.26 lacs, which has been shown as income from others in Note 2.21.

2. Certain bank accounts shown in Notes 2.17 of Cash and Bank balances under sub-head ''Balance with Banks'' are non- operating for last some period and are also subject to reconciliation and receipt of confirmation. As such, the balance of Rs.2.31 lacs shown in respect of those bank accounts in the financial statements is as per books of account only.

3. In view of the decision of Hon''ble Supreme Court, extra price and excise duty realized on levy sugar in earlier years amounting to Rs.67.11 lacs for funding under the Sugar Price Equalization Fund Act, 1976 was transferred to Sugar Price Equalization Reserve Account. Later on as per the order dated 22.09.1993 of Hon''ble Supreme Court, a sum of Rs. 17.90 lacs was paid to the Government out of bank guarantee furnished by the Company and further, during the year 1998- 99 a sum of Rs.1.00 lac was paid towards Excise Duty on the above. The company has further made a payment of Rs.35.81 lacs during the year 2005-06 to the Government of India against the bank guarantee furnished by it along with interest of Rs.118.25 lacs thereon. Still a sum of Rs.12.40 lacs is lying in the Sugar Price Equalization Reserve as on 30.09.13 shown under Note 2.2 of "Reserve & Surplus".

4. Certain balances in account of various debtors, advances, deposit account, and creditors are subject to reconciliation and confirmation by the respective parties. In some of the cases, the amount is overdue for last some years and consequential revenue impact, if any, is not ascertainable. However, management has reviewed these advances from its realization point of view and based on the management''s working, the required provisions in respect thereof has been considered in these financial statements, wherever necessary. As far as other balances are concerned, the management is of the opinion that these balances are recoverable/adjustable and accordingly, provision against the same has not been considered at this stage and these balances are disclosed in the financial statements as per books of account only. The management is of the view that the realization from these assets in the ordinary course of business would not be less than the amount at which they are stated in the books of account. Further, there is no system of charging interest as per market tradition on amount due from sundry debtors and the parties to whom advances extended in the ordinary course of business and which remains due for a substantial period.

5. Long term liabilities (Note No.2.5) includes a loan from U.P. Government amounting to Rs.14.50 lacs. The issue relating to interest payable thereon is under dispute and the matter is sub- judice before the Hon''ble Allahabad High Court. However, as per the interim order of the Court, a fixed deposit of Rs.14.50 lacs has been kept with the District Magistrate, Faizabad. In opinion of the management, the interest due on fixed deposit is sufficient to meet out the interest liability of the Company on the said loan and as such, no interest is being provided for in these financial statements.

6. For the purpose of computing deferred tax liability, amount of brought forward losses as claimed in the income tax returns filed has been considered for recognizing deferred tax assets. On the basis of future projections taken on record by the management after considering improved performance of

Cogen and Distillery Divisions, the management is confident that there is a virtual certainty that sufficient taxable income will be available in the forthcoming financials years against which, the deferred tax assets can be realized in the normal course of business of the company.

7. No provision for current tax has been made in view of the availability of brought forward business loss and unabsorbed depreciation.

8. Since, the sugar industry is a seasonal industry; the cost of production of sugar is worked out on annualized basis.

9. Related Party Disclosures:-

Pursuant to compliance of Accounting Standard (AS 18) on related party disclosure, the relevant information is provided here below. -

a) Related party where control exist

- Shri L. K. Jhunjhunwala -Chairman ShriAditya Jhunjhunwala -Managing Director Shri Sanjay Jhunjhunwala -Joint Managing Director

b) Details of the related parties:

i. Key Management Persons (Group A)

Shri L. K. Jhunjhunwala -Chairman

ShriAditya Jhunjhunwala -Managing Director

Shri Sanjay Jhunjhunwala -Joint Managing Director

- ShriS.C.Agarwal -Executive Director

ii. Key Management Persons'' relatives (Group B)

- Shri PC. Jhunjhunwala L. K. Jhunjhunwala (HUF)

- A. K. Jhunjhunwala (HUF)

- S.K. Jhunjhunwala (HUF)

Smt. Naina Jhunjhunwala (Wife of Shri L.K. Jhunjhunwala) Smt. Priti Jhunjhunwala (Wife of Shri Aditya Jhunjhunwala)

- Smt. Priti Jhunjhunwala (Wife of Shri Sanjay Jhunjhunwala) Shri Vatsal Jhunjhunwala (Son of Shri A. K. Jhunjhunwala)

- Smt. Reena Agarwal (Wife of Shri S. C. Agarwal)

- Shri Ayush Agarwal (Son of ShriS.C.Agarwal) Shri Payoush Agarwal (Son of Shri S. C. Agarwal)

iii. Associates (Group C)

- K.M.Vyapar(P)Ltd. K.M. Plantations (P) Ltd.

- Marvel Business (P) Limited

- Francoise Commerce (P) Limited

- Nidhi Financial Services (P) Limited Shree Shakti Credits Limited Prakash Properties Limited

- Promising Logistics (P) Ltd. Shailja Propertied (P) Ltd.

- Zar International (P) Ltd.

iv. Companies/ Parties in which Key management person or his relatives have substantial interest/significant influence (Group

Virdhi Trust

- Shivam Trust

- Vatsal Trust

- Laxmi Public Charitable Trust Jhunjhunwala P G College

c) Details of the related parties with whom transactions have taken place during the year:

i. Key Management Persons (Group A)

ShriL K Jhunjhunwala -Chairman

ShriAditya Jhunjhunwala -Managing Director

- ShriSanjay Jhunjhunwala -Joint Managing Director

- ShriS.C.Agarwal -Executive Director

ii. Associates (Group C)

K.M.Vyapar(P)Ltd. Marvel Business (P) Limited Shree Shakti Credits Limited

- Zar International (P) Ltd.

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

ii. No amount has been written back/written off during the year in respect to due to/due from related parties.

iii. The amount due from related parties are good and hence no provision for doubtful debts in respect of dues from such related parties is required.

10. Segment Reporting: Information on the Segment Reporting of the company for the year ended 30.09.2013:

The company has identified three primary business segments viz. Sugar, Distillery and Co-generation. Segments have been identified and reported taking into account the nature of products, the differing risks and returns, the organizational structure and internal business reposting system. Capital expenditure includes fixed assets capitalized during the year ani'' net increase/decrease in capital work-in-progress.

The transactions between segments are primarily for materials which are transferred at market determined prices. Common costs are apportioned on a reasonable basis.

Information about Secondary Geographical Segment: There is no secondary segment.

11. Following are the relevant disclosures as required under the Micro, Small & Medium Enterprises Development Act, 2006

a. Sundry creditors include a sum aggregating Rs.36.84 lacs (Rs.37.54 lacs) due to micro & small enterprises is on account of principal only.

b. The Amount of interest paid by the Company in terms of Section 16, along with the amount of payment made to the micro & small enterprises beyond the appointed date during the year Rs. Nil.

c. The amount of interest due and payable for the period of delay in making payment which have been paid but beyond the appointed day during the year but without adding the interest specified under this Act. Rs. Nil.

d. The amount of interest accrued and remaining unpaid Rs. Nil.

e. The amount of further interest remaining due and payable even in succeeding year Rs. Nil.

The above mentioned outstanding are in normal course of business and the information regarding micro & small enterprises have been determined to the extent such parties have been identified on the basis of information available with the company.

12. Payments to Auditors:

AuditFee Rs.2,00,000/- (Previous Year: Rs.2,00,000/-)

TaxAuditFee Rs.1,00,000/- (Previous Year: Rs.1,00,0007-)

13. The borrowings from banks were restructured under Corporate Debt Restructuring Mechanism (CDR) vide tetter of approval dated 27.03.2012 issued by CDR EG. This CDR package has since been implemented and necessary effect to the extent allowed by the banks has been considered in the financial statements.

14. The Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 4th April, 2013 approved the dismantling of regulated release mechanism of sugar with immediate effect and also removed the obligation on the sugar manufactures to supply 10% of their sugar production as levy sugar for sugar produced on or after 1 st October, 2012. Necessary notification in this regard has been issued on 2nd May, 2013. Therefore, the company has given necessary effect totheannouncementofCCEAinits books of account for the year ended 30th September, 2013.

15. Amount of Rs.44 lacs withdrawn during the year from Bank Account represent the Molasses Storage Fund is to be utilized for construction and repairs of molasses storage tanks and will be used for specified purposes in next financial year in compliance of the statutory requirement.

16. The previous year''s figures have been regrouped, reclassified, reworked and rearranged wherever necessary to correspond with the current years'' classification/disclosures. Amounts and other disclosures for the preceding year 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 current year.

Sep 30, 2012

A. Nature of Securities

i. Rupee Term Loan of State Bank of India (SEFASU) and Punjab National Bank (SEFASU) are secured by residual 4th charge on entire fixed assets of the company on pari passu basis with other term lenders under scheme for extending Financial Assistance to Sugar Undertakings 2007 (SEAFSU).

ii. Punjab National Bank cogen loan is secured by first charge on entire fixed assets of the company on pari passu basis with otherterm lenders and personal guarantee of two directors.

ii. Rupee Term Loan of Punjab National Bank and Allhabad Bank are secured by 4th charge on entire fixed assets of the company on pari passu basis with otherterm lenders and personal guarantee of two directors.

iii. FITL of Punjab National Bank and Allahabad Bank are secured by first charge on entire fixed assets of the company on pari passu basis with otherterm lenders and personal guarantee of two directors.

iv. Rupee Term Loan from SDF are secured by second charge on Company''s immovable and movable properties both present and future.

v. Unsecured loan from related parties represent promoters contribution as per CDR approval.

b. The company has defaulted in repaymentof loans and interest in respect of the following:

From Punjab National Bank -Short term loan

Principal amount Rs.337 lacs has been repaid in June, 12 with average delay of 3 months.

Interest

Interest of Rs.0.25 lacs for the month September, 11 has been paid in December 11.

Interest in total of Rs.45.38 lacs charged on monthly basis for the period from October, 11 to June. 12 has been paid with average delay of 3 months.

Note:

The company has defaulted in repayment of principal sum and interest of unsecured loan taken from Punjab National Bank and Allahabad Bank.

Subsequently, these loans were restructured under Corporate Debt Restructuring Mechanism (CDR) vide letter of approval dated 27.03.2012 issued by CDR EG. Now default on these loans are ml at the year end.

1.1 Basis of Preparation of Financial Statements

These financial statements have been prepared on the accrual basis of accounting, under the historical cost convention except for revaluation of certain Fixed Assets, in accordance with the Companies Act, 1956 and the applicable Accounting Standards issued by the Institute of Chartered Accountants of India. There is no change in the system of accounting as being consistently followed from earlier years unless otherwise stated.

All assets and liabilities have been classified as current or non- current as per company''s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of operations and time between procurement of raw material and realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

2.1 Other Disclosures

1. Contingent liabilities (to the extent not provided for and as certified by the management)

(a) Claims against the Company not acknowledged as debts in respect of pending cases of employees under labour laws - Rs. 113.56 lacs (Previous Year - Rs. 108.80 lacs).

(b) Claims against the company not acknowledged as debts in respect of criminal and Civil Cases Rs.43.43 lacs (Previous Year-Rs.34.13 lacs).

(c) Estimated value of contracts remaining to be executed on capital account and not provided for Rs. Nil (Previous Year-Nil).

(d) Bank guarantees given to the Central Government, Excise Department, Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. etc. aggregating to Rs.25.26 lacs (Previous Year Rs.122.38 lacs).

(e) Company has given guarantee to the banks, which provided vehicle loans to the employees of the company, outstanding loan as on 30.09.2012 Rs.0.41 lacs (Previous Year Rs 1.17 lacs).

(f) Disputed sales tax, income tax and excise duty cases under appeal - Rs.6484.84 lacs (Previous Year Rs.648.49 lacs)

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals filed by the company

2. Employee Benefits

The Company has during the year adopted Accounting Standard -15 (revised 2005) ''Employees Benefits'' for recognizing liability of employees benefits. The Company has classified the various benefits provided to employees as under:

a. Defined contribution plans

Employee benefits in the form of Provident Fund are considered as defined contribution plan. The contribution to

b. Defined benefits plans

Long term employee benefits in the form of gratuity and leave encashment are considered as defined benefit plan. The present value of obligation is determined based on actuarial valuation using projected unit credit method as at the balance sheet date. The amount of defined benefits recognized in the balance sheet represent the present value of obligation as adjusted for unrecognized past service cost as reduced by the fair value of plan assets.

In accordance with the Accounting Standard 15, actuarial valuation was done in respect of gratuity and leave encashment defined benefits plans and details of the same are given below:

Note: The Company funded the gratuity liability through a separate Gratuity Fund. The fair value of the plan assets is based on the information certified by the management However, the gratuity liability of Rs.7,92,757/- of Distillery Division & Rs 16,63,712/- of Co- Gen Division is notfunded.

3. Short term loans and advances shown under Notes 2.18 includes certain advances given to suppliers of raw material and revenue purchases, which are adjustable against the supply of goods/services but are running due in the books since long. The management is of the opinion that these balances are recoverable/adjustable in future and accordingly, provision against the same has not been considered at this stage.

This advance also includes an amount of Rs.99.00 lacs due from U P. State Government as per order of the Hon''ble Allahabad High Court on account of claim lodged by the Company for compensation towards acquisition by the State Government of one of the sugar mills owned by the company. The matter is sub-judice and is pending for execution before the Commissioner, Lucknow. The management is hopeful to recover the said amount along with interest. However, interest income on the same is not recognized in the accounts and it will be considered in the books on receipt basis in the year of its actual realization.

4. Certain bank accounts shown in Notes 2.17 of Cash and Bank balances under sub-head ''Balance with Banks'' are non- operating for last some period and are also subject to reconciliation and receipt of confirmation. As such, the balance of Rs.8.78 lacs shown in respect of those bank accounts in the financial statements is as per books of account only.

5. In view of the decision of Hon''ble Supreme Court, extra price and excise duty realized on levy sugar in earlier years amounting to Rs.67.11 lacs for funding under the Sugar Price Equalization Fund Act, 1976 was transferred to Sugar Price Equalization Reserve Account. Later on as per the order dated 22.09.1993 of Hon''ble Supreme Court, a sum of Rs.17.90 lacs was paid to the Government out of bank guarantee furnished by the Company and further, during the year 1998- 99 a sum of Rs. 1.00 lac was paid towards Excise Duty on the above. The company has further made a payment of Rs.35.81 lacs during the year 2005-06 to the Government of India against the bank guarantee furnished by it along with interest of Rs. 118.25 lacs thereon. Still a sum of Rs. 12.40 lacs is lying in the Sugar Price Equalization Reserve as on 30.09.12 shown under Note 2.2 of "Reserve & Surplus".

6. Certain balances in personal account of various debtors, advances, deposit account, and creditors are subject to reconciliation and confirmation by the respective parties. In some of the cases, the amount is overdue for last some years and consequential revenue impact, if any, is not ascertainable. However, management has reviewed these advances from its realization point of view and based on the management''s working, the required provisions in respect thereof has been considered in these financial statements, wherever necessary. As far as other balances are concerned, the management is of the opinion that these balances are recoverable/adjustable and accordingly, provision against the same has not been considered at this stage and these balances are disclosed in the financial statements as per books of account only. The management is of the view that the realization from these assets in the ordinary course of business would not be less than the amount at which they are stated in the books of account. Further, there is no system of charging interest as per market tradition on amount due from sundry debtors and the parties to whom advances extended in the ordinary course of business and which remains due for a substantial period.

7. The quantity of pressmud with Sugar Division has not been ascertained as on 30.09.2012 and therefore, the value of closing stock of pressmud with Sugar Division is shown at Nil.

8. Long term liabilities (Note No.2.5) includes a loan from U.P. Government amounting to Rs.14.50 lacs. The issue relating to interest payable thereon is under dispute and the matter is sub- judice before the Hon''ble Allahabad High Court. However, as per the interim order of the Court, a fixed deposit of Rs.14.50 lacs has been kept with the District Magistrate, Faizabad. In opinion of the management, the interest due on fixed deposit is sufficient to meet out the interest liability of the Company on the said loan and as such, no interest is being provided for in these financial statements.

9. Long term liabilities (Note No.2.13) includes excise duty paid under protest Rs.30.85 lakhs on clearance of Rectified Spirit (RS) and Extra Neutral Alcohol (ENA) on stock held on 28.02.02 and manufactured and cleared after 01.03.02 from the molasses stock.

10. The company has incurred loss of Rs.1.09 lacs from derivatives trading/transaction in commodities/currency, which is adjusted against Miscellaneous Income shown in Notes 2.21 ''Other Income''.

11. Differential cane price for the season 2007-08 aggregating Rs.669.55 lacs provided for in pursuance to order dated 17th January, 2012 of the Hon''ble Supreme Court is included in the amount of cane consumption of the year and is charged to Statement of Profit & Loss.

12. For the purpose of computing deferred tax liability, part amount of brought forward losses as claimed in the income tax returns filed has been considered for recognizing deferred tax assets. On the basis of future projections taken on record by the management after considering improved margins in sugar in current domestic sugar market scenario, the management is confident that there is a virtual certainty that sufficient future taxable income will be available against which, the deferred tax assets can be realized in the normal course of business of the company.

13. Since, the sugar industry is a seasonal industry; the cost of production of sugar is worked out on annualized basis.

14. Related Party Disclosures:-

Pursuant to compliance of Accounting Standard (AS 18) on related party disclosure, the relevant information is provided here below:-

a) Related party where control exist

- ShriL.K.Jhunjhunwala -Chairman

- Shri Aditya Jhunjhunwala -Managing Director

- Shri Sanjay Jhunjhunwala -Jt. Managing Director

- ShriS.C.Agarwal -Executive Director

b) Details of the related parties with whom transactions have taken place during the year:

i. Key Management Persons (Group A)

- ShriL.K.Jhunjhunwala -Chairman

- Shri Aditya Jhunjhunwala -Managing Director

- Shri Sanjay Jhunjhunwala -Joint Managing Director

- ShriS.C.Agarwal -Executive Director

ii. Key Management Persons'' relatives (Group B)

- Shri PC. Jhunjhunwala

- L.K. Jhunjhunwala (HUF)

- A. K. Jhunjhunwala (HUF)

- S. K. Jhunjhunwala (HUF)

- Smt. Naina Jhunjhunwala (Wife of Shri L.K. Jhunjhunwala)

- Smt Priti Jhunjhunwala (Wife of Shri Aditya Jhunjhunwala)

- Smt Priti Jhunjhunwala (Wife of Shri Sanjay Jhunjhunwala)

- Smt. Reena Agarwal (Wife of Shri S C. Agarwal)

- Shri Ayush Agarwal (Son of Shri S. C. Agarwal)

- Shri Payoush Agarwal (Son of Shri S C. Agarwal)

iii. Associates (Group C)

- K.M.Vyapar(P)Ltd.

- K.M. Plantations (P) Ltd.

- Marvel Business (P) Limited

- Francoise Commerce (P) Limited

- Nidhi Financial Services (P) Limited

- Shree Shakti Credits Limited

- Prakash Properties Limited .

- Promissing Logistics (P) Ltd. ''

- Shailja Propertied (P) Ltd.

- Zar International (P) Ltd.

iv. Companies/ Parties in which Key management person or his relatives have substantial interest/ significant influence (Group D)

- Virdhi Trust

- Shivam Trust

- Vatsal Trust

- Laxmi Public Charitable Trust

- JhunkhunwalaPG College

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

ii. No amount has been written back/written off during the year in respect to due to/due from related parlies.

iii. The amount due from related parties are good and hence no provision for doubtful debts m respect of dues from such related parties is required.

15. Segment Reporting: Information on the Segment Reporting of the company for the year ended 30.09.2012:

The company has identified three primary business segments viz. Sugar, Distillery and Co-generation. Segments have been identified and reported taking into account the nature of products, the differing risks and returns, the organizational structure and internal business reposting system.

''Capital expenditure includes fixed assets capitalized during the year and net increase/decrease in capital work-in- progress.

The transactions between segments are primarily for materials which are transferred at market determined prices. Common costs are apportioned on a reasonable basis.

16. Following are the relevant disclosures as required under the Micro, Small & Medium Enterprises Development Act, 2006

(a) Sundry creditors include a sum aggregating Rs.37.54 lacs (Rs.43.60 lacs) due to micro & small enterprises is on account of principal only.

(b) The Amount of interest paid by the Company in terms of Section 16, along with the amount of payment made to the micro & small enterprises beyond the appointed date during the year Rs. Nil.

(c) The amount of interest due and payable for the period of delay in making payment which have been paid but beyond the appointed day during the year but without adding the interest specified under this Act. Rs. Nil.

(d) The amount of interest accrued and remaining unpaid Rs. Nil.

(e) The amount of further interest remaining due and payable even in succeeding year Rs. Nil.

The Above mentioned outstanding are in normal course of business and the information regarding micro & small enterprises have been determined to the extent such parties have been identified on the basis of information available with the company.

Note: The value of perquisites shown above is as per the income taB$| provisions.

Approval of Central Government for the remuneration paid to Chairman, Managing Director, Joint Managing Director and Executive Director pursuant to resolution passed in Annual General Meeting held on 19th March, 2012 is awaited.

17. Company has defaulted in repayment of instalments and interest of Term Loan taken from Punjab National Bank (PNB) and principal sum and interest towards Corporate Loans taken from PNB and Allahabad Bank. Subsequently, these loans were restructured under Corporate Debt Restructuring Mechanism (CDR) vide letter of approval dated 27.03.2012 issued by CDR EG. This CDR package has been partly implemented during the year and necessary effect to that extent is given in the financial statements.

18. The Revised Schedule VI has become effective from 1 stApril, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current years'' classification / disclosures.

Sep 30, 2009

1. CONTINGENT LIABILITIES {to the extent not provided for)

(a) Claims against the Company not acknowledged as debts (as certified by the management) in respect of pending cases of employees under labour laws - Rs.47.36 lacs. (Previous Year - Rs.44.16 lacs).

(b) Claims against the company not acknowledged as debts (as certified by the management) in respect of criminal and Civil Cases - Rs.42.10 lacs. (Previous Year-Rs.23.50 lacs).

(c) Estimated value of contracts remaining to be executed on capital account and not provided for- Rs.37.32 !acs.(Previous Year- Rs.99.57 lacs),

(d) Bank guarantees givers to the Central. Government, Excise. Department, Indian Oil Corporation and U.R Pollution Control Board aggregating to Rs.39.70 lacs. (Previous Year - Rs39.70 lac).

(e) Company has given guarantee to the banks, which provided vehicle loans to the employees of the company - outstanding loan as on 30.09.2009 - RS 10.48 lacs. (Previous Year-Rs.14.36 Iacs).

(f) Interest of Rs. 167.42 lacs on Short Term Loan of Rs.858 lacs received during the FY 2007-2008- under the Scheme. for Extending Financial Assistance to Sugar Undertaking, 2007 (SEFASU) payable in case, the terms and conditions of the loan are not complied with by the Company. (Previous Year-Rs. 64.46)

2. Advances recoverable in cash or in kind or for value fo be received shown under Schedule 8 includes certain advances given to suppliers of raw material, revenue purchases and of capital goods, which are adjustable against the supply of goods but are running due from the earlier years. The management has undertaken an extensive exercise for recovery of such advances and is confident of recovering the same in near future. Accordingly, provision against the same has not been considered at this stage.

These advances also include a sum of Rs.24.50 lacs sized by the Income Tax authorities from the possession of one of the staff member of the company three years back. The income tax proceedings subsequent thereto are under progress. The Company has also filed writ petition before the Honble Allahabad Court in this matter, which is pending for final hearing.

These advances also include an amount of Rs.99.00 lacs due from U.R State Government as per order of the Honble High Court of Allahabad on account of claim lodged by the Company for compensation towards acquisition by the State Govt, of one the sugar mills owned by the company. The matter is sub-jud:ce and is still pending for execution before the Commissioner, Lucknow. The management is hopeful to recover the said amount along with interest.

3. Certain bank accounts included in Schedule 7 of Current Assets under the sub-head Bank Balance are non- operating for last some period and are also subject to reconciliation and therefore, amount shown in respect of those bank accounts in the financial statements are as per books of account only.

4. The company has paid road transport freight amounting to Rs.835.47 lacs in relation to sugar trading activities undertaken by it during the F.Y, 2007-2008 without depositing service thereon. The estimated service tax liability of Rs,25.82 lacs is worked out on the same, which in the opinion of the management is not payable as the sugar sold by them has been ultimately consumed for export purposes and as per them there is complete exemption of service tax in case the services are used for export of goods.

5. In view of the decision of Honble Supreme Court, extra price and excise duty realized on levy sugar in earlier years amounting to Rs.67.11 lacs for funding under the Sugar Price Equalization Fund Act, 1976 was transferred to Sugar Price Equalization Reserve Account. Later on as per the order dated 22.09.1993 of Honble Supreme Court, a sum of Rs. 17.90 lacs was paid to the Government out of bank guarantee furnished by the Company and further, during the year 1998-99 a sum of Rs.1.00 lacs was paid towards Excise Duty on the above. The company has further made a payment of Rs.35.81 lacs during the year 2005-06 to the Government of India against the bank guarantee furnished by it along with interest of Rs. 118.25 lacs thereon. Still a sum of Rs 12,40 lac is lying in the Sugar Price Equalization Reserve season 2007-08 at Rs.110 per quintal, the rate at which it has made payment to the cane growers as per the interim order of the Honble Supreme Court, against the State Advised Price of Rs.125 per quintal fixed by Uttar Pradesh State Government. Necessary adjustments, if any. will be made in accordance with subsequent orders of the Honble Supreme Court in the matter.

6. Certain balances in personal account of various debtors, advances, deposits account, and creditors are subject to reconciliation and confirmation by the respective parties and in some of the cases, the amount is overdue for last some years. However, the balances disclosed in the financial statements are as per books of account only and no provision against them has been considered in the books by the management as in their view, the realization from these assets in the ordinary course of business would not be less than the amount at which they are stated in the books of account. Further, there is no system of charging any interest on amount due from sundry debtors and the parties to whom advances extended in the ordinary course of business and which remains due for a substantiaI period.

7. The company received a loan of Rs.858 lacs under the Scheme for Extending Financial Assistance to Sugar Undertaking, 2007 (SEFASU) during the year for payment of cane dues of the season 2006-07 at zero rate of interest. However, if company defaults in complying with the terms and conditions of the said loan, it would be liable to pay interest at the rate of 12% p.a., and therefore, the liability on this account for the accounting period has been shown as contingent liability in para 2 above.

8. The quantity of pressmud and bagasse has not been ascertained as on 30.09.2008 and therefore, the value of closing stock of pressmud and bagasse is shown at Nil.

9. Unsecured Loans includes a loan from U.P. Government amounting to Rs.14.50 lacs. The issue relating to interest payable thereon is under dispute and is sub-judice before the Honble High Court. However, as per the interim order of the Court a fixed deposit of Rs.14.50 lacs has been kept with the District Magistrate, Faizabad. In opinion of the management, the interest due on fixed deposit is sufficient to meet out the interest liability of the Company on the said loan and as such, no interest is being provided for in these financial statements,

10. Advance excise duty includes excise duty paid under protest Rs.30.85 lakhs on clearance of Rectified Spirit (RS) and Extra Neutral Alcohol (ENA) on stock held on 28.02,02 and manufactured and cleared from 01,03.02 onwards from the molasses stock.

11. Since, the sugar industry is a seasonal industry; the cost of , production of sugar is worked out on annualized basis,

12. In order to mitigate the risk of price fluctuations of the sugar being manufactured by the Company, it engaged itself in the commodity hedging contracts and resultant gains/(loss) is generally included in the sugar sales.

13. Related Party Disclosures:-

Pursuant to compliance of Accounting Standard (AS 18) on related party disclosure, the relevant information is provided here below:-

a) Related party where control exist

- Shri.L.K.Jhunjhunwala - Chairman

- Shri.Aditya Jhunjhunwala - Managing Director

- Shri, Sanjay Jhunjhunwala - Joint Managing Director

- Shri.S.C.Agarwal - Executive Director

b) Details of the related parties with whom transactions have taken place during the year

i. Key Management Persons (Group A)

- Shri.L.K.Jhunjhunwala -Chairman

- Shri.AdityaJhunjhunwala -Managing Director

- Shri, SanjayJhunjhunwala -Joint Managing Director

- Shri.S.C.Agarwal -Executive Director

ii. Key Management Persons relatives ( Group B)

- Smt. Reena Agarwal (Wife of Shri, S. C.Agarwal)

- P. C. Jhunjhunwala

- P. C. Jhunjhunwala (HUF)

- L.K. Jhunjhunwala (HUF)

- A, K. Jhunjhunwala (HUF)

- S.K. Jhunjhunwala (HUF)

ÃÂ» Ms. Naina Jhunjhunwala (Wife of Shri L.K. Jhunjhunwala)

- Ms. Priti Jhunjriunwala (Wife of A. K. Jhunjhunwala)

- Ms. Priti Jhunjhunwala (Wife of S.K. Jhunjhunwala)

iii. Associates (Group C)

K. M. Vyapar (P) Ltd. (Formerly K.M. Gases (P) Ltd.)

- K.M, Plantations (P) Ltd, (Formerly K. M. Constructions (P) Ltd,)

- Marvel Business (P) Limited.

- Francoise Commerce (P) Limited

- Nidhi Financial Services (P) Limited.

- ShreeShakti Credit Limited.

ÃÂ» Prakash Properties Limited.

ÃÂ» Promising Logistics (P) Ltd.

- K.R. Modi Drinks (P) Ltd,

- K.M. SakharKarkhana (P) Ltd.

- Shailja Propertied (P) Ltd.

- Zar International (P) Ltd.

v. Companies/ Parties in which Key management person or his relatives have substantial interest/significant influence (Group D)

- Virdhi Trust

- Shivam Trust

- Vatsal Trust

- Laxmi Public Charitable Trust

14. (a) Sundry Creditors (Schedule-9) includes a sum aggregating Rs.39.24 lacs 6m to small scale industrial undertakings out of which the parties from whom the Company owes any sum which is outstanding for more than 30 days from the Balance Sheet date are Annapurna Gases, Anshuman Industries, Austin Engineering Company, Baiaji Industries, Bharat Engineering & Castings, Brylplast Pvt. Ltd., Diffusion Engineers, Digital Utilities, Gita Flopumps India (P) Ltd., Imperial Gases Ltd., Kemtech Polymer, P.P.I Pumps (?) Ltd., Paltech Cooling Tower, Parveen Perforators, Pelicon Valves, Prem Chand Industry, Rajukesh Industry, S.R Enterprises, S.S. Chemicals, Sagar Rubber Udyog, Tri Squre Switch Gears, Universal Transformers, Vishal Conveyor System, The above information has been compiled in respect of the parties which could be certified as small scale industrial undertakings on the basis of information in possession of the company to the extent.

(b) The company is in the process of identifying the micro, small and medium enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2008 and therefore information to be disclosed in this regard is not given in the accounts.

15, Sales includes inter division transfer of molasses for Rs 754,42 lacs (PY RS. 974.97 lacs), bagasse for Rs.288.05 lacs (PY RS, 183.86 lacs)and power for Rs. 198.47 lacs (PY RS. 206.80 lacs) for own consumption at market price.

16, No current tax provision has been made during the year in these financial statements in view of the brought forward losses and benefits / deductions / allowances available for the year ending 30.09,2009 as per the provisions of the income tax act 1961.

17. The figures of production, sales and closing stock of Alcohol and molasses have been taken as per the records maintained under Central Excise Rules,

18. Figures of- previous year are regrouped or rearranged wherever necessary.

19. Schedule 1 to 17 forming part of the Balance Sheet as at 30th September, 2009and Profit & Loss Account for the period ended on that date.

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