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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 Ponni Sugars (Erode) Ltd.

Mar 31, 2025

The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.

a) Reconciliation of shares outstanding at the beginning and at the end of the year

No change during the period

b) Rights, preferences and restrictions attached to equity shares

The Equity shares of the company having par value of '' 10 per share rank pari passu in all respects including voting rights, dividend entitlement and repayment of capital.

e) Management of Capital:

The company pursues a policy of conservative capital structure that seeks to provide adequate capital to its business for growth and create sustainable stakeholder value. Low gearing levels empower the company to navigate cyclical stresses in business. The company funds its operations through internal accruals and lays emphasis on prepayment of debts during up-swing in business cycles. .

13.1 Description of nature and purpose of Reserve:

(i) Capital Reserve represents gain of a capital nature and is not available for dividend distribution.

(ii) Securities Premium records the premium component on issue of shares and can be utilised only in accordance with the provisions of Companies Act, 2013.

(iii) General Reserve is created by transferring part of Retained Earnings from time to time. It is transfer from one component of equity to another and it is not an item of Other Comprehensive Income. It is a free reserve created to strengthen the net worth of the Company and it is available for dividend distribution in accordance with the provisions of Companies Act, 2013.

(D) Tax option:

Available deduction under Section 80- IA and MAT Credit Receivable being more beneficial, the company has not exercised the option under Section 115BAA of the Income Tax Act.

(E ) Deferred Tax :

MAT credit of '' 200 lakhs (net) for the year (previous year '' 143 lakhs) and '' 2053 lakhs as on 31st March 2025 ('' 1853 lakhs as on 31st March 2024) is recognised and carried forward as deferred tax asset as there exists reasonable certainty to recover the same in future.

* The manner of reckoning normative PLF at 60%, whether on annual or cumulative basis, was held in favour of the company by Tamil Nadu Electricity Regulatory Commission (TNERC) in December 2023. This has since been challenged before the Appellate Tribunal for Electricity (APTEL). The company has recognized additional revenue on this score of '' 133 lakhs for and aggregating '' 598 lakhs till FY 2024-25 that is subject to the outcome of appeal before APTEL.

(B) The company has a long term power purchase agreement for supplying power on a preferential tariff determined by the regulators. The company is in appeal before APTEL in respect of various tariff orders since 2012. APTEL has since concluded the hearings and reserved its judgement. It is however not practicable to estimate the financial impact to arise out of APTELâs judgement at this stage.

1. The fair value of investment in quoted equity shares is measured at the closing price in the Stock Exchange on the reporting date.

2. In case of trade receivables, cash and cash equivalents, trade payables and other financial assets and liabilities it is assessed that the fair values approximate their carrying amounts largely due to the short-term maturities of these instruments.

3. The fair values of the financial assets and financial liabilities included above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counter-parties.

(ii) Financial Instrument measured at Amortised Cost

The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.

30 (C): Financial Risk Management - Objectives and Policies:

The Companyâs financial liabilities comprise mainly trade payables and other payables. The Companyâs financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, security deposits, trade receivables and other receivables.

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of Directors (âBoardâ) oversee the management of these financial risks in its regular meetings. Risk Management guidelines as discussed in the Audit Committee and approved by the Board, states the Companyâs approach to address uncertainties in its endeavor to achieve its stated and implicit objectives. It prescribes the roles and responsibilities of the Companyâs management, the structure for managing risks and the framework for risk management. The framework seeks to identify, assess and mitigate financial risks in order to minimize potential adverse effects on the Companyâs financial performance.

The following disclosures summarize the Companyâs exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks.

1. 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 risks interest rate risk, currency risk and other price risk. Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables, loans and derivative financial instruments.

(i) Interest Rate Risk

Interest rate risk is not material.

(ii) Foreign Currency Risk

Foreign currency exposure at end of the reporting period - Nil

(iii) Equity Price Risk

Equity price Risk is related to the change in market reference price of the investments in equity securities.

All the investments are held for strategic purposes and not held for trading.

2. Credit Risk

Credit Risk is the risk of financial loss arising from counter party default on its contractual obligations resulting in financial loss to the company. Credit risk encompasses both the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks.

Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, loans and advances and derivative financial instruments. None of the financial instruments of the Company result material concentrations of credit risks.

Exposure to Credit Risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to Credit risk was '' 6115 lakhs as at 31st March 2025, and '' 8966 lakhs as at 31st March 2024 being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets excluding equity investments.

The credit risk arising for the exposure of investing in other balances with banks and bank balances is limited and there is no collateral held against these because the counter parties are scheduled banks under RBI oversight.

. 3. Liquidity Risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.

The company has obtained sanction of fund based limit of '' 15 crores from consortium banks towards working capital loan which is secured by first charge of inventories, book debts and immovables. However, utilization against the above facilities as at 31.03.2025 is Nil (PY Nil).

The Company invests its surplus funds in bank fixed deposit, which carry no / low mark to market risks.

Contractual maturities of financial liabilities based on contractual undiscounted payments:

31. Corporate Social Responsibility (CSR)

(i) Amount required to be spent by the company during the year: '' 84 lakhs

(ii) Amount excess spent in the previous year brought forward : '' 21 lakhs

(iii) Amount of expenditure incurred: '' 82 lakhs

(iv) Construction / acquisition of asset: Nil

(v) Purposes other than (iv) above: '' 82 lakhs

(vi) Shortfall at the end of the year: Nil

(vii) Total of previous years shortfall: Nil

(viii) Reason for Shortfall: N.A.

(ix) Carried over surplus to succeeding financial year: '' 19 lakhs

(x) Nature of CSR activities:

32. (i) In terms of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, power dues outstanding as on 03.06.2022 including Late Payment Surcharge (LPS) till that date were made payable over 48 EMIs, with no further LPS thereon. This was recognised in FY 2022-23. Concurrently fair value adjustment of '' 684 lakhs was recognized in that year.

(ii) Fair value reversals aggregating '' 162 lakhs (PY '' 239 lakhs) on receipt of the monthly EMIs during the year is included in Other Income (Note-20).

(iii) EMIs falling due twelve months after the reporting period are classified as non-current trade receivables (Note-4).

33. Acquisition of jaggery unit

(i) The company during the year has acquired a 50 tcd jaggery production unit through E-auction under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The company has been issued sale certificate for '' 460.50 lakhs. Out of this, land value for '' 61.64 lakhs has been capitalised, while the balance of '' 398.86 lakhs towards buildings, plant & machinery not being ready for intended use at the close of reporting period has been recognized as capital work in progress in these financial statements.

(ii) Land registration process is pending final determination of stamp duty by the registration authorities.

Note: (i) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources

or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

(ii) The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

36. Employee Benefits

(i) Defined Contribution Plans

The Company has recognised '' 133 Lakhs (previous year '' 126 Lakhs) for Provident Fund contributions and '' 42 Lakhs (previous year '' 36 Lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plans (a) Gratuity

In respect of Gratuity plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as of March 31,2025. The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the projected unit cost method.

The following table sets forth the status of the Gratuity Plan of the Company and the amount recognised in the Balance Sheet and Statement of Profit and Loss. The Company provides the gratuity benefit through annual contributions to the funds managed by the ICICI Prudential Life Insurance Company Ltd.

The Company pays contribution under the Group Gratuity Scheme to ICICI Prudential Life Insurance Company Ltd. that is invested by the insurer in the plan assets in Government Securities, Debt Funds, Equity shares, Mutual Funds and Money Market Instruments. The expected rate of return on plan assets based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation. Significant actuarial assumptions for the determination of the defined benefit obligation are as discussed above.

Sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

There was no change in the methods of assumptions used in preparing the sensitivity analysis from prior years.

Since the measurement of other long term employee benefits is not usually subject to the same degree of uncertainty as the measurement of post-employment benefits - gratuity, simplified method of accounting is adopted i.e., remeasurements are not recognized in Other comprehensive income but directly in the Statement of Profit and Loss (para 154 of Ind AS- 19).

The short-term leave obligation covers the companyâs liability for casual leave. The entire provision of '' 3 lakhs (PY '' 2 lakhs) is presented as current, since the company does not have an unconditional right to defer settlement for the short-term obligations.

40. Approval of Financial Statements

The financial statements have been approved for issue by the Board of Directors on 9th May 2025.

Mar 31, 2024

a) Reconciliation of shares outstanding at the beginning and at the end of the year

No change during the period

b) Rights, preferences and restrictions attached to equity shares

The Equity shares of the company having par value of '' 10 per share rank pari passu in all respects including voting rights, dividend entitlement and repayment of capital.

There is no change in the % of holding in the case of any promoter during the year or in the previous year. e) Management of Capital:

Proposed Dividend :

The Board of directors at their meeting held on 26th April, 2024 has recommended dividend of '' 7.00 (PY '' 6.50) per equity share of face value of '' 10 each for the financial year ended 31st March, 2024.

This is subject to approval at the ensuing Annual General Meeting of the company and hence not recognized in these financial statements.

13.1 Description of nature and purpose of Reserve:

(i) Capital Reserve represents gain of a capital nature and is not available for dividend distribution.

(ii) Securities Premium records the premium component on issue of shares and can be utilised only in accordance with the provisions of Companies Act, 2013.

(D) Current Tax:

(i) The company has recognized Minimum Alternate Tax ( MAT) since the tax payable under normal computation is lower than MAT.

(ii) Available deduction under Section 80-IA and MAT Credit Receivable being more beneficial, the company has not exercised the option under Section 115BAA of the Income Tax Act.

(E ) Deferred Tax :

MAT credit of '' 143 lakhs (net) for the year (previous year '' 73 lakhs) and '' 1853 lakhs as on 31st March 2024 ('' 1710 lakhs as on 31st March 2023 ) is recognised and carried forward as deferred tax asset as there exists reasonable certainty to recover the same in future.

(F) Reversal of Tax (Net):

The company had obtained favourable orders from the High Court of Madras for its depreciation entitlement on fair value of assets transferred under Scheme of Arrangement sanctioned by High Court of Madras. Pursuant to this, the tax department has initiated proceedings during the year to give effect to same. Consequently tax provision since 1st April 1999 has been re-estimated and excess provision (net) of '' 597 Lakhs has been reversed in the current year.

28. Contingent Liabilities and Commitments:		('' in Lakhs)
Particulars	As at 31.03.2024	As at 31.03.2023
a. Contingent Liabilities
Claims against the company not acknowledged as debt
- Indirect tax demands contested	7	7
- Others	10	10
b. Commitments
- Contracts for purchase of sugar cane	14,621	18,410
- Estimated value of contracts remaining to be executed on capital account and not provided for	682	273

1. The fair value of investment in quoted equity shares measured at the closing price in the Stock Exchange on the reporting date.

2. In case of trade receivables, cash and cash equivalents, trade payables, short term borrowings and other financial assets and liabilities it is assessed that the fair values approximate their carrying amounts largely due to the shortterm maturities of these instruments.

(ii) Financial Instrument measured at Amortised Cost

30 (C): Financial Risk Management - Objectives and Policies:

The following disclosures summarize the Companyâs exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks.

1. Market Risk

(i) Interest Rate Risk

Interest rate risk is not material.

(ii) Foreign Currency Risk

Foreign currency exposure at end of the reporting period - Nil

(iii) Equity Price Risk

Equity price Risk is related to the change in market reference price of the investments in equity securities.

All the investments are held for strategic purposes and not held for trading.

2. Credit Risk

Exposure to Credit Risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to Credit risk was '' 8966 lakhs as at 31st March 2024, and '' 7951 lakhs as at 31st March 2023 being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets excluding equity investments.

3. Liquidity Risk

The company has obtained sanction of fund based limit of '' 15 crores and non-fund based limit of '' 1crore from consortium banks towards working capital loan which is secured by first charge of inventories, book debts and immovables. However, utilization against the above facilities as at 31.03.2024 is Nil (PY Nil).

The Company invests its surplus funds in bank fixed deposit, which carry no / low mark to market risks.

(ii) Fair value reversals aggregating '' 239 lakhs on receipt of the monthly EMIs during the year is included in Other Income (Note-20).

(iii) EMIs falling due twelve months after the reporting period are classified as non-current trade receivables (Note-4).

Note: (i) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources

34. Employee Benefits

(i) Defined Contribution Plans

The Company has recognised '' 126 Lakhs (previous year '' 110 Lakhs) for Provident Fund contributions and '' 36 Lakhs (previous year '' 29 Lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plans (a) Gratuity

In respect of Gratuity plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as of March 31,2024. The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the projected unit cost method.

There was no change in the methods of assumptions used in preparing the sensitivity analysis from prior years.

Since the measurement of other long term employee benefits is not usually subject to the same degree of uncertainty as the measurement of post-employment benefits - gratuity, simplified method of accounting is adopted i.e. remeasurements are not recognized in Other Comprehensive Income but directly in the Statement of Profit and Loss (para 154 of Ind AS- 19).

The short-term leave obligation covers the companyâs liability for casual leave. The entire provision of '' 2 lakhs (PY '' 3 lakhs) is presented as current, since the company does not have an unconditional right to defer settlement for the short-term obligations.

Information required under Para 34 of Ind AS 108.

Two customers in Sugar (previous year two) and two customers in Cogen (previous year two) individually contribute to more than 10% of the revenue of respective segment.

38. Approval of Financial Statements

The financial statements have been approved for issue by the Board of Directors on 26th April 2024.

Mar 31, 2023

13.1 Description of nature and purpose of Reserve:

(i) Capital Reserve represents gain of a capital nature and is not available for dividend distribution.

(ii) Securities Premium records the premium component on issue of shares and can be utilised only in accordance with the provisions of Companies Act, 2013.

(D) Current Tax:

(i) The company has recognized Minimum Alternate Tax ( MAT) since the tax payable under normal computation is lower than MAT.

(ii) In view of the deduction available under Section 80-IA and MAT Credit Receivable which is more beneficial, the company has not exercised the option under Section 115BAA of the Income Tax Act.

(E) Deferred Tax:

MAT credit of '' 73 lakhs (net) for the year (previous year '' 30 lakhs) and '' 1,710 lakhs as on 31st March 2023 ('' 1,637 lakhs as on 31st March 2022 ) is recognised and carried forward as deferred tax asset as there exists reasonable certainty to recover the same in future.

(F) The company claims tax holiday under Section 80-IA of the Income Tax Act, 1961 for its profits from cogeneration of power. The Transfer Pricing Officer (TPO) has determined the Armâs Length Price (ALP) for AY 2020-21 at a lower rate than adopted by the company. Pending completion of assessment which is subject to appellate remedies, the company on a conservative basis has reworked 80-IA benefit for all the years on the basis of the order of TPO. Pursuant to this, MAT credit receivable is reversed stands reduced by ''113 lakhs at the close of reporting period.

(G) The company has obtained a favourable order from the High Court of Madras for its depreciation entitlement based on fair value of assets. In addition, there are appeals pending before the Commissioner of Income Tax (Appeals) on various additions/disallowances for the Assessment Years 2003-04 to 2017-18. Adjustments for the impact of these items will be given effect in the financial statements on receipt of orders from the authorities concerned.

29. Contingent Liabilities and Commitments: ^ i_n L_akh_s)
			As at 31.03.2023	As at 31.03.2022
	a. Contingent Liabilities
	Claims against the company not acknowledged as debt
	- Indirect tax demands contested		7	7
	- Others		10	10
	b. Commitments
	- Contracts for purchase of sugar cane		18,410	17751
	- Estimated value of contracts remaining to be executed on capital account and not provided for		273	44
30. Government Grant : The Company has recognised Government Grants in these financial statements under relevant heads as disclosed below:
	Particulars	Treatment in Accounts	31.03.2023	31.03.2022
	a. Export quota swapping	Included in other operating revenue (Note 20)	332	-
	b. Sale of Renewal Energy Certificates	Included in other operating revenue (Note 20)	93	248
	Total		425	248

1. The fair value of investment in quoted equity shares measured at the closing price in the Stock Exchange on the reporting date.

(ii) Financial Instrument measured at Amortised Cost :

31(C). Financial Risk Management - Objectives and Policies:

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of Directors (âBoardâ) oversee the management of these financial risks in its regular meetings. Risk management guidelines as discussed in the Audit Committee and approved by the Board, states the Companyâs approach to address uncertainties in its endeavor to achieve its stated and implicit objectives. It prescribes the roles and responsibilities of the Companyâs management, the structure for managing risks and the framework for risk management. The framework seeks to identify, assess and mitigate financial risks in order to minimize potential adverse effects on the Companyâs financial performance.

The following disclosures summarize the Companyâs exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks.

1. Market 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. Since the Company has insignificant interest bearing borrowings, the exposure to risk of changes in market interest rates is minimal.

(ii) Foreign Currency Risk

The fluctuation in foreign currency exchange rates may have lower impact on the income statement and equity.

The Company, as per its forex policy, uses foreign exchange and other derivative instruments primarily to hedge foreign exchange and interest rate exposure.

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in accordance with its forex policy.

Foreign currency exposure at end of the reporting period - Nil

(iii) Equity Price Risk

Equity price risk is related to the change in market reference price of the investments in equity securities.

All the investments are held for strategic purposes and not held for trading.

2. Credit Risk

Exposure to Credit Risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to Credit risk was '' 7951 lakhs as at 31st March 2023, and '' 5545 lakhs as at 31st March 2022 being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets excluding equity investments.

3. Liquidity Risk

The company has obtained sanction of fund based limit of '' 30 crores and non-fund based limit of '' 1crore from consortium banks towards working capital loan which is secured by first charge of inventories book debts and immovable. However, utilization against the above facilities as at 31.03.2023 is Nil (PY Nil).

The Company invests its surplus funds in bank fixed deposit, which carry no / low mark to market risks.

33. (i) In terms of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, power dues outstanding as on 03.06.2022 including Late Payment Surcharge (LPS) till that date are made payable over 48 EMIs, with no further LPS thereon.

(ii) Aggregate outstanding of '' 4738 lakhs as on that date has consequently been recognized at fair value.

(iii) The fair value adjustment of '' 684 lakhs on account of this is disclosed in Other Expenses (Note-25).

(iv) Fair value reversals aggregating ''198 lakhs on receipt of the monthly EMIs is included in Other Income (Note-21).

(v) EMIs falling due twelve months after the reporting period are classified as non-current trade receivables (Note-4).

(i) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

35. Employee Benefits

(i) Defined Contribution Plans:

The Company has recognised '' 110 Lakhs (previous year '' 101 Lakhs) for Provident Fund contributions and '' 29 Lakhs (previous year ''28 Lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plans (a) Gratuity

In respect of Gratuity plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as of March 31,2023. The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the projected unit cost method.

There was no change in the methods of assumptions used in preparing the sensitivity analysis from prior years.

39. Approval of Financial Statements

The financial statements have been approved for issue by the Board of Directors on 28th April 2023.

Mar 31, 2019

1. Company Overview

Ponni Sugars (Erode) Limited is a public limited company, incorporated under the Companies Act, 1956 and domiciled in India. It is an associate of Seshasayee Paper and Boards Limited. Its registered office is at âEsvin Houseâ, No. 13, Old Mahabalipuram Road, Seevaram Village, Perungudi, Chennai - 600 096. It has a sugar factory at Erode having a capacity to crush 3500 tonnes of sugarcane per day and generate 19 MW of power. The Companyâs shares are listed on BSE Ltd and National Stock Exchange.

a) Reconciliation of shares outstanding at the beginning and at the end of the year

No change during the period

b) Rights, preferences and restrictions attached to equity shares

The Equity shares of the company having par value of Rs. 10 per share rank pari passu in all respects including voting rights, dividend entitlement and repayment of capital.

d) Management of Capital:

Proposed Dividend

The Board of directors at their meeting held on 24th May 2019 have recommended payment of dividend of Rs. 2.00 (PY Rs. 1.00) per equity share of face value of Rs. 10 each for the Financial Year ended 31st March 2019. This amounts to Rs. 207 Lakhs including Dividend Distribution Tax of Rs. 35 Lakhs.

The above is subject to approval at the ensuing Annual General Meeting of the company and hence not recognized as a liability.

Changes during the year in respect of each of the line item above are disclosed in the Statement of changes in Equity for the year ended 31st March 2019.

2.1 Description of nature and purpose of Reserve:

(i) Capital Reserve represents gain of a capital nature and is not available for dividend declaration.

(ii) Securities Premium records the premium component on issue of shares and can be utilised only in accordance with the provisions of Companies Act, 2013.

Working capital loan is Secured by

(i) first charge on Inventories, book debts and specific movables; and

(ii) second charge on immovables.

Revenue till 30th June 2017 was inclusive of excise duty while GST from 1st July 2017 is not included in Revenue in accordance with âInd AS 115â. For comparability, Revenue for the previous year excluding excise duty is Rs. 19464 Lakhs.

1. The fair value of investment in quoted equity shares measured at quoted price on the reporting date.

(ii) Financial Instrument measured at Amortised Cost :

3(A). Financial Risk Management - Objectives and Policies:

The Companyâs financial liabilities comprise mainly of borrowings, trade payables and other payables. The Companyâs financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, security deposits, trade receivables and other receivables.

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of Directors (âBoardâ) oversee the management of these financial risks in its regular meetings. Risk Management guidelines as discussed in the Audit Committee and approved by the Board, states the Companyâs approach to address uncertainties in its endeavour to achieve its stated and implicit objectives. It prescribes the roles and responsibilities of the Companyâs management, the structure for managing risks and the framework for risk management. The framework seeks to identify, assess and mitigate financial risks in order to minimize potential adverse effects on the Companyâs financial performance.

The following disclosures summarize the Companyâs exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks.

1. Market Risk

(i) Interest Rate Risk

(ii) Foreign Currency Risk

The fluctuation in foreign currency exchange rates may have lower impact on the income statement and equity.

The Company, as per its forex policy, uses foreign exchange and other derivative instruments primarily to hedge foreign exchange and interest rate exposure.

No foreign currency exposure at end of the reporting period.

(iii) Equity Price Risk

Equity price Risk is related to the change in market reference price of the investments in equity securities.

The majority of the Companyâs investments are in the shares of group companies held for strategic rather than trading purposes.

2. Credit Risk

Exposure to Credit Risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to Credit risk was Rs. 4185 lakhs as at 31st March 2019, and Rs. 1917 lakhs as at 31st March 2018 being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets excluding equity investments.

3. Liquidity Risk

The company has obtained fund and non-fund based working capital loans from consortium banks. The Company invests its surplus funds in bank fixed deposit and liquid and liquid plus schemes of mutual funds, which carry no / low mark to market risks.

4. The Company has filed Writ Petitions in the High Court of Madras in respect of the disallowance of depreciation claim on the transfer value of assets in terms of Scheme of Arrangement by treating the same as Demerger within the meaning of Income Tax Act, 1961 and obtained interim stay for consequent demand of Rs. 1308 lakhs. The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote. Accordingly, no provision or disclosure of contingent liability is required for same in terms of Ind AS 37.

5. (a) The Tamil Nadu Electricity Regulatory Commission by its order dated 4th Jan 2019 has held that Parallel Operation Charges are payable by Cogenerating plants from 7th May 2014. Consequently, the estimated liability is recognised in these financial statements and the amount of Rs. 31 lakhs pertaining to the past periods is considered under âexceptional itemsâ.

(b) The Assistant Commissioner of GST & Central Excise by order dated 18th Jan 2018 held that the company being the successor of Ponni Sugars and Chemicals Ltd is liable for the excise duty and service tax liabilities of that company. The Commissioner of GST & Central Excise (Appeals) by order dated 24th Jan 2019 has confirmed the same. While the company is contesting same on appeal, it has recognized the tax amount of Rs.102 lakhs involved in these financial statements under âexceptional itemsâ.

6. As against CSR obligation of Rs. 19 lakhs for the year under Sec.135(5) of the Companies Act, 2013, the Company has incurred Rs. 29 lakhs towards CSR activities as under:

(a) Construction/ acquisition of any asset: Nil

7. Employee Benefits:

(i) Defined Contribution Plans:

The Company makes Provident Fund and Superannuation Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of eligible pay to fund the benefits. The Company has recognised Rs. 81 Lakhs (previous year Rs. 85 Lakhs) for Provident Fund contributions and Rs. 24 Lakhs (previous year Rs. 24Lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plans (a) Gratuity

In respect of Gratuity plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as of March 31, 2019. The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the projected unit cost method. The following table sets forth the status of the Gratuity Plan of the Company and the amount recognised in the Balance Sheet and Statement of Profit and Loss. The Company provides the gratuity benefit through annual contributions to the funds managed by the ICICI Prudential Life Insurance Company Ltd.

The Company pays contribution under the Group Gratuity Scheme to ICICI Prudential Life Insurance Company Ltd., that is invested by the insurer in the plan assets in Government Securities, Debt Funds, Equity shares, Mutual Funds and Money Market Instruments. The expected rate of return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation. Significant actuarial assumptions for the determination of the defined benefit obligation are as discussed above.

The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis are given below:

There was no change in the methods of assumptions used in preparing the sensitivity analysis from prior years.

8. Approval of Financial Statements

The financial statements have been approved for issue by the Board of Directors on 24th May 2019.

9. Figures for the previous year have been regrouped, wherever necessary.

Mar 31, 2018

1. Company Overview

Ponni Sugars (Erode) Limited is a Public Limited Company, incorporated under the Companies Act, 1956 and domiciled in India. Its registered office is located at âEsvin Houseâ, No. 13, Old Mahabalipuram Road, Seevaram Village, Perungudi, Chennai - 600 096. It has a sugar factory at Erode having a capacity to crush 3500 tonnes of sugarcane per day and generate 19 MW of power. The Companyâs shares are listed on BSE Ltd and National Stock Exchange.

(i) All the above assets are owned by the company.

(ii) The Company has taken borrowings from banks which carry second charge over the immovable assets of the Company ( Note 17 and 19) towards security.

(iii) Contractual commitments for the acquisition of Property plant and equipment as at 31-03-2018 - NIL (Previous year Nil).

2. Equity Share Capital:

a) Reconciliation of shares outstanding at the beginning and at the end of the year

No change during the period

b) Rights, preferences and restrictions attached to equity shares

The Equity shares of the company having par value of Rs. 10 per share rank pari passu in all respects including voting rights, dividend entitlement and repayment of capital.

d) Management of Capital:

The company pursues a policy of conservative capital structure that seeks to provide adequate capital to its business for growth and creation of sustainable stakeholders value. Low gearing levels empower the company to navigate cyclical stresses in business. The company funds its operations through internal accruals and lays emphasis on prepayment of debts during up-swing in business cycles.

Proposed Divided

The Board of directors at its meeting held on 25 th May, 2018 have recommended a payment of dividend of Rs. 1.00 (PY ''2.50) per equity share of face value of Rs. 10 each for the Financial Year ended 31st March, 2018. The same amounts to Rs. 103 Lakhs including Dividend Distribution Tax of Rs. 17Lakhs)

The above is subject to approval at the ensuing Annual General Meeting of the company and hence not recognized as a liability.

Changes during the year in respect of each of the line item above are disclosed in the Statement of changes in Equity for the year ended 31st March 2018.

3. Description of nature and purpose of Reserve:

(i) Capital Reserve represents gain of a capital nature and is not available for dividend declaration.

(ii) Securities Premium Account records the premium component on issue of shares and can be utilised in accordance with the provisions of Companies Act, 2013.

(iii) General Reserve is created by transferring part of Retained Earnings from time to time. It is transfer from one component of equity to another and it is not an item of other comprehensive income. It is a free reserve created to strengthen the net worth of the Company.

Working capital loan is Secured by

(i) first charge on Inventories, book debts and specific movables; and

(ii) second charge on immovables ranking pari passu with loan under SEFASU .

(i) The classification of the suppliers under Micro, Small and Medium Enterprises Development Act,2006 is made on the basis of information made available to the Company.

Current maturities of the Loan under the Scheme for Extending Financial Assistance to Sugar Undertakings, 2014 (SEFASU) is secured by

(i) second charge on immovables ranking pari passu with working capital loans and

(ii) second charge on movables .

Revenue for the period till 30th June 2017 was inclusive of excise duty. GST imposed from 1st July 2017 is not included in Revenue in accordance with ''Ind AS 18''. For comparability, Revenue excluding excise duty is Rs. 19,464 Lakhs (Previous year Rs. 25,047 Lakhs)

1. The fair value of investment in quoted equity shares measured at quoted price on the reporting date.

(ii) Financial Instrument measured at Amortised Cost

4 (A): Financial Risk Management - Objectives and Policies:

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of Directors (âBoardâ) oversee the management of these financial risks in its regular meetings. Risk Management guidelines as discussed in the Audit Committee and approved by the Board, states the Companyâs approach to address uncertainties in its endeavour to achieve its stated and implicit objectives. It prescribes the roles and responsibilities of the Companyâs management, the structure for managing risks and the framework for risk management. The framework seeks to identify, assess and mitigate financial risks in order to minimize potential adverse effects on the Companyâs financial performance.

The following disclosure summarize the Companyâs exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks.

1. Market Risk

(i) Interest Rate Risk

(ii) Foreign Currency Risk

The fluctuation in foreign currency exchange rates may have lower impact on the income statement and equity.

The Company, as per its forex policy, uses foreign exchange and other derivative instruments primarily to hedge foreign exchange and interest rate exposure.

No foreign currency exposure at end of the reporting period.

(iii) Equity Price Risk

Equity price Risk is related to the change in market reference price of the investments in equity securities.

The majority of the Companyâs investments are in the shares of group companies held for strategic rather than trading purposes.

2. Credit Risk

Credit Risk is the risk of financial loss arising from counter party default on its contractual obligations resulting in financial loss to the Company. Credit risk encompasses both the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks.

Exposure to Credit Risk - The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to Credit risk was Rs. 1,918 lakhs as at 31st March 2018, Rs. 2,679 lakhs as at 31st March 2017 and Rs. 3,779 lakhs as at 1st April 2016 being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets excluding equity investments.

3. Liquidity Risk

The Company has obtained fund and non-fund based working capital loans from consortium banks. The Company invests its surplus funds in bank fixed deposit and liquid and liquid plus schemes of mutual funds, which carry no / low mark to market risks.

5.1: FIRST TIME ADOPTION OF Ind AS:

For all periods upto and including the year ended 31st March, 2017, the Company had prepared its financial statements in accordance with the accounting standards notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (âPrevious IGAAPâ). This note explains the principal adjustments made by the Company in restating its financial statements prepared under Previous GAAP in accordance with Ind AS for the following:

a) Balance Sheet as at 1st April, 2016 (Transition date);

b) Balance Sheet as at 31st March, 2017,

c) Statement of Profit and Loss for the year ended 31st March, 2017; and

d) Statement of Cash flows for the year ended 31st March, 2017.

The mandatory exception and exemption availed on the transition to Ind As disclosed in Note 1.27

* Under the previous GAAP there was no concept of Other Comprehensive Income. Under Ind AS, specified items of income, expense, gains or losses are required to be presented in Other Comprehensive Income.

5.2: Description of adjustments:

a. Non-Current Investments

In the financial statements prepared under Previous GAAP Non-current Investments of the Company were measured at cost less provision for diminution. Under Ind AS, the Company has recognized such investments as follows:

Equity shares - At Fair Value through Other Comprehensive Income (FVTOCI) through an irrevocable option. Ind AS requires the investments to be recognized at fair value (except investments in equity shares of subsidiary and associate companies).

On the date of transition to Ind AS, the difference between the fair value of Non- Current Investments as per Ind AS and their corresponding carrying amount as per financial statements prepared under Previous IGAAP has resulted in an increase in the carrying amount of these investments by '' 2,198 lakhs which has been recognized as Effect of Measuring Investments at fair value under Other Comprehensive Income (OCI).

As at 31st March, 2017, the difference between the fair value of Non-Current Investments as per Ind AS and their corresponding carrying amounts as per financial statements prepared under Previous IGAAP has resulted in an increase in the carrying amount of these investments by Rs. 11,982 lakhs which has been recognized in OCI.

The above has resulted increase in equity by Rs. 2,198 lakhs as at the date of transition to Ind AS and by Rs. 9,784 lakhs as at 31st March, 2017.

b. Proposed Dividend

Till the year ended 31st March, 2016, in the financial statements prepared under Previous IGAAP dividend on equity shares recommended by the Board of Directors after the end of reporting period but before the financial statements were approved for issue, was recognised as a liability in the financial statements in the reporting period relating to which dividend was proposed. Under Ind AS, such dividend is recognised in the reporting period in which the same is approved by the members in a general meeting.

On the date of transition, the above change in accounting treatment of proposed dividend has resulted increase in Equity with a corresponding decrease in Provisions by Rs. 124 lakhs. The dividend is recognized in the year of declaration (ie.year ended 31st March, 2017) in retained earnings. The above change however, does not affect the Profit before tax and Profit after tax for the year ended 31st March, 2017.

c. Fair Valuation for Financial Assets

On the date of transition to Ind AS in accordance with Ind AS-109, the Company has valued its financial assets at fair value. This has resulted in provision for impairment of Rs. 110 lakhs and is recognized in the âRetained Earningsâ on the transition date. Consequently, the provisions recognized in the financial statements prepared under IGAAP for the year ended 31st March, 2017 is reversed.

d. Revenue from sales of products

In the financial statements prepared under Previous IGAAP revenue from sale of products was presented net of Excise Duty. However, under Ind AS, revenue from sale of products includes Excise Duty. Excise Duty expense amounting to Rs. 1,207 lakhs is presented separately on the face of the Statement of Profit and Loss for the year ended 31st March, 2017.

e. Re-measurement benefit of defined benefit plans

In the financial statements prepared under Previous IGAAP re-measurement benefit of defined plans (gratuity), arising primarily due to change in actuarial assumptions was recognized as employee benefit expense in the Statement of Profit and Loss. Under Ind AS, such re-measurement benefit relating to defined benefit plans is recognized in OCI as per the requirements of Ind AS 19 - Employee benefits. Consequently, the related tax effect of the same has also been recognized in OCI.

For the year ended 31st March, 2017, re-measurement of gratuity liability resulted in a net benefit of Rs. 54 lakhs which has now been removed from employee benefits expense in the Statement of Profit and Loss and recognized separately in OCI. This has resulted in increase in employee benefits expense by Rs. 54 lakhs and gain in OCI by Rs. 54 lakhs for the year ended 31st March, 2017. Consequently, tax effect of the same amounting to Rs. 19 lakhs is also recognized separately in OCI.

The above changes do not affect Equity as at date of transition to Ind AS and as at 31st March, 2017. However, Profit before tax and profit for the year ended 31st March, 2017 decreased by Rs. 54 lakhs and Rs. 35 lakhs respectively.

f. Deferred tax

In the financial statements prepared under Previous IGAAP deferred tax was accounted as per the Income approach and reconciled as per Balance Sheet approach. Under Ind AS 12 deferred taxes are to be accounted as per Balance Sheet approach. However the change to Balance Sheet approach has no impact. Under the previous IGAAP MAT credit was disclosed as MAT credit receivable under Non current assets. Under Ind AS, the same is disclosed under Deferred Tax assets and accordingly the amounts are reclassified.

g. Statement of Cash Flow for the year ended 31st March, 2017

In the financial statements prepared under Previous IGAAP interest received was grouped under Financing Activity. However, the same is now grouped under Investment activity in line with Ind AS 7 - Statement of Cash Flows.

6. The Company has filed Writ Petitions in the High Court of Madras in respect of the disallowance of depreciation claim on the transfer value of assets in terms of Scheme of Arrangement by treating the same as Demerger within the meaning of Income Tax Act, 1961 and obtained interim stay for consequent demand of Rs. 1308 lakhs. The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote. Accordingly, no provision or disclosure of contingent liability is required for same in terms of Ind AS 37.

7. Government of Tamilnadu has announced State Advised Price (SAP) from sugar seasons 2013-14 to 2016-17 that has been challenged by South Indian Sugar Mills Association, Tamil Nadu (in which the Company is a member) in Writ Petition before High Court of Madras. Since the Honâble Supreme Court had held in 2014 that SAP is only recommendatory in Tamil Nadu, the Company did not foresee any adverse impact.

The Company has since opted to pay an agreed sum to reach one time settlement with cane farmers and remove future uncertainty. The financial impact of this is fully considered in these financial statements.

8. The Company did not attract the mandatory spend on Corporate Social Responsibility (CSR) for the previous years pursuant to Sec.135 (5) of the Companies Act, 2013. It however continued CSR programs earlier initiated on voluntary basis and incurred CSR expenditure. In the current year the Company attract the mandatory spend on CSR and the gross amount to be spent by the Company during the year towards CSR as per the provision of Sec.135 (5) of the Companies Act, 2013 amounts to Rs. 13 lakhs. As against the above, the Company has spent Rs. 36 lakhs towards CSR Activities as under:

(a) Construction/ acquisition of any asset: Nil

9. Employee Benefits:

(i) Defined Contribution Plans

The Company makes Provident Fund and Superannuation Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of eligible pay to fund the benefits. The Company has recognised Rs. 85 Lakhs (previous year Rs. 86 Lakhs) for Provident Fund contributions and Rs. 24 Lakhs (previous year Rs. 21 Lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plans (a) Gratuity

In respect of Gratuity plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as of March 31, 2018. The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the projected unit cost method. The following table sets forth the status of the Gratuity Plan of the Company and the amount recognised in the Balance Sheet and Statement of Profit and Loss. The Company provides the gratuity benefit through annual contributions to the funds managed by the ICICI Prudential Life Insurance Company Ltd.

The Company pays contribution under the Group Gratuity Scheme to ICICI Prudential Life Insurance Company Ltd., that is invested by the insurer in the plan assets in Government Securities, Debt Funds, Equity shares, Mutual Funds and Money Market Instruments. The expected rate of return on plan assets based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation. Significant actuarial assumptions for the determination of the defined benefit obligation are as discussed above.

There was no change in the methods of assumptions used in preparing the sensitivity analysis from prior years.

10. Approval of Financial Statements:

The financial statements were approved for issue by the Board of Directors on 25th May 2018

Mar 31, 2017

(1) Note on Proposed Dividend

(a) Proposed dividend on equity shares is subject to declaration/ approval at the Annual General Meeting and is not recognised as a liability (including DDT thereon) as at 31st March 2017 pursuant to the Accounting Standard 4 revised by MCA Notification dated 30th March 2016.

(b) As a result of change in accounting policy to comply with the revised AS-4, Reserves & Surplus is higher by Rs.259 Lakhs and Short-term provisions lower by equivalent amount. This however has no impact on the profit for the year.

(2) The Company has filed Writ Petitions in the High Court of Madras in respect of the disallowance of depreciation claim on the transfer value of assets in terms of Scheme of Arrangement by treating the same as Demerger within the meaning of Income Tax Act, 1961 and obtained interim stay for consequent demand of Rs.1308 lakhs. The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote. Accordingly, no provision or disclosure of contingent liability is required for same in terms of Accounting Standard 29.

(3) The company recognized eligible subsidies of Rs.690 lakhs due from Sugar Development Fund (SDF) as income in earlier period and treated the amount outstanding as âincentives/subsidies receivableâ under the head âOther current assetsâ. This is based on the legal stand taken by the company and vindicated later by rulings obtained from both the Ld. Single Judge and Division Bench of the High Court of Madras in its favour.

The company during the year moved a fresh Writ Petition seeking specific direction of the Honâble High Court of Madras for immediate payment of pending subsidies. The High Court by its Order dated 12.01.2017 directed such payment with in three weeks. While the Central Govt settled the buffer stock subsidy, it by communication dated 14.02.2017 has repudiated the claims for export subsidies on technical and other extraneous grounds.

While the company would persist with its legal remedy for eventual realization of these claims, having regard to the continuing uncertainty and on grounds of prudence and without prejudice to its legal rights to pursue the matter, the company has recognized the disallowance of claims for incentives/ subsidies in these Financial Statements and disclosed its effect as âExceptional Itemâ in the Statement of Profit & Loss.

(4) South Indian Sugar Mills Association, Tamil Nadu has filed a Writ Petition in the High Court of Madras on behalf of private sector sugar mills in the State, challenging the power of State Govt to fix State Advised Price (SAP) for sugarcane. Since the Honâble Supreme Court has already held in 2004 that SAP is only recommendatory in Tamil Nadu and having regard to the legal opinion in the matter, the company does not foresee any adverse impact.

(5) The Company does not attract the mandatory spend on CSR for the current year pursuant to Sec. 135 (5) of the Companies Act, 2013 in the absence of average net profits made during the three immediately preceeding financial years. It however continued CSR programs earlier initiated on voluntary basis and incurred CSR expenditure during the year on following:

(6) Employee Benefits:

(i) Defined Contribution Plans:

Contribution of Rs.108 lakhs (previous year Rs.110 lakhs) to defined contribution plans is recognized as expense and included in Employee benefits expense in the Statement of profit and loss.

(ii) Defined Benefit Plans:

Disclosure for defined benefit plans based on actuarial valuation as on 31.03.2017

(38) Related Party Disclosures

a) List of Related Parties where control exists : None

b) Transaction between Related Parties:

i) Names of the transacting

Related Parties : Seshasayee Paper and Boards Ltd

Esvi International (Engineers & Exporters) Ltd

ii) Description of relationship : Presumption of significant influence

iii) Description of Transactions :

a) Seshasayee Paper and Boards Ltd

(7) Figures for the previous year have been regrouped, wherever necessary.

Mar 31, 2016

(1) The Company has filed Writ Petitions in the High Court of Madras in respect of the disallowance of depreciation claim on the transfer value of assets in terms of Scheme of Arrangement by treating the same as Demerger within the meaning of Income Tax Act, 1961 and obtained interim stay for consequent demand of Rs. 1308 lakhs. The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote. Accordingly, no provision or disclosure of contingent liability is required for same in terms of Accounting Standard 29.

(2) The Central Government, with a view to offset the cost of sugarcane, notified a production subsidy of Rs.4.50 per quintal of cane crushed during 2015-16 sugar season. This is conditional upon the company fulfilling at least 80% of the minimum indicative export quota allocated which has since been completed.

(3) Power tariff has been revised by the Tamil Nadu Electricity Regulatory Commission by its order dated 23rd Feb 2016 pursuant to the ruling of Appellate Tribunal for Electricity effective 01st Aug 2012. Accordingly, the company has recognized the differential tariff of Rs. 1503 lakhs as income in these financial statements. Of this, the income of Rs. 1090 lakhs relating to earlier periods is disclosed as âexceptional itemâ.

(4) Considering the cyclical nature of sugar industry, turnaround evidenced from improving sugar prices and power tariff revision, the management is of the opinion that the company will have adequate taxable income in the near future and there exists virtual certainty for taking benefit of Deferred Tax Asset and MAT credit. Accordingly, these have been duly recognized in these Financial Statements.

(5) Sugar Development Fund (SDF) has withheld eligible subsidies of Rs.690 lakhs (previous year Rs. 690 lakhs) on a legal dispute that is since decided by the High Court of Madras in favour of the company. Government has accepted this ruling and advised concerned Departments to process pending subsidies/ loan and other payments to the company in the normal course.

SDF had also withheld the issue of âNo Due Certificateâ for the company to claim levy sugar price differential of Rs. 220 lakhs (previous year Rs. 220 lakhs) in respect of 2009-10 sugar season. Though SDF has since issued the clearance, realization is pending departmental procedures.

(6) South Indian Sugar Mills Association, Tamil Nadu has filed a Writ Petition in the High Court of Madras on behalf of private sector sugar mills in the State, challenging the power of State Govt to fix State Advised Price (SAP) for sugarcane. Since the Honâble Supreme Court has already held in 2004 that SAP is only recommendatory in Tamil Nadu and having regard to the legal opinion in the matter, the company does not foresee any adverse impact.

(7) The Company is not covered under Sec. 135 on Corporate Social Responsibility (CSR) for the financial year 201516 since it does not meet with any of the minimum threshold criteria specified under sub section (1) thereof. It however continued CSR programs earlier initiated on voluntary basis and incurred CSR expenditure during the year on following:

(8) Employee Benefits:

(i) Defined Contribution Plans:

Contribution of Rs. 110 lakhs (previous year Rs. 105 lakhs) to defined contribution plans is recognized as expense and included in Employee benefits expense in the Statement of profit and loss.

(ii) Defined Benefit Plans:

(9) Related Party Disclosures

a) List of Related Parties where control exists : None

b) Transaction between Related Parties:

i) Names of the transacting

Related Parties : Seshasayee Paper and Boards Ltd

Esvi International (Engineers & Exporters) Ltd

ii) Description of relationship : Presumption of significant influence

iii) Description of Transactions :

(10) Figures for the previous year have been regrouped, wherever necessary.

Mar 31, 2015

(1) Contingent Liabilities and Commitments:

31.03.2015 31.03.2014

Contingent Liabilities:

* Claims against the company not acknowledged as debts

* Tax demands contested 161 199

* Interest on Electricity consumption tax 97 95 contested

Commitments

* Estimated value of contracts remaining to be executed on capital account and not provided for - 81

* Contracts for purchase of sugar cane 9065 7213

(2) The Company has changed the method of providing depreciation from 1st April 2014 as required by the Companies Act, 2013. Accordingly depreciation has been provided in accordance with Schedule II thereof for the current year as against the rates specified in Schedule XIV to the Companies Act, 1956 adopted in the previous year. As a result, depreciation for the current year is lower by Rs. 277 lakhs.

Further, in respect of assets whose remaining useful life is nil, their carrying amounts as on 1st April 2014, after retaining the residual value, have been charged to the Statement of Profit and Loss and disclosed as an exceptional item.

(3) The Company has filed Writ Petitions before High Court of Madras in respect of the disallowance of depreciation claim on the transfer value of assets in terms of Scheme of Arrangement by treating the same as Demerger within the meaning of Income Tax Act, 1961 and obtained interim stay for consequent demand of Rs. 1308 lakhs. The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote. Accordingly, no provision or disclosure of contingent liability is required for same in terms of Accounting Standard 29.

(4) Consistent with the Accounting Policy No.1(b) and pursuant to the developments during the year which have a material bearing, the related trade payables have been revised, resulting in write down of trade payables by Rs.1026 lakhs.

(5) Considering the cyclical nature of sugar industry and favourable order obtained from an appellate authority facilitating an upward revision in regulatory power tariff, the management is of the opinion that the company will have adequate taxable income in the near future and there exists virtual certainty for taking benefit of Deferred Tax Asset and MAT credit and accordingly these have been duly recognized in these Financial Statements.

(6) Sugar Development Fund (SDF) has withheld eligible subsidies of Rs. 690 lakhs (previous year Rs. 690 lakhs) holding the company liable for the loans due from erstwhile Ponni Sugars and Chemicals Ltd (PSCL) amounting to Rs. 1339 lakhs as of 31st March 2013. On the Writ Petition filed by the company,the High Court of Madras by its order dated 9th November 2010 held that the loans due from PSCL cannot be recovered from the company and directed release of withheld subsidies. Writ Appeal filed by SDF before the Division Bench of the High Court of Madras has since been dismissed.

SDF had also withheld the issue of ''No Due Certificate'' for the company to claim levy sugar price differential of Rs. 220 lakhs (previous year Rs. 220 lakhs) in respect of 2009-10 sugar season. SDF has during the year issued the requisite ''No Due Certificate'' and the company is in pursuit for recovery of this claim.

(7) South Indian Sugar Mills Association, Tamil Nadu has filed a Writ Petition in the High Court of Madras on behalf of private sector sugar mills in the State, challenging the power of State Govt to fix State Advised Price (SAP) for sugarcane. Since the Hon''ble Supreme Court has already held in 2004 that SAP is only recommendatory in Tamil Nadu, the company does not foresee any adverse impact on its financial position.

(8) Employee Benefits:

(i) Defined Contribution Plans:

Contribution of Rs.105 lakhs (previous year Rs. 92 lakhs) to defined contribution plans is recognized as expense and included in Employee benefits expense in the Statement of profit and loss.

(9) Related Party Disclosures

a) List of Related Parties where control exists : None

b) Transaction between Related Parties:

i) Names of the transacting

Related Parties : Seshasayee Paper and Boards Ltd

Esvi International (Engineers &

Exporters) Ltd

ii) Description of relationship : Presumption of significant influence

iii) Description of Transactions :

(10) Figures for the previous year have been regrouped, wherever necessary.

Mar 31, 2014

(1) The company was providing depreciation under written down value method for the assets of Co- generation Segment and straight line method for other assets at respective rates specified in Schedule XIV to the Companies Act, 1956. The Companies Act, 2013 coming into force from 1st April 2014 provides for reckoning depreciation based on useful life for plant & machinery in lieu of specific rates and has prescribed 25 years of useful life for continuous process plant. Having regard to the need for switchover to the prescribed methodology under the new Company Law, the company has adopted straight line method of providing Depreciation uniformly for all its assets including cogen assets from the current year.

Consequent to the above change in policy, the depreciation and loss for the year before exceptional item is lower by Rs. 822 lakhs. The surplus of Rs. 541 lakhs on recalculation of depreciation from the date of Co-generation segment assets coming into use in accordance with the new method is credited to the Statement of Profit and Loss under Exceptional items.

(2) The Company has filed Writ Petitions before High Court of Madras in respect of the disallowance of depreciation claim on the transfer value of assets in terms of Scheme of Arrangement by treating the same as Demerger within the meaning of Income Tax Act, 1961 and obtained interim stay. The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote. Accordingly, no provision or disclosure of contingent liability is required in terms of Accounting Standard 29 of the Companies (Accounting Standards) Rules, 2006.

(3) Sugar Development Fund (SDF) has withheld eligible subsidies of Rs. 690 lakhs (previous year of Rs. 690 lakhs) and ''No Due Certificate'' for levy sugar price differentials of Rs. 220 lakhs (previous year Rs. 220 lakhs) to the Company. This was to recover loans due from the erstwhile Ponni Sugars & Chemicals Ltd (PSCL) for Rs. 1339 lakhs as of 31st March 2013.

The Company had challenged the above in Writ Petition. The High Court of Madras by its order dated 9/11/2010 held that the loans due from PSCL can not be recovered from the Company and directed release of withheld subsidies. SDF has filed appeal before the Divisional Bench of High Court of Madras.

(4) Employee Benefits:

(i) Defined Contribution Plans:

Contribution of Rs. 92 lakhs (previous year Rs. 88 lakhs) to defined contribution plans is recognized as expense and included in Employee benefits expense in the Statement of profit and loss.

(ii) Defined Benefit Plans:

(5) Related Party Disclosures

(a) List of Related Parties where control exists None

(b) Transaction between Related Parties :

i) Names of the transacting Related Parties Seshasayee Paper and Boards Ltd

Esvi International (Engineers & Exporters) Ltd

ii) Description of relationship Presumption of significant influence

(6) Figures for the previous year have been regrouped, wherever necessary.

Mar 31, 2013

(1) Contingent Liabilities and Commitments: (Rs. in Lakhs)

31.03.20131 31.03.2012

Contingent Liabilities: - Claims against the company not acknowledged as debts

- Indirect tax demands contested 156 151 Commitments

- Estimated value of contracts remaining to be executed on capital account 267 497 and not provided for

- Contracts for purchase of sugar cane 7476 13366

(2) The Company has filed Writ Petitions before High Court of Madras in respect of the disallowance of depreciation claim on the transfer value of assets in terms of Scheme of Arrangement by treating the same as Demerger within the meaning of Income Tax Act, 1961 and obtained interim stay. The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote. Accordingly, no provision or disclosure of contingent liability is required in terms of Accounting Standard 29 of the Companies (Accounting Standards) Rules, 2006.

(3) Sugar Development Fund (SDF) has withheld eligible subsidies of Rs. 690 lakhs (previous year Rs. 690 Lakhs) and ''No Due Certificate'' for levy sugar price differentials of Rs. 220 lakhs (previous year Rs. 220 lakhs) to the Company. This was to recover loans due from the erstwhile Ponni Sugars & Chemicals Ltd (PSCL) for Rs. 1274 lakhs as of 31st December 2011.

The Company had challenged the above in Writ Petition. The High Court of Madras by its order dated 9/11/2010 held that the loans due from PSCL can not be recovered from the Company and directed release of withheld subsidies.

SDF has filed appeal before the Division Bench of High Court of Madras and obtained interim order staying the order of Single Judge.

(4) Employee Benefits:

(i) Defined Contribution Plans:

Contribution of Rs. 88 lakhs (previous year Rs. 82 lakhs) to defined contribution plans is recognized as expense and included in Employee benefits expense in the profit and loss statement.

(ii) Defined Benefit Plans:

(5) Taxation

(i) Current tax

Provision for Minimum Alternate Tax (MAT) is made on book profits in accordance with Sec. 115JB of the Income Tax Act, 1961, there being no taxable income under normal computation due to increased depreciation allowance available on the commissioning of Cogeneration project.

MAT credit is recognized having regard to expected profitable operations and availability of sufficient future taxable income against which it can be set off within permissible time limit.

(ii) Deferred Tax

Deferred Tax Liability recognized on timing differences relating to depreciation is net of Rs.1122 lakhs in respect of timing differences expected to reverse during the tax holiday period of Cogen project in accordance with Paragraph 13 of AS22 - Taxes on Income.

Deferred Tax Asset on account of unabsorbed depreciation is recognized, having regard to profitable operations and availability of sufficient taxable income in future against which it can be realized.

(6) Related Party Disclosures

(a) List of Related Parties where control exists : None

(b) Transaction between Related Parties:

i) Names of the transacting Related Parties : Seshasayee Paper and Boards Ltd

Esvi International (Engineers & Exporters) Ltd

ii) Description of relationship : Presumption of significant influence

(7) Figures for the previous year have been regrouped, wherever necessary.

Mar 31, 2012

(1) Contingent Liabilities and Commitments:

31.03.2012 31.03.2011

Contingent Liabilities: - Claims against the company not acknowledged as debts

- Indirect tax demand contested 151 115 Commitments

- Estimated value of contracts remaining to be executed on capital account and not provided for 497 6747

- Contracts for purchase of sugar cane 13366 12157

The Company had challenged the above in Writ Petition. The High Court of Madras by its order dated 9/11/2010 held that the loans due from PSCL cannot be recovered from the Company and directed release of withheld subsidies.

SDF has filed appeal before the Divisional Bench of High Court of Madras and obtained interim order staying the order of Single Judge.

(2) Employee Benefits:

(i) Defined Contribution Plans

Contribution of Rs 82 lakhs (previous year Rs 75 lakhs) to defined contribution plans is recognized as expense and included in Employee benefits expense in the profit and loss statement.

(ii) Defined Benefit Plans

(3) The Company is engaged in a single business and geographical segment.

Mar 31, 2011

I Contingent Liabilities

Claims against the Company not acknowledged as debts Rs. 3907.77 Lakhs (2010 - Rs. 267.19 Lakhs). These comprise -

a. Tax demands disputed by the Company relating to disallowances/additions of fiscal benefits, pending at various stages of appeal, aggregating to Rs. 3894.40 Lakhs (2010 - Rs. 149.00 Lakhs).

b. Land disputes representing claims towards land grabbing cases pending before Honble Special Court aggregating to Rs. Nil (2010 - Rs. 103.16 Lakhs).

c. Other matters relating to labour cases etc. aggregating to Rs. 13.37 Lakhs (2010 - Rs. 15.03 Lakhs).

II Future lease obligations

The Company has entered into various operating lease agreements and the amounts paid under such agreements have been charged to revenue as Rent under Schedule 17. All these agreements are cancellable in nature.

III Disclosures regarding Derivative Instruments

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts for trading or speculation purposes.

IV Amalgamation of VST Distribution, Storage & Leasing Company Private Limited (DSL) with the Company

Pursuant to the scheme of amalgamation of erstwhile wholly owned subsidiary DSL with the Company, as sanctioned by the Honble High Court of Andhra Pradesh on 16th March, 2011, the assets and liabilities of the erstwhile DSL were transferred to and vested in the Company, pending mutation, with effect from 1st April, 2010. The scheme has accordingly been given effect to in these accounts.

The amalgamation has been accounted for under the pooling of interest method prescribed by the Accounting Standard on Amalgamation (AS-14).

The assets and liabilities and other reserves of the erstwhile DSL as at 1st April, 2010 have been taken over at their book values.

Consequently, the investment of the Company in DSL and the Equity Share Capital of DSL stands cancelled.

In veiw of the aforesaid amalgamation with effect from 1st April, 2010, the figures for the current year are not comparable to those of the previous year.

V Micro and small scale business entities

There are no micro and small enterprises, to whom the Company owes dues, which are outstanding as at 31st March, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

VI Employee Benefits

a. The Employee Benefit Schemes are as under:

i. Provident Fund

Eligible employees of the Company receive benefits under the Provident Fund which are defined contribution/benefit plans wherein both the employee and the Company make monthly contributions equal to a specified percentage of the covered employees salary. These contributions are made to the Funds administered and managed by the Government of India/Companys own Trust. The Companys monthly contributions are charged to revenue in the period they are incurred.

ii. Gratuity

In accordance with the Payment of Gratuity Act, 1972 of India, the Company provides for gratuity, a defined retirement benefit plan (the Gratuity Plan) covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by actuarial valuation and are charged to revenue in the period determined. The Gratuity Plan is a funded plan administered by Companys own Trust which has subscribed to Group Gratuity Scheme of Life Insurance Corporation of India.

iii. Pension Fund

The Company has a defined contribution pension scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees salary. These contributions are administered by the Companys own Trust which has subscribed to Group Pension Scheme of Life Insurance Corporation of India. The Companys contributions of Rs. 103.66 Lakhs (2010 - Rs. 100.64 Lakhs) are charged to revenue in the period they are incurred.

In addition to the above, the Company has a funded defined benefit pension scheme for its employees in the workmen category. Liabilities with regard to such defined benefit plan are determined by actuarial valuation and are charged to revenue in the period determined. The plan is administered by the Companys own Trust which has subscribed to Group Pension Scheme of Life Insurance Corporation of India.

iv. Leave Encashment

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at period-end. The value of such leave balance eligible for carry forward, is determined by actuarial valuation and charged to revenue in the period determined. The scheme is fully funded by way of subscription to the Leave Encashment Scheme of Life Insurance Corporation of India.

(I) Directors Remuneration

(II) Exceptional items represents expense incurred under Voluntary Retirement Scheme for employees for the year ended 31st March, 2010 - Rs. 1241 Lakhs.

(V) Segment Reporting

The Companys business activity primarily falls within a single primary business segment viz. Tobacco and related products and hence no business segment information is provided.

The entire activity pertaining to sales outside India is carried out from India, hence all segment assets are considered entirely to be in India.

20. Additional Information pursuant to the provisions of Paragraphs 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956

a. CLASS OF GOODS, CAPACITY AND PRODUCTION

* The figure of Registered/Licenced Capacity is as re-endorsed on the Certificate of Registration as on 30th September, 1985 and is exclusive of an additional 25 per cent of the approved Registered/Licenced Capacity available to the Company under the Central Governments Liberalised Industrial Policy.

Mar 31, 2010

1. Outstanding litigations

(i) The Company has contested the claim of Sugar Development Fund (SDF) towards loans due from erstwhile Ponni Sugars and Chemicals Ltd for Rs 949 72 lakhs as of 3rd October 2005

(ii) SDF authorities have withheld eligible subsidies of Rs 690 30 lakhs (Previous year Rs 690 30 lakhs) due to the Company.

(iii) The Assessing Officer has disallowed depreciation claim of the Company on the transfer value of assets in terms of Scheme of Arrangement by treating same as Demerger within the meaning of Income Tax Act 1961

The Company has filed Writ Petitions before High Court of Madras in respect of above matters and has obtained interim stay in respect of Income Tax matters The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote Accordingly no provision or disclosure of contingent liability is required in terms of Accounting Standard 29 of the Companies (Accounting Standards) Rules, 2006.

31.03.2010 31.03.2009

(Rs. in Lakhs) (Rs.in Lakhs)

3 a) Contingent liabilities not provided for - Indirect Tax demands contested - 8.91

b) Estimated value of contracts remaining to be executed on capital account 19.70 17.25

2. Employee Benefits

(i) Defined Contribution Plans

Contribution of Rs. 65.33 lakhs (Previous year Rs. 60.52 lakhs) to defined contribution plans is recognized as expense and included in Employee Cost ( Schedule 16 ) in the profit and loss account.

3 Related Party Disclosures

(a) List of Related Parties where control exists None

(b) Transaction between Related Parties:

i) Names of the transacting Related Parties Seshasayee Paper and Boards Ltd (SPB)

High Energy Batteries (India) Ltd (HEB) SPB Projects & Consultancy Ltd Esvi International (Engineers & Exporters) Ltd

ii) Description of relationship Presumption of significant influence

4 Micro enterprises and Small enterprises under the Micro Small and Medium Enterprises Development Act 2006 have been determined to the extent such parties have been identified on the basis of information available with the company. There are no overdues to parties on account of principal amount and/or interest and accordingly no additional disclosures have been made.

5. The Company is engaged in a single business and geographical segment.

6. Figures for the previous year have been regrouped, wherever necessary.

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