the oudh sugar mills limited

“For Private circulation to the equity shareholders of the Company”

Private and confidential

THE OUDH SUGAR MILLS LIMITED (Incorporated on July 26, 1932 under the Indian Companies Act VII of 1913)

Registered Office: P.O. Hargaon, Dist. Sitapur (U.P.) 261 121, India (shifted from Industry House, 159,

Churchgate Reclamation, Mumbai 400 020, India w.e.f. March 8, 2000)

Tel: (+91 5862) 256220 Fax: (+91 5862) 256225

Corporate Office: Industry House, 159, Churchgate Reclamation, Mumbai 400 020, India,

Tel: (+91 22) 2287 5987 Fax: (+91 22) 2284 5485,

Head Office: 9/1 R.N.Mukherjee Road, Kolkata 700 001, India Tel: (+91 33) 2243 0497/8

Fax: (+91 33) 2248 6369 E-mail: [email protected]; Website: www.birla-sugar.com,

Company Secetary and Compliance Officer: Mr. Sanjay Mukherjee

DRAFT LETTER OF OFFER

Issue of [●] Equity Shares of face value of Rs. 10/- each for cash at a premium of Rs. [●] per Equity Share on rights

basis to the existing Equity Shareholders of The Oudh Sugar Mills Limited in the ratio of [●] Equity Shares for every

[●] Equity Shares held on the Record Date i.e. [●].The issue price for the Equity Shares will be payable in [●●●●]

installments; [●] of the issue price will be payable on Application; [●] of the Issue Price will become payable at the option of Our Company, on or before 12 months from the Date of Allotment. For every [●] Equity Shares allotted on

rights basis the allottees will receive [●] detachable Warrants. Total Issue including conversion of Warrants into

Equity Shares at Rs [●] per share would aggregate to Rs 5000 lacs. The Issue Price is [●] times the face value of the

Equity Shares.For detrails please refer to Offering Information on page 306 of this Draft Letter of Offer.

GENERAL RISKS

Investments in equity and equity related securities involve a degree of risk and Investors should not invest any funds in this

Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors

carefully before taking an investment decision in this Issue. For taking an investment decision, Investors must rely on their

own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or

approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this

document. Investors are advised to refer to “Risk Factors” on page 7 before making an investment in this Issue.

ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information

with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Draft Letter of

Offer is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed

herein are honestly held and that there are no other facts, the omission of which makes this Draft Letter of Offer as a whole or any such

information or the expression of any such opinions or intentions misleading in any material respect.

LISTING The existing Equity Shares of the Company are listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India

Limited (NSE). The Company has received “in-principle” approvals from BSE and NSE for listing the Equity Shares arising from this

Issue vide letters dated [●] and [●] respectively. For purpose of this Issue, the Designated Stock Exchange is [●].

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

Enam Securities Private Limited SEBI Reg. No:INM000006856

801/802, Dalamal Towers,

Nariman Point, Mumbai 400021

Tel: +91 22 5638 1800

Fax: +91 22 2284 6824

Email: [email protected]

Website: www.enam.com

Contact Person : Mr Sachin K Chandiwal

Intime Spectrum Registry Limited

C - 13, Pannalal Silk Mills Compound,

L.B.S. Marg, Bhandup (West), Mumbai 400 078.

Tel: +91 22 2596 0320-28

Fax: +91 22 2596 0329

Email : [email protected]

Website: www.intimespectrum.com

Contact Person: Ms Awani Thakkar

ISSUE PROGRAMME

ISSUE OPENS ON LAST DATE FOR REQUEST

FOR SPLIT APPLICATION

FORMS

ISSUE CLOSES ON

[●] [●] [●]

Draft Letter of Offer

1

CONTENTS

ITEM PAGE NO.

SECTION I: DEFINITIONS & ABBREVIATIONS 2

SECTION II: CERTAIN CONVENTION AND USE OF MARKET DATA 5

SECTION III: FORWARD LOOKING STATEMENTS 6

SECTIONS IV: RISK FACTORS 7

SECTION V: INTRODUCTION 24

SUMMARY OF INDUSTRY AND BUSINESS...................................................................................... 24

THE ISSUE SUMMARY.............................................................................................................. 25

SUMMARY OF FINANCIAL DATA................................................................. 26

GENERAL INFORMATION................................................................................................................ 29

CAPITAL STRUCTURE OF THE COMPANY……………………………………………………….......... 33

OBJECTS OF THE ISSUE............................................................................................................... 39

BASIS FOR ISSUE PRICE............................................................................................................... 41

TAX BENEFITS STATEMENT......................................................................................................... 43

SECTION VI: DETAILS OF ISSUER COMPANY 51

INDUSTRY OVERVIEW.................................................................................................................................. 51

OUR BUSINESS................................................................................................................................................. 58

OUR PROPERTIES ………………………………………………………………………………………….. 64

REGULATIONS AND POLICY.................................................................................................. 66

HISTORY OF THE COMPANY AND OTHER CORPORATE MATTERS................................... 70

OUR SUBSIDIARIES................................................................................................................................. 72

OUR MANAGEMENT.................................................................................................................................. 76

OUR PROMOTERS...................................................................................................... 86

DIVIDEND POLICY.......................................................................................................................... 101

RELATED PARTY TRANSACTION……………………………………………………………….. 102

SECTION VII : FINANCIAL STATEMENTS 115

FINANCIAL INFORMATION OF THE ISSUER COMPANY......................................................... 115

PROMOTER GROUP COMPANIES…………………………………………………………………….. 208

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATION AS REFLECTED

218

SECTION VIII: LEGAL AND OTHER INFORMATION 225

OUTSTANDING LITIGATIONS AND DEFAULTS....................................................................................... 225

GOVERNMENT APPROVALS AND LICENSES................................................. 285

OTHER REGULATORY AND STATUTORY DISCLOSURE..................................................... 294

SECTION IX: OFFERING INFORMATION 306

TERMS OF THE ISSUE.................................................................................................................... 306

ISSUE PROCEDURE...................................................................................................................... 309

SECTION X: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION OF THE COMPANY 327

SECTION XI: OTHER INFORMATION 350

LIST OF MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION............................... 350

DECLARATION...................................................................................................................................... 351


2

SECTION I: DEFINITIONS & ABBREVIATIONS

GENERAL TERMS AND ABBREVIATIONS

Act The Companies Act, 1956 and amendments thereto

Articles Articles of Association of the Company

Auditors S.R.Batliboi & Company, Chartered Accountants, 22, Camac Street, Block ‘C’, 3rd Floor,

Kolkata 700 016

AGM Annual General Meeting

Board or Board of

Directors

Board of Directors of The Oudh Sugar Mills Limited or a Committee thereof

BSE Bombay Stock Exchange Limited

Capital or Share

Capital

Share Capital of the Company

CDSL Central Depository Services (India) Limited

CESTAT Customs, Excise & Service Tax Appellate Tribunal

CIT Commissioner of Income Tax

DP Depository Participant

ECS Electronic Clearance System

EGM Extra-Ordinary General Meeting

Equity Share(s) or

Share(s)

means the Equity Share of the Company having a face value of

Rs. 10/-

Shareholder means an Equity Shareholder of The Oudh Sugar Mills Limited

FDI Foreign Direct Investment

FEMA Foreign Exchange Management Act, 1999

FI Financial Institutions

FII(s) Foreign Institutional Investors registered with SEBI under applicable laws and rules

FY / Fiscal Financial Year ending March 31 or June 30, as the case maybe

GoI Government of India

HUF Hindu Undivided Family

INR or Rs. Indian Rupee

IT Act The Income-Tax Act, 1961 and amendments thereto

ITAT Income Tax Appellate Tribunal

MD Managing Director

Memorandum Memorandum of Association of the Company

MoU Memorandum of Understanding

NR Non Resident

NRI(s) Non Resident Indian(s)

NSE The National Stock Exchange of India Limited

NSDL National Securities Depository Limited

Oudh or OSML or

Issuer or the

Company

or we or our / us

The Oudh Sugar Mills Limited

RBI Reserve Bank of India

ROC Registrar of Companies

SEBI Securities and Exchange Board of India

SEBI Act, 1992 Securities and Exchange Board of India Act,1992 and amendments thereto

SEBI DIP

Guidelines

SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued on January 19, 2000

read with amendments issued subsequent to that date

SICA Sick Industrial Companies (Special Provisions) Act 1985

Takeover

Regulations

SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and

amendments thereto

WTO World Trade Organisation


3

ISSUE RELATED TERMS AND ABBREVIATIONS

Allotment Unless the context otherwise requires, issue of equity shares pursuant to this Issue

Allottee The successful applicant to whom the Equity Shares along with the warrants are being/or

have been issued.

Applicant Any prospective investor who makes an application pursuant to the terms of this Draft

Letter of Offer

CAF Composite Application Form

Call Money Notice Notice issued by the Company to the list of shareholders for making payment towards

the [●]% of issue price of the Equity Shares

Conversion Price [●]

Consolidated

Certificate

In case of physical certificates, the Company would issue one certificate for the Equity

Shares allotted to one folio

Designated Stock

Exchange

The Bombay Stock Exchange Limited & the National Stock Exchange of India Limited

Draft Letter of Offer Draft Letter of Offer filed with SEBI on December 24, 2007 for its Comments

Enam or Lead

Manager

Enam Securities Private Limited

Face Value Face Value of equity shares of the Company being Rs 10/- each

First applicant The applicant whose name appears first in the Application Form

Issue/ Rights Issue Issue of [●] Equity Shares of face value of Rs. 10/- each for cash at a premium of Rs. [●]

per Equity Share on rights basis to the existing Equity Shareholders of The Oudh Sugar

Mills Limited in the ratio of [●] Equity Shares for every [●] Equity Shares held on the

Record Date i.e. [●] for every [●] Equity Shares to being allotted on rights basis. The

issue price for the Equity Shares will be payable in [●] installments. In terms of Clause

8.6.1 (vi) at leaset 25% of the issue price will be payable on Application; balance Rs. [●]

of the Issue Price will become payable at the option of Our Company, on or before 12

months from the Date of Allotment.

Under the Issue, the allottees will also receive [●] detachable Warrants. Total Issue

including conversion of Warrants into Equity Shares during Warrant Conversion Period

at Rs [●] per share would aggregate to Rs 5000 lacs. The Issue Price is [●] times the face

value of the Equity Shares. For detrails please refer to “Terms of the Issue” on page

306 of this Draft Letter of Offer.

Issue Closing Date [●], 2008

Issue Opening Date [●], 2008

Issue Price Rs. [●] per Equity Share

Investor(s) Shall mean the holder(s) of Equity Shares of the Company as on the Record Date, i.e.

[●], 2008

Letter of Offer Letter of Offer dated [●],as filed with the Stock Exchanges after incorporating SEBI

comments on the Draft Letter of Offer

Memorandum of

Association/MoA

The Memorandum of Association of The Oudh Sugar Mills Limited

Offer The Issue of Equity Shares along with detachable warrants pursuant to this Draft Letter

of Offer

PAN Permanent Account Number

Promoters Dr. K.K.Birla,

Shri C.S.Nopany,

Uttar Pradesh Trading Company Limited,

SCM Investment & Trading Company Limited,

RTM Investment & Trading Company Limited,

Darbhanga Marketing Company Limited,

Sonali Commercial Limited,

Deepsikha Trading Company Pvt. Limited,

Modern Household & Accessories Trading Pvt. Limited,

New India Retailing & Investment Ltd. (formerly New India Sugar Mills Ltd.),

HTL Investment & Trading Company Pvt. Limited,

Yashovardhan Investment & Trading Company Limited,

Shradhanjali Investment & Trading Company Limited,


4

Rajpur Farms Limited,

Narkatiajang Farms Limited

Promoter Group

(Top 5 listed

Companies)

Zuari Industries Limited

Texmaco Limited

Sutlej Textiles & Industries Limited

Upper Ganges Sugar & Industries Limited

Chambal Fetilizers & Chemicals Limited

Record Date [●], 2008

Registrar to the

Issue or Registrar

Intime Spectrum Registry Limited

Rights entitlement The number of Equity Shares with detachable warrants that a Shareholder is entitled to

in proportion to his/her shareholding in the Company as on the Record Date

Stock Exchange(s) Shall refer to the BSE and NSE where the Shares of the Company are presently listed

Renouncees Shall mean the persons who have aquired Rights entitlements from the Equity

Shareholders.

Warrant Exercise

Period

The period commencing after [●] months form the date of allotment upto [●] months

from the date of allotment. The warrant will get converted on or before the fixed date

(“Notice Date, the outermost date for conversion”) and would be made uniformly in

respect of all the warrants outstanding.

Warrant Exercise

Price

Lower of (a) 20% discount to the average six month weekly closing prices before the

date of the public notice on the Designated Stock Exchange; or (b) 20% discount to

average two weekly closing prices before the date of the public notice on Designated

Stock Exchange; or (c) the cap price, being Rs [●] per Equity Share

COMPANY/INDUSTRY RELATED TERMS AND ABBREVIATIONS

ISMA Indian Sugar Mills Association

TCD Tonnes crushing per day

SAP State Advised Price of Sugar Cane

SMP Statutory Minimum Price of Sugar Cane

ISO International Sugar Organisation


5

SECTION II: CERTAIN CONVENTIONS; USE OF MARKET DATA AND

CURRENCY OF PRESENTATION

In this Draft Letter of Offer, the terms “we”, “us”, “our” or “the Company”, unless the context otherwise

implies, refer to The Oudh Sugar Mills Limited.

All references to India contained in this Draft Letter of Offer are to the Republic of India.All references to

“Rupees”or”Rs.”or”Re” are to Indian Rupees, the official currency of India.

For additional definitions used in this Draft Letter of Offer, see the section “Definitions & Abbreviations” on

page 2 of this Draft Letter of Offer.

Market data used throughout this Draft Letter of Offer were obtained from industry publications and internal

Company reports. Industry publications generally state that the information contained in those publications has

been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and

their reliability cannot be assured. Although we believe market data used in this Draft Letter of Offer are

reliable, it has not been independently verified. Similarly, internal Company reports, while believed by us to be

reliable, have not been verified by any independent sources.


6

SECTION III: FORWARD-LOOKING STATEMENTS

This Draft Letter of Offer contains certain “forward-looking statements”. These forward looking statements

generally can be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”,

“intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” or other words or phrases

of similar import. Similarly, statements that describe our objectives, plans or goals are also forward-looking

statements.

All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause

actual results to differ materially from those contemplated by the relevant forward-looking statements.

Important factors that could cause actual results to differ materially from our expectations include, among

others:

1. Our ability to successfully implement our strategy, our growth and expansion plans and technological

changes;

2. Increasing competition in and the conditions of the Global and Indian sugar industry;

3. Increasing employee costs;

4. Manufacturer’s defects or mechanical problems in our plant and machineries;

5. Cyclical or seasonal fluctuations in our operating results;

6. General economic and business conditions in India;

7. Changes in the value of the Rupee and other currencies; and

8. Changes in laws and regulations that apply to the Indian and Global sugar industry.

For further discussion of factors that could cause our actual results to differ, see “Risk Factors” beginning on

page 7 of this Draft Letter of Offer. By their nature, certain market risk disclosures are only estimates and could

be materially different from what actually occurs in the future. As a result, actual future gains or losses could

materially differ from those that have been estimated. Neither our Company, the Lead Manager nor any of their

respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances

arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions

do not come to fruition. In accordance with SEBI requirements, our Company and the Lead Manager will

ensure that investors in India are informed of material developments until such time as the grant of listing and

trading permission by the Stock Exchanges.


7

SECTION IV: RISK FACTORS

Investors should consider the following risk factors together with all other information included in this Draft

Letter of Offer carefully, in evaluating us and our business before making any investment decision. This Draft

Letter of Offer contains forward-looking statements that involve risks and uncertainties. Such statements can be

identified by the use of forward-looking terminology such as “may”, “believes”, “will”, “expect”,

“anticipate”, “estimate”, continue”, “plan”, “likely” or other similar words. Our actual results could differ

from those anticipated in these forward-looking statements as a result of various factors, including those set

forth in the following risk factors and elsewhere in this Draft Letter of Offer.

An investment in equity shares involves a high degree of risk. You should carefully consider all the information

in this Draft Letter of Offer, including the risks and uncertainties described below, before making an investment

in our Equity Shares. If any of the following risks actually occur, our business, results of operations and

financial condition could suffer, the price of our Equity Shares could decline, and you may loose all or part of

your investment. The financial and other implications of material impact of risks concerned, wherever

quantifiable have been disclosed in the risk factors mentioned below. However there are a few risk factors

where the impact is not quantifiable and hence the same has not been disclosed in such risk factors.

This Draft Letter of Offer also includes statistical and other data regarding the Indian Sugar Industry. This data

was obtained from industry publications, reports and other sources that we and the Lead Manager believe to be

reliable. Neither we nor the Lead Manager have independently verified such data.

INTERNAL RISK FACTORS

1. Cases were filed against our promoter Shri C. S. Nopany by the Income Tax Department. The cases

were pending for final orders.

Pursuant to an Amnesty Scheme introduced by the Government under the Income tax (I.T.) and Wealth

tax (W.T.) Acts for the assesment year 1986-87, a self assessment was made by our promoter Shri

C.S.Nopany whereby two cheques were deposited and a token receipt against such deposit was

attached to the applications which were duly submitted to the Income Tax / Wealth Tax Officer.

However, the cheques were dishonoured by the bank. The Income Tax Officer & Wealth Tax Officer

thus filed criminal cases (under Section 420 of the Indian Penal Code,1860 read with Section 35D of

the Wealth Act and Section 277 of the Income Tax Act, 1961) at the Court of Metropolitan Magistrate

at Kolkata in 1989 in this regard. Subsequently, both the amounts claimed (Rs. 53,500/- under the I.T.

and Rs. 1,11,400/- under the W.T.), have been paid to the concerned Authorities. Moreover, interest /

penalties for both the claims have also been waived by the concerned Authorities. The cases are now

pending for final orders.

2. Criminal case pending against our Directors Shri C S Nopany, Shri S V Muzumdar, Shri Ashvin C

Dalal & Shri C B Patodia

The Food Inspector, Jallandhar has filed a Criminal Complaint before the Addl. Chief Judicial

Magistrate Jallandhar, under section 7/16 of the Prevention of Food Adultration Act 1954 and Rules 32

r.w. 50 thereof. In the event of any unfavourable order in the said compaliant, our Directors Shri C S

Nopany, Shri S V Muzumdar, Shri Ashvin C Dalal & Shri C B Patodia may be liable for consequences

under the Prevention of Food Adultration Act 1954.

3. We have a high Debt-Equity ratio

Our debt-equity ratio, as per our restated financial statement, is considerably high. Details of our debt-

equity ratio for last five financial years are as follows: (please check these figures are as per restated

accounts)

Financial

Year/Period

2002 - 2003 2003 - 2004 2004 - 2005 2005 – 2006 2006 - 2007

Debt-Equity

Ratio 55.87 19.94 3.23 1.80 4.24


8

Our high gearing ratio, coupled with financial performance in past had caused us to pay higher interest

rates. If the trend continues, it may cause substantial interest outgo which may affect profit margin

adversely.

4. Our success is substantially dependent on our management team

The success of our business is substantially dependent on our management team and key personnel and

their loss could adversely affect our business. Further, our ability to maintain our position in the sugar

industry substantially depends on our ability to attract, motivate and retain such personnel.

5. We are involved in certain legal proceedings, incidental to our business and operations, which if

determined against us, could have an adverse impact on our results of operations and financial

condition.

Our Company is involved in the certain litigation incidental to our business and operations. In the event

of any unfavourable orders, our company may incur additional liability of Rs 740.06 Lacs. (Net of

amount already provided by the Company).

For more information on ‘Litigations initiated by us’, ‘Litigation initiated against us’ and ‘Litigation

initiated against our Group Companies’, please refer to Section Litigations & other Information on

page no 225 of this Draft Letter of Offer.

6. There was shortfall in performances vis-à-vis projections made in relation to our earlier rights issue

and one of our promoter’s previous rights issue.

We made a rights issue in 1996 and made certain projections in that issue. We could not achieve the

same. For further details, please refer to section titled “Promise vs. Performance” on page 299 of this

Draft Letter of Offer.

One of our promoter namely Upper Ganges Sugar & Industries Limited, had made a rights issue in

1994. They had made certain projections on operating and financial performances in relation to that

Rights Issue, based on then prevailing situation. However, due to various reasons, the projections could

not be achieved. For further details, please refer to section titled “Promise vs. Performance” on page


7. As of June 30, 2007; we had some contingent liabilities, determination of which against us may

adversely impact our financial position

As on June 30, 2007; we have the following contingent liabilities:

Rs. In lacs

Nature of Liability Amount

Involved Demand/Claims against the Company not acknowledged as debts 658.14

Guarantees given to a bank against loans to cane growers

Against the above, the loan facilities actually availed as on the balance sheet

date aggregated to

1500.00

1074.37

Unredeemed Bank Guarantees 0.96

Bills discounted from Bank under LC (Since realized) 66.65

If any of these liabilites actually occur, our financial performance may be affected adversely.

8. Conflict of Interest

Some of the ventures promoted by our promoters viz. Gobind Sugar Mills Limited and Upper Ganges

Sugar & Industries Limited are also engaged in sugar business. Presence of these companies in the

same line of business may lead to the conflict of interest between our Company and our promoters as

our promoters may pursue such policies which may be favourable for Gobind Sugar Mills Limited and

Upper Ganges Sugar & Industries Limited but may be unfavourable for us.

9. We are subject to restrictive covenants in certain short-term and long term debt facilities provided to

us by our lenders


9

We have taken long term and short term loans from FIs/Banks. As per the signed loan agreements with

them, there are certain standard restrictions imposed on us regarding change in capital structure,

payment of dividend out of reserves and other such matters. We are required to obtain their prior

approval before initiating such changes.

10. We are operating in a higly regulated market. Policy decision by the government may not be

favourable and that may have an impact over our revenues and profitability.

Sugar, being an essential commodity, is subject to various restrictions and regulations imposed by the

State/Central Government like Government controls over fixation of cane price, distribution and sale of

sugar, both levy and free, because of the release mechanism. As such the performance of our company

at par with the industry depends upon government policies and regulations.

11. In the past in accordance with the government regulations we were being forced to run our plants

despite lower recovery ratio and lower realisations

Under the government policies governing sugar factories, we are bound to procure the entire

contractual quantity of sugarcane from the reserved area, irrespective of recovery and realisation. In

1992 and 1996 we had to operate our plants for abnormally longer period resulting in lower recovery.

12. Our unsecured loans are repayable on demand basis

As on June 30, 2007, we have outstanding unsecured loans aggregating Rs. 13880.16 lacs from our

group companies and other entities, which are repayable on demand basis. Unscheduled demand of

these loans and payments thereof, may impact our liquidity positions.

13. There are certain qualifications in the Auditors’ Report dated December 11, 2007 regarding non-

provision/non-adjustment of some potential liabilities. Crystallisation of those liabilities/adjustments

may affect our financials adversely.

Our Statutory Auditors, in their report dated December 11, 2007 have made the following

qualifications:

“Attention is drawn to the following notes in Annexures 6 to this report:

1. Note Nos. 1(a) and 1(b) regarding non adjustment of certain realizations in earlier years

aggregating to Rs. 165.51 lacs and non provision of interest payable thereon, if any, in case of

refund of such realizations. As the matters are under adjudication / not yet settled, the impact

of the above non adjustment on the Company’s profit is not presently ascertainable.

The above-mentioned non-provisioning/non-adjustments, if crystallized in future, will impact our

financials adversely.

14. Some of the companies, through which our promoters Dr. K.K.Birla and C.S.Nopany control our

company through their direct and indirect shareholding, have incurred losses in previous years.

Further, some of the top five companies promoted by our promoters have also incurred losses in

previous years.

Some of the companies, through which our promoters Dr. K.K.Birla and Mr C.S.Nopany control our

company through their direct and indirect shareholding, have incurred losses in previous years. Further,

some of the top five listed companies promoted by our promoters have also incurred losses in previous

years. Details of the profit/(loss) incurred by those companies in last three years are detailed below:


10

Rs. In Lacs

Name of the entity 2004-05 2005-06 2006-07

Upper Ganges Sugar & Industries

Limited

1369.44 2862.29 (2826.13)

New India Retailing & Investment

Limited

(124.44) 209.58 (27.68)

15. Our success depends on our ability to efficiently handle the critical factors affecting profitability

of sugar mill units.

Production of sugar is a complicated activity with the profitability primarily dependent on four critical

factors being Cane Acreage, Yield per Hectare, Drawal and Recovery factor. The sugar cycle (as

described on page no. 51 of Industry Section of this Offer Document) affects the Cane Acreage. As per

the extant laws, the distance between the chimneys of two sugar mills should be a minimum of 15

kilometers. The Cane Commissioner of the respective region allocates the reserved area for each sugar

mill. We are required under law to purchase sugarcane grown within our reserved area.

However, the farmers are not under any obligation to grow sugar cane and may shift to

alternative/more remunerative crops in case of non-receipt of sugar cane dues. Yield per Hectare

affects the quantum of sugar cane availability. As discussed earlier, adverse weather conditions, crop

disease, pest attacks may adversely affect sugarcane crop yields. Recovery rate depends on various

factors including quality of cane, duration between harvesting and crushing, sucrose content in cane

etc. Any reduction in the yield per hectare or the recovery rate may have a material adverse effect on

our profitability.

16. Sugarcane grown within our Reserved Cane Area may be sold to manufactures of Gur &

Khandsari and others instead of us.

India’s substantial sugarcane production was utilized for ‘Gur and Khandsari’ for ‘Seed, Feed and

Chewing, etc’. Hence, the total sugarcane grown may not be available to sugar manufacturers. To

ensure that the farmers stay interested in selling sugarcane to us, we may need to provide financial and

other incentives to the farmers. This may adversely affect our financial condition and results of our

operations.

17. High cost of raw material and inability to pass it to the consumer may put a pressure on the

profit margins.

Sugarcane costs constitute a major portion of our direct expenditure. As per the extant norms, we have

to purchase sugarcane at the State Advised Price (SAP). At the same time, the amount of sugar that can

be sold in the market is regulated. Sugar is sold in the open market at market-determined prices. Thus,

we have little control over the quantity or the price at which we can sell the sugar produced. This can

put a pressure on our profit margins.

The Uttar Pradesh Sugar Mills Association has challenged the SAP by the Uttar Pradesh Governement

fixing the price for the 2007-08 season. For further detail on the same please refer to Section

Litigations & other Information on page no 225 of this Draft Letter of Offer

18. Adverse weather conditions, crop disease, pest attacks may adversely affect sugarcane crop

yields and sugar recovery rates for any given harvest.

Our sugar production depends on the volume and sucrose content of the sugarcane that is supplied to

us. Crop yields and sucrose content depends primarily on the variety of sugarcane grown, the presence

of any crop disease and weather conditions such as adequate rainfall and temperature, which vary.

Adverse weather conditions have caused crop failures and reduced harvests and resulted in volatility in

the sugar and Ethanol industries and consequently in our operating results. Flood, drought or frost can

adversely affect the supply and pricing of the agricultural commodities that we sell and use in our

business. There can be no assurance that future weather patterns, potential crop disease or the

cultivation of certain sugarcane crop varieties will not reduce the amount of sugarcane or sugar that we


11

can recover in any given harvest. Any reduction in the amount of sugar recovered could have a material

adverse effect on our results of operations.

19. Selling Price of sugar depends largely on prevailing market prices.

The wholesale price of sugar has a significant impact on our profits. Sugar is subject to price

fluctuations resulting from weather, natural disasters, domestic and foreign trade policies, shifts in

supply and demand and other factors beyond our control. Further the sugar industry in India is highly

fragmented and the pricing power of individual companies is limited. As a result, any prolonged

decrease in sugar prices could have a material adverse effect on our Company and our results of

operations.

20. Our profitability depends significantly on the cost of our primary raw material sugarcane and

the selling price of sugar that we are able to obtain for sugar. We are not able to set the cost of

sugarcane or the selling price for our sugar. Some of the main reasons that contribute to

fluctuations in the margin between our raw material cost and the selling price of our sugar are set forth below.

Sugar is an essential commodity, and is included within the purview of the Essential Commodities Act,

1955 and consequently, its production, supply and distribution are regulated by the state and central

government.

The Cane Commissioner of each state reserves and assigns areas for the supply of sugarcane to

factories on an equitable distribution basis. The purchase price of sugarcane is regulated by the State &

Central government who fixes the minimum price of sugarcane, termed as SAP & SMP repectively,

which must mandatorily be paid by sugar producers to sugarcane growers, within a specified time. The

SMP is fixed for a given base level of recovery. This is the minimum price that we have to pay the

farmers from whom we purchase cane. We typically pay a price for sugarcane, which is at a premium

to the SMP and is a function of overall availability of sugarcane and prices being paid by other mills in

the region. We may be adversely affected if the GoI raises the SMP, which in turn would affect the

actual price paid. The situation may worsen in the event of a decrease in the price of sugar.

Mills must sell a specified percentage termed as “Free Sale Sugar”, which is currently at 90% of their

production in the open market and are thereby subject to the forces of demand and supply. However,

the quantity to be sold is based on a Monthly Release Mechanism governed by the Sugar Directorate.

The remaining portion of a sugar factories production, commercially termed as “Levy Sugar”, must be

sold as per government directions through fair price shops and the public distribution system at

government notified prices, which could be below the cost of production. The Free Sale Sugar prices

are also modulated to some extent by the Monthly Release Mechanism (MRM). We may be adversely

affected if the Free Sale Sugar prices decline.

Various taxes and levies are also imposed on the purchase, use and consumption of sugarcane. For

further details, please see the section titled “Key Industry Regulations” in page 66 of this Offer

Document. Any change in governmental or legal policies or the applicability of the present regulations

and policies to our detriment, can adversely affect our business, operations and profitability.

21. We may face competition from other established companies and future entrants into the

industry. Since the sugar industry is going through a lean period, increasingly additional capacities are being

added by existing sugar companies and by new entrants in this field. The supply of sugar in the market

will increase once these additional capacities start production. This additional supply of sugar in the

market will affect the sugar price if it is not supported by proportionate increase in demand. Our profit

margin may reduce incase of fall in future sugar prices and the same will have a direct impact on our

share price. Competition is inevitable in any line of business.

22. We operate in an industry where the market price for our products is cyclical and affected by

general economic conditions.

Domestic sugar industry typically follows a 5 to 7 years cycle. Higher sugarcane and sugar production

results in a fall in sugar prices and non-payment of dues to farmers. This compels the farmers to switch

to other crops thereby causing a shortage of sugarcane, consequently an increase in sugarcane prices


12

and extraordinary profits. Taking into account the prevalent higher prices for sugarcane, farmers then

switch back to sugarcane. Profitability of sugar manufacturing units like ours depends largely on the

stage of the cycle witnessed by the industry. Presently, the industry has witnessed high production of

28.50 million tonnes of sugar in the Sugar Season 2006- 07. As per ISMA, the production is expected

to increase in the current Sugar Season 2007-08. However, the higher production is also coupled with

lower inventory levels and thus prices are expected to remain stable if not rise.

The sugar industry has historically been subject to commodity cycles and is sensitive to changes in

domestic market prices, supply and demand. The market in India has experienced periods of limited

supply, causing sugar prices and industry profit margins to increase. Sugar imports are governed by

GoI’s policy, which currently applies a 100% customs duty and other import tariffs on imported white

crystal sugar. In the event of any changes in these policies, import of white sugar may be an attractive

option and which, in turn, would drop domestic prices and thereby impact our financial condition.

Conversely, years of low production and declining sugar stocks may be followed by years of excess

production that result in over-supply of sugar to the domestic markets, causing a decline in sugar prices

and industry profit margins. For further details see the section titled “Industry Overview” on page 51 of

this Offer Document.

Risks in relation to Co-generation business

23. Bagasse, which is derived from sugarcane, and other biomass based fuels are the basic raw

materials for our co-generation business. Any constraint in the availability or fluctuations in the

price of sugarcane may affect the current or future capacity utilisation of the co-generation plant.

Bagasse and other biomass based products such as rice husk, cane trash, mustard stalk/husk woodchips,

are raw materials for the co-generation business. Availability of the primary fuel, Bagasse is dependent

on the supply of sugarcane. Further, these raw materials are also used in some industries such as paper

and paperboard. The availability of Bagasse and other biomass based raw materials for co-generation is

subject to changes in the consumption patterns and other market forces in such other industries.

Additionally, other industries may offer higher prices which may divert the supply of externally

sourced raw material, which may in turn adversely affect the availability or pricing of these raw

materials could impact our co-generation business and our profitability. Any constraint in the

availability of sugarcane may affect the availability of Bagasse and consequently, the business of our

co-generation plant.

Risks in relation to our Distillery Business

24. Our Distillery business is molasses based, which is derived from sugarcane. Any constraint in the

availability of sugarcane may affect the current or future capacity utilisation of the distillery

business.

One of the by-products of sugar production is molasses. Our distillery uses molasses as raw material

for production of ethanol. Though in the past we have resorted to purchase of molasses from other

sugar mills, currently our dependence on external supply of raw materials is minimal. Any constraint in

the availability of molasses, will affect the results of our distillery business.

EXTERNAL RISK FACTORS

1. A slowdown in economic growth in India could cause our business to suffer

The economy has experienced rapid growth in recent years with the GDP growth being 8.5 %, 7.5%,

8.4 % and 9.4% in fiscal 2004, 2005, 2006 and for the second quter of fiscal 2007 respectively.

Any slowdown in the growth of Indian economy or future volatility in global commodity prices, could

adversely affect our business, including our future financial performance, our shareholders’ funds and

our ability to implement our strategy and the price of our Equity Shares.

2. A significant change in the Government’s economic liberalization and deregulation policies could

disrupt our business and adversely affect our financial performance


13

The Government of India has traditionally exercised and continues to exercise a dominant influence

over many aspects of the economy. Its economic policies have had and could continue to have a

significant effect on public and private sector entities, including us, and on market conditions and

prices of Indian securities, including in the future our Equity Shares. The present Government, which

was formed after the Indian parliamentary elections in April-May 2004, is headed by the Indira

Congress and is a coalition of several political parties. Any significant change in the Government’s

policies or any political instability in India could adversely affect business and economic conditions in

India and could also adversely affect our business, our future financial performance and the price of our

Equity Shares.

3. Terrorist attacks and other acts of violence or war involving India, the United States and other

countries could adversely affect the financial markets, result in a loss of business confidence and

adversely affect our business, results of operations and financial condition.

Terrorist attacks, such as the ones that occurred in Hyederabad in September 2007, Mumbai on July 11,

2006, New York and Washington, D.C. on September 11, 2001, New Delhi on December 13, 2001,

Gandhinagar in Gujarat on September 24, 2002, Bali on October 12, 2002 and Mumbai on August 25,

2003, and other acts of violence or war may negatively affect the Indian stock markets and also

adversely affect the global financial markets. These acts may also result in a loss of business

confidence and have other consequences that could adversely affect our business, results of operations

and financial condition.

After the December 13, 2001 attack in New Delhi, July 11, 2006 in Mumbai and a terrorist attack on

May 14, 2002 in Jammu, India, diplomatic relations between India and Pakistan became strained and

there was a risk of intensified tensions between the two countries. The governments of India and

Pakistan have recently been engaged in conciliatory efforts. However, any deterioration in relations

between India and Pakistan might result in investor concern about stability in the region, which could

adversely affect the price of our Equity Shares. India has also witnessed civil disturbances in recent

years and it is possible that future civil unrest as well as other adverse social, economic and political

events in India could have an adverse impact on us.

Military activities or terrorist attacks in the future could influence the Indian economy by disrupting

communications and making travel and transportation more difficult. Such political tensions could

create a greater perception that investments in Indian companies involve a higher degree of risk. This,

in turn, could have a material adverse effect on the market for securities of Indian companies, including

our Equity Shares and on the market for our services.

4. Our performance is linked to the stability of policies and the political situation in India

The role of the Indian central and state governments in the Indian economy on producers, consumers

and regulators has remained significant over the years. Since 1991, the Government of India has

pursued policies of economic liberalization, including significantly relaxing restrictions on the private

sector. Certain members of the current coalition government have been protesting against the

privatization measures being undertaken by the Government of India. We cannot assure you that these

liberalization policies will continue in the future. Protests against privatization could slowdown the

pace of liberalization and deregulation. The rate of economic liberalization could change, and specific

laws and policies affecting technology companies, foreign investment, currency exchange rates and

other matters affecting investment in our securities could change as well. The withdrawal of one or

more of these parties from a coalition government can result in political instability. Any political

instability could delay the reform of the Indian economy and could have a material adverse effect on

the market for our Equity Shares and on the market for our services.

5. Any downgrading of India’s debt rating by an international rating agency could have a negative

impact on our business

Any adverse revisions to India’s credit ratings for domestic and international debt by international

rating agencies may adversely impact our ability to raise additional financing from overseas markets,

and the interest rates and other commercial terms at which such additional financing is available. This

could have a material adverse effect on our business and financial performance and adversely affect our

ability to obtain financing from overseas markets.

6. Sensitivity to the economy and extraneous factors


14

The Company’s performance is highly correlated to the performance of the economy and the financial

markets. The health of the economy and the financial markets in turn depends on the domestic

economic growth, state of the global economy and business and consumer confidence, among other

factors. Any event disturbing the dynamic balance of these diverse factors would directly or indirectly

affect the performance of the Company.

7. Changes in Indian Government policies could adversely affect economic conditions in India, and

thereby adversely impact the Company’s results of operations and financial condition A significant proportion of the Company’s production facilities are located in India, and a significant

portion of its revenue is derived from sales of its products in the Indian market. Consequently, the

Company itself, and the market price and liquidity of the equity shares, may be affected by Indian

Government policy changes in India. For example, the imposition of foreign exchange controls, rising

interest rates, increases in taxation or the creation of new regulations could have a detrimental effect on

the Indian economy generally and the Company in particular.

The Indian Government has in recent years sought to implement economic reforms, and the current

Indian Government has implemented policies and undertaken initiatives that continue the economic

liberalization policies pursued by previous Indian Governments. For example, the Indian Government

has announced its general intention to continue India’s current economic and financial sector

deregulation policies and encourage infrastructure projects. However, the roles of the Indian

Government and the State Governments in the Indian economy as producers, consumers and regulators

have remained significant and there can be no assurance that liberalization policies will continue in the

future. Any significant change in such liberalization and deregulation policies could adversely affect

business and economic conditions in India generally and the Company’s results of operations and

financial condition in particular.

8. If inflation worsens, the Company’s results of operations and financial condition may be adversely

affected In 2006, India’s wholesale price inflation index suggested an increasing inflation trend compared to

recent years. An increase in inflation in India could cause a rise in the price of transportation, wages,

raw materials or any other of the Company’s expenses. If this trend continues and the Company is

unable to reduce its costs or pass its increased costs along to its customers, the Company’s results of

operations and financial condition may be materially and adversely affected.

NOTES TO RISK FACTORS:

1. Net worth of our company as on June 30 2007, was Rs. 9699.96 lacs. The size of the Rights Issue is Rs.

5,000.00 lacs. The book value per share as on June 30, 2007 for Rs. 10/- face value was Rs. 53.37.

2. Issue of [●] Equity Shares of face value of Rs. 10/- each for cash at a premium of Rs. [●] per Equity Share

on rights basis to the existing Equity Shareholders of The Oudh Sugar Mills Limited in the ratio of [●]

Equity Shares for every [●] Equity Shares held on the Record Date i.e. [●] for every [●] Equity Shares to

being allotted on rights basis. The issue price for the Equity Shares will be payable in [●] installments. In

terms of Clause 8.6.1 (vi) at leaset 25% of the issue price will be payable on Application; balance Rs. [●] of

the Issue Price will become payable at the option of Our Company, on or before 12 months from the Date

of Allotment.

Under the Issue, the allottees will also receive [●] detachable Warrants. Total Issue including conversion of

Warrants into Equity Shares during Warrant Conversion Period at Rs [●] per share would aggregate to Rs

5000 lacs. The Issue Price is [●] times the face value of the Equity Shares. For detrails please refer to

“Terms of the Issue” on page 306 of this Draft Letter of Offer.

3. Details of Related Party Transactions are as follows:

Statement of Aggregated Related Party Transactions as per Accounting Standard-18 for the reporting period


15

Enterprises owned by Key Relatives of

Key Management Management Key Management

Particulars Personnel or their relatives Personnel Personnel Total

Year Transactions Balance Transactions Balance Transactions Balance Transactions Balance

Value Outstanding Value Outstanding Value Outstanding

Value Outstanding

as on as on as on as on

30th June 30th June 30th June 30th June

Sale of Goods/

Fixed Assets

Upper Ganges

Sugar &

Industries Ltd.

2006-07 224.14 - - - - -

224.14 -

2005-06 245.76 - - - - - 245.76 -

2004-05 271.18 - - - - - 271.18 -

2003-04 39.39 - - - - - 39.39 -

2002-03 48.64 - - - - - 48.64 -

Purchase of

Goods /Fixed

Assets

Upper Ganges

Sugar &

Industries Ltd.

2006-07

970.95

- - - - -

970.95 -

2005-06 75.31 - - - - - 75.31 -

2004-05 73.51 - - - - - 73.51 -

2003-04 10.42 - - - - - 10.42 -

2002-03 13.80 - - - - - 13.80 -

Mrs Vedanti

Sharma

2003-04 - - - -

10.79

-

10.79 -

Right Issue of


16

Shares

Mr.

C.S.Nopany

2004-05 - - 9.56 - - -

9.56 -

SCM

Investment &

Trading

Company

Ltd.,

2004-05 339.98 - - - - -

339.98 -

RTM

Investment &

Trading

Company

Ltd.,

2004-05 349.13 - - - - -

349.13 -

Others 2004-05 - - 0.01 - 0.01 - 0.02 -

Dividend Paid

Mr.

C.S.Nopany

2006-07 - - 2.01 - - -

2.01 -

2005-06 - - 1.12 - - - 1.12

2004-05 - - 0.64 - - - 0.64 -

SCM

Investment &

Trading

Company

Ltd.,

2006-07 87.42 - - - - -

87.42 -

2005-06 39.66 - - - - - 39.66 -

2004-05 25.79 - - - - - 25.79 -

RTM

Investment &

Trading

Company

Ltd.,

2006-07 73.32 - - - - -

73.32 -

2005-06 40.73 - - - - - 40.73 -


17

2004-05 25.90 - - - - - 25.90

Uttar Pradesh

Trading

Co.Ltd.,

2006-07 88.34 - - - - -

88.34 -

2005-06 49.08 - - - - - 49.08 -

Others 2004-05 - - 0.02 - 0.11 0.13 -

Interest Paid

Sutlej Textiles

& Industries

Limited

2006-07 62.43 - - - - -

62.43 -

SIL

Investments

Ltd.,(Formerly

Sutlej

Industries

Limited)

2004-05 140.71 - - - - -

140.71 -

2003-04 47.15 - - - - - 47.15 -

2002-03 68.00 - - - - - 68.00 -

SCM

Investment &

Trading Co.

Ltd.

2004-05

102.63

- - - - -

102.63 -

2003-04 150.26 - - - - - 150.26 -

2002-03 26.43 - - - - - 26.43 -

RTM

Investment &

Trading Co.

Ltd.

2004-05

53.25

- - - - -

53.25 -

2003-04 103.96 - - - - - 103.96 -

2002-03 17.47 - - - - - 17.47 -

Others 2005-06 - - 0.10 3.59 3.69 -

2004-05 5.90 0.42 0.10 3.88 4.09

10.20

4.19

2003-04

13.75

- 0.28 -

4.65

3.58

18.68

3.58


18

2002-03 13.26 - 0.28 - 3.60 - 17.14 -

Loans Repaid /

Given

Upper Ganges

Sugar &

Industries Ltd.

2005-06

455.00

455.00 - - - -

455.00

455.00

Sutlej Textiles

& Industries

Limited

2006-07 1,500.0 - - - - -

1,500.00 -

SIL

Investments

Ltd.,(Formerly

Sutlej

Industries

Limited)

2004-05 2,100.0 - - - - -

2,100.00 -

2003-04 300.00 - - - - - 300.00 -

2002-03 1,405.00 - - - - - 1,405.00 -

SCM

Investment &

Trading Co.

Ltd.

2004-05

2,150.00

- - - - -

2,150.00 -

2003-04 2,300.00 - - - - - 2,300.00 -

2002-03 550.00 - - - - - 550.00 -

RTM Investment &

Trading Co. Ltd. 2004-05 2,225.00

- - - - -

2,225.00 -

2003-04 2,800.00 - - - - - 2,800.00 -

2002-03 300.00 - - - - - 300.00 -

Others 2005-06 - - 4.00 - 11.57 - 15.57 -

2004-05 340.00 - 2.00 - 9.50 - 351.50 -

2003-04 385.00 - - - 13.01 - 398.01 -

2002-03 340.00 - - - 1.40 - 341.40 -

Loans/Intercorporate

Loans Taken

Upper Ganges Sugar &

Industries Ltd. 2006-07 455.00

- - - - -

455.00


19

Sutlej Textiles &

Industries Limited 2006-07

3,500.00 2,000.00 - - - -

3,500.00

2,000.00

SIL Investments

Ltd.,(Formerly Sutlej

Industries Limited) 2004-05

900.00 - - - - -

900.00 -

2003-04 1,200.00 1,200.00

- - - -

1,200.00

1,200.00

2002-03 1,705.00 300.00

- - - -

1,705.00

300.00

SCM Investment &

Trading Co. Ltd. 2004-05 1,150.00

- - - - -

1,150.00 -

2003-04 2,900.00 1,000.00

- - - -

2,900.00

1,000.00

2002-03 950.00 400.00

- - - -

950.00

400.00

RTM Investment &

Trading Co. Ltd. 2004-05 2,025.00

- - - - -

2,025.00 -

2003-04 2,500.00 200.00

- - - -

2,500.00

200.00

2002-03 800.00 500.00

- - - -

800.00

500.00

Others 2005-06 - - - - 2.31 - 2.31 -

2004-05

250.00 - 4.00 4.00

13.16 33.47 267.16

37.47

2003-04 400.00 90.00

- 2.00 9.60 33.81

409.60

125.81

2002-03 415.00 75.00

- 2.00

18.22

35.96

433.22

112.96

Balance Outstanding on

Current Accounts (net)

Credit :


Industries Ltd. 2006-07

-

58.02

- - - -

-

58.02

2005-06

-

16.72

- - - -

-

16.72

2004-05

-

14.07

- - - -

-

14.07


20

2003-04

-

7.58

- - - -

-

7.58

2002-03

-

7.42

- - - -

-

7.42

Debit :

Mr. C.S.Nopany 2006-07

- - 6.09 6.09 - -

6.09

6.09

Interest Received



- - - - -

2.15 -

2005-06 32.17 - - - - - 32.17 -

Dividend Received

Sutlej Textiles &

Industries Limited 2006-07 70.93

- - - - -

70.93 -

SIL Investments

Ltd.,(Formerly Sutlej

Industries Limited) 2005-06 65.93

- - - - -

65.93 -

2004-05 65.93 - - - - - 65.93 -

2003-04 65.93 65.93

2002-03 61.53 61.53



- - - - -

58.61 -

2005-06 27.02 - - - - - 27.02 -

2004-05 25.67 - - - - - 25.67 -

- - - - - - -

Remuneration

Mr. C.S.Nopany 2006-07 - - 100.31 - - - 100.31 -

2005-06 - - 79.10 - - - 79.10

2004-05 - - 16.80 - - - 16.80

2003-04 - - 10.75 - - - 10.75 -

2002-03 - - 10.75 - - - 10.75 -

Mr. P.K.Lakhotia 2005-06

- -

15.91

5.29 - -

15.91

5.29

2004-05 - - 14.59 2.90 - - 14.59


21

2.90

2003-04

- - 12.35 1.29 - -

12.35

1.29

2002-03 - - 7.90 - - - 7.90 -

Mr. Chandra Mohan 2006-07

- -

1.47

1.47 - -

1.47

1.47

Mr.M.S.Sharma 2006-07 - - 10.51 - - - 10.51 -

2005-06

- -

10.23

0.74 - -

10.23

0.74

2004-05

- -

9.00

0.67 - -

9.00

0.67

2003-04

- - 7.56 0.60 - -

7.56

0.60

2002-03 - - 7.05 - - - 7.05 -

Mr.M.N.Agarwal 2003-04 - - 6.53 - - - 6.53 -

2002-03 - - 6.32 - - - 6.32 -

Mr.V.P.Singh 2006-07

- - 18.97 4.00 - -

18.97

4.00

2005-06

- - 8.99 1.83 - -

8.99

1.83

2004-05

- - 6.92 0.56 - -

6.92

0.56

2003-04

- -

0.56

0.56 - -

0.56

0.56

Mr.P.K.Saini 2006-07 - - 8.95 - - - 8.95 -

2005-06

- -

0.39

0.20 - -

0.39

0.20

Mr.S.K.Premi 2006-07 - - 10.36 - - - 10.36 -

2005-06 - - 8.55 - - - 8.55 -

2004-05

- -

9.15

0.07 - -

9.15

0.07

2003-04

- -

6.88

0.49 - -

6.88

0.49

2002-03 - - 7.32 - - - 7.32 -

Mr.S.D.Shukla 2006-07 - - 4.74 1.42 - - 4.74


22

1.42

Mr.D.J.Darji 2006-07

- -

4.62

0.10 - -

4.62

0.10

Note: The period referred to above is from 1st July to 30th June each year.



4 Before making an investment decision in respect of this Offer, you are advised to refer to the section titled

‘Basis for Issue Price’ on page 41 of this Draft Letter of Offer.

5 Please refer to the sub section titled ‘Basis of Allotment’ on page 321 of this Draft Letter of Offer for details

on basis of allotment.

6 Average cost of acquisition of shares of our Company currently held by our Promoters is as follows:

Name Average cost

of acquisition

of a share (in

Rs.)

Shri C.S.Nopany 42.22

Dr. K.K.Birla 33.50

Shri K.K.Birla, HUF 34.73

Uttar Pradesh Trading Company Limited 45.91

SCM Investment & Trading Company Limited 76.96

RTM Investment & Trading Company Limited 50.00

Darbhanga Marketing Company Limited 54.77

Sonali Commercial Limited 38.72

Deepsikha Trading Company Pvt. Limited 34.39

Modern Household & Accessories Trading Pvt.

Limited

51.44

New India Retailing & Investment Ltd.

(formerly New India Sugar Mills Ltd.)

51.51

HTL Investment & Trading Company Pvt.

Limited

43.65

Yashovardhan Investment & Trading Company

Limited

32.86

Shradhanjali Investment & Trading Company

Limited

45.04

Rajpur Farms Limited 199.48

Narkatiajang Farms Limited 190.73

7 You may contact the Lead Manager for any complaints pertaining to the Issue including any clarification or

information relating to the Issue. The Lead Manager is obliged to provide the same to you.

8 All information shall be made available by the Lead Manager and by us to the public and investors at large

and no selective or additional information would be available for a section of the investors in any manner

whatsoever.

9 Please refer page no. 153 of this Draft Letter of Offer for ‘Details of Loans & Advances’.

10 There is no interest of promoters/directors/key management personnel other than their shareholding,

unsecured loan and reimbursement of expenses incurred or normal remuneration or benefits.


24

SECTION V: INTRODUCTION

SUMMARY OF INDUSTRY AND BUSINESS

INDUSTRY SUMMARY

Sugar industry is the second largest agro-based industry located in the rural India. About 50 million

sugarcane farmers, their dependents and a large mass of agricultural labourers are involved in sugarcane

cultivation, harvesting and ancillary activities, and constituting 7.5% of the rural population. Besides, about

0.5 million skilled and semi-skilled workers, mostly from the rural areas are engaged in the sugar industry.

Some of the sugar factories have also diversified into byproduct based industries and have invested and put

up distilleries, organic chemical plants, paper and board factories and cogeneration plants. The industry

generates its own replenishable biomass and uses it as fuel without depending on fossil fuel. At the

prevailing sugar prices, the total sugar produced in the country value at about Rs.37,000 crore per year.

There are approximately 607 sugar mills located in the 18 states of the country. About 50 % of these mills

are in the cooperative sector, 40% in the private sector and rest in the public sector. However, only 500

sugar mills were in operation during the season 06-07. (Source: ISMA)

BUSINESS SUMMARY

Our Company was promoted by Late Shri R.D.Birla in 1932 with the main object of carrying on business of

production and sales of sugar and sugar related products. The first sugar mill of our Company was set up at

Hargaon (District: Sitapur, Uttarpradesh) with a crushing capacity of 400 tcd. We further established a

distillery at Hargaon in 1945. Subsequently, our company purchased a sugar factory namely Rosa Sugar

Works at Rosa (Dist. Shahanjapur, Uttar Pradesh) in 1976 with a crushing capacity of 1000 tcd. In 1984,

The New Swadeshi Sugar Mills Limited having a sugar mill, distillery at Narkatiaganj (Bihar), a fruit and

vegetable canning factory at Allahabad and a paint factory under lease at Calcutta was merged with our

Company. The lease of the paint factory was terminated in April, 1997. Over the period we have expanded

our capacities of sugar production, industrial alcohol/ethanol and canning products.Presently we have three

sugar factories at Hargaon, Rosa in Uttarpradesh and at Narkatiaganj in Bihar with a combined crushing

capacity of 21,700 tcd alongwith 25 M.W. Co-generation. Our Company is also having two distilleries at

Hargaon and at Narkatiaganj with a total installed capacity 22.50 million litres per annum. Our fruits and

vegetable canning factory is situated at Bamrauli near Allahabad. The Company is in process of setting up a

Greenfield Sugar unit at Hatta, Gorakhpur, U.P with a capacity 7,000 tcd and co-generation power plant of

35 M.W.

We manufacture the following four main cateagories of products:

• Sugar

• Industrial Spirits (including Denaturants), Fusel Oil & Bio-Compost

• Co-generation

• Canning Products.

In addition, we also have arrangement for manufacturing of Bio-compost at Hargaon by using Press-Mud

from sugar factory and spent wash from distillery. Bio-compositing culture purchased from Vasant Dada

Sugar Institute, Pune are added and by Aerobic Bio-composting process in 45-60 days Bio-compost is

ready. This is a fertilizer having Nitrogen, Phosphorus and Potash etc. and widely used in cane, wheat,

vegetables & flowers cultivation. Bio-compost produced by us is marketed under the brand name “Oudh

Jaivik Khad”.


25

THE ISSUE SUMMARY

Pursuant to the resolution passed by Board of Directors of the Company at its Meeting held on 20th

August,

2007 and Shareholders approval in the EGM held on 22nd

September 2007, the Finance & Corporate Affairs

Committee of Directors of the Company at its meetings held on 17th

October 2007 has decided to make the

following offer to the Equity Shareholders of the Company:

Issue of [●] Equity Shares of face value of Rs. 10/- each for cash at a premium of Rs. [●] per Equity Share on

rights basis to the existing Equity Shareholders of The Oudh Sugar Mills Limited in the ratio of [●] Equity

Shares for every [●] Equity Shares held on the Record Date i.e. [●] for every [●] Equity Shares to being allotted

on rights basis. The issue price for the Equity Shares will be payable in [●] installments. In terms of Clause

8.6.1 (vi) at leaset 25% of the issue price will be payable on Application; balance Rs. [●] of the Issue Price will

become payable at the option of Our Company, on or before 12 months from the Date of Allotment.


Warrants into Equity Shares during Warrant Conversion Period at Rs [●] per share would aggregate to Rs 5000

lacs. The Issue Price is [●] times the face value of the Equity Shares. For detrails please refer to “Terms of the

Issue” on page 306 of this Draft Letter of Offer.

Terms of Payment

In terms of Clause 8.6.1 (vi) at leaset 25% of the issue price will be payable on Application; i.e. Rs [●], which

constitutes [●] % of the full amount of the Issue Price Rs. [●] shall be payable (“Application Money”). The

remaining [●] % of the full amount of the Issue Price shall become payable, at the option of our Company, on or

before 12 months after the Allotment Date.

Towards Share Capital Towards Share Premium

Account

On Application Rs [●]

(In terms of Clause 8.6.1 (vi)

at leaset 25% of the issue price

will be payable on

Application)

Rs [●] per Equity Shares Rs [●]

On first and final Call Rs [●] Rs [●] per Equity Share Rs [●]


26

SUMMARY OF FINANCIAL DATA

Please read the following data in conjunction with the detailed Auditors’ report on page 115 under the heading

“FINANCIAL INFORMATION OF THE ISSUER COMPANY”.

STATEMENT OF ADJUSTED PROFITS AND LOSSES

(Rs. In lacs)

For the year ended 30th June

Particulars 2003 2004 2005 2006 2007

Income

Sales of Products (Net of excise

duty) 31,331.65

35,435.52

35,604.57

50,116.73

44,244.45

Increase / (Decrease) in

Inventories (352.38)

(6,353.86)

1,077.83

(2,099.02)

3,708.61

Other Income 306.65

344.90

287.25

117.35

161.16

Total 31,285.92

29,426.56 36,969.65

48,135.06

48,114.22

Expenditure

Purchase of Semi-Finished

Goods 47.76

173.05

998.83

62.59

34.73

Raw Materials Consumed 23,557.64

17,247.94

21,528.91

29,727.34

38,765.85

Staff Cost 1,933.45

1,918.45

2,028.78

2,401.92

2,748.37

Other Manufacturing Expenses 2,858.63

3,001.23

3,152.68

3,973.93

4,752.87

Administrative and Other

Expenses 752.81

763.00

1,041.66

993.04

1,087.74

Selling and Distribution

Expenses 507.91

581.96

476.37

558.13

543.90

Interest & Finance Charges (Net) 3,084.35

3,536.87

2,701.54

1,684.79

2,092.87

Depreciation 1,072.72

1,097.79

1,251.28

1,558.68

2,028.67

Total 33,815.27

28,320.29 33,180.05

40,960.42

52,055.00

Net Profit / (Loss) Before Tax (2,529.35)

1,106.27 3,789.60

7,174.64

(3,940.78)

Taxation:

Current Tax (Net of Refunds) 1.03

32.17

197.09

680.38

29.65

Fringe Benefit Tax -

-

4.50

24.90

27.50

Deferred Tax Liability / (Asset) -

- -

1,103.64

(1,103.64)

Net Profit / (Loss) after Tax (2,530.38)

1,074.10 3,588.01

5,365.72

(2,894.29)

Notes:


27

STATEMENT OF ADJUSTED ASSETS AND LIABILITIES

(Rs. In Lacs)

As at 30th June

Particulars 2003 2004 2005 2006 2007

Application of Funds

A Fixed Assets

Gross Block

21,866.61

22,580.79

26,919.44

30,321.92

41,687.98

Less : Depreciation

8,383.88

9,371.99

10,446.97

11,780.40

13,254.85

Net Block

13,482.73

13,208.80

16,472.47

18,541.52

28,433.13

Capital Work In Progress

306.92

174.66

190.09

202.11

256.09

Capital Expenditure on Expansion / New

Projects

-

1,415.50

1,443.10

4,421.31

13,224.76

13,789.65

14,798.96

18,105.66

23,164.94

41,913.98

B Investments

1,106.77

1,103.53

1,078.53

1,078.53

1,079.52

C Current assets, loans and advances

Inventories

22,790.91

16,032.43

17,326.19

15,143.37

19,473.86

Sundry Debtors

947.03

603.02

111.61

411.66

591.95

Cash & Bank Balances

310.94

191.06

203.83

338.70

512.27

Loans and advances

1,188.22

1,505.04

1,785.11

1,490.59

2,645.50

Other Current Assets

3.64

3.55

4.08

2.52

3.54

Total

25,240.74

18,335.10

19,430.82

17,386.84

23,227.12

TOTAL ASSETS

40,137.16

34,237.59

38,615.01

41,630.31

66,220.62

D Deferred Tax Liability (net)

- -

-

1,103.64

-

E Liabilities & Provisions

Secured Loans

26,761.85

21,894.76

24,282.17

20,555.15

27,252.99

Unsecured Loans

3,550.36

4,692.68

2,300.76

2,236.48

13,880.16

Current Liabilities

9,282.44 6023.29 3272.35 3997.12

15,311.65

Provisions

-

293.59

530.47

1,106.64

75.86

TOTAL LIABILITIES

39,594.65

32,904.32

30,385.75

27,895.39

56,520.66

F Net Worth (A+B+C-D-E)

542.51

1,333.27

8,229.26

12,631.28

9,699.96

G Represented by :

Shareholder's Funds

a. Equity Share Capital

1,038.62

1,038.62

1,817.49

1,817.49

1,817.49


28

As at 30th June

Particulars 2003 2004 2005 2006 2007

b. Reserves and Surplus

3,566.33

3,576.58

6,623.74

10,813.79

7,882.47

4,604.95

4,615.20

8,441.23

12,631.28

9,699.96

Less: Profit and Loss Account Debit

Balance

4,062.44

3,281.93

211.97 -

-

Total

542.51

1,333.27

8,229.26

12,631.28

9,699.96


29

GENERAL INFORMATION

ISSUER DETAILS

Name : The Oudh Sugar Mills Limited

Address of the Registered Office : P.O. Hargaon, Dist. Sitapur (U.P.) 261 121, India

Tel: (+91 5862) 256220 Fax: (+91 5862) 256225

Registration number of the Issuer : 20 – 25186

Corporate Identity Number : L15432UP1932PLC025186

Address of the Registrar of

Companies

: Registrar of Companies, Uttar Pradesh

West-Cott Building

The Mall, M. G. Road

Kanpur – 208 001.

The Equity shares of the Company are listed on the BSE & NSE

BOARD OF DIRECTORS OF THE ISSUER

Sr. No.

Name of the Director Designation DIN

1. Shri C.S.Nopany Chairman Cum Managing Director 00014587

2. Shri S. V. Muzumdar Non-Executive Independent Director 00006935

3. Shri Ashvin C. Dalal Non-Executive Independent Director 00016985

4. Shri Rohit Kumar Dhoot Non-Executive Independent Director 00016856

5. Smt. Madhu Vadera

Jayakumar

Non-Executive Independent Director 00016921

6. Shri C. B. Patodia Non-Executive Independent Director 01389238

7. Shri Haigreve Khaitan Non-Executive Independent Director 00005290

8. Shri J. N. Godbole Non-Executive Independent Director 00056830

BRIEF DETAILS OF THE CHAIRMAN CUM MANAGING DIRECTOR

Shri C. S. Nopany, is the Chairman cum Managing Director of our Company. He is a Chartered Accountant and

Master of Science in Industrial Administration from USA. He is an eminent industrialist having vast industrial

experience in diverse fields like sugar, tea, shipping, textiles, fertilizers and chemicals etc. He is the past

President of Indian Chamber of Commerce. He was appointed as Managing Director on 1st July, 1995. On 2

nd

September, 2002 he was designated as Chairman-cum-Managing Director. He is the overall in-charge of the

affairs of the Company. He is also a member of Finance & Corporate Affairs Committee of the Company.

There is no other Executive Director on our Board other than Shri C.S.Nopany.

COMPANY SECRETARY & COMPLIANCE OFFICER

Shri Sanjay Mukherjee,

9/1, R N Mukherjee Road, 5th Floor

Kolkata 700 001

Tel: +91- 33- 2242 9956

Fax: +91-33- 2248 6369


Investors can contact the Registrar to the Issue/Compliance Officer in case of any pre-Issue or post-Issue related

problems such as non-receipt of Draft Letter of Offer/Composite Application Form/ Letter of Allotment/Share

Certificate/credit of allotted shares in respective beneficiary account/refund order etc.

ADVISOR TO THE ISSUE

M/s ANS Law Associates


30

Advocates & Solicitors

41-A Film Center,

68, Tardeo Road,

Mumbai 400 034

Maharashtra, India

Tel: (+91 22) 6660 4761

Fax: (+91 22) 6660 4763

Contact Person: Mr Sharad Abhyankar

e-mail: [email protected]

BANKER TO THE COMPANY

State Bank of India Commercial Branch,

24 Park Street,

Kolkata – 700 016.

Tel: (+91 33) 2217 6022

Fax: (+91 33) 2229 3555


LEAD MANAGER TO THE ISSUE

Enam Securities Private Limited 801/802, Dalamal Towers

Nariman Point

Mumbai 400 021

Tel: +91-22-6638 1800

Fax: +91 22 2284 6824

Contact Person: Shri Sachin K.Chandiwal


REGISTRAR TO THE ISSUE

Intime Spectrum Registry Limited C – 13, Pannalal Silk Mills Compound

L.B.S. Marg, Bhandup (West)

Mumbai 400 078

Tel: (+91 22) 2596 3838

Fax: (+91 22) 2594 6969

Contact Person: Ms. Awani Thakkar


BANKER TO THE ISSUE

HDFC Bank Limited

26-A, Narayan Properties,

Chandivalli Farm Road,

Saki Naka, Andheri (East)

Mumbai – 400 072

Tel: (91 22) 022 28569202

Fax: (91 22) 022 285 69256

E-mail: [email protected]

Contact Person: Mr. Viral Kothari

AUDITORS OF THE COMPANY

S.R.Batliboi & Company Chartered Accountants

22, Camac Street

Block ‘C’, 3rd

Floor

Kolkata 700 016

Tel: (+91 33) 2281 1224

Fax: (+91 33) 2281 7750


31

INTER-SE ALLOCATION OF RESPONSIBILITIES The statement of inter se allocation of responsibilities for this Issue is as follows:

Sn.No

Activities Responsibility Coordinator

1. Capital structuring with relative components and formalities such

as type of instruments, etc.

ENAM ENAM

2. Drafting and Design of the Letter of Offer document and of

advertisement/publicity material including newspaper

advertisements and brochure / memorandum containing salient

features of the Letter of Offer document. The designated Lead

Merchant Banker shall ensure compliance with the Guidelines for

Disclosure and Investor Protection and other stipulated

requirements and completion of prescribed formalities with Stock

Exchange, Registrar of Companies and SEBI.

ENAM ENAM

3. Marketing of the Issue, which will cover, inter alia, formulating

marketing strategies, preparation of publicity budget, arrangements

for selection of (i) ad-media, (ii) centres of holding conferences of

brokers, investors etc. (iii) bankers to the issue, (iv) collection

centres (v) brokers to the issue, distribution of publicity and issue

material including application form, prospectus and brochure, and

deciding on the quantum of issue material.

ENAM ENAM

4. Selection of various agencies connected with the issue, namely

Registrars to the Issue, printers, bankers and advertisement

agencies.

ENAM ENAM

5. Follow-up with bankers to the issue to get estimates of collection

and advising the issuer about closure of the issue, based on the

correct figures.

ENAM ENAM

6. The post-issue activities will involve essential follow-up steps,

which must include finalisation of basis of allotment / weeding out

of multiple applications, listing of instruments and dispatch of

certificates and refunds, with the various agencies connected with

the work such as registrars to the issue, bankers to the issue, and

bank handling refund business. Even if many of these post-issue

activities would be handled by other intermediaries, the designated

Lead Merchant Banker shall be responsible for ensuring that these

agencies fulfil their functions and enable him to discharge this

responsibility through suitable agreements with the issuer

Company.

ENAM ENAM

CREDIT RATING Not applicable, since the current issue is a Rights Issue of Equity Shares.

DEBENTURE TRUSTEE As the issue consists of the Equity Shares, the appointment of trustees is not required.

MONITORING AGENCY In terms of clause 8.17.1 of the SEBI Guidelines, the size of the issue being less than Rs. 5000 million, we are

not required to appoint a monitoring agency.

APPRAISING ENTITY Not applicable.

BOOK BUILDING PROCESS DETAILS Not applicable.

UNDERWRITING DETAILS


32

The Company has not currently entered into any standby underwriting arrangement. However, it may enter into

such an arrangement for the purpose of Rights Issue at an appropriate time and on such terms and conditions as

it may deem fit. In the event, if the Company does enter into such an arrangement prior to filing of the Letter of

Offer with the designated stock exchange, the Letter of Offer will be updated to reflect the same.


33

CAPITAL STRUCTURE OF THE COMPANY

Nominal

Amount (Rs

in Lacs.)

Aggregate

Value (Rs.

in Lacs)

Authorised Share Capital

4,00,00,000 Equity Shares of Rs. 10/- each 4,000.00 4,000.00

Issued Share Capital

1,81,73,820 Equity Shares of Rs. 10/- each 1,817.38

1883.5 Equity Shares of Rs. 100/- each 1.89 1,819.27 1,819.27

Subscribed and Paid-up Share Capital

1,81,73,820 Equity Shares of Rs. 10/- each 1,817.38

44 Quarter Equity Shares of Rs. 25 each fully paid 0.01

Bearer Equity Share Coupons of Rs. 25 and Rs.

12.50 each fully paid 0.06

Add: Forfeited Shares (amount originally paid-up) 0.04

1,817.49

1,817.49

Present Issue being offered to the Equity Shareholders through this Draft Letter of Offer

[●] Equity Shares of Rs. 10/- each at a premium of Rs. each

[●] [●]

Paid-up Capital after the Issue

[●] Equity shares of Rs. 10/- each [●]

44 Quarter Equity Shares of Rs. 25 each fully paid 0.01

Bearer Equity Share Coupons of Rs. 25 and Rs.

12.50 each fully paid 0.06

Add: Forfeited Shares (amount originally paid-up) 0.04

[●]

Paid Up capital on conversion of Warrants [●]

Share Premium Account

Existing Share Premium Account 6,247.67 [●]

Share Premium Account after the Issue assuming allotment of all Equity Shares

offered [●] [●]

Share Premium Account after the conversion of warrants assuming allotment of all

warrants offered have been converted [●] [●]

(1) The Equity Share split was approved at the Annual General Meeting of the Shareholders of our Company

held on September 26, 1996, resulting each equity share of Rs.100/- being subdivided into ten Equity

Shares of Rs.10/- each.

(2) The Authorised Share Capital of our Company was increased from Rs.20,00,00,000/- divided into

2,00,00,000 Equity Shares of Rs. 10/- each to Rs. 40,00,00,000/- divided into 4,00,00,000 Equity Shares of

Rs.10/- each by an ordinary resolution passed at the Annual General Meeting of the Shareholders of our

Company held on October 15, 2004.

(3) Out of the above Issued and Subscribed Capital, 6,11,550 Equity Shares have been issued for consideration

other than cash and 11,55,575 Equity Shares have been allotted as Bonus Shares by capitalisation of Share

Premium and General Reserve.

(4) (a) Quarter Equity Shares of Rs. 25 each fully paid-up were issued by us as Bonus Shares in the

year 1943. Holders of those Quarter Equity Shares were not having any voting right.

Subsequently in the year 1949 those Quarter Equity Shares were called back for cancellation

by us and then we issued 1 Equity Share of Rs. 100/- as fully paid-up against each 4 Quarter

Equity Shares of Rs. 25/- each. However, 44 Quarter Equity Shares, as shown in the Capital

Structure above, were not tendered to us for cancellation and conversion. Subsequently, in the

year 1997, we sent a circular to all the shareholders requesting them to surrender their share

certificates in respect of Quarter Equity Shares for cancellation and issuance of Equity Shares


34

of Rs. 10/- face value each. Even then, those 44 Quarter Equity Shares were not tendered to

us.

(b) On 18th

October, 1948; we passed a Shareholders’ Resolution which authorised us to issue

Bearer Equity Share Coupons and accordingly such Bearer Equity Share Coupons were issued

to the then existing equity shareholders. We, at our Annual General Meeting dated September

26, 1996; passed a resolution authorising sub-division of the then existing 20,00,000 Equity

Shares of Rs. 100/- each into 2,00,00,000 Equity Shares of Rs. 10/- each and to give effect to

the same, the Board was authorised to issue Equity Shares of Rs. 10/- each to the holders of

Bearer Equity Share Coupons provided the same are consolidated. Subsequently, in the year

1997, we sent a circular to all the shareholders requesting them to surrender their Bearer

Equity Share Coupons for consolidation and issuance of Equity Shares of Rs. 10/- face value

each in exchange of the same. Even then, those Bearer Equity Share Coupons were not

tendered to us.

(c) Since the holders of the Quarter Equity Shares and Bearer Equity Share Coupons have not

tendered their respective instruments to us despite repeated efforts as stated above, our

Finance and Corporate Affiars Committee of the Board of Directors, vide its resolution passed

on 14th

September 2007, has not made any entitlement in the last Rights Issue for the holders

of the said Quarter Equity Shares as well as the Bearer Equity Share Coupons who have not

consolidated and converted their Quarter Equity Shares and Bearer Equity Share Coupons to

Equity Shares of Rs. 10/- each fully paid, on the Record Date. We have adopted a similar

practice in the past at the time of our Rights Issue in 1992 , 1996 and 2005 and the Bonus

Issue in the year 1975.

NOTES TO THE CAPITAL STRUCTURE

1. Share Capital History

Date of Allotment

Number of Equity

Shares

Nominal value

(Rs.)

Issue Price

(Rs.)

Considertion

Reason for Allotment

Cumulative number of

shares

July 26,

1932

603 100 100 Cash Subscribers to the

Memorandum

603

Issued Capital (from May 9, 1975 onwards)

May 9, 1975 77,487 100 NA NA Bonus Issue 1,54,895

November

10, 1986

61,155 100 NA NA Issued on account of

the amalgamation of

The New Swadeshi

Sugar Mills Limited

with our Company

w.e.f. July 1, 1984.

2,16,050

February 8,

1993

1,30,068 100 450 Cash 1,29,838 Equity

Shares on Rights

Basis (Ratio 3:5) and

230 Equity Shares to

permanent/regular

employees through

reservation

3,46,118

March 22,

1996

6,92,386 100 500 Cash Rights Basis (Ratio

2:1)

10,38,504*

June 30,

2005

77,88,780 10 50 Cash Rights Basis (Ratio

3:4)

1,81,73,820

Total number of Shares 1,81,73,820

*10,38,504 Equity Shares of Rs.100 each were sub-divided into 1,03,85,040 Equity Shares of Rs.10 each

pursuant to the resolution passed by the Shareholders at the Annual General Meeting held on 26th

September,

1996 and the Board resolution dated 29th

January, 1997

2. Neither the Promoters of our Company and their relatives and associates nor the directors of our Company

have entered into any buyback/standby arrangement for purchase of Equity Shares of the Company from

any person.


35

3 The Promoters of our Company have confirmed full subscription to their entitlement in the present Rights

Issue vide their letter dated [●]. The Promoters reserve the right to subscribe to their entitlement in the Issue

either by themselves or combination of entities controlled by the Promoters including by subscribing for

renunciation if any made within the promoter group to another person forming part of the promoter group.

In the event of undersubscription, our Promoters intend to apply for additional Equity Shares, to ensure

atleast minimum ninety percent subscription to make the Rights Issue subscribed. Allotment of shares to the

Promoters for additional Equity Shares in excess of their respective rights entitlement will not result in

change in control of management and will be governed by the regulation 3(1)(b) of SEBI (Substantial

Acquisition of Shares and Takeovers) Regulations, 1997 and amendments thereof. The promoters undertake

to comply with Clause 17 of SEBI (Delisting of Securities) Guidelines 2003 in case of non-promoter

holding in the Company falls below the level required for continuous listing requirement.

4 Details regarding top 10 Shareholders

(a) On the date of filing the Draft Letter of Offer with Stock Exchanges i.e. December 20, 2007

Sl.

No.

Name of the Shareholder No. of Shares

held

Percentage

Shareholding

1 Uttar Pradesh Trading Company Limited 19,63,127 10.80

2 SCM Investment & Trading Company Limited 19,42,568 10.69

3 RTM Investment & Trading Company Limited 16,29,285 8.97

4 Darbhanga Marketing Company Limited 12,77,434 7.03

5 Life Insurance Corporation Of India 8,30,918 4.57

6 National Insurance Company Limited 5,99,100 3.30

7 Sonali Commercial Limited 5,12,500 2.82

8 Deepsikha Trading Company Private Limited 3,86,055 2.12

9 SIL Investment Limited 3,64,000 2.00

10 Gama Holding Private Limited 3,25,000 1.79

(b) 10 days prior to the date of filing the Draft Letter of Offer with Stock Exchanges i.e. December 9, 2007

Sl. No.

Name of the Shareholder No. of Shares held

Percentage Shareholding

1 Uttar Pradesh Trading Company Limited 19,63,127 10.80







8 Deepsikha Trading Company Private Limited 3,86,055 2.12

9 SIL Investment Ltd 3,64,000 2.00

10 Gama Holding Private Limited 3,25,000 1.79

(c) 2 years prior to the date of filing the Draft Letter of Offer with Stock Exchanges i.e. December 20, 2005

Sl.

No.

Name of the Shareholder No. of Shares

held

Percentage

Shareholding

1 Uttar Pradesh Trading CompanyLimited 19,63,127 10.80







8 Gobind Sugar Mills Limited 4,28,700 2.36

9 Deepshikha Trading Co. Private Limited 3,86,055 2.12

10 Modern household & Accessories Trading Private Limited 2,93,189 2.14


36

5. Aggregate Shareholding of Promoters and Directors of the Corporate Promoters (assuming full subscription

to the entitlement):

Pre-Issue Post-Issue Name

No. of

Shares

% of

shareholding

No. of

Shares

% of

shareho

lding

No. of equity

shares post

exercise of

warrants

% of post

issue capital,

post

exercising warrants

Promoters

Dr.K.K. Birla 22,506 0.12% [●] [●] [●] [●]

Shri C. S. Nopany 51,254 0.28% [●] [●] [●] [●]

Uttar Pradesh Trading Company Limited 19,63,127 10.80% [●] [●] [●] [●]

SCM Investment & Trading Company

Limited

19,42,568 10.69% [●] [●] [●] [●]

RTM Investment & Trading Company

Limited

16,29,285 8.97% [●] [●] [●] [●]

Darbhanga Marketing Company Limited 12,77,434 7.03% [●] [●] [●] [●]

Sonali Commercial Limited 5,12,500 2.82% [●] [●] [●] [●]

Deepshikha Trading Company Private

Limited

3,86,055 2.12% [●] [●] [●] [●]

Modern Household and Accessories

Trading Private Limited

2,93,189 1.61% [●] [●] [●] [●]

New India Retailing and Investment

Limited

2,70,410 1.49% [●] [●] [●] [●]

HTL Investment & Trading Company

Limited

1,59,460 0.88% [●] [●] [●] [●]

Yashovardhan Investment & Trading

Company Limited

1,27,733 0.70% [●] [●] [●] [●]

Shradhanjali Investment & Trading

Company Limited

13,350 0.07% [●] [●] [●] [●]

Rajpur Farms Limited 27,573 0.15% [●] [●] [●] [●]

Narkatiaganj Farms Limited 17,413 0.10% [●] [●] [●] [●]

Relatives of Individual Promoters - - [●] [●] [●] [●]

Total 86,93,857 47.84 [●] [●] [●] [●]

6. Shareholding pattern before and after the Issue is as under (assuming full subscription to the entitlement):

Category

Code

Category of

shareholder

Total

number of

shares held

pre-issue

% of pre-

issue

capital

No. of equity

shares post-

rights issue

% of post

rights issue

capital

No. of equity

shares post

exercise of

warrants

% of post issue

capital, post

exercising

warrants

(A) Shareholding of

Promoter and

Promoter Group

[●] [●] [●] [●]

(I) Indians 86,93,857 47.84 [●] [●] [●] [●]

Sub-Total (A)(1) [●] [●] [●] [●]

(II) Foreign Promoters - - [●] [●] [●] [●]

Sub-Total (A)(2) - - [●] [●] [●] [●]

Total Shareholding

of Promoter and

Promoter Group

(A) =

(A)(1)+(A)(2)

86,93,857 47.84 [●] [●] [●] [●]

(B) Public

Shareholding

[●] [●] [●] [●]

(I) Institutions [●] [●] [●] [●]

(a) Mutual Funds/UTI 3,950 0.02 [●] [●] [●] [●]

(b) Financial

Institutions/Banks

19,16,885

10.02 [●] [●] [●] [●]


37

Category

Code

Category of

shareholder

Total

number of

shares held

pre-issue

% of pre-

issue

capital

No. of equity

shares post-

rights issue

% of post

rights issue

capital

No. of equity

shares post

exercise of

warrants

% of post issue

capital, post

exercising

warrants

(c) Foreign

Institutional

Investors

55,000 0.30 [●] [●] [●] [●]

Sub-Total (B)(1) 19,75,835 10.87 [●] [●] [●] [●]

II Non-institutions [●] [●] [●] [●]

(a) Private Corporate

Bodies

26,85,504 14.78 [●] [●] [●] [●]

(b) Indian Public 48,18,624 26.51 [●] [●] [●] [●]

Sub-Total (B)(2) 75,04,128 41.29 [●] [●] [●] [●]

Total Shareholding

(B)=(B)(1)+(B)(2)

9,479,963 52.16 [●] [●] [●] [●]

Total (A)+(B) 18,173,820 100 [●] [●] [●] [●]

7 Promoters of the Company, their relatives and associates, Promoter’s Group and the directors of the

Corporate Promoters have not purchased or sold, directly or indirectly, any equity shares during a period of

six months preceeding the date on which this Draft Letter of Offer is filed with Stock Exchanges.

8. We have 16107 Equity Shareholders as on December 14, 2007.

9. We have not issued any Equity Shares out of revaluation reserve in the past.

10. No further issue of equity capital whether by way of issue of bonus shares, preferential allotment, rights

issue or in any other manner will be made by our Company during the period commencing from submission

of the Draft Letter of Offer with SEBI until the securities referred to in this Draft Letter of Offer have been

listed or application money is refunded in case of failure of the Issue.

11. We presently do not have any intention or proposal to alter our capital structure for a period of 6 (six)

months from the Issue Opening Date, by way of split/consolidation of the denomination of Equity Shares or

further issue of Equity Shares (including issue of securities convertible / exchangeable, directly or indirectly

for Equity Shares) whether on preferential basis or otherwise. However, if we go in for acquisitions and

joint ventures, our Company might consider raising additional capital to fund such activity or use shares as

currency for acquisition and/or participation in such joint venture.

12 There are no warrants, options or any other convertible instruments except that of 44 Quarter Equity Shares

of Rs. 25/- each fully paid & Bearer Equity Share Coupons of Rs.25 and Rs.12.50 each fully paid up. These

securities are pending for conversion into fully paid Equity Share of Rs.10/- each on exchange of old

certificates.

13. Save and except 44 Quarter Equity Shares of Rs.25/- each fully paid, there shall be only one denomination

for the Equity Shares of the Company at any given point of time and the Company shall comply with such

disclosure and accounting norms as may be prescribed by SEBI.

14. We have not raised any bridge loan against the proceeds of this Issue.

15. Non-Resident Investors and FIIs will not need permission of the FIPB/RBI for investment in the Issue to

the extent of their Rights Entitlement. However, in case of applications from such entities in excess of their

entitlement, allotment will be subject to restrictions under applicable laws.

16. The Issue will remain open for 30 days. However, the Board will have the right to extend the issue period as

it may determine from time to time but not exceeding 60 days from the issue opening date

17. The Equity Shares offered through this Issue shall be made fully paid-up or may be forfeited within [●]

months from the date of the Call Option Notice.

18. In terms of loan agreements signed with Industrial Development Bank of India, State Bank of India and Axis

Bank Limited; we are required to obtain prior consent from them for issuing fresh Equity Shares. We have

obtained prior sanctions from the aforesaid lenders as stated below:


38

19. Neither we nor our directors or Lead Manager have entered into any buy-back and/or standby

arrangements for purchase of Equity Shares of the Company.

Name of the Lender Letter reference no. Letter date

Industrial Development

Bank of India

IDBIL.KMB.No.6712/CFD 29.10.2007

State Bank of India CB/RM-III/598 07.11.2007

Axis Bank Limited AXISB/CB-MC/07-08/SS/228 10.10.2007

State Bank of Hyderabad F/BRC/Oudh/547 15.10.2007


39

OBJECTS OF THE ISSUE The objects of the present issue of equity shares are:

1. To reduce overall indebtedness of the Company by repaying borrowings.

2. To meet the expenses of the issue

Fund Requirement Amount (Rs. in lacs)

Repayment of borrowing [�]

Meeting issue expenses [�]

Total 5000.00

Repayment of Borrowings

The Company has entered into various financing arrangements with banks and financial institutions.

Arrangements entered into by the Company, other than with related parties, includes borrowings in the form of

term loans, working capital facilities and unsecured loans including corporate loans from banks. As on

November 30, 2007 the amount outstanding from the Company under these facilities was Rs. 42137.29 lacs.

Details of the amounts outstanding have been provided in the table below:

(Rupees in lacs)

Sr. No Banks/ Financial Institutions/Lenders Amount Outstanding as

on November 30, 2007

A Term Loan Account

1 Industrial Development Bank of India (IDBI) 6300.00

2 Axis Bank Ltd 2911.56

3 Government of India ( Sugar Development Fund) 2299.86

4 Rabo India Finance 3000.00

5 State Bank Of India 10873.35

6 State Bank Of Hyderabad 2482.73

7 Union Bank of India 2000.00

TOTAL ( A ) 29867.50

B Working Capital Borrowings (from Banks) (B)

6734.79

C Unsecured Borrowings ( other than related parties)

1 State Bank of Hyderabad 1000.00

2 The Bank of Rajasthan Ltd. 1000.00

3 Intercorporate Deposits 3535.00

Total ( C ) 5535.00

Total (A+B+C) 42137.29

* Including Rs. 859.86 lacs towards interest which, as per stipulated terms, is payable on a long term basis.

The Company intends to utilize the net proceeds of the Issue upto Rs [●] lacs toward repayment of a portion of

debt as given above. Some of the Company’s financing arrangements contain provisions relating to pre-

payement penalty. The Company will take these provisions into considerations in pre-paying its debt from the

proceeds of the Issue.

BREAK-UP OF ISSUE EXPENSES

The expenses for this Rights Issue are estimated at Rs. [�] lacs, the break-up whereof is as follows:

Particulars Rs. in Lacs

Fees to Lead Manager [�]

Fees to Registrar [�]

Fees to Auditors [�]

Fees to Banker to the Issue [�]

Fees to Legal Advisor to the Issue [�]

Printing & Stationery and Postage expenses [�]

Advertisement, Travel and other Miscellaneous Expenses [�]

Total [�]


40

No part of the issue proceeds will be paid as consideration to promoters, directors, key managerial personnel,

associates or group companies.

DEPLOYMENT OF FUNDS PENDING UTILIZATION Pending utilization of the proceeds for the purpose described above, we intend to temporarily invest the Issue

proceeds in interest bearing instruements including money market mutual funds and deposits with banks, for the

necessary duration.


41

BASIS FOR ISSUE PRICE

Our issue price is based on the following ‘Qualitative Factors’ and ‘Quantitative Factors’:

Qualitative Factors: 1. More than 75 years experience in sugar industry.

2. Sugar plants are located in rich sugarcane producing areas of Northern India.

3. Loyal and experienced workforce.

Quantitative Factors :

Information presented in this section is derived from our Restated Financial Statements prepared in accordance

with Indian GAAP and SEBI (DIP) Guidelines.

1. Adjusted Earning Per Share (EPS)

Particulars Weight EPS (Rs.)

Year ended June 30, 2005 1 22.66


Year ended June 30, 2007 3 (15.93)

Weighted Average 12.08

(1) The earning per share has been computed on the basis of Restated Profits & Losses after Tax for the

respective years.

(2) The denominator considered for the purpose of calculating Earning Per Share is the weighted average

number of Equity Shares outstanding during the year.

2. Price/Earning (P/E) ratio in relation to Issue Price of Rs. [��] per Equity Share

a. Based on earnings of financial year ended June 30, 2007; EPS was Rs. (15.93)

b. Industry P/E

i) Highest : 30.70

ii) Lowest : 01.40

iii) Industry Composite : 21.40

(Source: “Capital Market”, Vol.XXII/20, Dec-03-16, 2007)

3. Average Return on Net Worth

Weight RONW (%)



Year ended June 30, 2007 3 (29.84)

Weighted Average 18.75

(1) The average return on net worth has been computed on the basis of Restated Profits & Losses after Tax

for the respective year.

4. Minimum Return on Total Networth after Issue needed to maintain EPS - Not Applicable.

5. Net Asset Value Net Asset Value per Equity Share represents Shareholders’ Equity less Miscellaneous Expenses as

divided by weighted average number of Equity Shares.

Net Asset Value per Equity Share as at June 30, 2007 is Rs. 53.37

The Net Asset Value per Equity Share after the Issue is Rs. [�]


42

Issue Price per Equity Share: Rs. [�]

6. Comparison of Accounting Ratios (1)

EPS (Rs.)

P/E* RONW (%)

Book Value/

Share (Rs.)

The Oudh Sugar Mills Ltd. (Based on June 30,

2007, Restated financial statements)

(15.93) [�] (29.84) 53.37

Industry Data

Category: Private Sector Companies

Peer Group

Bajaj Hindustan (for year ended September 30,

2006)

13.60 - 19.30 96.80

Balrampur Chini (for year ended September 30,

2007)

- - 27.80 34.80

Dhampur Sugar(for year ended September 30,

2006)

10.40 - 18.70 91.90

Ponni Sugars (E) (for year ended March 31,

2007)

5.8 - 13.80 45.70

Dwarikesh Sugar(for year ended September 30,

2007)

- - 17.20 90.0

Venus Sugars (for year ended June 30, 2007) - - - (0.20)

Industry Composite - 21.40 - -

* P/E based on trailing twelve month data

(Source: “Capital Market”, Vol.XXII/20, Dec-03-16, 2007)

7. Issue Price

In view of the reasons mentioned above, the Company and the Lead Manager to the Issue, in consultation with

whom the share premium has been decided, are of the opinion that the share premium is reasonable and

justified.

The Lead Managers believe that the Issue Price of Rs. [-] is justified in view of the above qualitative and

quantitative parameters. See the section titled “Risk Factors” on page 7 of this Draft Letter of Offer and the

financials of the Company including important profitability and return ratios, as set out in the Auditors Report

on page 115 of this Draft Letter of Offer to have a more informed view.


43

TAX BENEFIT STATEMENT We, the auditors of The Oudh Sugar Mills Limited hereby confirm that the attached Annexure states the

possible tax benefits available to the Company and its shareholders under the Income Tax Act, 1961, subject to

the fact that several of these benefits are dependent on the Company or its shareholders fulfilling the conditions

prescribed under the relevant tax laws. Hence the ability of the Company or its shareholders to derive the tax

benefits is dependent upon fulfilling such conditions, which based on the business imperatives, the Company

may or may not choose to fulfill. The benefits discussed in the Annexure are not exhaustive.

This statement is only intended to provide general information to the investors and is neither designed nor

intended to be a substitute for the professional tax advice. In view of the individual nature of the tax

consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with

respect to the specific tax implications arising out of their participation in the issue.

We do not express any opinion or provide any assurance as to whether:

• The Company or its shareholders will continue to obtain these benefits in future; or

• The conditions prescribed for availing of these benefits have been / would be met with.

The contents of this Annexure are based on the information, explanations and representations obtained from the

Company and on the basis of our understanding of the business activities and operations of the Company and

interpretations of the current tax laws.

22 Camac Street

Block ‘C’, 3rd

Floor

Kolkata 700 016

Dated : 11th

December,2007

S. R. BATLIBOI & CO.

Chartered Accountants

Per R K AGRAWAL

Partner

Membership No. 16667


44

ANNEXURE TO THE STATEMENT OF TAX BENEFITS

STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS UNDER THE INCOME TAX ACT, 1961.

The tax benefits listed below are the possible benefits available under the current tax laws in India. Several of

these benefits are dependent on the company or its shareholders fulfilling the conditions prescribed under the tax

laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon

fulfilling such conditions as may be prescribed under the relevant sections of the Income Tax Act, 1961 (‘the

Act’) .

I. SPECIAL TAX BENEFITS AVAILABLE TO THE COMPANY:

The Company is mainly engaged in production of Sugar, Spirits and Power. Based on its business activities,

there are no specific tax incentives available to the Company, except for Power as mentioned below.

Deduction under Section 80 IA of the Act for the profits derived from the Captive Power Plant will be available

to the Company subject to fulfilment of the conditions specified in the said section.

II. OTHER BENEFITS AVAILABLE TO THE COMPANY: 1. Subject to compliance of certain conditions laid down in Section 32 of the Income Tax Act 1961,

(hereinafter referred to as ACT) the Company will be entitled to a deduction for depreciation:-

a) In respect of building, machinery, plant or furniture being tangible assets

b) In respect of intangible assets being in the nature of know how, patents, copyrights, trademarks,

licenses, franchises or any other business or commercial rights of similar nature acquired after

31st day of March, 1998 at the rates prescribed under Income Tax Rules, 1962;

c) In respect of new plant or machinery which has been acquired and installed after 31st March,

2005 by a tax payer engaged in the business of manufacture or production of any article or thing,

additional depreciation of 20% of the actual cost of such new plant or machinery will be allowed

as deduction.

2. Subject to compliance of certain conditions laid down in Section 35 (1) (iv) of the Act, the Company is

entitled to claim as deduction the whole of capital expenditure, other than the expenditure incurred on

the acquisition of any land, incurred on scientific research related to the business of the Company.

3. The Company is eligible for amortization of preliminary expenses including the expenditure on public

issue of shares under Section 35D of the Act, subject to the conditions and limits specified in the

section.

4. Under Section 36 (1) (xiii) of the Act, the Company is entitled to claim deduction of Banking Cash

Transaction Tax paid on taxable Banking Transactions entered into by it.

5. MAT credit allowable is the difference between MAT paid and the tax computed as per the normal

provisions of the Act and can be utilized in those years in which tax becomes payable under the normal

provisions of the Act. MAT credit can be utilised to the extent of difference between tax payable under

the normal provisions and MAT payable for the relevant year. MAT credit cannot be carried forward

and set off beyond 7 years immediately succeeding the assessment year in which it becomes allowable

under section 115JAA(1A) of the Act [section 115 JAA(1A) of the Act].

III. BENEFITS AVAILABLE TO THE COMPANY AND PROSPECTIVE RESIDENT

SHAREHOLDERS OTHER THAN DOMESTIC COMPANIES 1. DIVIDENDS EXEMPT UNDER SECTION 10(34) OF THE ACT


45

1.1 Any income by way of dividends (declared, distributed or paid on or after 1 April, 2003) from a domestic

company are exempt in the hands of the Company/shareholders, if the same is subject to dividend

distribution tax as referred to in Section 115-O, as per the provisions of section 10(34) of the Act.

However, Section 94(7) of the Act provides that the losses arising on account of sale/transfer of shares

purchased up to three months prior to the record date and sold within three months after such date will be

disallowed to the extent of dividend on such shares are claimed as tax exempt by the shareholder.

2. INCOME FROM CAPITAL GAINS

2.1 Section 48 of the Act, categorises capital assets into two major categories viz. Long term Capital Assets

and Short Term Capital Assets. If the shares are held for a period more than 12 months it is termed as a

long term asset and otherwise as a short term asset. Any profit or loss arising on account of sale/transfer

of such Long Term Assets are termed as long term capital gains and short term assets as short term

capital gains.

2.2 Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for deduction

of cost of acquisition / improvement and expenses incurred wholly and exclusively in connection with the

transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains. However,

as per second proviso to Section 48 of the Act, in respect of long term capital gains arising from transfer

of shares of Indian Company, it offers a benefit by permitting substitution of cost of acquisition /

improvement with the indexed cost of acquisition / improvement, which adjusts the cost of acquisition /

improvement by a cost inflation index, as prescribed annually.

2.3 Provisions of Section 112 of the Act, permit taxing long term capital gains (which are not exempt under

Section 10(38) of the Act) arising on transfer of shares in the Company at a rate of 20 percent (plus

applicable surcharge and education cess) after factoring the indexation benefit. However, the share

holder may opt for the tax on long term gains computed at the rate of 10 percent (plus applicable

surcharge and education cess), if the tax on indexed long term capital gains resulting on transfer of listed

securities calculated at the rate of 20 percent exceeds the tax on long term gains computed at the rate of

10 percent without indexation benefit.

2.4 Provisions of Section 111A of the Act, prescribes for taxing the short-term capital gains arising from sale

of equity shares in the Company at a rate of 10 percent (plus applicable surcharge and education cess)

where such transaction of sale is entered on a recognized stock exchange in India and is liable to

securities transaction tax.

2.5 Provisions of section 10(38) of the Act, exempts from tax the long term capital gains arising on sale of

equity shares in the Company where the sale transaction has been entered on a recognized stock exchange

of India and is liable to securities transaction tax.

2.6 Provisions of Section 54EC of the Act exempts long-term capital gains (which are not exempt under

section 10(38) of the Act) from being taxed to the extent such capital gains are invested in long term

specified assets within a period of 6 months after the date of such transfer in notified bonds (Presently,

bonds issued by the National Highways Authority of India or the Rural Electrification Corporation

Limited have been specified) Where only a part of the capital gains is so invested, the exemption is

proportionately available. The minimum holding period prescribed to remain eligible for the exemption is

3 years.

However, in terms of Union Budget 2007-08 investments in the specified assets by an assessee during

any Financial Year should not exceed 50 lakhs rupees.

2.7 Subject to the conditions specified under the Provisions of Section 54F of the Act, long-term capital gains

(which are not exempt from tax under Section 10(38) of the Act) arising to an individual or a Hindu

Undivided Family (‘HUF’) on transfer of shares of the Company will be exempt from capital gains tax if

the sale proceeds from transfer of such shares are used for purchase of residential house property within a

period of 1 year before or 2 years after the date on which the transfer took place or for construction of

residential house property, within a period of 3 years after the date of such transfer.

2.8 In terms of Securities Transaction Tax as enacted by Chapter VII of the Finance (No.2) Act, 2004,

transactions for purchase and sale of the securities in the recognized stock exchange by the shareholder,

shall be chargeable to securities transaction tax. As per the said provisions, any delivery based purchase

and sale of equity share in a company through the recognized stock exchange is liable to securities


46

transaction tax @ 0.125 percent of the value payable by both buyer and seller. (The non-delivery based

sale transactions are liable to tax @ 0.025 percent of the value payable by the seller).

2.9 Provisions of Section 88E provides that where the total income of a person includes income chargeable

under the head “Profits and Gains of business or profession” arising from purchase or sale of equity

shares in a company entered into on a recognized stock exchange, i.e. from taxable securities

transactions, he shall get a rebate equal to the securities transaction tax paid by him in the course of his

business. Such rebate is to be allowed from the amount of income tax in respect of such transactions

calculated by applying average rate of income tax on such income.

IV. BENEFITS AVAILABLE TO CORPORATE RESIDENT SHAREHOLDERS (DOMESTIC

COMPANIES).

DIVIDENDS EXEMPT UNDER SECTION 10(34) OF THE ACT

1 Any income by way of dividends (declared, distributed or paid on or after 1 April, 2003) from a

domestic company are exempt in the hands of the Company/shareholders, if the same is subject to

dividend distribution tax as referred to in Section 115-O, as per the provisions of section 10(34) of the

Act. However, Section 94(7) of the Act provides that the losses arising on account of sale/transfer of

shares purchased up to three months prior to the record date and sold within three months after such

date will be disallowed to the extent dividend on such shares are claimed as tax exempt by the

shareholder.

INCOME FROM CAPITAL GAINS

2.1 Section 48 of the Act, categorises capital assets into two major categories viz. long term capital assets

and short term capital assets. If the shares are held for a period more than 12 months it is termed as a

long term asset and otherwise short term asset. Any profit or loss arising on account of sale/transfer of

such long term assets are termed as long term capital gains and short term assets as short term capital

gains.

2.2 Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for

deduction of cost of acquisition / improvement and expenses incurred wholly and exclusively in

connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of

capital gains. Further, in respect of long term capital gains from transfer of shares of Indian Company,

it offers a benefit by permitting substitution of cost of acquisition / improvement with the indexed cost

of acquisition / improvement, which adjusts the cost of acquisition / improvement by a cost inflation

index, as prescribed annually.

2.3 Provisions of Section 112 of the Act, permit taxing long term capital gains (which are not exempt

under Section 10(38) of the Act) arising on transfer of shares in the Company at a rate of 20 percent

(plus applicable surcharge and education cess) after factoring the indexation benefit. However, the

share holder may opt for the tax on long term gains computed at the rate of 10 percent (plus applicable

surcharge and education cess), if the tax on indexed long term capital gains resulting on transfer of

listed securities calculated at the rate of 20 percent exceeds the tax on long term gains computed at the

rate of 10 percent without indexation benefit.

2.4 Provisions of Section 111A of the Act, prescribes for taxing the short-term capital gains arising from

sale of equity share in the Company at a rate of 10 percent (plus applicable surcharge and education

cess) where such transaction of sale is entered on a recognized stock exchange in India and is liable to



equity shares in the Company where the sale transaction has been entered into on a recognized stock

exchange of India and is liable to securities transaction tax, subject to the condition that the income by

way of long-term capital gain of the company shall be taken into account in computing the book profit

and income tax payable under Section 115JB of the Act.





47



proportionately available. The minimum holding period prescribed to remain eligible for the exemption

is 3 years.


any Financial Year should not exceed 50 lacs rupees.








under the head “Profits and Gains of business or profession” arising from purchase or sale of an equity

share in a company entered on a recognized stock exchange, i.e. from taxable securities transactions,

the company shall get a rebate equal to the securities transaction tax paid by it in the course of its

business. Such rebate is to be allowed from the amount of income tax in respect of such transactions

calculated by applying average rate of income tax on such income.

V. BENEFITS AVAILABLE TO MUTUAL FUNDS

Provisions of Section 10(23D) of the Act exempts the Mutual Funds registered under the Securities and

Exchange Board of India or Mutual Funds set up by Public Sector Banks or Public Financial Institutions or

authorized by the Reserve Bank of India and subject to the conditions specified therein, from income tax on

their income.

VI. BENEFITS AVAILABLE TO FOREIGN INSTITUTIONAL INVESTORS (‘FIIS’)


Any income by way of dividends (declared, distributed or paid on or after 1 April, 2003) from a domestic

company are exempt in the hands of the Company/shareholders, if the same is subject to dividend

distribution tax as referred to in Section 115-O, as per the provisions of section 10(34) of the Act.

However, Section 94(7) of the Act provides that the losses arising on account of sale/transfer of shares

purchased up to three months prior to the record date and sold within three months after such date will be

disallowed to the extent dividend on such shares are claimed as tax exempt by the shareholder.


2.1 Provisions of Section 115AD of the Act, provides for taxing income of FIIS arising from securities

(other than income by way of dividends referred to in section 115(O) of the Act) at concessional rates,

as follows:

Nature of income Rate of tax (%)

Income in respect of securities 20

(other than units referred to in Section 115AB)

Long Term capital gains 10

Short term capital gains

(other than short term capital gain referred

to in section 111A) 30

The above tax rates would be increased by the applicable surcharge and education cess. The benefits of

indexation and foreign currency fluctuation protection as provided under Section 48 of the Act are not

available to a FII.


48





2.3 Provisions of the Double Taxation Avoidance Agreement between India and the country of residence

of the FII would prevail over the provisions of the Act, as per section 90(2) of the Act, to the extent

they are more beneficial to the FII.



exchange of India and is liable to securities transaction tax, subject to the condition that the income by

way of long-term capital gain of the company shall be taken into account in computing the book profit

and income tax payable under Section 115JB.







is 3 years.










under the head “Profits and Gains of business or profession” arising from purchase or sale of an equity

share in a company entered on a recognized stock exchange, ie. from taxable securities transactions, he

shall get a rebate equal to the securities transaction tax paid by him in the course of his business. Such

rebate is to be allowed from the amount of income tax in respect of such transactions calculated by

applying average rate of income tax on such income.

VII. BENEFITS AVAILABLE TO NON-RESIDENTS / NON-RESIDENT INDIAN

SHAREHOLDERS (OTHER THAN MUTUAL FUNDS, FIIS AND FOREIGN VENTURE

CAPITAL INVESTORS)


1. Any income by way of dividends (declared, distributed or paid on or after 1 April, 2003) from a

domestic company are exempt in the hands of the Company/shareholders, if the same is subject to

dividend distribution tax as referred to in Section 115-O, as per the provisions of section 10(34) of the

Act. However, Section 94(7) of the Act provides that the losses arising on account of sale/transfer of

shares purchased upto three months prior to the record date and sold within three months after such

date will be disallowed to the extent dividend on such shares are claimed as tax exempt by the

shareholder.


2.1 In terms of first proviso to Section 48 of the Act, in case of a non-resident, while computing the capital

gains arising from transfer of shares in or debentures of the Company acquired in convertible foreign

exchange (as per exchange control regulations) protection is provided from fluctuations in the value of

rupee in terms of foreign currency in which the original investment was made. Cost indexation

benefits will not be available in such a case. The capital gains/ loss in such a case is computed by


49

converting the cost of acquisition, sales consideration and expenditure incurred wholly and exclusively

in connection with such transfer into the same foreign currency which was utilized in the purchase of

shares.

2.2 Provisions of Section 112 of the Act, permit taxing long term capital gains (which are not exempt

under Section 10(38) of the Act) arising on transfer of shares in the Company at a rate of 20 percent

(plus applicable surcharge and education cess) after factoring the indexation benefit. However, the

share holder may opt for the tax on long term gains computed at the rate of 10 percent (plus applicable

surcharge and education cess), if the tax on indexed long term capital gains resulting on transfer of

listed securities calculated at the rate of 20 percent exceeds the tax on long term gains computed at the

rate of 10 percent without indexation benefit.




securities transaction tax. Short term capital gains arising from transfer of shares in a company other

than those covered by Section 111A of the Act would be subject to tax as calculated under the normal

provisions of the Act.

2.4 Provisions of the Double Taxation Avoidance Agreement between India and the country of residence

of the non resident would prevail over the provisions of the Act, as per section 90(2) of the Act, to the

extent they are more beneficial to the non-resident.



exchange of India and is liable to securities transaction tax.







is 3 years.



2.7 Subject to the conditions specified under the Provisions of Section 54F of the Act, long-term capital

gains (which are not exempt from tax under Section 10(38) of the Act) arising to an individual or a

Hindu Undivided Family (‘HUF’) on transfer of shares of the Company will be exempt from capital

gains tax if the sale proceeds from transfer of such shares are used for purchase of residential house

property within a period of 1 year before or 2 years after the date on which the transfer took place or

for construction of residential house property within a period of 3 years after the date of such transfer.

2.8 Where shares of the Company have been subscribed in convertible foreign exchange, Non-Resident

Indians (ie. An individual being a citizen of India or person of Indian origin who is not a resident) have

the option of being governed by the provisions of Chapter XII-A of the Act, which inter alia entitles

them to the following benefits:

• Under Section 115E, where the total income of a non-resident Indian includes any income

from investment in convertible foreign exchange, such income shall be taxed at a concessional

rate of 20 per cent (plus applicable surcharge and education cess). Income arising to a non –

resident Indian in form of long term capital gain shall be taxed at a concessional rate of 10

percent (plus applicable surcharge and education cess).

• Under Section 115F of the Act, long-term capital gains (in cases not covered by section 10(38)

of the Act) arising to a non-resident Indian from transfer of shares of the company, subscribed

in convertible foreign exchange (in case not covered under Section 115E of the Act), shall be

exempt from income tax, if the entire net consideration is reinvested in specified assets/saving

certificates referred to in Section 10(4B) within 6 months of the date of transfer. Where only a

part of the net consideration is so reinvested, the exemption shall be proportionately reduced.

The amount so exempted shall be chargeable to tax subsequently, if the specified assets/saving


50

certificates are transferred or converted into money within 3 years from the date of their

acquisition.

• Under Section 115G of the Act, it shall not be necessary for a non-resident Indian to furnish

his return of income under Section 139(1) if his income chargeable under the Act consists of

only investment income or long term capital gains or both, arising out of assets acquired,

purchased or subscribed in convertible foreign exchange and tax has been deducted at source

from such income as per the provisions of Chapter XVII-B of the Act.

• Under Section 115I of the Act, a Non-Resident Indian may elect not to be governed by the

foregoing provisions for any assessment year by furnishing his return of income for that

assessment year under Section 139 of the Act, declaring therein that the provisions of Chapter

XII-A shall not apply to him for that assessment year and accordingly his total income for that

assessment year will be computed in accordance with the other provisions of the Act.







2.10 Section 88E provides that where the total income of a person includes income chargeable under the

head “Profits and gains of business or profession” arising from purchase or sale of an equity share in a

company entered into on a recognized stock exchange, i.e. from taxable securities transactions, he shall

get rebate equal to the securities transaction tax paid by him in the course of his business. Such rebate

is to be allowed from the amount of income tax in respect of such transactions calculated by applying

average rate of income tax.

BENEFITS AVAILABLE UNDER THE WEALTH TAX ACT, 1957

1. Investment in shares of companies are excluded from the definition of the term “asset” as given under

section 2(ea) of the Wealth Tax act, 1957, and hence the shares held by the shareholders would not be

liable to Wealth tax.

BENEFITS AVAILABLE UNDER THE GIFT TAX ACT

1. Gift tax is not leviable in respect of any gifts made on or after 1st October, 1998. Therefore, any gift

of shares of the Company will not attract Gift tax.

Notes:

• The above Statement of Possible Direct Tax benefits sets out the provisions of law in a summary

manner only and is not a complete analysis or listing of all potential tax consequences of the purchase,

ownership and disposal of equity shares.

• The above Statement of Possible Direct Tax benefits sets out the possible tax benefits available to the

Company and its shareholders under the current tax laws presently in force in India. Several of these

benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the

relevant tax laws.

• This statement is only intended to provide general information to the investors and is neither designed

nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax

consequences, the changing tax laws, each investor is advised to consult his or her own tax consultant

with respect of the specific tax implications arising out of their participation in the issue.

• In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further

subject to any benefits available under the Double Taxation Avoidance Agreement, if any, between

India and the country in which the non-resident has fiscal domicile.


51

SECTION VI: DETAILS OF ISSUER COMPANY

INDUSTRY OVERVIEW The information presented in this section has been extracted from publicly available documents from various

sources, including officially prepared materials from the Government and its various ministries and has not

been prepared or independently verified by the Issuer or the Lead Manager.

INTERNATIONAL SCENARIO

Sugar

The world sugar market has entered a distinctive surplus phase, characterised by a significant excess in global

production over consumption and export availability considerably higher than projected import demand. World

sugar production is expected to be 11.139 million tonnes higher than world consumption in the year 2007-08.

The global sugar industry has undergone a complete transformation characterised by a significant excess in

global production over consumption. Brazil and India are two of the largest sugar producing countries in the

world with India as the largest consumer in the world. Brazil maintained its position of largest manufacturer and

exporter of sugar in the world but is likely to be overtaken by India during the current year.

Production

The world sugar production is expected to increase by 2.58 % and reach 170.308 million tonnes in the sugar

season 2007-08.

The major sugar producing countries comprising Brazil, India, China and U.S.A account for 45% of total sugar

production. EU collectively produces around 14 percent of the total sugar production. Brazil is the largest

producer of sugar. Going forward, the country plans to boost sugarcane output to 627 million tonnes in the next

seven years. India is the second largest producer and its sugar production has increased consistently except in

years which were drought affected.

Consumption

The total world consumption of sugar is estimated at 159.169 million tonnes in 2007-2008. India is the largest

consumer of sugar followed by China, Brazil, USA and Russia. Consumption in China, India and Brazil is

growing at a higher rate than the world average of 2.2 percent. Consequently, these geographies are expected to

play a larger role in the global sugar trade in the coming years.

World Sugar Balance

(mln tonne, raw value) 2007/08 2006/07 Change

in mln t in %

Production 170.308 166.030 4.278 2.58

Consumption 159.169 154.985 4.184 2.70

Surplus / Deficit 11.139 11.045

Import demand 45.496 46.070 -0.574 -1.25

Export availability 49.768 46.077 3.691 8.01

End Stocks 74.716 67.849 6.867 10.12

Stocks/Consumption ratio in% 46.94 43.78

Source: ISO quarterly market outlook, November, 2007

Ethanol


52

Ethanol a real-world petroleum substitute is likely to emerge as a complete energy solution in the coming years,

especially with the spiraling cost of crude.

Being an oxygenate, ethanol contains 35% oxygen, helping combust fuel more completely and reducing

vehicular tailpipe emissions. This progressive use of ethanol will reduce vehicular pollution load and migrate

vehicles to Euro IV norms. The accelerated phase-out of MTBE (Methyl tertiary-butyl ether) will accelerate

ethanol demand

Global perspective: The world trade of ethanol reached a record high of 7.8 billion litres in 2006 compared to

5.9 billion litres in 2005. Brazil is the dominant supplier at 3.43 billion litres and US is the major importer at

2.74 billion litres.

Indian perspective: In India, the blending of petrol with 5% ethanol has been permitted, in all states excepting

the North-East states. India requires an estimated 550 million liters of Ethanol. The government is considering a

proposal to make 5% doping compulsory with immediate effect across the country, which is expected to

increase to 10% from October 2008. This will boost production of ethanol remarkably in India.

Global outlook: The world fuel ethanol production and consumption is forecast to grow by 28% and 27%

respectively in 2007. The world production is expected to rise to 50.7 billion litres in 2007 from 39.5 billion

litres in 2006. The world consumption closely approximates world production and is forecasted to reach 49.20

billion litres in 2007 from 38 billion litres in 2006.

INDIAN SCENARIO

Overview & Key Trends

• Sugar industry is the largest agro-based industry located in the rural India. About 50 million sugarcane

farmers, their dependents and a large mass of agricultural labourer are involved in sugarcane

cultivation, harvesting and ancillary activities, constituting 7.5% of the rural population. Besides, about

0.5 million skilled and semi-skilled workers, mostly from the rural areas are engaged in the sugar

industry. Some of the sugar factories have also diversified into byproduct based industries and have

invested and put up distilleries, organic chemical plants, paper and board factories and cogeneration

plants. The industry generates its own replenishable biomass and uses it as fuel without depending on

fossil fuel. At the prevailing sugar price, the total sugar cane produced in the country value at about

Rs. 37,000 crore per year.

• There are approximately 607 sugar mills located in the 18 states of the country. About 50 % of these

mills are in the cooperative sector, 40% in the private sector and rest in the public sector. However only

500 sugar mills were in operation during the season 06-07. (Source: ISMA)

• The minimum price of raw material, namely sugarcane, is statutorily fixed by the Central Government

on the basis of the recommendation made by Commission for Agricultural Costs & Prices (CACP).

Sale of sugar produced by the mills is regulated by the Central Government through monthly release of

quota. Currently, 90% of the sugar produced is allowed to be sold by mills as free sale quota (free in

regard to price and movement) and 10% is allowed to be sold as levy to State Governments or their

nominees at predetermined prices (levy Price). The sale of sugar produced in 4-5 months of the sugar

season is staggered over a period of a year or more.

• Sugar cycle: The domestic sugar industry typically follows a 4 to 5 year cycle. Higher sugarcane and

sugar production results in a fall in sugar prices and non-payment of dues to farmers. This compels the

farmers to switch to other crops thereby causing a shortage of sugarcane, consequently an increase in

sugarcane prices and extraordinary profits. Taking into account the prevalent higher prices for cane,

farmers then switch back to sugarcane. For example, the bumper crop in sugar season (Oct - Sep) 2002-

03 resulted in higher production, but lower prices for sugar. It also resulted in large cane arrears leading

to harsh times for cane growers. Taking into account the bad experience of 2002-03, many farmers

shifted to other crops leading to drop in sugarcane and sugar production in the country. The limited

availability of sugarcane in 2004-05 season forced the sugar manufacturers to make higher and prompt

payment to farmers. Consequently, this resulted in a bumper crop in 2006-07 season. An illustration of

the said sugar cycle is given below:


53

• Agriculture in the country being largely rain fed, monsoon plays an important role in the production of

sugarcane, the basic raw material for the sugar industry. The sugar production in the last 15 years is

given below:

Year Sugar Production (Million Tonnes)

1988-89 8.75

1989-90 10.99

1990-91 12.04

1991-92 13.40

1992-93 10.60

1993-94 9.83

1994-95 14.64

1995-96 16.45

1996-97 12.90

1997-98 12.85

1998-99 15.53

1999-00 18.20

2000-01 18.51

2001-02 18.52

2002-03 20.14

2003-04 14.00

2004-05 12.69

2005-06 19.27

2006-07

(estimated)

28.50

(Source: ISMA October, 2007 issue)

The Indian sugar industry is the country’s second-largest agro-processing industry with a production of over

28.50 million tonnes during 2006-07.

The Indian sugar market is one of the largest markets in the world, in volume terms. India is also the second

largest sugar producing geography globally. It remains a key growth driver for world sugar, growing above the

Asian and world consumption growth average.

Production

Sugar production has been increasing steadily but there have been periods of low production, due to a variety of

reasons including pests and drought. Production has been cyclical, with the typical cycle duration ranging

between 4 to 5 years.


54

Sugar production in India is driven by factors such as sugar and sugarcane prices, cane acreage, yield per

hectare and recovery percentage.

Yield per hectare: The average yield per hectare of cane production in India is estimated at 68 tonnes per hectare

compared to 73 tonnes per hectare in Brazil. Besides, the yield per hectare varies depending on the location of

the growing area. South India being significantly higher than the north. In Tamilnadu, the yield per hectare is

about 105 tonnes as opposed to Uttar Pradesh's 59 tonnes.

Consumption The Indian sugar consumption has steadily increased at 3.5 percent since 1996. The total sugar consumption is

estimated at 20 million tonnes. Of the total sugar sold in the free market, an estimated 61 percent is accounted

for by the industrial and small business segment, also referred to as indirect consumption of sugar. Dairy,

confectionary, bakery and beverages account for 75 percent of industrial consumption. The household segment,

which consumes sugar directly, accounts for an estimated 39 percent of the total free sale (non-levy) sugar

consumption.

The per capita sugar consumption increases with rise in income. At the lowest income levels, the average

household sugar consumption is at 2.2 kg per month, while at the highest income levels the average household

sugar consumption is at 5.11 kg per month.

Sugar Equation

(million/tonne)

2002-03 2003-04 2004-05 2005-06 2006-07 *

Opening stock 11.32 11.62 7.67 4.00 3.90

Production 20.14 14.00 12.69 19.27 28.50

Imports 0.04 0.40 2.14

Total supply 31.50 26.02 23.34 23.27 32.40

Consumption 18.38 18.13 18.50 18.24 19.00

Exports 1.50 0.22 0 1.13 1.80

Total demand 19.88 17.51 18.50 19.37 20.80

Closing stock 11.62 7.67 4.00 3.90 11.60

(* Estimated - Source ISMA –October, 2007)

Exports To support the ailing sugar industry, impacted by a bumper sugarcane production and sliding realization, the

Government has provided permission to export sugar in January 2007.

The Government made a u-turn to its earlier policy and is now actively encouraging Indian exporters to move

abroad as much sugar as possible. India's exports are expected to reach 2 million tonnes for the sugar season

2006-07.


55

In addition to providing an additional revenue stream, exports have been boosted by favourable Government

incentives against transportation costs. The Central Government announced reimbursement of internal

Transport and freight charges subject to a ceiling of Rs.1350/- per ton for mills located in coastal area and

Rs.1450/- per ton for those in interior areas.

Government initiatives for stock building

The Food Ministry has created a 5 million tonnes sugar buffer to bail out the ailing industry. The buffer would

basically transfer the cost of interest, storage and insurance payable on the total allocated quantity from the

sugar mills to the Union Government's account. The money for buffer stock will come from the Sugar

Development Fund.

Sugarcane Pricing

Sugarcane is the main raw material for sugar industry and accounts for about 70% of the cost of production of

sugar. It is also the major source of income for millions of farmers. The determination of price for sugarcane is,

therefore, a matter of critical importance both for the sugar industry and the cane growers. The Central

Government fixes a Statutory Minimum Price factory wise, in terms of Clause 3 of the Sugarcane (Control)

order, 1966 in respect of each sugar season having regard to the following:

• Cost of production of sugarcane

• Return to the growers from alternative crops and the general trend of prices of agricultural commodities

• Availability of sugar to consumers at a fair price

• Price at which sugar produced from sugarcane is sold by sugar producers

• Recovery of sugar from sugarcane

Further, under the Clause 5A of the Sugarcane (Control) Order 1966, the farmer is entitled to an additional

payment out of the price realization by the factories.

The Central Government before the onset of crushing season declares the SMP. For season 2006-07, SMP of

sugarcane was fixed at Rs. 80.25 per quintal linked to a base recovery rate of 9.00% with a premium for higher

recovery.

Furthermore, factories are required to pay an additional price under Clause 5A of Sugarcane (Control) Order,

1966, which is calculated by the Government based on any additional sugar price realized by the factories.

This pricing mechanism has been adopted to ensure that the farmers get a fair price for the cane. Besides, it

reduces the impact of cane prices variation on the cost structure of different mills depending on their location.

Sugar season SMP (Rs. per quintal) Link to recovery (%)

2000-01 59.50 8.5

2001-02 62.05 8.5

2002-03 69.50 8.5

2003-04 73.00 8.5

2004-05 74.50 8.5

2005-06 79.50 9.0

2006-07 80.25 9.0

2007-08 81.18 9.0

Basic Statutory Minimum Price (Rs. per quintal) for Company’s units

Units 2006-07 2005-06

Hargaon 94.65 91.82

Rosa 82.05 82.14

Narkatiaganj 82.95 83.90

However, some of the State Governments fix their own State Advised Price (SAP) that are substantially higher

that the SMP.


56

In a Landmark judgment, the Hon’ble Supreme Court in its 3:2 majority judgment, dated 5th May 2004 has

upheld the right of U.P State Government to fix the State Advised Price (SAP) of sugarcane at levels higher than

the SMP prescribed by the Central Government under the Sugar Cane (Control) Order, 1966, thereby setting

aside the order of the Allahabad High Court which had held SAP to be untenable. As regards other States, like

Bihar, Punjab, Haryana, the orders of the respective High Courts have been set aside and the writ petitions have

been remitted back to the respective High Courts for fresh consideration in accordance with the applicable laws

of those states. The U.P. Industry, subsequently filed the review petition, but the same was also dismissed.

After the judgement of the Supreme Court, the UP State Government has announced SAP for the sugar season

2003-04, with retrospective effect. The same was challenged by the U P Sugar Mills Association, before

Allahabad High Court and the Court has upheld the prices announced by the UP Government. As a result, we,

like the rest of the UP sugar mills have made a payment towards the arrears on account of differential prices of

cane for the seasons 1996-97, 2002-03 and 2003-04.

The U.P sugar factories have paid Rs. 107 per quintal for sugar season 2004-05, Rs. 115 per quintal for sugar

season 2005-06 and currently paying Rs. 125 per quintal for the sugar season 2006-07, based on the prices

announced by the U.P Government, which is also referred to as State Advised Price (SAP). Further the Bihar

sugar factories paid SMP for the sugar season 2003-04. However most of the Bihar sugar factories have paid a

contractual price of Rs. 108/- per quintal for sugar season 2005-06 and Rs. 115 per quintal for sugar season

2006-07, higher than the SMP.

The Uttar Pradesh Government has announced SAP of Rs 125 per quintal for Sugar season 07-08, which is

challenged by the Uttar Pradesh Sugar Mills Association, including the Company for its factories situated at

Hargaon and Rosa, before the Allahabad High Court, Lucknow Bench. For further details please refer to the

section Litigations & other Information on page no 225 of this Draft Letter of Offer

Release Mechanism of Sugar

Under the partial control of sugar industry followed by the Central Government, 90% of the sugar produced by

sugar mills may be disposed off by them, without any restriction on price and movement. The balance 10% is to

be supplied by them at prices fixed by the Central Government. However, both free sale sugar and levy sugar

are subject to monthly quotas decided by the Central Government. The sugar produced in 4 to 5 months in a

sugar seasons is controlled and regulated to be sold throughout the year. This release mechanism has been in

place since 1942, when the Sugar and Sugar Products Control Order was first promulgated and has since been

followed except for a break during 1978-79, when monthly release was given up. The reason for monthly

release of sugar has been to ensure that sugar is available throughout the year at reasonable prices to consumers.

10% of the sugar produced by the factory is procured by the Government as levy sugar at a pre-determined price

for supply to consumers through the Public Distribution System. This proportion of levy sugar was 60% in

1967-68 and has been gradually brought down to 10% from 2001-02.

Byproducts and Ethanol

Bagasse and molasses are the two most important by-products of the sugar industry. Whereas bagasse is

primarily used to meet the captive requirement of fuel, a substantial quantity of it can be saved to produce

products like paper, particle boards etc. In addition, the bagasse can also be used for cogeneration of power by

the sugar industry. It is estimated that the sugar industry has a potential to co-generate upto 5000 MW of power.

Similarly, molasses, an important by-product of the sugar industry, is used extensively for the manufacture of

ethyl alcohol and alcohol based down stream chemicals in addition to manufacture of potable alcohol.

Dehydrated alcohol (ethanol) is a good oxygenate and when used as a blend with motor spirit, substantially

reduce the vehicular emissions. Its blending therefore can help reduce pollution in large cities. Ethanol has a

high anti knock quality and its addition up to 10% raises the octane rating of regular petrol by 3 units and

blending up to 25% raises the octane no. by 8 units thus, eliminating the need for using environmentally harmful

lead additives for raising the octane number of petrol.

The Government announced Ethanol blended petrol scheme in 2002 to encourage alternative fuel, ethanol in the

larger interest of cane farmers and also its beneficial impact on environmental protection. the blending of petrol

with 5% ethanol has been permitted, in all states excepting the North-East states. India requires an estimated 550

million litters of Ethanol. The government is considering a proposal to make 5% doping compulsory with

immediate effect across the country, which is expected to increase to 10% from October 2008.

Co-generation


57

The bagasse, by product of sugar, is used for cogeneration of power by the sugar industry. It is estimated that the

sugar industry has a potential to co-generate upto 7000 MW of power. About 100 sugar units across the country

have Co-generation facilites out of which 95 % are in the private sector with installed capacity of about 1800

MW, exporting about 1100/1200 power to grid. To promote this activity, the Minstry of Consumer Affairs,

Food and Public Distribution has also amended the Sugar Development Fund Act, to provide loans to co-

generation projects at concessional rate of interest.


58

OUR BUSINESS

Our Company was promoted by Late R.D.Birla in 1932 with the main object of carrying on business of


Hargaon (District: Sitapur, Uttarpradesh) with a crushing capacity of 400 tcd. We further established a distillery

at Hargaon in 1945. Subsequently, our company purchased a sugar factory namely Rosa Sugar Works at Rosa

(Dist. Shahanjapur, Uttar Pradesh) in 1976 with a crushing capacity of 1000 tcd. In 1984, The New Swadeshi

Sugar Mills Limited having a sugar mill, distillery at Narkatiaganj (Bihar), a fruit and vegetable canning factory

at Allahabad and a paint factory under lease at Calcutta was merged with our Company. The lease of the paint

factory was terminated in April, 1997. Over the period we have expanded our capacities of sugar production,

industrial alcohol/ethanol and canning products.Presently we have three sugar factories at Hargaon, Rosa in

Uttarpradesh and at Narkatiaganj in Bihar with a combined crushing capacity of 21,700 tcd alongwith 25 M.W.

Co-generation. Our Company is also having two distilleries at Hargaon and at Narkatiaganj with a total installed

capacity 22.50 million litres per annum. Our fruits and vegetable canning factory is situated at Bamrauli near

Allahabad. The Company is in process of setting up a Greenfield Sugar unit at Hatta, Gorakhpur, U.P with a

capacity 7,000 tcd and co-generation power plant of 35 M.W.

DETAILS OF OUR PRODUCTS

As stated above, we manufacture the following four main categories of products:

• Sugar

• Co-generation



In addition, we also have arrangement for manufacturing of bio-compost at Hargaon and Narkatiagang by using

press-mud from sugar factory and spent wash from distillery. Bio-Compositing culture purchased from Vasant

Dada Sugar Institute, Pune are added and by Aerobic Bio-composting process in 45-60 days Bio-Compost is

being made. This fertilizer having Nitrogen, Phosphorus and Potash and other chemicals is being widely used in

cane, wheat, vegetables & Flowers cultivation. Bio-Compost produced by us is marketed under the brand name

“Oudh Jaivik Khad” at Hargaon.

Share of different segments in our total sales for the last three years is as follows:

(Rs. in Lacs)

2004-05 2005-06 2006-07

Amount % to total

sales

Amount % to total

sales

Amount % to total

sales

Sugar 32078.00 90.10 44890.74 89.57 37817.54 85.47

Co-generation - 0 0 0 766.43 1.73

Industrial Spirits

(including

Denaturants), Fusel

Oil & Bio-Compost

2335.20 6.56 3792.89 7.57 3919.33 8.86

Canning Products 1191.37 3.34 1433.10 2.86 1741.15 3.94

Total 35604.57 100.00 50116.73 100 44244.45 100


59

PRODUCTION PROCESS

Production process for sugar and industial alcohol/ethanol

Harvested cane is received at the mill gate. Cane is then weighed on the platform type weighbridges having the

weight recording arrangement with linkage to the computers for recording the gross and net weights as also the

price payable to the farmers. Unloading of Cane is done as follows:

• Cane received in Cart is unloaded directly into the cane carrier; and

• Canes received in tractor trolleys and truck is unloaded with the help of overhead traveling cranes and truck

trippler.

The sugarcane is uniformly fed to the shredder to prepare the same for efficient milling. The prepared cane will

then pass through the milling tandems for the initial grinding. The juice extracted is strained and kush-kush

separated from the juice is returned to the mill tandem. Bagasse from the last mill is conveyed, by means of a

carrier system, as fuel to the boilers.

Crushed juice from the milling plant is mechanically screened. Double sulphitation process is followed for the

manufacture of sugar in the factory. The juice is then sent for heating upto 70°C in rapid flow vertical juice

heater. The heated juice is limed and sulphited in a continuous juice sulphiter. The treated juice is then heated to

approximately 105 degree centigrade and made to enter a flash tank for the removal of gas and air before letting

it into a continuous clarifier, where the settling of the mud flock takes place. Accumulated mud is separately

withdrawn by gravity flow. Clear juice is withdrawn from the upper regions through the overflow box for

further treatment.

Clarified juice from the clarifier is further heated to around 115°C in a tubular heater, before being pumped for

thickening. Vapours from the 1st & 2nd effect are used to heat the pans. A quadruple effect evaporator is used to

effect final thickening of the juice into syrup. The syrup of approximately 60/62 brix is further bleached by

passing it through a continuous syrup sulphitation vessel and pumped to pan supply tanks at the pan floor.

A three and half boiling system with the use of true seeding method is used in the pans for complete exhaustion.

The process of crystallization is initiated in the pans, and is completed in the crystallizers. Air-cooled

crystallizers are used to handle proper crystallization. After the mother liquor in the massecuite is exhausted to

the optimum limit i.e. the maximum sugar from the mother liquor has been transferred to sugar crystals, the two

constituents are separated in the centrifugals. The sugar is washed thoroughly with super heated wash in stages

within the centrifugal baskets.

The sugar discharged from centrifugals is conveyed, dried and cooled by fluidized bed hoppers. Sugar is

screened in a grader so as to separate fine and lumps. Sugar is thereafter filled in sacks, weighted, stitched and

transferred to the sugar warehouse.

Molasses and Bagasse are by products of the sugar plant. Besides, the unit also produces steam, which is used to

generate power for captive consumption. The recovery of sugar from sugarcane ranges between 9% to 11%

during the last four years and the total reducing sugar in molasses has been around 40%.

Molasses is diluted and fermented with yeast. The Fermented diluted molasses called wash is distilled in the

distillation column to produce Rectified Spirit (Indstrial Alcohol). Rectified spirit is fed to the abosolute alcohol

plant whereby water present in rectified spirit is removed to get 99.5% -99.8% pure alcohol called absolute

alcohol (Ethanol).

Production process for Co-generation

In the process of generation of sugar, baggase is generated as a by-product, which in turn is used as the raw

material for production of steam, which is required to run turbine and alternative for production of electricity.

The Elctricity produced is of 440 volts and the voltage is stepped up through trasformers to match with the

frequency of 132 KVA of with State Grid.

Production process for Canning

The processing of our products upto receiving, sorting, weighing, washing, peeling & cutting is the common

irrespective of product category.


60

For Canned Fruits & Vegetables, the cut / prepared fruits and / or vegetables are blanched then weighed quantity

of same is filled in containers which are also filled with the covering media which is sugar syrup in case of fruits

and brine / gravy in case of vegetables. Then these cans are exhausted under steam, hermetically sealed, and

processed/sterilized, cooled, wiped and stacked.

For Jams & Jellies, washed and cut fruits are passed through pulper in order to get a homogeneous pulp. The

pulp is then mixed with sugar syrup, pectin and other required ingredients, boiled to a suitable consistency, hot

filled in containers cooled, wiped and stacked.

For Squashes, the pulp is mixed with required ingredients like sugar syrup, citric acid, colour, flavour etc. and

homogenised, filled in containers at ambient temperature, wiped and stacked.

For Juices, the pulp is mixed with required ingredients like sugar syrup, citric acid etc., homogenised, boiled,

hot filled in containers, sealed, processed, cooled, wiped and stacked.

For Tomato Ketchup & Vegetable Sauces, the tomatoes or vegetables are properly washed and cut / trimmed if

required boiled, passed through pulper in order to get homogeneous juice / pulp. The juice / pulp thus obtained

is mixed with required ingredients like sugar syrup, salt, spices etc., boiled to a suitable consistency, hot filled in

containers, cooled, wiped and stacked.

PROCUREMENT OF RAW MATERIALS

Sugar

Sugarcane is the sole raw material required for production of sugar.

In the present regulatory system, each sugar mill has a command area which is assigned by the cane

commissioner of the state. Each sugar mill is required to procure sugarcane from its command area.

Our Hargaon Sugar Unit is located in Village Hargaon on Sitapur-Lakhimpur Highway in Sitapur District of

Uttar Pradesh .The command area of Hargaon factory is 68,650 Hectares falling in Sitapur & Lakhimpur

Districts.

Narkatiaganj Sugar Unit is located in the sub-divisional town of Narkatiaganj in the District of West

Champaran, Bihar. The command area of this unit consists of 78,243 hectares of cultivable land.

The Rosa Sugar Unit is located in village Rosa on National Highway, Shahjahanpur District of Uttar Pradesh.

The cultivable area in command area of Rosa consists of 42,152 Hectres.

Our sugar mills have to pay the SAP fixed by the State Government for Uttar Pradesh and SMP/contractual

prices for the sugarcane supplied in Bihar by the cane growers.

Industrial Spirits (including Denaturants), Fusel Oil & Bio-Compost

In the process of production of sugar from cane juice, molasses is generated as a by-product which in turn is

used as the raw material for production of Industrial Spirits (including Denaturants), Fusel Oil & Bio-Compost

at our distilleries and balance, if any, is sold in the open market in accordance with Molasses Policy of the state

governments.

Co-generation

In the process of production of sugar from cane, baggase is generated as a by-product which in turn is used as

the raw material for production of Electiricty.

Canning

We procure fruits and vegetables for canning from open market on as and when required basis.


61

OUR PRODUCTION FACILITIES

We have three sugar units at Hargaon, Rosa in U.P and Narkatiaganj in Bihar. Our two distilleries are situated at

Hargaon in U.P and at Narkatiaganj in Bihar. Our canning unit is located at Bamrauli near Allahabad. The

Company is in process of setting up a Greenfield Sugar unit at Hatta, Gorakhpur, U.P with a capacity 7,000 tcd

and co-generation power plant of 35 M.W. Installed capacities, capacity utilisations and actual production of the

sugar units, distilleries and canning unit for the years 2004-05, 2005-06 and 2006-07 are as follows:

Hargaon Sugar Unit

Description 2004-05 2005- 06 2006-07

Installed capacity (TCD) 6500 7500 10000

Sugarcane crushed (lac quintals) 96.20 105.45 145.77

Capacity utilisation (%) 90.24 86.26 82.36

No. of working days 164 163 177

Sugar production (lac quintals) 10.02 11.14 15.15

Narkatiaganj Sugar Unit

Description 2004-05 2005- 06 2006-07

Installed capacity (TCD) 5000 5000 7500





Rosa Sugar Unit

Description 2004-05 2005- 06 2006-07

Installed capacity(TCD) 3500 4200 4200





Hargaon Distillery Unit

Description 2004-05 2005- 06 2006-07

Installed capacity(lac litres per annum) 135.00 135.00 135.00

Industrial Alcohol/Ethanol produced (lac litres) 64.13 93.29 130.36


Narkatiaganj Distillery Unit

Description 2004-05 2005- 06 2006-07

Installed capacity(lac litres per annum) 90 90 90

Industrial Alcohol/Ethanol produced (lac litres) 71.57 84.26 74.18


Allahabad Canning Company

Description 2004-05 2005- 06 2006-07

Installed capacity(in M.T. per shift of 8 hours) 10 10 10

Production (in M.T) 2930 4314 3427

Total Working Days 300 303 311

Capacity Utilisation 97.66 142.38 110.19


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Co-generation

Description 2006-07

Capacity (in M.W.) 25

Production (in Lac Units) 577.36

Total Units sold (in lac units) 262.53

OUR MARKETING Sugar

At present, 10% of the sugar produced is released by the Central Government for its nominees as levy sugar and

the remaining 90% is sold in the open market. However, the Government through the release mechanism system

controls the actual quantity that can be sold in the open market. The price of sugar sold in the open market

depends on market forces.

The free sugar is sold through a network of agents, who in turn sell to wholesalers. As per the Company’s

practice, the delivery of free sale sugar is generally made against advance payment through demand draft on ex-

factory basis. Besides U.P., our Company sells sugar in Haryana, Madhya Pradesh, Bihar, Jharkhand, West

Bengal & Assam.

Industrial Spirits (including Denaturants), Fusel Oil & Bio-Compost

The Industrial Spirits , generally being used by the Chemical Industry is being sold by our Company through our

own network. Absolute Alcohol finds application in a variety of industries including pharmaceuticals, paints,

etc. Due to hike in international prices of crude oil which have impacted the prices of petrol and diesel, the

Government of India has encouraged the use of bio fuels like Ethanol to be blended with petroleum based fuels.

Ethanol, being an oxygenate it contains high percentage of oxygen which helps combust fuel more completely

and reduces vehicular injurious emission. The Government has permitted for blending of fuel petrol with 5%

ethanol except in the states of Jammu & Kashmir, Himachal Pradesh and North Eastern States of the country.

However the Government is considering a proposal to make 5% doping compulsory with immidieate effect

across the country which is expected to increase to 10% from October 2008.

Logistical advantage would accrue to both oil companies and Distilleries in sale of Ethanol to the nearest oil

company’s depots.

Co-generation

Electricity is generated and sold to the State Grid under Power Purchase Agreement on the term and conditions

mentioned therein.

Canning

We can broadly divide our Sales in two sectors: (1) Sales to consumer through market penetration (2)

Institutional Sales

1) Regarding consumer sales, we have separately developed a marketing department, which looks after

entire sales. This department identifies the new area for selling our products, appoint new consignee

agents, distributors/dealers, look after our inventories lying at different locations, identifies new

products so that our production department may work on R&D work to introduce new products as well

make improvement in existing products and formulate different schemes as per market norms, which

can be offered to distributors as well as to consumers.

2) Regarding, institutional sales we have defined different segment, e.g. Star Hotels, Hostels, Technical

Institutes, Departmental Houses, Cooperatives Societies and Govt Canteens. In this sector we have

appointed liaison agents and distributors who look after these sales. The Company procures contracts

for the same by participating in the open market tenders floated by the Government (obtain copies of

some tenders and the bids they won as back up).


63

Business Strategy

Our Company is exploring various avenues for expanding and consolidating manufacturing capacities in sugar,

distillery and Co-generation. During the season 2006-07, we have completed the expansion of Sugar Mills at

Hargaon by increasing its capacity to 10,000 tcd, with a Co-generation Plant of 15 MW. Our Company has also

increased the capacity of the sugar factory at Narkatiaganj to 7500 tcd with a co-generation plant of 10 MW.

In order to meet the increasing demand of ethanol, we are in process of implementing capacity expansion of our

distilleries at Hargaon and Narkatiaganj to 100 KLPD and 60 KLPD respectively.

The Company is in process of setting up a Greenfield Sugar unit at Hata, Gorakhpur, U.P with a capacity 7,000

tcd and co-generation power plant of 35 M.W.

For further details, please refer to “Government Approvals” on page no. 285 of this Draft Letter of Offer

Export Obligation Currently there is no export obligation to be fulfilled by us.


64

OUR PROPERTIES

Except stated herein below there is no property which is owned by the Company or propose to purchase or

acquire which is to be paid for whole, or in part, from the net proceeds of the Issue or the purchase or

acquisition of which has not been completed on the date of this Draft Letter of Offer.

UNIT Area (Acre) Location

Sugar Unit-

Hargaon

5.298 At Village-Muradnagar,P.O.Hargaon

Distt.Sitapur,Uttar Pradesh

23.368 At Village-Muradnagar,P.O.Hargaon


0.230 At Village-Jahangirabad,P.O.Hargaon


5.552 At Village-Jahangirabad,P.O.Hargaon


7.349 At Village-Deeppur,P.O.Hargaon


3.800 At Village-Deeppur,P.O.Hargaon


3.01 At Village-Pipra Maroda Tehsil-Lakhim Pur

Distt.Lakhimpur-Kheri,Uttar Pradesh

0.71 At Village-Dudwa Midania Tehsil-Lakhim Pur


52.99 At Village-Saidipur Khurd Tehsil-Lakhim Pur


51.26 At Village-Haiderpur P.O.Hargaon


Hargaon Distillery

Unit

25.155 At Village-Surjipara P.O.Hargaon


Narkatiaganj Sugar 42.82 At village narkatiaganj, district-betia

Bihar.

Narkatiaganj Farms 1045.97 At village narkatiaganj, district-betia

Bihar.

Narkatiaganj

Distillery

46.10 At village narkatiaganj, district-betia

Bihar.

Rosa Sugar Unit 29.51 Village Chaundhera, Rosa ( Shahjahanpur)

1.57 Village Rausar, Rosa ( Shahjahanpur)

Allahabad Canning

Unit

5.318 Village Bamrauli, Allahabad.

Hata Sugar Unit 81.3931 Village Dhadha Bujurj, Pargana-Silhut, Tehsil-Hata

District-Kushinagar ( Uttar Pradesh)


65

INSURANCE

All our plants are insured and we have taken Insurance Policies for our plants (which covers fire risk for all

plant and machinery, loss caused due to earthquake and spontaneous combustion). All insurance polices are

tariff policies and the rates, terms, conditions and scope of coverage are determined by the Tariff Advisory

Committee, a Government body.)

COMPETITION

Sugar Industry in India is very fragmented and competitive because of presence of a number of players. Some of

the major players in Northen and Eastern India are Bajaj Hindusthan, Balrampur Chini Mills, Dhampur Sugar

etc.


66

REGULATIONS AND POLICY The sugar industry is one of the industries enumerated in entry 33 of List III of the Seventh Schedule to the

Constitution of India and sugarcane is an article relatable to the sugar industry. Accordingly, both the Centre and

the State are empowered to legislate on this subject, and such legislations would be applicable to the business of

the Company.

Set out below is a summary of the significant legislations passed by the Central Government relating to the

production, sale and purchase of sugar and sugarcane-

1. The Essential Commodities Act, 1955

The Essential Commodities Act, 1955 (“EC Act”) provides for the control of the production, supply,

sales, storage, distribution etc. in certain commodities. The terms ‘food stuff’ and ‘food crop’ have been

identified as essential commodities under the Act. ‘Sugarcane’ being a ‘food crop’ and ‘sugar’ being

‘food stuff’ are covered under the class of essential commodities under the Act ;

Section 2(e) of the EC Act defines ‘sugar’ as under :-

i) any form of sugar containing more than ninety per cent of sucrose, including , sugar candy;

ii) khandsari sugar or bura sugar or crushed sugar or any sugar in crystalline or powdered form;

or

iii) sugar in process in vacuum-pan sugar factory or raw sugar produced therein;

Section 3 of the EC Act empowers the Central Government for issuing directions to control production,

supply, distribution etc. of the ‘essential commodity’ produced by the manufacturer or stock holders,

and also makes specific provision with regard to the amount payable for the levy sugar sold by the

producer.

The levy sugar price is to be fixed by the Central Government as per the provisions of Section 3 (3C) of

the EC Act, having regard to :

(a) the minimum price, if any, fixed for sugarcane by the Central Government;

(b) the manufacturing cost of sugar;

(c) the duty or tax payable thereon;

(d) securing a reasonable return of the capital employed in the business of manufacturing sugar.

Further, Section 3 (3-c) of the EC Act provides for fixing different prices from time to time for different

areas or factories or for different kinds of sugar.

The Central Government has also been empowered to direct that no producer, importer or exporter shall

sell or otherwise dispose of or deliver any kind of sugar or remove from the bonded godown of the

factory in which it is produced, except under and in accordance with the directions issued by the

Government.

Further, all kinds of sugar including plantation white sugar, raw sugar and refined sugar, whether

indigenously produced or imported, fall within the scope of powers of the Central Government for

directions in regard to, inter alia, stock, disposal or delivery.

2. The Levy Sugar Supply (Control) Order, 1979

The objective of this legislation is to empower the Central Government to issue directions to any

producer or importer or recognized dealer to supply levy sugar in such quantities and from such place

of manufacture or storage to such persons or organisations, in such areas or markets or to the State

Government/Union Territory / Administration as specified by the Government.

The term ‘Levy Sugar’ has been defined to mean the sugar requisitioned by the Central Government

under the EC Act.

Further, the Order prescribes that the producer shall supply levy sugar at a price not exceeding the price

as determined by Central Government under the EC Act.


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3. Sugar (Control) Order, 1966

The Sugar (Control) Order authorizes the Central Government to regulate sales etc. of sugar produced

or imported.

According to Clause 4 of the Sugar (Control) Order, no producer shall sell or agree to sell or otherwise

dispose of or deliver or agree to deliver any kind of sugar or remove any kind of sugar from the bonded

godowns of the factory in which it is produced except in accordance with the directions issued in

writing by the Central Government.

Clause 5 of the Sugar (Control) Order empowers the Central Government to issue directions to

producers or importers or recognized dealers regarding production, maintenance of stocks, storage,

sale, grading, packing, marking, weighment, disposal, delivery and distribution of any kind of sugar.

Further, the Sugar (Control) Order provides for powers for attachment, seizure and sale of attached

sugar, regulation of quality of sugar and other administrative powers.

4. Sugar (Packing and Marking) Order, 1970

The objective of Sugar (Packing and Marking) Order is to regulate the packing of sugar manufactured

by a producer and marking on bags. The Sugar (Packing and Marking) Order prescribes that each

producer shall, at the time of such packing, mark the quality of sugar in terms of the Indian Sugar

Standards.

5. Sugarcane (Control) Order, 1966

Under the Sugarcane (Control) Order, the Central Government is empowered to fix the minimum price

of sugarcane to be paid by producers of the sugar for sugarcane purchased by them having regard to

certain factors as mentioned in Clause 3 of the said Sugarcane (Control) Order.

Further, a different price may be fixed for different areas or different qualities or varieties of sugarcane.

Further, the Central Government, may, subject to such conditions as specified in the Sugarcane

(Control) Order, allow a suitable rebate in the price so fixed.

The Sugarcane (Control) Order also contains various provisions for regulating the supply and

distribution of sugarcane.

The Central Government is empowered to direct the producers of the sugarcane to pay additional price

for sugarcane in addition to the minimum sugar prices fixed in accordance with the provisions of the

second schedule to the Sugarcane (Control) Order.

The Central Government is empowered to delegate certain powers conferred upon it by Sugarcane

(Control) Order subject to such restrictions, exceptions and conditions, if any, as the Central

Government may think fit.

The following State legislations are also applicable to the business of the Company.

1. The Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 (‘UP Sugarcane

Act’)

The aforesaid Act is applicable to the State of Uttar Pradesh and it seeks to regulate the supply and

purchase of sugarcane for use in sugar factories located in the State.

Section 2 of the UP Sugarcane Act defines the following terms as under-

(i) ‘Cane Commissioner’ means the Officer appointed to be Cane Commissioner under section 9

and includes an Additional Cane Commissioner under section 10 of UP Sugarcane Act.

(ii) ‘Crushing season’ means the period beginning on the 1st October in any year and ending on

the 15th of July in the next following year.


68

The UP Sugarcane Act prescribes that the Cane Commissioner shall, on application by the occupier of

the factory, reserve or assign any area for the purposes of supply of sugarcane to the factory in

accordance with the provisions of Section 16 of the UP Sugarcane Act.

Further, in case of a ‘reserved area’, the occupier of the factory may be directed to purchase all the cane

grown in that area. In the case of an assigned area, the Cane Commissioner may determine the quantity

of cane to be offered for sale to the occupier of the factory.

Section 16 of the UP Sugarcane Act contains provisions to regulate the purchases and supply of cane in

the reserved and assigned areas.

The Hon’ble Supreme Court, vide a land mark judgment passed on 5th May, 2004 in its 3:2 bench

upheld the rights of Uttar Pradesh State Government to fix the State Advise Price (‘SAP’) of

Sugarcane, under section 16 of the Act at levels higher than Statutory Minimum Price (SMP)

prescribed by the Central Government under the Sugarcane (Control) Order 1966.

2. The Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Rules,1954 (‘UP Sugarcane

Rules’)

The UP Sugarcane Rules have been framed in exercise of the powers conferred by Section 23 of Uttar

Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 which prescribes the rules with

particular regard to the reservation and assignment of sugarcane area, payment of the sugarcane price

by sugar factory to the cane growers, commission on the purchase of cane payable by the factory to the

Cane Growers Co-operative Society and Council to regulate the supply and purchase of sugarcane.

3. The Uttar Pradesh Sugarcane Supply & Purchase Order, 1954 (‘UP Sugarcane Order’)

The UP Sugarcane Order has been passed in exercise of powers conferred by Section 16 of the Uttar

Pradesh Sugarcane (Regulation of Supply & Purchase) Act, 1953. The UP Sugarcane Order deals with

the purchase of sugarcane by sugar factories as per the reservation order issued by the Cane

Commissioner. Sugar factories will have to enter into an agreement with the Cane Growers’ Co-

operative Society in Form ‘C’ by way of which the Co-operative Society agrees to sell the specified

quantity of sugarcane to the sugar factory through its members under the reservation order.

4. The Uttar Pradesh Sheera Niyantran Adhiniyam, 1964 (‘UPSNA’)

The UPSNA is applicable to the State of Uttar Pradesh which empowers the State Government to

control the storage, gradation and price of molasses produced by the sugar factories and the regulations

of supply and distribution thereof.

The term “molasses” has been defined under Section 2(d) of UPSNA as under-

“the heavy dark coloured viscose liquid produced in the final stage of manufacturing of sugar by

vacuum pan from sugarcane or gur, when the liquid as such or in any form or admixture contains

sugar”.

The UPSNA prescribes various provisions to regulate the supply and distribution of molasses from the

sugar factory to the distillery. The Act also contains provisions relating to storage of molasses.

5. Bihar Sugarcane (Regulation Of Supply and Purchase) Act, 1981 (‘Bihar Sugarcane Act’)

The Bihar Sugarcane Act regulates the production, supply and distribution of sugarcane intended for

use in sugar factories and khandsari sugar manufacturing units and taxation of sugarcane and matters

incidental thereto within the State of Bihar. The following key terms have been as under -

a. ‘Cane’ means sugarcane intended for use in a factory or unit.

b. ‘Cane Commissioner’ - means the officer appointed to be the Cane Commissioner under

section 12 of Bihar Sugarcane Act.

c. ‘Crushing year’ means the year commencing on the 1st day of July in any year and ending on

the 30th June in the year next following.


69

d. ‘Factory’ - means any premises including the precincts thereof in any part of which sugar is

manufactured by means of vacuum pan process.

e. ‘Unit’ - means a manufacturing unit engaged or ordinarily engaged in the manufacture or

production of khandsari sugar, gur, shakkar, gul, jagari or rab from cane juice by power

crusher.

As per the provisions of the Bihar Sugarcane Act, the Cane Commissioner may, on application by the

occupier of the factory, reserve or assign any area for the purposes of supply of sugarcane to the

factory, having regard to the crushing capacity of the factory and availability of sugarcane in such area.

Section 42 of Bihar Sugarcane Act also empowers the State Government to determine by notification in

the Official Gazette the minimum price of sugarcane payable by the owners of the units to the cane

growers or Co-operative Societies for cane supplied to them.

Section 48 and Section 49 of Bihar Sugarcane Act empowers the Government to fix the Commission

and Tax payable by the occupier of the factory on the purchase of cane.

6. Sugar Development Fund Act, 1982 and Rules, 1983 (‘Sugar Development Fund Act’ and ‘Sugar

Development Fund Rules’)

The Sugar Development Fund Act and Rules were enacted by the Central Government to set up a fund

for financing the activities and development of the sugar industry. The Central Government provides

loans to the sugar industry out of the funds available in the Sugar Development Fund, for the purpose of

rehabilitation and modernisation of the sugar plant and machinery based on the scheme approved by the

financial institutions as also for sugarcane development, co-generation and manufacturing of Ethenol.

Under Rule 19 of Sugar Development Fund Rules, the Central Government has been empowered to

decide about maintenance of Buffer Stock and payment of subsidy thereon. The Central Government

under Sugar Development Fund Act and Rules made thereunder may also provide financial assistance

as it may consider fit and proper.

A list of other legislations relating to sugar, sugar cane and alcohol are set out below:

(i) Prevention of Food & Adulteration Act

(ii) Petroleum Act 1934

(iii) The Arms Rules 1962

(iv) Water (Prevention and Control of Pollution) Act 1974 and Rules

(v) Air (Prevention and Control of Pollution) Act & Rules 1981

(vi) Hazardous Waste Rules

(vii) India Explosives Act & Rules 1884

(viii) Standard Weight & Measure (Packaged Commodities) Rules 1977

(ix) Industrial (Development& Regulation) Act 1951

(x) Import/Export Trade Control Policy of Govt. of India

(xi) Central Excise Act, 1944

(xii) Factories Act, 1948

(xiii) Oil and Alcohol Taxation Rules, 1977

(xiv) Income Tax 1961 and Income Tax Rules 1962

(xv) Bihar Sugarcane (Regulation and Supply & Purchase) Act, 1982

(xvi) Bihar Molasses (Control) Act 1947

(xvii) Bihar Execise Act, 1915

(xviii) Fruit Products Order, 1955

(xix) Trade Marks Act, 1999

(xx) Land Ceiling Act, 1950


70

HISTORY OF THE COMPANY AND OTHER CORPORATE MATTERS Our Company is a part of the K.K. Birla Group of Companies, which is a major player in key industries like

fertilizers, chemicals, heavy engineering, textiles, shipping. besides sugar.

Our Company was incorporated as a Public Limited Company in the year 1932 by the Birla Group under the

name of The Oudh Sugar Mills Limited. The first sugar mill was set up by the Company at Hargaon. The

Company started a distillery in the year 1945 and purchased Rosa Sugar Works at Rosa Dist. Shahjahanpur

(U.P.) in 1976 with a crushing capacity of 1000 tcd. Further, with effect from 1st July, 1984, The New Swadeshi

Sugar Mills Limited, having a sugar mill and distillery at Narkatiaganj, Dist. West Champaran (Bihar), a fruit &

vegetable canning factory at Allahabad & a paint factory under lease at Kolkata was merged with the Company.

The lease of the paint factory was terminated in April,1997. In 2006, the Company by a registered Deed of

Conveyance purchased from The Upper Ganges Sugar & Industries Limited on an ‘as is where is basis’ and ‘as

a going concern’ the sugar unit project at Hata, Dist, Khushinagar (U.P) which was under implementation. The

Company is now implementing the said Project with a crushing capacity of 7000 TCD and with co-generation of

35 MW.

Through organic and inorganic modes of growth, our company has cautiously but consistently grown from a

single unit sugar manufacturing company to a company having three sugar manufacturing units with an

aggregate crushing capacity of about 21,700 tonnes of sugarcane per day, two distilleries with a total installed

capacity of 22.5 million liters per annum of industrial alcohol/ethanol, bio-compost plant producing organic

fertilizer and a fruit and vegetable canning factory. After the proposed expansion & commissioning of the Hata

project the company shall have four sugar manufacturing units with an aggregate crushing capacity of about

28,700 tonnes of sugarcane per day, two distilleries with installed capacity of 45 million liters per annum of

industrial alcohol/ethanol.

The Equity Shares of our Company initially got listed on BSE on 1956. Thereafter, the Equity Shares were

listed on the Uttar Pradesh Stock Exchange Association Limited, Kanpur and the NSE. We voluntarily delisted

our Equity Shares from the Uttar Pradesh Stock Exchange Association Limited, Kanpur w.e.f. November 28,

2003.

OUR CORPORATE STRUCTURE

Management of the Company vests with the Board of Directors comprising of industrialists, professionals and

persons having industrial experience and business acumen. Majority of the directors on the Board are

independent. The Chairman -cum- Managing Director of the Company is overall incharge of the Company. He

is assisted by a team of Executive Presidents of various units of our Company and the Vice-Presidents to

manage the day to day affairs of the Company.

MAIN OBJECTS OF THE COMPANY

The main objects as set out in the Memorandum of Association of The Oudh Sugar Mills Limited are as under:

To purchase, manufacture, produce, refine, prepare, import, export, sell and generally to deal in sugar, sugar-

beets, sugarcane, molasses, syrups and melada and alcohol and all products or by-products thereof and food

products generally and in connection therewith to acquire, construct and operate sugar or other refineries,

buildings, mills, factories, distilleries and other works. To plant, cultivate, produce and raise or purchase

sugarcane, maize, sugar beets and other crops and to transact such other work or business as may be proper or

necessary in connection with the above objects or any of them.

The Objects Clause of the Memorandum of Association of our Company enables us to undertake our existing

activities.


71

CHANGES IN MEMORANDUM OF ASSOCIATION

Since incorporation, the following changes have been made to our Memorandum of Association:

Date of Shareholders approval Changes

January 28, 1943 Increase in Authorised Share Capital of the Company from Rs.15 Lacs to

Rs.30 Lacs.

July 19, 1944 Increase in Authorised Share Capital of the Company from Rs.30 Lacs to

Rs.50 Lacs.

September 7, 1946 Increase in Authorised Share Capital of the Company from Rs.50 Lacs to

Rs.60 Lacs.

October 5, 1948 Amendment to the objects clause of the Company by way of addition of

clauses 1A, 1B, 1C, 1D, 1E, 1F and 1G.

October 18, 1948 Increase in Authorised Share Capital of the Company from Rs.60 Lacs to

Rs.1 Crore.

December 31, 1948 Increase in Authorised Share Capital of the Company from Rs.1 Crore to Rs.

1.30 Crores.

December 30, 1964 Alteration of Capital Clause by reclassification of Share Capital as 90,000

Equity Shares of Rs.100/- each and 40,000 Preference Shares of Rs.100/-

each.

December 30, 1965 Amendment to the objects clause of the Company by way of addition of

Clause 1AA and sub-clause (xiv) to the Clause 6.

May 6, 1969 Increase in Authorised Share Capital of the Company from Rs.1.30 Crores to

Rs. 5 Crores divided into 2,60,000 Equity Shares of Rs.100/- each and

2,40,000 Preference Shares of Rs.100/- each.

January 31, 1972 Reclassification of Authorised Share Capital of the Company of Rs. 5 Crores

divided into 3,50,000 equity shares of Rs.100/- each, 1,25,000 Preference

Shares of Rs.100/- each and 25,000 9.5% Cumulative redeemable Preference

Shares of Rs.100/- each .

June 7, 1974 Amendment to the objects clause of the Company by way of addition of

clauses 1H, 1I, 1J, 1K and 1L.

July 13, 1992 Reclassification of Authorised Share Capital as 5,00,000 Equity Shares of

Rs.100/- each

May 9, 1995 Increase in the Authorised Share Capital of the Company from Rs.5 Crores to

Rs. 20 Crores divided into 20,00,000 Equity Shares of Rs. 100/- each .

September 26, 1996 Subdivision of equity shares into the denomination of Rs.10/- each.

April 26, 1999 Registered Office of the Company was shifted from State of Maharastra to

State of Uttar Pradesh.

October 15, 2004 Increase in the Authorised Share Capital of the Company from Rs. 20 Crores

divided into 2,00,00,000 equity shares of Rs.10/- each to Rs.40 Crores

divided into 4,00,00,000 equity shares of Rs. 10/- each.

The details of the capital raised by our Company are given in the section titled “Capital Structure” on page no.



72

OUR SUBSIDIARIES

Our Company currently has following four subsidiaries:

CHAMPARAN MARKETING COMPANY LIMITED. (“CMCL”)

CMCL was incorporated on 23rd

February, 1951 under the Indian Companies Act, 1913. CMCL became wholly

owned subsidiary of the Company with effect from 1st July, 1984.

As per its Memorandum of Association, its main object is to carry on business of buyers, sellers, importers,

exporters, manufacturers, producers, dealers, commission agents and otherwise in sugar, gur, molasses etc., and

other merchandise, commodities and articles of consumption of all kinds in India or elsewhere. Further the

objects also provides for carrying of an investment company and to invest in and acquire hold and deal in

shares, stocks, debentures and other securities.

CMCL’s main business activity consists of investment in shares and securities and is registered with RBI as a

NBFC under Section 45IA of RBI Act, 1934 vide Registration No. 05.00192 dated February 20, 1998.

Shareholding

CMCL is a wholly owned subsidiary of our Company.

Shareholding Pattern as on 30th

November 2007

Name of Shareholder Number of Shares % of shareholding

The Oudh Sugar Mills Ltd 43,48,994 100

Shri S.K. Poddar 1 -

Shri R.N.Jhunjhunwala 1 -

Shri R.N.Bagaria 1 -

Shri A.L.Tulsian 1 -

Shri S.K.Jhunjhunwala 1 -

Shri Sunil Lohia 1

Total 43,49,000 100

Board of Directors

• Shri R. N. Jhunjhunwala

• Shri Sanjay Mukherjee

• Shri T. R. Chachan

• Shri Sunil Lohia

Financial Performance (all figures are in Rs. lacs except per share data)

Year / Period March

2005 2006 2007 Three Months Period ended 30th June , 2007

Total Income 12.94 37.50 35.42 0.00

Profit After Tax/(Loss) 12.29 36.08 34.37 (0.04)

Equity Share Capital

(of Rs 2.50 each)

108.72 108.72 108.72 108.72

Reserves & Surplus 304.30 338.10 371.16 371.12

Earning per Share 0.23 0.78 0.76 0.0

Net Asset Value per

Share

9.50 10.27 10.57 10.57

The equity shares of CMCL are not listed on any stock exchanges in India. The company has not made any

public or rights issue in the last three years. The company has not become a sick industrial company under the

meaning of SICA and is not under winding up.


73

There are no defaults in meeting any statutory/bank/institution dues. No proceeding have been initiated for

economic offences against the company

The equity shares of CMCL are not listed on any stock exchange.

HARGAON INVESTMENT & TRADING COMPANY LIMITED (“HITCL”)

HITCL was incorporated on 26th

December, 1986 under the Companies Act, 1956. HITCL became subsidiary of

our Company with effect from 2nd

March, 1987.

As per its Memorandum of Association, its main object is to carry on business of investment company and to

invest in and acquire hold and deal in shares, stocks, debentures and other securities.

HITCL’s main business activity consists of investment in Shares and Securities and is registered with RBI as a

NBFC under Section 45IA of RBI Act vide Registration No. 05.00201 dated February 20, 1998.

Shareholding

HITCL is a wholly owned subsidiary of our Company.


November 2007




Shri R.N.Bagaria 1 -

Shri U.S. Beria 1 -

Shri K.C. Gupta 1 -


Shri Sunil Lohia 1

Total 30,45,727 100

Board of Directors

• Shri C. S. Nopany - Chairman

• Shri Sanjay Mukherjee

• Shri S. K. Jhunjhunwala

• Shri K. C. Gupta

Financial Performance

(all figures are in Rs. Lacs except per share data)

Year / Period

31st March

2005 2006 2007 Three Months Period

ended 30th June, 2007

Total Income 57.61 311.02 100.06 0.00

Profit After

Tax/(Loss)

56.97 305.05 97.01 (0.04)


(of Rs 10 each)

304.57 304.57 304.57 304.57



Net Asset Value per

Share

29.81 39.83 43.01 43.01

The equity shares of HITCL are not listed on any stock exchange. The company has not made any public

or rights issue in the last three years. The company has not become a sick industrial company under the meaning

of SICA and is not under winding up.


74



OSM INVESTMENT & TRADING COMPANY LIMITED (“OITCL”)

OITCL was incorporated on 26th

December, 1986 under the Companies Act, 1956. OITCL became subsidiary of

the Company with effect from 2nd

March, 1987.

As per its Memorandum of Association, its main object is to carry on business of investment company and to

invest in and acquire hold and deal in shares, stocks, debentures and other securities.

The main business activity of OITCL consists of investment in Shares and Securities and it is registered with

RBI as a NBFC under Section 45 IA of RBI Act vide Registration No. 05.00288 dated February 21, 1998 .

Shareholding

OITCL is a wholly owned subsidiary of our Company.


November 2007




Shri T.R.Chachan 1 -

Shri U.S. Beria 1 -

Shri K.C. Gupta 1 -


Shri Sunil Lohia 1

Total 17,40,418 100

Board of Directors

Shri C. S. Nopany - Chairman

Shri T. R. Chachan

Shri A. L. Tulsian

Shri C.K. Vyas



Year / Period 31st March

2005 2006 2007 Three Months Period ended 30th June, 2007

Total Income 21.23 98.39 39.86 0.0

Profit After

Tax/(Loss)

20.50 95.70 38.26 (0.05)


(of Rs 10 each)

174.04 174.04 174.04 174.04



Net Asset Value per

Share

20.30 25.64 27.74 27.74

The equity shares of OITCL are not listed on any stock exchange. The company has not made any public or

rights issue in the last three years. The company has not become a sick industrial company under the meaning of

SICA and is not under winding up.




75

HARGAON PROPERTIES LIMITED (“HPL”)

HPL was incorporated on 18th November, 2003 under the Companies Act, 1956. HPL is a subsidiary of HITCL,

a subsidiary of the Company since its incorporation.

As per its Memorandum of Association, its main object is to purchase or otherwise acquire and to sell,

exchange, surrender, lease, mortgage, charge, convert, develop, hold, turn to account, dispose of and deal in real

and personal property and rights of all kinds and in particular lands, buildings, hereditaments business concerns

and undertakings.

HPL is currently engaged in real estate business.

Shareholding Pattern

The shareholding pattern of HPL as on 30th

November 2007 this date was as follows:



Hargaon Investment & Trading

Company Limited

249,950 55.56

Champaran Marketing

Company Limited

200,000 44.44


Shri R.N. Bagaria 10 -

Shri U.S. Beria 10 -

Shri K.C. Gupta 10 -


Total 450,000 100

Board of Directors

Shri Sanjay Mukherjee

Shri U. S. Beria

Shri K. C. Gupta

Financial Performance (all figures are in Rs. lacs except per share data)

Year/Period

31st March

2005 2006 2007 Three Months

Period ended 30th

June, 2007

Total Income 0.48 3.27 1.05 0.00

Profit After Tax/(Loss) 0.13 2.70 0.56 (0.05)

Equity Share Capital (of Rs 10

each)

45.00 45.00 45.00 45.00

Reserves & Surplus (0.52) 2.27 2.83 2.78


Net Asset Value per Share

(excluding miscellaneous

expenditure)

9.79 10.42 10.57 10.57

The equity shares of HPL are not listed on any stock exchange. The company has not made any public or rights

issue in the last three years. The company has not become a sick industrial company under the meaning of SICA

and is not under winding up.




76

OUR MANAGEMENT

BOARD OF DIRECTORS

The following table sets forth details regarding our Board of Directors as on the date on this Draft Letter of

Offer:

Name, Designation, Father's Name,

Address, Occupation

Nationality Age

(years)

Other Directorships in Indian companies

Shri C. S. Nopany Indian 42 RTM Investment & Trading Company Limited

Designation - Chairman–cum–

Managing Director

OSM Investment & Trading Company Limited

Father’s Name - S/o. Shri Bimal

Kumar Nopany

Hargaon Investment & Trading CompanyLimited

Address - 44 Park Street,

Kolkata 700 016.

SCM Investment & Trading CompanyLimited

New India Retailing and Investment Limited

Occupation – Industrialist SIL Investment Limited

DIN No-00014587 Chambal Fertilizers & Chemicals Limited

Uttar Pradesh Trading Company Limited

Upper Ganges Sugar & Industries Limited

Gobind Sugar Mills Limited

Sutlej Textiles and Industries Ltd.

Yashovardhan Investment & Trading Company

Limited

La Monde Exports Pvt.Limited

Chambal Infrastructure Ventures Ltd.

Modern DiaGen Services Ltd.

CFCL Techonologies Limited, Cayman Islands

CFCL Ventures Limited, Cayman Islands

India Steamship Pte Limited, Singapore

Indo Maroc Phosphore S A, Morocco

Shri S. V. Muzumdar Indian 79 Tilaknagar Industries Limited

Indian Link Chain Mfrs. Limited

Designation – Director Industry House Limited

Phil Corporation Limited

Father’s Name - S/o. Late Vinayak D.

Muzumdar


Simon India Ltd.

Address - “Roxana”,

109, Maharshi Karve Road,

Mumbai 400 020.

- Company Executive

DIN No- 00006935

Shri Ashvin C. Dalal Indian 71 Ashvin Chinubhai Broking Private Limited

Designation – Director

Father’s Name - S/o. Late Chinubhai

Dalal

Address - “AL SABHA COURT’,

2nd

Floor, Block No.6,

73, Marine Drive,

Mumbai 400 020.


77


Address, Occupation

Nationality Age

(years)


Occupation- Share, Stock & Finance

Broker

DIN No-00016985

SEBI Registration No. INS

232332234 dated 18.11.2005

Category : Sub-broker

Shri Rohit Kumar Dhoot Indian 39 Dhoot Industrial Finance Limited

Dhoot Instruments Private. Limited

Designation – Director Dhoot Meters Private Limited

Kanishta Finance & Investments Private Limited

Father’s Name – S/o. Shri Rajgopal

Dhoot

Benhur Investments Company Private Limited

Address- 4B – IL PALAZZO Naman Finance & Investments Private.Limited

Little Gibbs Road Ghewar Investments & Trading Private Limited

Mumbai 400 006. Rutgers Investments & Trading Private Limited

Pick-me-Quick Holding Private Limited

Occupation – Industrialist Anukool Traders & Finance Private Limited

DIN No- 00016856 Avilok Trade & Finance Limited

Aakarshak Synthetics Limited

Young Buzz India Limited

Ashish Trading And Agency Limited

Pine Fresh Minerals Private Limited

IRIS Resources Private Limted

Smt. Madhu Vadera Jayakumar Indian 44 Judith Investment Pvt. Ltd.


Father’s Name - D/o. Late

Madhusudan Azad

Address- 51, Zenia Abad

Little Gibbs Road,

Malbar Hill

Mumbai – 400 006.

Occupation- Ex-banker & Investor

DIN No- 00016921

Shri C. B. Patodia 59 JKM Engineering Pvt. Ltd.

Indian Sugar Exim Corporation Ltd


Father’s Name – S/o. Late Shyam

Sunder Patodia

Address - D – 395,

Defence Colony,

New Delhi – 110 024.

Occupation – Service

DIN No- 01389238

Shri Haigreve Khaitan Indian 37 Ceat Limited

Dhunseri Tea & Industries Limited


78


Address, Occupation

Nationality Age

(years)


Designation – Director Great Eastern Energy Corporation Ltd.

Gujarat Borosil Limited

Father’s Name -S/o. Shri Pradip

Kumar Khaitan

Harrisons Malayalam Limited

Hindustan Composites Limited

Address- 1104 Sterling Sea Face I.G.E. (India) limited

Dr. Annie Besant Road International ConveyorsLimited

Worli, National Engineering Industries Limited

Mumbai 400 018. Rama Newsprint & Papers Limited

Sterlite Optical Technologies Limited

Occupation – Advocate The Madras Aluminium Company Limited

DIN No- 00005290 Xpro India Limited

AVTEC Limited

Bonanza Trading Company Limited

BTS Investment Advisor Pvt. Limited

Khaitan Consultants Limited

Vinar Systems Private Limited

Twenty – First Century Printers Pvt. Ltd

Shri J. N. Godbole Indian 62 Emmellen Biotech Pharmaceuticals Ltd.

Designation – Director Technocraft Industries (India) Ltd.

J. K. Cements Ltd.

Father’s Name – S/o. Late Narayan

Wasudeo Godbole.

Gillander Arbhuthnot & Co. Ltd.

Address- 604A, Cottage Lane, Plot

No.16A,

IMP Powers Ltd.

Sector 19A, Nerul (East), Emami Paper Mills Limited

Navi Mumbai – 400 706. Invent Assets Securitisation & Reconstruction

Pvt.Ltd.

Occupation- Retd Banker Invent Arc Pvt. Ltd.

DIN No- 00056830 Unitex Designs Ltd.

Brief Biography of Our Directors

Shri C. S. Nopany, aged 42 years, is the Chairman cum Managing Director of our Company. He is a Chartered

Accountant and Master of Science in Industrial Administration from Carnegie Mellon University, Pittsburgh,

USA. He is an eminent industrialist having vast industrial experience in diverse fields like sugar, tea, shipping,

textiles, fertilizers and chemicals etc. He is the past President of Indian Chamber of Commerce. He was

appointed as Managing Director on 1st July, 1995. On 2

nd September, 2002 he was designated as Chairman-

cum-Managing Director. He is the overall in-charge of the affairs of the Company. He is also a member of

Finance & Corporate Affairs Committee of the Company.

Shri S.V. Muzumdar aged 79 years, is a Bachelor of Arts & Law and has got wide and varied experience in

the legal field, taxation and general management areas. He joined the Board of the Company in November

1969. The He is the Chairman of Investors’ Grievance Committee and a member of Finance & Corporate

Affairs Committee, Audit Committee and Remuneration Committee of the Company.

Shri Ashvin C. Dalal aged 71 years, is Commerce graduate and a partner in the firm M/s. Chimanlal J. Dalal &

Company, leading Share and Stock broker. He joined the Board of the Company in September, 1987. He is

Chairman of Audit Committee and a member of Investors’ Grievance Committee, Finance & Corporate Affairs

Committee and Remuneration Committee of the Company.

Shri C. B. Patodia, aged 59 years and possesses rich experience of over 37 years especially in Cane Marketing,

Sugar Manufacturing Process, Administration and Finance and audit matters. He joined the Board of the

Company in July, 1995 He is a member of Audit Committee of the Company.

Shri Rohit Kumar Dhoot aged 39 years, is a Chartered Accountant and a businessman of wide experience

accounts, audit, taxation and finance matters.. He joined the Board of the Company in February, 2003. He is a

member of Investors’ Grievance Committee, Audit Committee and Remuneration Committee of the Company.


79

Smt. Madhu Vadera Jayakumar aged 44 years, is a holder of Post Graduate Diploma in Management from

Indian Institute of Management, Ahmedabad and Mathematics Honours Degree from University of Delhi. She

was associated with Mineral Metals Trading Corporation during 1985-1988 and later with Citi Bank N. A.

during 1988-2000. She joined the Board of the Company in May, 2003. She has wide experience in corporate

affairs, banking and finance matters. She is a member of Finance & Corporate Affairs Committee of the

Company.

Shri Haigreve Khaitan aged 37 years, a Bachelor of Law. Shri Khaitan is Practicing as an Advocate since,

1995. His Areas of expertise are commercial & corporate laws, tax laws, mergers and acquisitions,

restructuring, foreign collaboration, licensing etc. Mr. Khaitan has joined the Board of the Company in January

2006.

Shri J. N. Godbole aged 62 years, a Bachelor of Technology (Honours), Certificate in Financial Management

an ex-Chairman & Managing Director of Industrial Development Bank of India Ltd. His area of expertise

includes banking, financial Management, corporate restructuring mechanism, etc. Shri. Godbole joined the

Board in April, 2007.

Details of the Borrowing Powers

Pursuant to the provisions of Section 293(1)(d) of the Act, the shareholders at the annual general meeting held

on 6th

November, 2006 have authorised the Board of Directors of the Company to borrow a sum not exceeding

Rs.750 crores over and above the aggregate of the paid-up capital and free reserves of the Company.

Remuneration paid to Our Directors

Details of remuneration paid to Directors for the year 2006-07 are as follows:

Executive Director

Shri C S Nopany has been re-appointed as our Managing Director for a period of three years with effect from

July 1, 2005 on the following terms and conditions.

Salary Rs.3,25,000 (Rupees three lacs twenty five thousand only) per month

House The Company shall provide free furnished accommodation and also

pay all rents, rates, taxes, electricity, fuel charges, water charges and

all other expenses for the upkeep and maintenance thereof

Provident Fund Contribution to provident Fund shall be as per the Rules of the

Company

Gratuity Fund Contribution to Gratuity Fund shall be as per the Rules of the

Company

Medical

Reimbursement

Reimbursement of expenses incurred by the Managing Director for self

and his family, subject to a ceiling of one month’s salary in a year or

three months’ salary over a period of three years

Leave Leave with full pay including encashment of unavailed earned leave at

the end of the tenure of the Managing Director as per the Rules of the

Company

Leave Travel

Concession

For the Managing Director and his family once in a year in accordance

with the Rules of the Company

Entertainment,

traveling and other expenses

Reimbursement of entertainment, traveling and all other expenses

incurred for the business of the Company.

Club Fees Subject to a maximum of two clubs

Other perquisites Car with driver and telephone at the residence of the Managing

Director. Provision of car for use on Company’s business and

telephone will not be considered as perquisites. Personal long distance

calls and use of car for private purposes shall, however, be paid for by

the Managing Director.

Details of his remuneration for the year ended June 30, 2007 are as follows:


80

Managing Director Salary (Rs) Perquisite value of Rent

& Maintenance (Rs)

Retirement

benefits (Rs)

Shri C S Nopany 39,00,000 53,06,333 8,24,961

Non-Executive Directors

The Company pays remuneration to its Non- Executive Directors by way of commission upto 1% of the net

profits for all directors put together with the maximum ceiling of Rs.1,00,000 per director. Since last eight years

no commission has been paid to directors except in the year 2005-06, in view of losses under Section 349 of the

Companies Act, 1956.

The Company paid sitting fees to non-executive Directors for attending the meetings of the Board/Committee of

Directors Rs.5000/- and Rs. 2500/- per meeting for attending meetings of the Board and Committee thereof,

respectively. The details of sitting fees paid during the year 2006-07 are as follows :

Sl. No. Name of the Director Amount (Rs.)

1. Shri C. S. Nopany N.A.

2. Shri S. V. Muzumdar 62,500

3. Shri Ashvin C. Dalal 65,000

4. Shri C. B. Patodia 7,500

5. Shri Rohit Kumar Dhoot 40,000

6. Smt. Madhu Vadera Jayakumar 37,500

7. Shri Haigreve Khaitan 15,000

8. Shri J. N. Godbole 5,000

9. Shri Rajaram Muchhal (Expired on 20-04-07) 20,000

10. Shri Viney Kumar (Withdrawn Nomination by IDBI on 26-04-07) 25,000


81

Shareholding of our Directors in our Company

Name As on date of this Draft

Letter of Offer

Shri C S Nopany 51,254

Shri Suresh Vinayak Muzumdar 1,050

Interest of our Directors

Except as stated in “Related Party Transactions” on page 102 of this Draft Letter of Offer, and to the extent of

shareholding, remuneration, sitting fees for attending board or committee meetings, in our Company, the

Directors do not have any other interest in our business.

Changes in Our Board of Directors during the last three years

Corporate Governance

Composition of our Board of Directors is in compliance with the Corporate Governance norms as stipulated in

Clause 49 of the Listing Agreement. We have also formed Audit Committee and Investors’ Grievance

Committee in line with the Corporate Governance norms. The details of Audit Committee, Investors’ Grievance

Committee and Remuneration Committee are as follows :

1. Audit Committee

The Audit Committee of the Company is constituted in line with the provisions of Clause 49 of the

Listing Agreement with the Stock Exchange read with Section 292A of the Companies Act, 1956.

a) Terms of Reference

The terms of reference of the Audit Committee are broadly as under :

• Overview of the Company’s financial reporting process and the disclosure of its financial

information to ensure that the financial statements reflect a true and fair position and that

sufficient and credible information is disclosed.

• Recommending the appointment and removal of external auditors, fixation of audit fee and

also approval for payment for any other services.

• Discussion with external auditors before the audit commences, of the nature and scope of

audit as well as post-audit discussion to ascertain any area of concern.

• Reviewing the financial statements and draft audit report, including quarterly/half yearly

financial information.

• Reviewing with management the annual financial statements before submission to the Board,

focussing primarily on :

i. any changes in accounting policies and practices;

ii. major accounting entries based on exercise of judgment by management;

iii. qualifications in draft audit report;

iv. significant adjustments arising out of audit;

v. the going concern assumption;

Name of the Director Particulars of change Reason

Shri S . M. Agarwal Resigned wef 20.10.2005 Due to advancing age, health

grounds.

Shri M. Ghosh ( Nominee

Director of IDBI)

Resigned wef 19.05.2005 IDBI withdrew nomination

Shri Vinay Kumar ( Nominee

Director of IDBI)

Appointed wef 19.05.2005 Appointed in place of Shri M.

Ghosh

Shri Haigreve Khaitan Appointed wef 17.01.2006 Appointment

Late Rajaram Muchhal Expired on 20.04.2007 Death

Shri J. N. Godbole Appointed wef 23.04.2007 Appointment

Shri Vinay Kumar ( Nominee

Director of IDBI)

Resigned wef 26.04.2007 IDBI withdrew nomination


82

vi. compliance with accounting standards;

vii. compliance with stock exchange and legal requirements concerning financial

statements;

viii. any related party transactions as per Accounting Standard 18.

• Reviewing the Company’s financial and risk management policies.

• Reviewing with the management, external and internal auditors, the adequacy of internal

control systems.

• Reviewing the adequacy of internal audit function, including structure of the internal audit

department, approval of the audit plan and its execution, staffing and seniority of the official

heading the department, reporting structure, coverage and frequency of internal audit.

• Discussion with internal auditors of any significant findings and follow-up thereon.

• Reviewing the findings of any internal investigations by the internal auditors into matters

where there is suspected fraud or irregularity or a failure of internal control systems of a

material nature and reporting the matter to the Board.

• Looking into the reasons for substantial defaults in payments to the depositors, debenture

holders, shareholders (in case of non-payment of declared dividends) and creditors.

b) Composition

The Audit Committee comprises of four Independent non-executive Directors viz. Shri Ashvin

C. Dalal being the Chairman Shri C. B. Patodia, Shri S. V. Muzumdar and Shri Rohit Kumar

Dhoot.. The Secretary of the Company who is also acting as Secretary of the Audit Committee

attended the meetings.

The Aduit Committee has met four times during the Fiscal 06-07. In the current fiscal of 07-

08 the Committee has met three times.

2. Remuneration Committee

i) The broad terms of reference of the Remuneration Committee are as under:

a. To approve the remuneration and commission payable to the Directors.

b. Such other matters as the Board may from time to time request the Remuneration

Committee to examine and recommend/approve.

ii) The Committee, presently, comprises of three Independent Non-executive Directors, viz. Shri

S.V. Muzumdar being the Chairman, Shri Ashvin C. Dalal and Shri Rohit Kumar Dhoot.

The Remuneration Committee has met twice times during the Fiscal 06-07. No such meeting

has taken place in the current fiscal of 07-08.

3. Investors’ Grievance Committee

i) Terms of Reference

The Board of Directors have authorised the Secretary to approve transfers/transmissions of

upto 1000 shares. The transfers/transmissions approved by the Secretary are periodically

placed before the committee. The Committee deals with the applications for transfer/

transmission of shares, subdivision and consolidation of share certificates and issue of

duplicate share certificates, etc. The Committee also keeps a close watch on all

complaints/grievances of shareholders. During the year under review the Company received

94 complaints/grievances from the shareholders which were duly attended.

ii) Composition

The Committee, presently, comprises of three non-executive Directors viz. Shri S. V.

Muzumdar, as Chairman and Shri Rohit Kumar Dhoot and Smt. Madhu Vadera Jayakumar as

members. Shri Sanjay Mukherjee, Company Secretary, is the Compliance Officer of the

Company for complying with the requirements of the Listing Agreement with the Stock

Exchanges.

The Investor Grievance Committee has met once during the Fiscal 06-07. No such

meeting has held in the current fiscal of 07-08.


83

OUR ORGANISATION STRUCTURE

Key Managerial Personnel

The details of our key managerial personnel are as follows:

Name Age Designation Qualifications Previous

Employment

Total

Experience

Month of

Joining

Gross Salary Paid

during 2006-07

( Rs. In Lacs)

Shri C.S.Nopany 42 Chairman cum

Managing Director

ACA , Master

of Science in

Industrial

Administration

- 17 years August,

1992

100.31

Shri V. P. Singh

58 Executive President

(Hargaon)

Diploma in

Mechanical

Engineering

Dhampur

Sugar Mills

Limited

38 years June, 2004 20.00

Shri S. K. Premi


(Allahabad Canning

Company)

Diploma in

Food

Technology

Kejriwal

Enterprises

45 years April, 1979 10.36

Board of Directors

Chairman – cum –

Managing Director

Executive

President

Hargaon

Middle Management

Workmen

Executive

President

Narkatiaga

nj

Executive

President

Rosa

Executive

President

Allahabad

Company

Secretary Chief

Financial

Officer

Senior

Executive

Vice

Presidents

(Finance,

Stores, Cane,

Technical,

Production)

Executive

Vice

Presidents

(Finance,

Technical,

Cane)

Executive

Vice

Presidents

(Finance,

Production,

Cane,

Materials)

Works

Manager,

Manager

(Accounts &

Finance),

Production

Manager

Secretarial,

Legal &

Taxation

Executive

Vice

Presidents

(Finance &

Accounts)

Executive

President

Hata


84

Name Age Designation Qualifications Previous

Employment

Total

Experience

Month of

Joining

Gross Salary Paid

during 2006-07

( Rs. In Lacs)

Shri Mahesh Jain 51 Senior Executive

Vice-President &

Chief Financial

Officer

B.Com, Post

Graduate

Diploma in

Costs and

Works

Accountant

Triveni

Engineering

and

Industries

Limited

29 years September,

1998

11.86

Shri Sanjay

Mukherjee

52 Company Secretary B. Com., LL.B,

ACS,

Shree

Services &

Trading Co

Limited

27 years November

2007

-

Shri Chandra

Mohan


(Narkatiaganj)

B.E. (Mech.) Bajaj

Hindustan

Ltd. (UP)

26 years May, 2007 01.47

Shri Mohan

Sharma


(Hata)

B.Com, ICWA

(Inter)

Triveni

Enginering

Industries

Limited

36 years August,

2007

-

Shri P K Saini 54 Executive President

(Rosa)

Graduate Govind

Sugar Mills

Limited

34 years June 2006 08.95

All the abovementioned key managerial personnel are permanent employees of our Company. The remuneration

of each of our key managerial personnel is as per the provisions of Section 217(2A) of the Companies Act, 1956

and the Companies (Particulars of Employees) Rules, 1975.

Shareholding of our Key Managerial Personnel in our Company

Name of Key Managerial Personnel No. of Equity Shares held (Pre-Issue)

Shri C.S.Nopany 51,254

Shri Mahesh Jain 19

Interest of Key Managerial Personnel

The key managerial personnel of our Company do not have any interest in our Company other than to the extent

of the remuneration or benefits to which they are entitled to as per their terms of appointment and

reimbursement of expenses incurred by them during the ordinary course of business and to the extent of the

Equity Shares held by them in the Company as stated above.

Details of loans taken by Key Managerial Personnel in our Company

We have not granted any options to our Directors and key managerial personnel. Except as stated otherwise in

this Draft Letter of Offer, we have not entered into any contract, agreement or arrangement during the preceding

2 years from the date of this Draft Letter of Offer in which the Directors are interested directly or indirectly and

no payments have been made to them in respect of these contracts, agreements or arrangements or are proposed

to be made to them.


85

Changes in our Key Managerial Personnel during the last three years

Name Designation Date of

Joining

Date of Cessation(if

applicable)

Reason for Resignation (if

applicable)

Shri V. P. Singh Executive President,

Hargaon

04.06.2004 - -

Shri C. C. Chhaya Company Secretary 11.02.2003 31.08.2006 Personal

Shri D. J. Darji Company Secretary 11.09.2006 31.10.2007 Personal

Shri P K Lakhotia Executive President,

Hargaon

01.05.1997 15.06.2006 Personal

Shri P K Saini Executive President, Rosa 16.6.2006 - -

Shri M S Sharma Executive President,

Narkatiaganj

01.10.1983 18.06.2007 Retired

Shri Chandramohan Executive President,

Narkatiaganj

19.06.2007 - -

Shri Mohan Sharma Executive President, Hatta 06.08.2007 - -

Shri Sanjay

Mukherjee

Company Secretary 1.11.2007 - -


86

OUR PROMOTERS

Our Company was incorporated in 1932 by the well known house of Birlas with Late R.D. Birla as the

Chairman. M/s Birla Brothers Limited were the Managing Agents of the Company. During 1942, consequent to

a change in the Managing Agents, the Cotton Agents Ltd. (name subsequently changed to Birla Bombay Pvt.

Ltd), came in and continued to be Managing Agents till 1969, whereafter the Managing Agency System was

abolished by the Government. The Company currently is part of the well known K. K Birla group. Our present

promoters are Dr. K K Birla & Shri C S Nopany, who control the Company through their direct holdings and

through shares held through the following companies:

• Uttar Pradesh Trading Company Limited.

• RTM Investment & Trading Company Limited.

• SCM Investment & Trading Company Limited

• Darbhanga Marketing Company Limited

• Sonali Commercial Limited

• Deepsikha Trading Company Private Limited.

• HTL Investment & Trading Company Limited.

• Yashovardhan Investment & Trading Company Limited.

• Modern Household & Accessories Trading Company Private Limited.

• Shradhanjali Investment & Trading Company Limited

• Rajpur Farms Limited

• Narkatiaganj Farms Limited.

• New India Retailing and Investment Limited

At present, our Company is being managed by the Board of Directors. Shri C.S. Nopany is the Chairman Cum

Managing Director of the Company. Dr. K.K. Birla is the Chairman Emeritus of the Company.

Brief Profiles of our promoters and the above-mentioned companies are given below:

Dr. K.K. Birla

Voter ID No. DKD-1457803, Permanent Account No. ADMPB 6470C.

Dr. Krishna Kumar Birla, son of Late Ghanshyam Das Birla, was born in

Pilani, Rajasthan, on 12th October, 1918. He joined the Sugar Industry in

the year 1940 and is amongst the founder member of Indian Sugar Industry.

Over the years, Dr. Birla has established one of India's well known business

conglomerate through brilliance of entrepreneurial genius and sheer hard

work. His industrial empire spans across a wide spectrum of key industries

like sugar, fertilizers, chemicals, heavy engineering, textiles, shipping,

newspaper etc. One of his greatest achievements has been to earn the trust

of his millions of shareholders, employees and customers which has played

a crucial role in his phenomenal growth. He has the distinction of being a

respected parliamentarian, socialite, philanthropist and scholar apart from

being a renowned industrialist.

For 18 consecutive years Dr. Birla was a Member of Rajya Sabha. In the

year 1961, he was elected Sheriff of Calcutta and in the year 1997, he was

conferred Doctor of Letters (Honoris Causa) by Pondichery University. He

has headed a number of Chambers of Commerce such as Indian Sugar

Mills Association, Federation of Indian Chamber of Commerce and

Industry, Indian Chamber of Commerce and many such prominent

organisations. His numerous responsibilities include the Trusteeship of the

Birla Education Trust, which runs a number of schools and institutions in

the country offering subsidised education, and Chairmanship of the

prestigious Birla Institute of Technology and Science (BITS) at Pilani and

Dubai. Dr. Birla has established K.K. Birla Foundation which has instituted

annual awards for excellence in Indian literature, scientific research, Indian

philosophy etc. and K.K. Birla Academy to undertake research on

scientific, cultural and historical subjects. The beautiful Radhakrishna


87

Temple dedicated to Lord Krishna in Kolkata and the G.D. Birla Sabhagar

in Kolkata are amongst his many social contributions.

Details of the Permanent Account Number, Bank Account Number and

Passport Number have been submitted to the Stock Exchanges where the

Equity Shares are proposed to be listed at the time of filing this Draft Letter

of Offer.

Shri C.S. Nopany

Voter ID No. DWK 4990941, Driving License No. WB-01-035925,

Permanent Account No. ABJPN 5385K

Shri C. S. Nopany, aged 42 years, is the Chairman cum Managing

Director of our Company. He is a Chartered Accountant and Master of

Science in Industrial Administration from Carnegie Mellon University,

Pittsburgh, USA. He is an eminent industrialist having vast industrial

experience in diverse fields like sugar, tea, shipping, textiles, fertilizers

and chemicals etc. He is the past President of Indian Chamber of

Commerce & Indian Sugar Mills Association.

Details of the Permanent Account Number, Bank Account Number and

Passport Number have been submitted to the Stock Exchanges where the

Equity Shares are proposed to be listed at the time of filing this Draft

Letter of Offer.

Uttar Pradesh Trading Company Limited (“UPTCL”)

UPTCL was incorporated on February 23, 1951 under the Indian Companies Act, 1913. The registered office of

UPTCL is at 9/1, R.N. Mukherjee Road, Kolkata – 700 001.

As per its Memorandum of Association, the main object of the company is to carry on business of buyers,

sellers, agents , dealers, exporters and importers of any goods or merchandise whatsoever and to transit all

manufacturing or treating and preparing process and mercantile business and to purchase and vend raw material

and manufactured articles. Further the objects provides for undertaking investment activities and dealing in

shares and securities.

Currently, it is engaged in the business of dealing and investment in shares and securities. UPTCL is registered

with RBI as a NBFC vide certificate of registration number 05.00220 dated February 20, 1998 under section

45IA of RBI Act, 1934.


UPTCL is a wholly owned subsidiary of Upper Ganges Sugar & Industries Limited.

Holding of Dr, K.K. Birla and Shri C.S. Nopany in Upper Ganges Sugar & Industries Limited are given below:

Name No. of equity shares held % of total shareholding

Dr. K.K. Birla 1,77,729 1.54

Shri C.S. Nopany 39,600 0.34

Shri C.S. Nopany (C/o. Urvi Nopany Charity Trust) 5,610 0.05

Board of Directors

The Board of Directors of UPTCL as on date is comprised of Smt. Nandini Nopany (Chairperson), Shri C. S.

Nopany (Managing Director), Shri I.P. Singh Roy (Nominee of Upper Ganges Sugar & Industries Limited), Shri

R. N. Jhunjhunwala and Shri A. L. Tulsian.



88

Brief financials of UPTCL for the financial years 2004-05, 2005-06 and 2006-07 are given below:

(all figures are in Rs. lacs except per share data)

Particulars 2004-05 2005-06 2006-07

Total Income 447.41 156.65 223.74

Profit After Tax 441.27 152.82 211.50


(of Re1each)

1636.25 1636.25 1636.25

Reserves & Surplus 1007.03 1156.42 1365.86

Earning per Share 0.27 0.09 0.13

Net Asset Value per

Share

1.61 1.71 1.83

There has been no change in management of UPTCL in last ten years.

The Company Registration Number, Permanent Account Number, Bank Account Number and the address of

Registrar where UPTCL is registered have been submitted to the Stock Exchanges where the Equity Shares are

proposed to be listed at the time of filing the Draft Letter of Offer.

The equity shares of UPTCL are not listed on any stock exchange. The company has not made any public or





RTM Investment & Trading Company Limited. (“RITCL”)

RITCL was incorporated on February 6, 1987 under the Companies Act, 1956. The registered office of RITCL

is at 9/1, R.N. Mukherjee Road, Kolkata – 700 001.

As per its Memorandum of Association, the main object of the company is to carry on business of Investment

Company and to invest in and acquire hold, deal in shares, stocks, debentures, debentures stocks and other

securities.

Currently, the company is engaged in the business of investment in shares and securities. The company is

registered with RBI as a NBFC vide certificate of registration number 05.00345 dated February 26, 1998 under

section 45IA of RBI Act, 1934.


RITCL is a wholly owned subsidiary of SIL Investment Limited.

Dr. K.K. Birla and Shri C.S. Nopany do not hold any shares in SIL Investment Limited.

Board of Directors

The Board of Directors of RITCL as on date is comprised of Shri C.S. Nopany(Chairman), Shri T.R. Chachan

(Managing Director), Shri R.N. Laddha, Shri Sanjay Goenka (Nominee of SIL Investment Ltd.), Shri N.M.

Gupta, Shri S.K. Poddar and Shri Sunil Lohia.


Brief financials of RITCL for the financial years 2004-05, 2005-06 and 2006-07 are given below:


Particulars 2004-05 2005-06 2006-07

Total Income 185.06 646.11 123.89

Profit After Tax 118.10 626.78 110.04


89

Particulars 2004-05 2005-06 2006-07


(of Rs 10 each)

1445.69 1445.69 1445.69



Net Asset Value per

Share

13.26 17.59 18.35

There has been no change in management of RITCL in last ten years.


Registrar where RITCL is registered have been submitted to the Stock Exchanges where the Equity Shares are


The equity shares of RITCL are not listed on any stock exchange. The company has not made any public or





SCM Investment & Trading Company Limited. (“SITCL”)

SITCL was incorporated on December 26, 1986 under the Companies Act, 1956. The registered office of SITCL


As per its Memorandum of Association, the main object of the company is to carry on business of investment

company and to invest in and acquire hold, deal in shares, stocks, debentures, debentures stocks and other

securities.


registered with RBI as a NBFC vide certificate of registration number 05.02417 dated May 16, 1998 under



SITCL is a wholly owned subsidiary of SIL Investments Limited.

Board of Directors

The Board of Directors of SITCL as on date is comprised of Shri C.S. Nopany (Chairman), Shri U.S. Beria

(Managing Director), Shri Padam Khaitan (Nominee of SIL Investment Ltd.), Shri R.N. Jhunjhunwala Shri

Sanjay Mukherjee and Shri R.N. Laddha .


Brief financials of SITCL for the financial years 2004-05, 2005-06 and 2006-07 are given below:


Particulars 2004-05 2005-06 2006-07

Total Income 253.21 769.81 139.20

Profit After Tax 134.59 749.24 130.62

Equity Share Capital (of

Rs.10 each)

1550.92 1550.92 1550.92



Net Asset Value per

Share

13.75 18.58 19.42

There has been no change in management of SITCL in last ten years.


90


Registrar where SITCL is registered have been submitted to the Stock Exchanges where the Equity Shares are


The equity shares of SITCL are not listed on any stock exchange.The company has not made any public or





*Darbhanga Marketing Company Limited. (“DMCL”)

DMCL was incorporated on February 23, 1951 under the Indian Companies Act, 1913. The registered office of

DMCL is at 9/1, R.N. Mukherjee Road, Kolkata – 700 001.

As per its Memorandum of Association, the main object of the company is to carry on business of buyers,

sellers, agents , dealers, exporters and importers of any goods or merchandise whatsoever and to transit all

manufacturing or treating and preparing process and mercantile business and to purchase and vend raw material

and manufactured articles. Further the objects provides for undertaking investment activities and dealing in

shares and securities.





DMCL is a wholly owned subsidiary of New India Retailing and Investment Limited.

Dr. K.K. Birla holds 750 equity shares constituting 0.06% of the paid-up share capital of New India Retailing

and Investment Limited

Board of Directors

The Board of Directors of DMCL as on date is comprised of Shri U.S. Beria (Managing Director), Shri Sanjay

Mukherjee and Shri C.K. Vyas.


Brief financials of DMCL for the financial years 2004-05, 2005-06 and 2006-07 are given below:


Particulars 2004-05 2005-06 2006-07

Total Income 244.19 961.55 483.62

Profit After Tax 241.39 949.89 445.36

Equity Share Capital (of Re. 1 each) 694.40 694.40 694.40



Net Asset Value per Share 2.35 3.71 4.35

There has been no change in management of DMCL in last ten years.


Registrar where DMCL is registered have been submitted to the Stock Exchanges where the Equity Shares are


The equity shares of DMCL are not listed on any stock exchange. The company has not made any public or




91

There are no defaults in meeting any statutory /bank /institution dues. No proceedings have been initiated for

economic offences against the company.

*Note: Pursuant to the Scheme of Amalgamation under section 391 & 394 of the Companies Act, 1956 of

Darbhanga Marketing Company Limited with New India Retailing & Investment Limited ( formerly known as

New India Sugar Mills Limited), DMCL shall stand amalgamated in to New India Retailing & Investment

Limited with effect from the date of filing of the sacnitoned Scheme of Amalgamation with the Registrar of

Companies. The certified copy of the sanctioned Scheme of Amalgamation is awaited from the Calcutta High

Court.

Sonali Commercial Limited. (“SCL”)

SCL was incorporated on June 3, 1985 under the Companies Act, 1956. The registered office of SCL is at 9/1,

R.N. Mukherjee Road, Kolkata – 700 001.

As per its Memorandum of Association, its main object is to carry on the business of manufacturing, trading and

dealing in several goods and articles. Further the other objects of the company provide for undertaking

investment activities and dealing in shares and securities.





Shareholding Pattern of SCL as on date is as follows:

Category of Shareholder Number of Shares held % Shareholding

Promoters 2,33,730 95.40

Mutual Funds, Banks, FIs, Insurance Companies - -

Private Corporate Bodies - -

Others(Public) 11,270 4.60

Total 2,45,000 100.00

Dr. K.K. Birla and Shri C.S. Nopany do not hold any share in SCL.

Board of Directors

The Board of Directors of SCL as on date comprises of Shri K. C. Gupta, Shri. Sunil Lohia and Shri P.C.

Kejriwal.


Brief financials of SCL for the financial year 2004-05, 2005-06 and 2006-07 are given below:


Particulars 2004-05 2005-06 2006-07

Total Income 61.23 22.78 39.08

Profit After Tax 59.17 20.90 37.11


Rs.10each)

24.50 24.50 24.50



Net Asset Value per

Share

114.29 118.82 133.97


92

The equity shares of SCL are listed on The Calcutta Stock Exchange Association Limited and Uttar Pradesh

Stock Exchange Association Limited. There has been no trading in the equity shares of SCL during last six

months preceding the month in which this Draft Letter of Offer is filed.

There has been no change in management of the company in last ten years.


Registrar where SCL is registered have been submitted to the Stock Exchanges where the Equity Shares are


Promise vs Performance

No Public Issue or Rights Issue has been made in last ten years.

The equity shares of SCL are not listed on any stock exchange. The company has not made any public or rights

issue in the last three. The company has not become a sick industrial company under the meaning of SICA and

is not under winding up.



Deepsikha Trading Company Private Limited. (“DTCPL”)

DTCPL was incorporated on December 24, 1983 under the Companies Act, 1956. The registered office of

DTCPL is at 9/1, R.N .Mukherjee Road, Kolkata – 700 001.

As per its Memorandum of Association, its main object is to carry on the business of traders, importers,

exporters, buyers, sellers, dealers, stockists, hire purchasers, agents, distributors and concessionaries of all

substance merchandise, goods, chemicals machinery, tools, implements, hardware, and to undertake, transact

and execute agency business in connection therewith. Further in addition to other objects, the objects of the

company also provide for carrying on business of an investment company.


registered with RBI as a NBFC vide certificate of registration number 05.02860 dated August 27, 1998 under



Shareholding Pattern of DTCPL as on date is as follows:

Name of Shareholder Number of Shares held % Shareholding

FIACO S.A. 380,000 76.00

Ronson Traders Limited 70,000 14.00

Pavapuri Trading & Investment

Company Limited

50,000 10.00

Total 500,000 100.00

Dr. K.K. Birla and Dr. K.K. Birla (HUF) hold 77,500 (13.52%) and 2,27,495 (39.70%) equity shares in Ronson

Traders Limited.. Shri C.S. Nopany does not hold any equity share in Ronson Traders Limited.

Dr. K.K. Birla and Shri C.S. Nopany do not hold any shares in FIACO S.A. and Pavapuri Trading & Investment

Company Limited.

Board of Directors

The Board of Directors of DTCPL as on date comprises of Shri T.R. Chachan, Shri K.C. Gupta and Shri Sunil

Lohia.


Brief financials of DTCPL for the financial years 2004-05, 2005-06 and 2006-07 are given below:


93

(all figures are in Rs. lac except per share data)

Particulars 2004-05 2005-06 2006-07

Total Income 65.89 23.06 34.02



Rs. 10 each)

50.00 50.00 50.00



Net Asset Value per

Share

32.51 34.83 38.71

There has been no change in management of DTCPL in last ten years.


Registrar where DTCPL is registered have been submitted to the Stock Exchanges where the Equity Shares are


The equity shares of DTCPL are not listed on any stock exchange. The company has not made any public

or rights issue in the last three. The company has not become a sick industrial company under the meaning of




Yashovardhan Investment & Trading Company Limited (“YITCL”)

YITCLwas incorporated on October 30, 1987 as a private limited company under the name “Yashovardhan

Investment & Trading Company Private Limited” under the Companies Act, 1956. Subsequently, it was

converted to a public limited company and the word ‘private’ was deleted from its name with effect from April

28, 1993.The registered office of YITCL is at 9/1 R.N. Mukherjee Road, Kolkata 700 001.

As per its Memorandum of Association, its main object is to invest in and acquire, hold and deal in shares,

stocks, debentures, debenture stocks, bonds, obligations and securities, issued or guaranteed by any

Government, State dominion sovereign, ruler, commissioners, public body or authority, supreme, municipal,

local or otherwise, whether in India or elsewhere.

Currently, it is engaged in the business of dealing and investment in shares, securities and debentures. The

company is registered with RBI as NBFC vide certificate of registration number 05.00216 dated February 20,

1998 under section 45IA of the RBI Act, 1934.


The shareholding pattern of YITCL as on date is as follows:

Name of the shareholder No. of shares held Percentage

Smt. Nandini Nopany 10 -

Smt. Jyotsna Poddar 10 -

Usha Flowell Limited 52,000 1.50

Duke Commerce Limited 52,000 1.50

Deepsikha Trading Company

Private Limited

102,500 2.96

Ricon Commerce Limited 1,500 0.04

Pavapuri Trading & Investment

Company Limited

52,000 1.50

Nilgiri Plantations Limited 1,000,000 28.90

Sidh Enterprises Limited 50,000 1.45

Udit(India)Limited 50,000 1.45

Shital Commercial Limited 50,000 1.45


94

Name of the shareholder No. of shares held Percentage

Ronson Traders Limited 1,050,000 30.35

Sonali Commercial Limited 850,000 24.56

Britex (India) Limited 50,000 1.45

Swasthya Sewa Sansthan 100,000 2.89

Total 3,460,020 100.00

Board of Directors

The Board of Directors of YITCL as on date is comprised of Dr. K.K. Birla (Chairman), Smt. Jyotsna Poddar,

Smt. Shobhana Bhartia, Shri C.S. Nopany, Shri Sanjay Mukherjee, Shri U.S. Beria and Shri. T.R. Chachan


Brief financials of YITCL for the financial years 2004-05, 2005-06 and 2006-07 are given below:

(All figures are in Rs. Lacs except per share data)

Particulars 2004-05 2005-06 2006-07

Total Income 142.63 292.07 196.85

Profit After Tax 135.15 283.83 188.64

Equity Share Capital (Rs.

10 each)

346.00 346.00 346.00



Net Asset Value per

Share

43.51 51.69 57.13

There has been no change in management of YITCL in last ten years.


Registrar where YITCL is registered have been submitted to the Stock Exchanges where the Equity Shares are


The equity shares of YITCL are not listed on any Stock Exchange. The company has not made any public or

rights issue in the last three. The company has not become a sick industrial company under the meaning of




Modern Household & Accessories Trading Company Private Limited. (“MHATCPL”)

MHATCPL was incorporated on 1st March, 2004 under the Companies Act, 1956. The registered office of

MHATCPL is at 9/1 R.N. Mukherjee Road, Kolkata 700 001.

As per its Memorandum of Association, its main object is to carry on the business of trading in household

appliances , furnitures and other items.


Shareholding Pattern of MHATCPL as on date is as follows:

Name of the shareholder No. of shares

held

Percentage(%)

Darbhanga Marketing Company Limited 20,000 9.53

Jhalak Marketing Private Limited 20,000 9.53

RTM Investment & Trading Company Limited 15,000 7.14

SCM Investment & Trading Limited 15,000 7.14

La – Monde Exports Private Limited 40,000 19.05


95


held

Percentage(%)

La – Monde Trading & Investments Private Limited 20,000 9.52

Wasmen Technologies Private Limited 15,000 7.14

Moneyline Finvest Private Limited 15,000 7.14

Shri C.S. Nopany 25,000 11.91

Shri C.S. Nopany (HUF) 25,000 11.91

Total 210,000 100.00

Board of Directors

The Board of Directors of MHATCPL as on date is comprised of Shri M. G. Kamath, Shri K. C. Agarwal, Shri

S. K. Poddar, Shri U. S. Beria and Shri T. R. Chachan.


Brief financials of MHATCPL for the financial years 2004-05, 2005-06 and 2006-07 are given below:

(All figures are in Rs. Lacs except per share data)

Particulars 2004-05 2005-06 2006-07

Total Income 77.12 111.77 16.56



10 each)

21.00 21.00 21.00



Net Asset Value per

Share

41.83 89.47 96.80

There has been no change in management of MHATCPL since inception.


Registrar where MHATCPL is registered have been submitted to the Stock Exchanges where the Equity Shares

are proposed to be listed at the time of filing the Draft Letter of Offer.

The equity shares of MHATCPL are not listed on any Stock Exchange.

The company has not made any public or rights issue in the last three years. The company has not become a sick

industrial company under the meaning of SICA and is not under winding up.



HTL Investment & Trading Company Limited. (“HITCL”)

HITCL was incorporated on April 2, 1986 under the Companies Act, 1956. The registered office of HITCL is at

Hindustan Times House, 7th

Floor, 18-20, Kasturba Gandhi Marg, New Delhi – 110 001.

As per its Memorandum of Association, its main object is to carry on the business of an investment company.


registered with RBI as a NBFC vide certificate of registration number 05.02487 dated May 25, 1998 under



HITCL is a wholly owned subsidiary of The Hindustan Times Limited.


96

Dr. K.K.Birla and Shri C.S.Nopany do not hold any share in The Hindustan Times Limited.

Board of Directors

The Board of Directors of HITCL as on date is comprised of Smt. Shobhana Bhartia, Shri S.M. Agarwal, Shri.

T.R.Chachan, Shri R.K. Agarwal and Shri Raian Karanjawala.


Brief financials of HITCL for the financial years 2004-05, 2005-06 and 2006-07 are given below:


Particulars 2004-05 2005-06 2006-07

Total Income 63.68 152.83 143.41



Rs. 10each)

109.22 109.22 109.22



Net Asset Value per Shares 29.53 40.78 48.11

There has been no change in management of HITCL in last ten years.


Registrar where HITCL is registered have been submitted to the Stock Exchanges where the Equity Shares are

proposed to be listed at the time of filing the draft Letter of Offer.

The equity shares of HITCL are not listed on any stock exchange.





Shradhanjali Investment & Trading Company Limited (“SHITCL”)

SHITCL was incorporated on April 2, 1986 under the Companies Act, 1956. Its registered office is at Hindustan

Times House, 7th

Floor, 18-20, Kasturba Gandhi Marg, New Delhi 110 001.

As per its Memorandum of Association, its main object is to carry on the business of an investment company.


registered with RBI as a NBFC vide certificate of registration number 05.00777 dated Mrch 9, 1998 under



SHITCL is a wholly owned subsidiary of The Hindustan Times Limited.

Board of Directors

The Board of Directors of SHITCL as on date is comprised of Smt. Shobhana Bhartia, Shri S.K.Poddar, Shri

V.K.Charoria and Shri R.K.Agrawal.

Financial Performace

Brief financials of SHITCL for the financial years 2004-05, 2005-06 and 2006-07 are given below:


97

(All figures in Rs. lacs except per share data)

Particulars 2004-05 2005-06 2006-07

Total Income 70.18 123.41 169.43



10 each)

76.05 76.05 76.05



Net Asset Value per Share 40.63 53.05 60.14

There has been no change in management of SHITCL in last ten years.


Registrar where SHITCL is registered have been submitted to the Stock Exchanges where the Equity Shares are


The equity shares of SHITCL are not listed on any stock exchange





Rajpur Farms Limited (“RFL”)

RFL was incorporated on December 19, 1949 under the Indian Companies Act, 1913. The registered office of

RFL is at 9/1, R.N. Mukherjee Road, Kolkata – 700 001.

As per its Memorandum of Association, the main object of the company is to carry on business of plantation,

cultivation and purchase/sell of sugarcane, maize, sugar-beets and other crops and to transact such other work or

business as may be proper or necessary in connection with the above object or any of them. Further the objects

provides for undertaking investment activities and dealing in shares and securities.


Shareholding Pattern of RFL as on date is as follows:


held

Percentage(%)

The Oudh Sugar Mills Limited 50,000 19.22



Modern Household & Accessories Trading Private Limited. 25,000 9.62

La – Monde Exports Private Limited 45,000 17.31

La – Monde Trading & Investments Private Limited 20,000 7.69



Narkatiaganj Farms Limited 10,000 3.85



Total 260,000 100.00


98

Board of Directors

The Board of Directors of RFL as on date is comprised of Shri B L Himmatsinghka, Shri A K Dasmal, Shri T R

Chachan, Shri K C Gupta and Shri Sunil Lohia.


Brief financials of RFL for the financial years 2004-05, 2005-06 and 2006-07 are given below:


Particulars 2004-05 2005-06 2006-07

Total Income 79.01 122.16 8.56



(of Re1each)

26.00 26.00 26.00



Net Asset Value per

Share

40.44 76.11 79.10

RFL was a 100 % subsidiary of the Company till 19.10.2004. Except the same there is no change in

Management.


Registrar where RFL is registered have been submitted to the Stock Exchanges where the Equity Shares are


The equity shares of RFL are not listed on any stock exchange.





Narkatiaganj Farms Limited (“NFL”)

NFL was incorporated on March 31, 1951 under the Indian Companies Act, 1913. The registered office of NFL


As per its Memorandum of Association, the main object of the company is to carry on business of plantation,

cultivation and purchase/sell of sugarcane, maize, sugar-beets and other crops and to transact such other work or

business as may be proper or necessary in connection with the above object or any of them. Further the objects

provides for undertaking investment activities and dealing in shares and securities.


Shareholding Pattern of NFL as on date is as follows:


held

Percentage(%)

The Oudh Sugar Mills Limited 50,000 19.22



Modern Household & Accessories Trading Private Limited. 25,000 9.62

La-Monde Exports Private Limited 45,000 17.31

La-Monde Trading & Investments Private Limited 20,000 7.69



Rajpur Farms Limited 10,000 3.85


99


held

Percentage(%)



Total 260,000 100.00

Board of Directors

The Board of Directors of NFL as on date is comprised of Shri Sushil Poddar, Shri R N Jhunjhunwala, Shri S K

Jhunjhunwala and Shri C K Vyas.


Brief financials of NFL for the financial years 2004-05, 2005-06 and 2006-07 are given below:


Particulars 2004-05 2005-06 2006-07

Total Income 80.64 121.16 9.47



(of Re1each)

26.00 26.00 26.00



Net Asset Value per

Share

43.12 81.45 84.64

NFL was a 100 % subsidiary of our Company till 19.10.2004. Except this there is no change in the management.


Registrar where NFL is registered have been submitted to the Stock Exchanges where the Equity Shares are


The equity shares of NFL are not listed on any stock exchange. The company has not made any public or rights

issue in the last three years. The company has not become a sick industrial company under the meaning of SICA

and is not under winding up.



New India Retailing & Investment Limited (“NIRIL”)

NIRIL, formerly known as New India Sugar Mills Limited, was incorporated on May 4, 1933 under the

Companies Act, 1913. The registered office of NIRIL is at 9/1, R.N. Mukherjee Road, Kolkata – 700 001.

As per its Memorandum of Association, the main object of the Company is to carry on the business of sugar

manufacture and refinery and manufacture of any other material that may be decided upon by or on behalf of the

Company and the business of buyers, sellers and dealers of any goods or merchandise whatsoever and to

transact all manufacturing or treating and preparing processes and mercantile business that may be necessary or

expedient and to purchase and vend the raw material and manufactured articles.

Currently, the Company is engaged in the business of trading in various goods and products including dress

materials, etc. besides investments in shares and securities.


Shareholding Pattern of NIRIL as on date is as follows:


Promoters 9,42,765 64.88

Mutual Funds, Banks, FIs, Insurance Companies 1,30,606 8.99

Private Corporate Bodies 1,41,512 9.74


100


Others(Public) 2,38,112 16.39

Total 14,52,995 100.00

Dr. K.K .Birla holds 750 shares in the Company. However, Shri C.S. Nopany do not hold any share in NIRIL.

Board of Directors

The Board of Directors of NIRIL as on date comprises of Shri C S Nopany (Chairman), Shri R. Tapuriah, Shri

P.K. Singhi, Smt. Shalini Nopany, Shri Suresh Somani, Shri K.K .Palit and Shri V.P. Singh.


Brief financials of NIRIL for the financial year 2004-05, 2005-06 and 2006-07 are given below:


Particulars 2004-05 2005-06 2006-07

Total Income 412.60 243.23 1098.84

Profit After Tax (124.44) 209.58 (27.68)


Rs.10each)

125.22 145.47 145.47


Earning per Share (8.56) 14.42 (1.91)

Net Asset Value per

Share

75.19 77.05 74.65

The equity shares of NIRIL are listed on The Calcutta Stock Exchange Association Limited. There has been no

trading in the equity shares of NIRIL during last six months preceeding the month in which this Draft Letter of

Offer is filed.

There has been no change in management of the company in last ten years.


Registrar where NIRIL is registered have been submitted to the Stock Exchanges where the Equity Shares are


Promise vs Performance

No Public Issue or Rights Issue has been made in last ten years.

INTEREST OF PROMOTERS


shareholdings, remuneration, sitting fees for attending board or committee meetings, in our Company, the

Promoters do not have any other interest in our company.

PAYMENT OR BENEFITS TO THE PROMOTERS


dividend paid on account of their respective shareholding, remuneration, sitting fees for attending board or

committee meetings, our Promoters have not received any payment or benefit.

RELATED PARTY TRANSACTIONS

For details, please refer point 3 of Notes to Risk Factors.


101

DIVIDEND POLICY

The declaration and payment of dividend is recommended by our Board of Directors depending upon number of

factors, including but not limited to our profits, capital requirements and overall financial conditions, and shall

be subject to the provisions of our Articles, Companies Act, 1956 and approval of our lenders.

Please refer to Annexure 12 of Financial Statements on page 149 of this Draft Letter of Offer.

The amounts paid as dividend in the past are not necessarily indicative of our dividend policy or dividend

amounts, if any, to be paid in future. Future dividends will depend upon our revenues, profits, cash flows,

financial condition, capital requirements and other factors (statutorily or otherwise).


102

ANNEXURE - 10

RELATED PARTY DISCLOSURES

Names of the related parties: Subsidiary Companies

Champaran Marketing Company Ltd.

OSM Investment & Trading Company Ltd.

Hargaon Investment & Trading Company Ltd.

Hargaon Properties Ltd.

Rajpur Farms Ltd. *

Narkatiaganj Farms Ltd.*

Key Management Personnel

Shri C. S. Nopany – Chairman cum Mg. Director

Shri P.K. Lakhotia – Executive President, Hargaon Unit (upto 15th June 2006)

Shri V.P.Singh –Executive President, Rosa Unit (From 4th

June,2004)

Executive President, Hargaon (From 16th June 2006)

Shri M. S. Sharma – Executive President,Narkatiaganj Unit (upto 18th June, 2007)

Shri Chandra Mohan–Executive President,Narkatiaganj Unit (from 19th June, 2007)

Shri P.K. Saini – Executive President, Rosa Unit (From16th June 2006)

Shri M.N. Agarwal – Executive President, Rosa Unit (Upto 2ndJune,2004)

Shri S.D. Shukla – Sr.Executive Vice President, Hata Unit

Shri S.K. Premi – Executive President, Allahabad Unit

Shri D.J. Darji – Secretary

Relatives of Key Management Personnel

Smt. Nandini Nopany - Mother of Shri C.S. Nopany

Shri Ansul Sharma- Son of Shri M. S. Sharma ** (upto 18th June,2007)

Smt. Vedanti Sharma- Wife of Shri M. S. Sharma ** (upto 18th June,2007)

Smt. Ritu Sharma- Duaghter of Shri M. S. Sharma ** (upto 18th June,2007)

Smt. Urmila Lakhotia- Wife of Shri P K Lakhotia ** (upto 15th June,2006)

Miss. Garima Lakhotia- Daughter of Shri P K Lakhotia ** (upto 15th June,2006)

Miss. Abha Lakhotia- Daughter of Shri P K Lakhotia ** (upto 15th June,2006)

Miss. Astha Lakhotia- Daughter of Shri P K Lakhotia ** (upto 15th June,2006)

Mr. Mohit Lakhotia- Son of Shri P K Lakhotia ** (upto 15th June,2006)

Miss. Anamika- Daughter of Shri M N Agarwal ** (upto 2nd June,2004)

Miss. Annapurna- Daughter of Shri M N Agarwal ** (upto 2nd June,2004)

Enterprises owned or significantly influenced by Key Management Personnel and their relatives

Upper Ganges Sugar & Industries Ltd.

SIL Investments Ltd. ( Formerly Sutlej Industries Ltd.)

Sutlej Textiles & Industries Ltd.

SCM Investment & Trading Co. Ltd.

RTM Investment & Trading Co. Ltd.

RTM Properties Ltd. (Formerly ISS Shipping Services Ltd.)

SIL Properites Ltd. (Formerly ISS Shipping and Trading Co. Ltd.)

Uttar Pradesh Trading Co. Ltd.

* Ceased to be subsidiaries of the Company w.e.f. 19-10-2004. All the transactions relating to these companies are


103

considered only upto the aforesaid date.

** Ceased to be related parties in term of Accounting Standard- 18 from the respective dates. Accordingly all the

transactions are considerred only upto the said dates and also their outstanding balances, if any, as on Balance Sheet date

has not been disclosed.



ANNEXURE-10

(Contd.) Restated Related Party

Disclosure

Statement of Aggregated Related Party Transactions as per Accounting Standard-18 for the reporting period

(Rs. In lacs.)

Enterprises

owned by Key Relatives of

Key

Management Management Key Management

Particulars Subsidiaries

Personnel or

their relatives Personnel Personnel Total

Time

Transac

tions Balance

Transa

ctions Balance

Transac

tions Balance

Transactio

ns Balance Transactions Balance

Period Value

Outstan

ding Value

Outstan

ding Value

Outstandi

ng Value

Outstandin

g Value

Outstand

ing

as on as on as on as on as on

Sale of Goods/ Fixed

Assets

Rajpur Farms Ltd. 2004-05 1.47

-

-

-

-

- - -

1.47

-

2003-04

4.56

-

-

-

-

- - -

4.56

-

2002-03

2.22

-

-

-

-

- - -

2.22

-

Narkatiaganj Farms

Ltd. 2004-05

1.23

-

-

-

-

- - -

1.23

-

2003-04

3.62

-

-

-

-

- - -

3.62

-

2002-03

1.03

-

-

-

-

- - -

1.03

-

Upper Ganges Sugar & 2006-07 - - - 224.14


105

Industries Ltd. - - 224.14 - - -

2005-06

-

-

245.76

-

-

- - -

245.76

-

2004-05

-

-

271.18

-

-

- - -

271.18

-

2003-04

-

-

39.39

-

-

- - -

39.39

-

2002-03

-

-

48.64

-

-

- - -

48.64

-

Purchase of Goods /Fixed

Assets

Rajpur Farms Ltd. 2003-04

5.30

-

-

-

-

- - -

5.30

-

2002-03

3.34

-

-

-

-

- - -

3.34

-

Narkatiaganj Farms

Ltd. 2003-04

3.44

-

-

-

-

- - -

3.44

-

2002-03

3.25

-

-

-

-

- - -

3.25

-



-

-

970.95

-

-

- - -

970.95

-

2005-06

-

-

75.31

-

-

- - -

75.31

-

2004-05

-

-

73.51

-

-

- - -

73.51

-

2003-04

-

-

10.42

-

-

- - -

10.42

-

2002-03

-

-

13.80

-

-

- - -

13.80

-

Mrs Vedanti Sharma 2003-04

-

-

-

-

-

-

10.79

-

10.79

-

Right Issue of Shares


-

-

-

-

9.56

- - -

9.56

-

SCM Investment & 2004-05 - - - 339.98


106

Trading Company Ltd., - - 339.98 - - -

RTM Investment &

Trading Company Ltd., 2004-05

-

-

349.13

-

-

- - -

349.13

-

Others 2004-05

-

-

-

-

0.01

-

0.01

-

0.02

-

Dividend Paid


-

-

-

-

2.01

- - -

2.01

-

2005-06

-

-

-

-

1.12

- - -

1.12

2004-05

-

-

-

-

0.64

- - -

0.64

-

SCM Investment &


-

-

87.42

-

-

- - -

87.42

-

2005-06

-

-

39.66

-

-

- - -

39.66

-

2004-05

-

-

25.79

-

-

- - -

25.79

-

RTM Investment &


-

-

73.32

-

-

- - -

73.32

-

2005-06

-

-

40.73

-

-

- - -

40.73

-

2004-05

-

-

25.90

-

-

- - -

25.90

Uttar Pradesh Trading

Co.Ltd., 2006-07

-

-

88.34

-

-

- - -

88.34

-

2005-06

-

-

49.08

-

-

- - -

49.08

-

Others 2004-05

-

-

-

-

0.02

-

0.11

-

0.13

-

Interest Paid


0.34

-

-

-

-

- - -

0.34

-

2003-04

1.13

-

-

-

-

- - -

1.13

-

Narkatiaganj Farms

Ltd. 2004-05

0.42

-

-

-

-

- - -

0.42

-


107

2003-04

0.91

-

-

-

-

- - -

0.91

-

2002-03

0.27

-

-

-

-

- - -

0.27

-

Sutlej Textiles &


-

-

62.43

-

-

- - -

62.43

-

SIL Investments Ltd.,(

Formerly Sutlej


-

-

140.71

-

-

- - -

140.71

-

2003-04

-

-

47.15

-

-

- - -

47.15

-

2002-03

-

-

68.00

-

-

- - -

68.00

-

SCM Investment &

Trading Co. Ltd. 2004-05

-

-

102.63

-

-

- - -

102.63

-

2003-04

-

-

150.26

-

-

- - -

150.26

-

2002-03

-

-

26.43

-

-

- - -

26.43

-

RTM Investment &


-

-

53.25

-

-

- - -

53.25

-

2003-04

-

-

103.96

-

-

- - -

103.96

-

2002-03

-

-

17.47

-

-

- - -

17.47

-

Others 2005-06

-

-

-

-

0.10

-

3.59

-

3.69

-

2004-05

-

-

5.90

-

0.42

0.10

3.88

4.09

10.20

4.19

2003-04

-

-

13.75

-

0.28

-

4.65

3.58

18.68

3.58

2002-03

-

-

13.26

-

0.28

-

3.60

-

17.14

-

Loans Repaid / Given

Champaran Marketing

Company Ltd. 2006-07

168.00

39.50

-

-

-

- - -

168.00

39.50


108

2005-06

5.00

-

-

-

-

- - -

5.00

-

2004-05

5.00

-

-

-

-

- - -

5.00

-

2003-04

22.50

-

-

-

-

- - -

22.50

-

2002-03

7.75

-

-

-

-

- - -

7.75

-


16.00

-

-

-

-

- - -

16.00

-

2003-04

6.19

-

-

-

-

- - -

6.19

-

2002-03

2.08

-

-

-

-

- - -

2.08

-

Narkatiaganj Farms

Ltd. 2004-05

17.50

-

-

-

-

- - -

17.50

-

2003-04

5.65

-

-

-

-

- - -

5.65

-

2002-03

2.17

-

-

-

-

- - -

2.17

-

OSM Investment &

Trading Company Ltd. 2006-07

55.50

-

-

-

-

- - -

55.50

-

2005-06

7.50

-

-

-

-

- - -

7.50

-

2004-05

3.50

-

-

-

-

- - -

3.50

-

2003-04

2.50

6.00

-

-

-

- - -

2.50

6.00

2002-03

14.50

26.50

-

-

-

- - -

14.50

26.50

Hargaon Investment &


122.50

-

-

-

-

- - -

122.50

-

2005-06

5.75

-

-

-

-

- - -

5.75

-

2004-05

0.25

-

-

-

-

- - -

0.25

-


109

2003-04

24.75

3.25

-

-

-

- - -

24.75

3.25

2002-03

80.46

22.50

-

-

-

- - -

80.46

22.50

Hargaon Properties Ltd. 2005-06

39.75

7.36

-

-

-

- - -

39.75

7.36

2004-05

0.04

0.04

-

-

-

- - -

0.04

0.04

Sutlej Textiles &


-

-

1,500.0

-

-

- - -

1,500.00

-


Formerly Sutlej


-

-

2,100.0

-

-

- - -

2,100.00

-

2003-04

-

-

300.00

-

-

- - -

300.00

-

2002-03

-

-

1,405.00

-

-

- - -

1,405.00

-

SCM Investment &


-

-

2,150.00

-

-

- - -

2,150.00

-

2003-04

-

-

2,300.00

-

-

- - -

2,300.00

-

2002-03

-

-

550.00

-

-

- - -

550.00

-

RTM Investment &


-

-

2,225.00

-

-

- - -

2,225.00

-

2003-04

-

-

2,800.00

-

-

- - -

2,800.00

-

2002-03

-

-

300.00

-

-

- - -

300.00

-

Others 2005-06

-

-

-

4.00

-

11.57

-

15.57

-

2004-05

-

-

340.00

-

2.00

-

9.50

-

351.50

-


110

2003-04

-

-

385.00

-

-

-

13.01

-

398.01

-

2002-03

-

-

340.00

-

-

-

1.40

-

341.40

-


Loans Taken


8.50

16.00

-

-

-

- - -

8.50

16.00

2002-03

19.77

13.69

-

-

-

- - -

19.77

13.69

Narkatiaganj Farms

Ltd. 2003-04

12.50

17.50

-

-

-

- - -

12.50

17.50

2002-03

13.82

10.65

-

-

-

- - -

13.82

10.65

Champaran Marketing


30.00

-

-

-

-

- - -

30.00

-

2005-06

19.75

98.50

-

-

-

- - -

19.75

98.50

2004-05

13.25

83.75

-

-

-

- - -

13.25

83.75

2003-04

22.00

75.50

-

-

-

- - -

22.00

75.50

2002-03

6.00

76.00

-

-

-

- - -

6.00

76.00

OSM Investment &


37.50

10.50

-

-

-

- - -

37.50

10.50

2005-06

24.50

28.50

-

-

-

- - -

24.50

28.50

2004-05

21.00

11.50

-

-

-

- - -

21.00

11.50

2003-04

23.00

-

-

-

-

- - -

23.00

-

2002-03

12.25

-

-

-

-

- - -

12.25

-



94.00

89.00

-

-

-

- - -

94.00

89.00


111

2005-06

69.50

117.50

-

-

-

- - -

69.50

117.50

2004-05

57.25

53.75

-

-

-

- - -

57.25

53.75

2003-04

44.00

-

-

-

-

- - -

44.00

-

2002-03

57.96

-

-

-

-

- - -

57.96

-


7.36

-

-

-

-

- - -

7.36

-

2005-06

32.43

-

-

-

-

- - -

32.43

-

Sutlej Textiles &


-

-

3,500.00

2,000.00

-

- - -

3,500.00

2,000.00


Formerly Sutlej


-

-

900.00

-

-

- - -

900.00

-

2003-04

-

-

1,200.00

1,200.00

-

- - -

1,200.00

1,200.00

2002-03

-

-

1,705.00

300.00

-

- - -

1,705.00

300.00

SCM Investment &


-

-

1,150.00

-

-

- - -

1,150.00

-

2003-04

-

-

2,900.00

1,000.00

-

- - -

2,900.00

1,000.00

2002-03

-

-

950.00

400.00

-

- - -

950.00

400.00

RTM Investment &


-

-

2,025.00

-

-

- - -

2,025.00

-

2003-04

-

-

2,500.00

200.00

-

- - -

2,500.00

200.00

2002-03

-

-

800.00

500.00

-

- - -

800.00

500.00

Others 2005-06

-

-

-

-

-

2.31

-

2.31

-

2004-05 33.47 267.16


112

- - 250.00 - 4.00 4.00 13.16 37.47

2003-04

-

-

400.00

90.00

-

2.00

9.60

33.81

409.60

125.81

2002-03

-

-

415.00

75.00

-

2.00

18.22

37.22

433.22

114.22



Credit :



-

-

-

58.02

-

- - -

-

58.02

2005-06

-

-

-

16.72

-

- - -

-

16.72

2004-05

-

-

-

14.07

-

- - -

-

14.07

2003-04

-

-

-

7.58

-

- - -

-

7.58

2002-03

-

-

-

7.42

-

- - -

-

7.42

Debit :


-

-

-

-

6.09

6.09

- -

6.09

6.09

Dividend Received



-

-

0.93

-

-

- - -

0.93

-

2005-06

-

-

0.45

-

-

- - -

0.45

-

2004-05

-

-

0.34

-

-

- - -

0.34

-

Champaran Marketing


5.22

-

-

-

-

- - -

5.22

-

OSM Investment &


12.18

-

-

-

-

- - -

12.18

-



41.24

-

-

-

-

- - -

41.24

-

Remuneration


-

-

-

-

100.31

- - -

100.31

-


113

2005-06

-

-

-

-

79.10

- - -

79.10

-

2004-05

-

-

-

-

16.80

- - -

16.80

-

2003-04

-

-

-

-

10.75

- - -

10.75

-

2002-03

-

-

-

-

10.75

- - -

10.75

-


-

-

-

-

15.91

5.29

- -

15.91

5.29

2004-05

-

-

-

-

14.59

2.90

- -

14.59

2.90

2003-04

-

-

-

-

12.35

1.29

- -

12.35

1.29

2002-03

-

-

-

-

7.90

- - -

7.90

-


1.47

1.47

1.47

1.47

Mr.M.S.Sharma 2006-07

-

-

-

-

10.51

- - -

10.51

-

2005-06

-

-

-

-

10.23

0.74

- -

10.23

0.74

2004-05

-

-

-

-

9.00

0.67

- -

9.00

0.67

2003-04

-

-

-

-

7.56

0.60

- -

7.56

0.60

2002-03

-

-

-

-

7.05

- - -

7.05

-

Mr.M.N.Agarwal 2003-04

-

-

-

-

6.53

- - -

6.53

-

2002-03

-

-

-

-

6.32

- - -

6.32

-


-

-

-

-

18.97

4.00

- -

18.97

4.00

2005-06

-

-

-

-

8.99

1.83

- -

8.99

1.83

2004-05

-

-

-

-

6.92

0.56

- -

6.92

0.56


114

2003-04

-

-

-

-

0.56

0.56

- -

0.56

0.56

Mr.P.K.Saini 2006-07

-

-

-

-

8.95

- - -

8.95

-

2005-06

-

-

-

-

0.39

0.20

- -

0.39

0.20

Mr.S.K.Premi 2006-07

-

-

-

-

10.36

- - -

10.36

-

2005-06

-

-

-

-

8.55

- - -

8.55

-

2004-05

-

-

-

-

9.15

0.07

- -

9.15

0.07

2003-04

-

-

-

-

6.88

0.49

- -

6.88

0.49

2002-03

-

-

-

-

7.32

- - -

7.32

-

Mr.S.D.Shukla 2006-07

-

-

-

-

4.74

1.42

- -

4.74

1.42


-

-

-

-

4.62

0.10

- -

4.62

0.10




SECTION VII : FINANCIAL STATEMENTS

FINANCIAL INFORMATION OF THE ISSUER COMPANY

AUDITORS’ REPORT

To,

The Board of Directors


9/1 R N Mukherjee Road

Kolkata 700 001

Dear Sirs,

1. We have examined the attached financial information of The Oudh Sugar Mills Limited (hereinafter referred

to as the Company), as approved by the Committee of Directors of the Company, prepared in terms of the

requirements of Paragraph B, Part II of Schedule II of the Companies Act, 1956 (“the Act”) and the

Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 as amended to

date (SEBI Guidelines) and in terms of our engagement agreed upon with you in accordance with our

engagement letter dated 22nd October, 2007 in connection with the proposed Rights Issue of Equity shares

alongwith detachable warrants of the Company.

2. These information have been extracted by the Management from the financial statements for the years ended

on 30th

June 2003, 2004, 2005, 2006 and 2007.

3. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI Guidelines

and in terms of our engagement agreed with you, we further report that:

a) The ‘Restated Summary of Assets and Liabilities’ of the Company as at 30th

June 2003, 2004, 2005,

2006 and 2007 examined by us, as set out in Annexure-1 to this report are after making such adjustments

and regroupings as in our opinion were appropriate and as are more fully described in Significant

Accounting Policies and Notes and Statement of Adjustments (Refer Annexures 4A, 4B, 5 & 6).

b) The ‘Restated Summary Statement of Profits and Losses’ of the Company for each of the years ended on

30th

June 2003, 2004, 2005, 2006 and 2007 examined by us, as set out in Annexure-2 to this report are

after making such adjustments and regroupings as in our opinion were appropriate and as are more fully

described in Significant Accounting Policies & Notes and Statement of Adjustments (Refer Annexures

4A , 4B, 5 & 6).

c) The ‘Restated Statement of Cash Flows’ of the Company in respect of each of the years ended on 30th

June 2003, 2004, 2005, 2006 and 2007 examined by us, as set out in Annexure-3 to this report, in our

opinion, have been prepared by the Company in accordance with the requirement of Accounting

Standard 3 (Cash Flow Statements) issued by the Institute of Chartered Accountants of India.

d) Without qualifying our opinion, we draw attention to the fact that for the purpose of these summary

statements, due to practical difficulties in retrospective application of Accounting Standard 29 on

“Provisions, Contingent Liabilities and Contingent Assets” as detailed vide Note No. 5 on Annexure-6,

such standard has been applied from the date it became applicable to the Company and not for all the

periods restated.

e) Based on the above, we are of the opinion that

i. the restated financial information have been made after incorporating:

a. Adjustments for the changes in accounting policies retrospectively in the respective financial

years to reflect the same accounting treatment as per changed accounting policies for the

reporting periods.

b. Adjustments for the material amounts in the respective financial years to which they relate

except to the extent mentioned in clause iii below;

ii. There are no extra-ordinary items that need to be disclosed separately in the Summary

Statements; and


116

iii. The adjustments for qualifications and material adjustments relating to the relevant previous

year have been made in the summary statements except for Note Nos. 1 (a) and 1(b) on

Annexure-6 regarding non-adjustment of certain realisations in earlier years aggregating to

Rs. 165.51 lacs and non-provision of interest payable thereon, if any, in case of refund of such

realisations. As the matters are under adjudication / not yet settled, the impact of above non-

adjustment on the Company’s profit / (loss) is not presently ascertainable.

f) At your request, we have also examined the following other financial information prepared by the

management and approved by the Committee of Directors relating to the Company for the year ended on

30th

June 2003, 2004, 2005, 2006 and 2007:

i. Statement of Changes in Accounting Policies enclosed as Annexure-7

ii. Statement of Qualifications in Auditors Report enclosed as Annexure-8

iii. Statement of Accounting Ratios based on the adjusted profits / (losses) relating to earning per

share, net assets value & return on net worth, enclosed as Annexure-9.

iv. Statement of Related Party Transactions enclosed as Annexure-10.

v. Statement of Segment Reporting enclosed as Annexure-11.

vi. Statement of Dividend Paid enclosed as Annexure-12.

vii. Statement of Tax Shelter enclosed as Annexure-13.

viii. Capitalisation Statement as at 30th

June, 2007 enclosed as Annexure-14.

ix. Statement of Earning Per Share enclosed as Annexure-15A.

x. Statement of Balance of Debtors enclosed as Annexure-15B.

xi. Statement of Loans & Advances enclosed as Annexure-15C.

xii. Statement of Other Income enclosed as Annexure-15D

xiii. Statement of Secured and Unsecured Loans enclosed as Annexure- 15E & 15F.

xiv. Statement of Investments enclosed as Annexure -15G.

In our opinion, the financial information contained in Annexures 7 to 15G of this report read along with

the Significant Accounting Policies and Notes (Refer Annexures- 5&6) prepared after making such

adjustments and regroupings as were considered appropriate, have been prepared in accordance with Part

IIB of Schedule II of the Act and the SEBI Guidelines.

We report that subject to our observation in para 3(e) (iii) above, the information mentioned in clauses 1

to 3 have been correctly computed / compiled with reference to the various statements enclosed vide

Annexures 1 to 15G of this report.

4. This report should not be in any way construed as a reissuance or redating of any of the previous audit reports

issued by us, nor should this report be construed as a new opinion on any of the financial statements referred

to herein.

Our report is intended solely for use of the management and for inclusion in the Letter of Offer in connection

with the proposed Rights Issue of the Company. Our report should not be used for any other purpose without

our prior written consent.

For S. R. BATLIBOI & CO.

CHARTERED ACCOUNTANTS

Place: Kolkata

Dated: December 11, 2007 Per R K AGRAWAL Partner

Membership No.

16667


117

STATEMENT OF RESTATED ASSETS AND LIABILITIES

ANNEXURE - 1

Rs. In lacs

As at 30th June

Particulars 2003 2004 2005 2006 2007


A Fixed Assets

Gross Block

21,866.61 22,580.79 26,919.44 30,321.92

41,687.98

Less : Depreciation

8,383.88 9,371.99 10,446.97 11,780.40

13,254.85

Net Block

13,482.73 13,208.80 16,472.47 18,541.52

28,433.13

Capital Work In Progress

306.92 174.66 190.09 202.11

256.09

Capital Expenditure on

Expansion / New Projects

- 1,415.50 1,443.10 4,421.31

13,224.76

13,789.65 14,798.96 18,105.66 23,164.94

41,913.98

B Investments

1,106.77 1,103.53 1,078.53 1,078.53

1,079.52

C

Current assets, loans and

advances

Inventories

22,790.91 16,032.43 17,326.19 15,143.37

19,473.86

Sundry Debtors

947.03 603.02 111.61 411.66

591.95

Cash & Bank Balances

310.94 191.06 203.83 338.70

512.27

Loans and advances

1,188.22 1,505.04 1,785.11 1,490.59

2,645.50

Other Current Assets

3.64 3.55 4.08 2.52

3.54

Total

25,240.74 18,335.10 19,430.82 17,386.84

23,227.12

TOTAL ASSETS

40,137.16 34,237.59 38,615.01 41,630.31

66,220.62

D Deferred Tax Liability (net)

- - - 1,103.64 -


Secured Loans

26,761.85 21,894.76 24,282.17 20,555.15

27,252.99

Unsecured Loans

3,550.36 4,692.68 2,300.76 2,236.48

13,880.16

Current Liabilities

9,282.44 6023.29 3272.35 3997.12

15,311.65

Provisions

- 293.59 530.47 1,106.64

75.86

TOTAL LIABILITIES

39,594.65 32,904.32 30,385.75 27,895.39

56,520.66

F Net Worth (A+B+C-D-E)

542.51 1,333.27 8,229.26 12,631.28

9,699.96

G Represented by :

Shareholder's Funds


118

STATEMENT OF RESTATED ASSETS AND LIABILITIES

ANNEXURE - 1

Rs. In lacs

As at 30th June

Particulars 2003 2004 2005 2006 2007

a. Equity Share Capital

1,038.62 1,038.62 1,817.49 1,817.49

1,817.49

b. Reserves and Surplus

3,566.33 3,576.58 6,623.74 10,813.79

7,882.47

4,604.95 4,615.20 8,441.23 12,631.28

9,699.96

Less: Profit and Loss

Account Debit Balance

4,062.44 3,281.93 211.97 - -

Total

542.51 1,333.27 8,229.26 12,631.28

9,699.96

Notes:

(1) The above figures should be read with the Statement of Significant Accounting Policies and Statement of Notes on Restated

Profits & Losses and Restated Assets & Liabilities, as appearing in Annexures 5 and 6 respectively.

(2) Necessary adjustments have been made to the audited financial statements in accordance with the requirements of

paragraph 6.10.2 of The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000.


119

STATEMENT OF RESTATED PROFITS AND LOSSES

ANNEXURE - 2

(Rs. in lacs.)


Particulars 2003 2004 2005 2006 2007

Income

Sales of Products (Net of

excise duty)

31,331.65

35,435.52

35,604.57

50,116.73

44,244.45

Increase / (Decrease) in

Inventories

(352.38)

(6,353.86)

1,077.83

(2,099.02)

3,708.61

Other Income

306.65

344.90

287.25

117.35

161.16

Total

31,285.92

29,426.56

36,969.65

48,135.06

48,114.22

Expenditure

Purchase of Semi-Finished

Goods

47.76

173.05

998.83

62.59

34.73

Raw Materials Consumed

23,557.64

17,247.94

21,528.91

29,727.34

38,765.85

Staff Cost

1,933.45

1,918.45

2,028.78

2,401.92

2,748.37

Other Manufacturing

Expenses

2,858.63

3,001.23

3,152.68

3,973.93

4,752.87

Administrative and Other

Expenses

752.81

763.00

1,041.66

993.04

1,087.74

Selling and Distribution

Expenses

507.91

581.96

476.37

558.13

543.90

Interest & Finance Charges

(Net)

3,084.35

3,536.87

2,701.54

1,684.79

2,092.87

Depreciation

1,072.72

1,097.79

1,251.28

1,558.68

2,028.67

Total

33,815.27

28,320.29

33,180.05

40,960.42

52,055.00

Net Profit / (Loss) Before Tax

(2,529.35)

1,106.27

3,789.60

7,174.64

(3,940.78)

Taxation:

Current Tax (Net of Refunds)

1.03

32.17

197.09

680.38

29.65

Fringe Benefit Tax - -

4.50

24.90

27.50

Deferred Tax Liability /

(Asset) - - -

1,103.64

(1,103.64)

Net Profit / (Loss) after Tax

(2,530.38)

1,074.10

3,588.01

5,365.72

(2,894.29)

Notes:

(1) The above figures should be read alongwith the Statement of Significant Accounting Policies and Statement

of Notes on Restated Profits & Losses and Restated Assets & Liabilities, as appearing in Annexures5 and 6

respectively.

(2) Necessary adjustments have been made to the audited financial statements in accordance with the

requirements of paragraph 6.10.2 of The Securities and Exchange Board of India (Disclosure and Investor

Protection) Guidelines, 2000.


120

STATEMENT OF RESTATED CASH FLOWS

ANNEXURE – 3

(Rs. in lacs)


2003 2004 2005 2006 2007

A.

CASH FLOW FROM

OPERATING ACTIVITIES :

Restated Profit /(Loss) before Tax (2,529.35) 1,106.27 3,789.60 7,174.64 (3,940.78)

Adjustments for :

Depreciation as per Restated Profit

& Loss 1,072.72 1,097.79 1,251.28 1,558.68 2,028.67

Depreciation on Agriculture

Equipments 0.20 0.16 0.13 1.00 1.42

Interest & Finance Charges (net of

capitalization) 3,162.80 3,590.38 2,729.46 1,725.16 2,177.60

Provision for diminution in the

value of investments - - 25.00 - -

Molasses Storage and Maintenance

Reserve 8.84 10.25 9.27 13.86 7.97

Loss on Fixed Assets sold /

discarded 9.93 18.19 (5.41) 34.24 41.40

Interest & Dividend Income (113.80) (53.98) (28.46) (41.02) (85.94)

Profit on Share Transactions - (23.36) - - -

Operating Profit before Working

Capital Changes : 1,611.34 5,745.70 7,770.87 10,466.56 230.34

Adjustments for :

Trade Payables 1,439.91 (3,218.41) (2,749.73) 757.91 9,399.11

Trade & Other Receivables (658.95) 19.43 219.53 (92.60) (1,158.64)

Inventories 249.93 6,758.48 (1,293.76) 2,182.82 (4,330.49)

1,030.89 3,559.50 (3,823.96) 2,848.13 3,909.98

Cash Generated from Operations : 2,642.23 9,305.20 3,946.91 13,314.69 4,140.32

Direct Taxes( Paid) / Refunds (9.95) (67.23) (208.22) (534.38) (321.45)

Net Cash from Operating Activities 2,632.28 9,237.97 3,738.69 12,780.31 3,818.87

B.

CASH FLOW FROM INVESTING

ACTIVITIES :

Sale of Fixed Assets 0.86 10.21 55.26 64.89 116.27

Loans (Given)/Refunds (5.93) 19.31 2.94 (13.52) (22.80)

Interest & Dividend Received 113.37 54.07 27.93 42.58 84.92

Capital Subsidy received - - 15.00 - -

Purchase of Fixed Assets (623.45) (2,105.19) (4,506.42) (6,530.13) (18,517.49)

Sale/(Purchase) of Investments (6.87) 3.24 - - (0.99)

Profit on Share Transactions - 23.36 - - -

Net Cash from Investing Activities (522.02) (1,995.00) (4,405.29) (6,436.18) (18,340.09)

C.

CASH FLOW FROM FINANCING

ACTIVITIES :

Proceeds from Borrowings 2,575.43 1,142.32 12,614.07 2,935.00 40,729.74

Repayment of Loans (1,639.97) (4,867.09) (12,618.58) (6,726.30) (22,244.26)


121

STATEMENT OF RESTATED CASH FLOWS

ANNEXURE – 3

(Rs. in lacs)


2003 2004 2005 2006 2007

Right Issue of Shares - - 778.87 - -

Premium on Right Issue of Shares - - 3,115.51 - -

Expenses on Right Issue of Shares - - (92.62) - -

Interest Paid (2,962.42) (3,637.47) (2,827.20) (1,900.61) (2,863.27)

Dividend Paid (0.64) (0.61) (290.68) (517.35) (927.42)

Net Cash from Financing Activities (2,027.60) (7,362.85) 679.37 (6,209.26) 14,694.79

NET CHANGES IN CASH & CASH EQUIVALENTS (A+B+C) 82.66 (119.88) 12.77 134.87 173.57

Cash & Cash equivalents -

Opening Balance 228.28 310.94 191.06 203.83 338.70

Cash & Cash equivalents - Closing

Balance 310.94 191.06 203.83 338.70 512.27

STATEMENT OF THE ADJUSTMENTS MADE TO THE AUDITED FINANCIAL STATEMENTS

ANNEXURE - 4 A

Rs. In Lacs

Statement of adjustments on profit and loss account carried out in accordance with Part II of Schedule II of the Companies Act,

1956 and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000


Particulars 2003 2004 2005 2006 2007

Net Profit / (Loss) as per Audited Profit and

Loss Account (1,176.53) 1,412.47 1,116.04 4,536.51 (2,689.55)

Add: Exceptional Items Considered Below

Separately - - 2,237.45 - -

Adjustments on account of :

Differential cane price *

(1,602.23) (480.21) - - -

Increase / (Decrease) in valuation of process and

finished stock ** 945.90 (648.27) (297.63) - -

Provision for doubtful debts 81.67 10.25 7.13 22.19 -

Provision for doubtful Loans & Advances (45.46) 31.04 18.43 91.91 -

Swap Transactions (3.93) 3.93 - - -

Items pertaining to previous years (5.03) (28.50) 2.79 (0.22) 2.32

Interest from Items pertaining to previous years 23.51 - - - -

Provision for Leave liability & Gratuity (0.50) (0.41) (0.27) 6.57 -

Total adjustments before tax (606.07) (1,112.17) 1,967.90 120.45 2.32

Adjustments for Taxation

Provision for current income tax - (3.01) (26.88) 29.89

MAT Credit entitlement - - - (696.00) (25.50)

Deferred tax (747.78) 776.81 530.95 1,374.87 (181.56)

Total adjustments for taxation (747.78) 773.80 504.07 708.76 (207.06)


122

Net adjustments (1,353.85) (338.37) 2,471.97 829.21 (204.74)

Profit / (Loss) after adjustments (2,530.38) 1,074.10 3,588.01 5,365.72 (2,894.29)

* Differential Cane Price of Rs. 155.01 Lacs for the season 1996-97 has been restated against the opening Reserve in the year 2003

** Arisen due to Consideration of differential cane price as a part of cost.

STATEMENT OF THE ADJUSTMENTS MADE TO THE AUDITED FINANCIAL STATEMENTS

ANNEXURE - 4B

Rs. In Lacs

Statement of adjustments on assets and liabilities carried out in accordance with Part II of Schedule II of

the Companies Act, 1956 and the Securities and Exchange Board of India (Disclosure and Investor

Protection) Guidelines, 2000.

As at 30th June

Particulars 2003 2004 2005 2006 2007

Net Adjustments ( as per Annexure 4A) (1,353.85) (338.37) 2,471.97 829.21 (204.74)

Adjusted from opening Reserves *

Opening Deferred Tax Liability

(1,934.85)

Doubtful Debts

(121.24)

Doubtful loans &advances

(95.92)

Exceptional Item ( differential cane price for

sugar season 1996-97)

(155.01)

Item pertaining to previous years

5.13

Provision for Leave liability& Gratuity

(5.39)

Increase / (Decrease) in Reserves (3,661.13) (338.37) 2,471.97 829.21 (204.74)

Cummulative Increase / (Decrease) in Reserves (3,661.13) (3,999.50) (1,527.53) (698.32) (903.06)

* Adjustments related to prior of reporting period


123

ANNEXURE- 5

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES ON RESTATED PROFIT & LOSS

ACCOUNT AND RESTATED ASSETS & LIABILITIES

1. ACCOUNTING POLICIES:

(i) Basis of Accounting:

The Company follows mercantile system of accounting and recognizes income and expenditure on

accrual basis, as per normally accepted accounting principles, except for the following which due to

uncertainty in realisation, are maintained on cash/ acceptance basis: –

(a) Insurance and other claims.

(b) Interest on doubtful loans and advances to cane growers.

(c) Compensation receivable in respect of land surrendered to / acquired by the Government.

(ii) Revenue Recognition:

Revenue from the sale of goods is recognized upon passage of title to the customers which

generally coincides with delivery thereof.

(iii) Fixed Assets:

Fixed assets are stated at cost of acquisition inclusive of duties (net of cenvat credit), taxes,

incidental expenses and erection/commissioning expenses etc. upto the date the asset is ready for its

intended use. Expenses incurred on major modernization programs including Projects under

implementation are capitalized.

Machinery spares which can be used only in connection with an item of fixed assets and whose

use as per technical assessment is expected to be irregular, are capitalised and depreciated over the

residual life of the respective assets.

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there

is any indication of impairment based on external/internal factors. An impairment loss is

recognized wherever the carrying amount of an asset exceeds its recoverable amount which

represents the greater of the net selling price and ‘Value in use’ of the assets. The estimated future

cash flows considered for determining the value in use, are discounted to their present value at the

weighted average cost of capital.

Assets awaiting disposal are valued at the lower of written down value and net realisable value

and disclosed separately.

(iv) Depreciation :

(a) The classification of plant and machinery into continuous and non-continuous process is

done as per technical certification and depreciation thereon is provided accordingly.


124

(b) Depreciation on fixed assets is provided as under:

A) On assets valuing Rs. 4.62 lacs, at the rate applicable under the Bihar Agricultural

Income Tax Act, 1949.

B) On assets valuing Rs. 43.11 lacs, on written-down value method, at the rates

prescribed in schedule XIV of the Companies Act, 1956.

C) On other assets, as per straight line method, at the rates prescribed in schedule XIV

of the Companies Act, 1956.

(c) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata

basis, with reference to the date of addition / disposal.

(d) In case of impairment, if any, depreciation is provided on the revised carrying amount of the

assets over its remaining useful life.

(v) Borrowing Costs :

Borrowing costs relating to acquisition / construction of qualifying assets are capitalized until the time

all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A

qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.

All other borrowing costs are charged to revenue.

(vi) Investments :

Current Quoted Investments are stated at lower of cost and market rate on individual investment

basis. Unquoted / long term investments are considered “at cost” on individual investment basis,

unless there is a decline other than temporary in the value, in which case adequate provision is made

against such diminution in the value of investments.

(vii) Inventories :

(a) Inventories (including Power - Banked) are valued at lower of cost (computed on annual

weighted average basis for raw materials, stores and spares etc.) and net realisable value.

However, Country Crop, by products and saleable scrap, whose cost is not identifiable, are

valued at estimated net realisable value.

(b) In case of inter-transferred materials, the transfer price is considered as cost for the purpose

of valuation of closing stock.

(viii) Foreign Currency Transactions :

(a) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the

foreign currency amount the exchange rate between the reporting currency and the foreign

currency at the date of the transaction.


125

(b) Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items

which are carried in terms of historical cost denominated in a foreign currency are reported

using the exchange rate at the date of the transaction, and non-monetary items which are

carried at fair value or other similar valuation denominated in a foreign currency are

reported using the exchange rates that existed when the values were determined.

(c) Exchange Differences

Exchange differences arising on the settlement/conversion of monetary items are

recognized as income or expenses in the year in which they arise except those relating to

acquisition of fixed assets outside India, in which case such exchange differences are

capitalized.

The premium or discount arising at the inception of forward exchange contracts is

amortized as expenses or income over the life of the respective contracts. Exchange

differences on such contracts are recognized in the statement of profit and loss in the year

in which the exchange rates change. Any profit or loss arising on cancellation or renewal

of forward exchange contract is recognized as income or as expense for the year.

(ix) Retirement Benefits :

(a) The Company has created an approved gratuity fund which has taken a group gratuity

insurance policy with Life Insurance Corporation of India (LIC), for future payment of

gratuity to the employees. The Company accounts for gratuity liability equivalent to the

premium amount payable to LIC every year based on actuarial valuation carried out by

them as on 31st March each year, which together with annual contribution in subsequent

years, would be sufficient to cover the gratuity liability as and when it accrues for payment.

(b) Leave liability is provided for on the basis of actuarial valuation carried on at the year end.

(c) Retirement benefits in the form of provident fund / pension schemes and superannuation funds

are charged to the Profit & Loss Account of the year when the contributions to the respective

funds are due.

(x) Taxation :

Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe

benefit tax are measured at the amount expected to be paid to tax authorities in accordance with

Income Tax Act, 1961. Deferred income taxes reflect the impact of current year timing differences

between taxable income for the year and reversal of timing differences of earlier years.

The deferred tax for timing differences between the book and tax profit for the year is accounted

for using the tax rates and laws that have been substantively enacted as of the Balance Sheet date.

Deferred tax asset are recognized only to the extent that there is reasonable certainty that sufficient

future taxable income will be available against which such deferred tax asset can be realized. If the


126

company has carry forward unabsorbed depreciation and tax losses, deferred tax asset are

recognized only to the extent that there is virtual certainty supported by convincing evidence that

sufficient taxable income will be available against which such deferred tax asset can be realized.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent

there is convincing evidence that the company will pay normal income tax during the specified

period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be

recognized as an asset in accordance with the recommendations contained in guidance Note

issued by the Institute of Chartered Accountants of India, the said asset is created by way of a

credit to the profit and loss account and shown as MAT Credit Entitlement. The Company

reviews the same at each balance sheet date and writes down the carrying amount of MAT

Credit Entitlement to the extent there is no longer convincing evidence to the effect that

Company will pay normal Income Tax during the specified period.

(xi) Segment Reporting :

(a) Identification of Segments :

The Company has identified that its operating segments are the primary segments. The Company’s

operating businesses are organized and managed separately according to the nature of products, with

each segment representing a strategic business unit that offers different products and serves different

markets. The analysis of geographical segments is based on the areas in which the customers of the

Company are located.

(b) Inter Segment Transfers :

The Company accounts for inter segment transfers at mutually agreed transfer prices.

(c) Allocation of Common Costs :

Common allocable costs are allocated to each segment on case to case basis applying the

ratio, appropriate to each relevant case. Revenue and expenses which relate to the enterprise

as a whole and are not allocable to segments on a reasonable basis are included under the

head “Unallocated – Common”.

The accounting policies adopted for segment reporting are in line with those of the Company.

(xii) Share Issue Expenses:

Share issue expenses are adjusted against Securities Premium Account.

(xiii) Earning per Share :

Basic Earning per Share are calculated by dividing the net profit or loss for the year attributable to

equity shareholders by the weighted number of equity shares outstanding during the year.


127

For the purpose of calculating diluted earning per share, net profit or loss for the period

attributable to equity share holders and the weighted average number of shares outstanding during

the period are adjusted for the effect of all dilutive potential equity shares.

(xiv) Excise Duty :

Excise Duty is accounted for at the point of manufacture of goods and accordingly, is considered

for valuation of stocks as on the Balance Sheet date.

(xv) Hedging :

The Company uses derivative financial instruments including forward exchange contracts to hedge

its risk associated with foreign currency fluctuations.

The premium or discount arising at the inception of forward exchange contracts is amortized as

expense or income over the life of the contract except those relating to acquisition of fixed assets

outside India, in which case such exchange differences are capitalized.

(xvi) Research & Development :

Research and Development expenditure of revenue nature are charged to the Profit & Loss Account,

while capital expenditure are added to the cost of fixed assets in the year in which these are incurred.

(xvii) Premium on Redemption of Debentures:

Premium on redemption of debentures is accounted for in the year of payment.

(xviii)Provisions:

A provision is recognized when an enterprise has a present obligation as a result of past event and

it is probable that an outflow of resources will be required to settle the obligation, in respect of

which a reliable estimate can be made. Provisions made in terms of Accounting Standard 29 are

not discounted to its present value and are determined based on management estimate required to

settle the obligation, at the Balance Sheet date. These are reviewed at each Balance Sheet date

and adjusted to reflect the current management estimates.

(xix) Contingencies:

Liabilities which are material and whose future outcome cannot be ascertained with reasonable

certainty are treated as contingent and disclosed by way of notes to the accounts.


128

Annexure 6

STATEMENT OF NOTES ON THE RESTATED PROFITS AND LOSSES AND RESTATED ASSETS

AND LIABILITIES

1. As required by paragraph 6.10.2 of The Securities and Exchange Board of India (Disclosure and

Investor Protection) Guidelines, 2000, the Statement of Adjusted Profits and Losses for the year ended

30th

June, 2003, 2004, 2005, 2006 and 2007 as well as Statement of Adjusted Assets and Liabilities as

at 30th

June, 2003, 2004, 2005, 2006 and 2007 have been reinstated for the changes in accounting

policies as well as audit qualifications. However, certain audit qualifications the impact whereof could

not be ascertained presently, for the reasons mentioned in the respective notes, have not been adjusted

and are indicated herein below:

(a) Pending disposal of writs/appeals by the court with regard to levy sugar prices for some years,

Rs.113.46 lacs (net) received as excess levy sugar price, against which bank guarantees furnished by

the Company for Rs. 84.88 lacs, are in force in terms of the Court Orders, is included under the head

'Current Liabilities'. Necessary adjustment for the above amount together with interest, if any, in this

regard will be made in the accounts as and when the matter will be finally settled.

(b) Pending decisions of the various courts on writ petitions filed by/ against the Company, no credit

has been taken in the Profit and Loss Account in respect of certain realizations aggregating to

Rs.52.05 lacs in earlier years, which is shown under the head ‘Current Liabilities’. Against the

above, fixed deposits receipts / bank guarantees for similar amount have been furnished by the

Company.

2. Sundry creditors include Rs. 8.55 lacs due to Small Scale Industrial undertakings (SSI) to the extent such

parties have been identified from the available documents / information. The Company has normally made

payments to the SSI units in due time and also there being no claims from the parties, interest, if any, on

overdue payments, is not expected to be material and thus not provided for.

3. Based on the information / documents available with the company, no creditor is covered under Micro,

Small and Medium Enterprises Development Act, 2006. As a result, no interest provisions / payments have

been made by the company to such creditors, if any, and no disclosures thereof are made in these accounts.

4. (a) Pending execution of the conveyance deed, no adjustment has been made in respect of 0.75 acre of land

sold by the Company in earlier years.

(b) An application filed by the Company for exemption of 3,785.19 sq. mtrs. of land at Bamrauli under the

Urban Land (Ceiling and Regulation) Act, 1976, is pending with the concerned authority.

5. Accounts are not restated for the periods prior to the date when the Accounting Standard-29 on Provisions,

Contingent Liabilities and Contingent Assets, became effective from the period commencing on or after 01-

.04-2004.

6. The year wise break up of contingent liabilities is as under :

Rs. In lacs

As at the year ended on 30th

June Nature of Liability

2003 2004 2005 2006 2007

Demands/Claims against the Company not

acknowledged as debts

205.86 105.43 212.18 615.87

658.14

Guarantees given to a bank against loans to cane

growers

750.00 750.00 750.00 750.00 1500.00

Against the above, the loan facilities actually availed

as on the balance sheet date

749.98 749.84 749.50 750.00 1074.37


129



2003 2004 2005 2006 2007

Customs duty in respect of pending export

obligations against duty free imports

493.13

Unredeemed Bank Guarantees

19.01 21.39 16.48 1.32 0.96

Bills discounted from bank under L/C 66.65

7. The year wise break up of estimated amount of contracts remaining to be executed on capital items and

not provided for is as under:

Rs. In lacs


June

2003 2004

2005

2006 2007

34.65 2331.01 1216.49 4739.61 18672.67


130

ANNEXURE - 7

STATEMENT OF SIGNIFICANT CHANGES IN ACCOUNTING POLCIES DURING THE

REPORTING PERIOD OF THE OUDH SUGAR MILLS LIMITED AND ITS SUBSIDIARIES

There is no change in the accounting policies during reporting period.


131

ANNEXURE - 8

STATEMENT OF QUALIFICATIONS IN AUDITORS’ REPORT DURING THE REPORTING PERIOD

(Rs. In lacs)


Sl

No.

Particulars of audit qualifications

2003 2004 2005 2006 2007

1 Non provision of doubtful debts,loans and advances the

impact whereof on the Company's profit/ (loss) is not

presently ascertainable.

180.95

139.66

114.10

-

-

2 Non provision of various government demands / dues, the

impact whereof is not presently ascertainable due to

pending appeals

495.44

392.16

312.47

-

-

3 Non adjustment of certain realizations in earlier years and

non provision of interest payable thereon, if any, in case of

refund of any such realization. As the matters are under

adjudication / not yet settled, the impact of the above

adjustment on the Company’s profit /(loss) is not presently

ascertainable

179.23

174.98

174.98

165.51

165.51

4 Recognition of Deferred tax Asset (net), based on the

future profitability projections made by the management.

However, we are unable to express any opinion on the

above projections and their consequent impact, if any, on

such recognition of deferred tax asset(net)

2,682.63

1,905.82

1,374.87

-

181.56

5 Non provision of gratuity and leave liability on differential

wages and salaries at the Company's Allahabad Unit.

Amount not ascertained

-

-

6 Non provision of Income Tax liability,if any, for the

period from 1st April to 30th June,2005

-

-

Amount

not

ascertained

-

-

7 Recognition of Minimum Alternate Tax (MAT) Credit

entitlement in terms of Section 115JB of the Income Tax

Act,1961 which being availabe as tax credit for set-off in

the future years, as per section 115 JAA of the Income Tax

Act,1961 has been carried forward as recoverable under "

MAT Credit Entitlement"

-

-

-

-

721.50


132

STATEMENT OF RESTATED PROFITS AND LOSSES

ANNEXURE - 9 ( Rs. in Lacs.)


Accounting Ratios 2003 2004 2005 2006 2007

Earnings per Share ( Rs.)

(24.36) 10.34 22.66 29.52

(15.93)

(Nominal Value Rs. 10

Per Share)

Return on Net Worth(%)

(466.42) 80.56 43.60 42.48

(29.84)

Net Asset Value per

Share (Rs.)

5.22 12.84 51.97 69.50

53.37

NOTES:

Defination of ratios:

a) Earning per share

( EPS)

Restated Profit/(Loss) after tax as per statement of Restated

Profits/(Losses),divided by the weighted average number of outstanding equity

shares during the year.

b)Return on net worth

Profit/(Loss)after tax as per statement of Restated Profits and Losses, divided by

net worth.

c) Net Assests Value

Net worth as per statement of Restated Assets and Liabilities, divided by the

weighted average number of outstanding equity shares during the year.

ANNEXURE - 10

RELATED PARTY DISCLOSURES

Names of the related parties: Subsidiary Companies

Champaran Marketing Company Ltd.

OSM Investment & Trading Company Ltd.

Hargaon Investment & Trading Company Ltd.

Hargaon Properties Ltd.

Rajpur Farms Ltd. *

Narkatiaganj Farms Ltd.*




Shri V.P.Singh –Executive President, Rosa Unit (From 4th

June,2004)

Executive President, Hargaon (From 16th June 2006)




Shri M.N. Agarwal – Executive President, Rosa Unit (Upto 2ndJune,2004)

Shri S.D. Shukla – Sr.Executive Vice President, Hata Unit

Shri S.K. Premi – Executive President, Allahabad Unit


133




Shri Ansul Sharma- Son of Shri M. S. Sharma ** (upto 18th June,2007)

Smt. Vedanti Sharma- Wife of Shri M. S. Sharma ** (upto 18th June,2007)

Smt. Ritu Sharma- Duaghter of Shri M. S. Sharma ** (upto 18th June,2007)

Smt. Urmila Lakhotia- Wife of Shri P K Lakhotia ** (upto 15th June,2006)

Miss. Garima Lakhotia- Daughter of Shri P K Lakhotia ** (upto 15th June,2006)

Miss. Abha Lakhotia- Daughter of Shri P K Lakhotia ** (upto 15th June,2006)

Miss. Astha Lakhotia- Daughter of Shri P K Lakhotia ** (upto 15th June,2006)

Mr. Mohit Lakhotia- Son of Shri P K Lakhotia ** (upto 15th June,2006)

Miss. Anamika- Daughter of Shri M N Agarwal ** (upto 2nd June,2004)

Miss. Annapurna- Daughter of Shri M N Agarwal ** (upto 2nd June,2004)










* Ceased to be subsidiaries of the Company w.e.f. 19-10-2004. All the transactions relating to these companies are

considered only upto the aforesaid date.

** Ceased to be related parties in term of Accounting Standard- 18 from the respective dates. Accordingly all the

transactions are considerred only upto the said dates and also their outstanding balances, if any, as on Balance Sheet date

has not been disclosed.


134

ANNEXURE-10

(Contd.)

Restated Related Party

Disclosure

Statement of Aggregated Related Party Transactions as per

Accounting Standard-18 for the reporting period

(Rs. In lacs.)

Enterprises


Key


Particulars Subsidiaries

Personnel or


Time

Transac

tions Balance

Transa

ctions Balance

Transac

tions Balance

Transactio

ns Balance Transactions Balance

Period Value

Outstan

ding Value

Outstan

ding Value

Outstandi

ng Value

Outstandin

g Value

Outstand

ing

as on as on as on as on as on

Sale of Goods/ Fixed Assets

Rajpur Farms Ltd. 2004-05 1.47

-

-

-

-

- - -

1.47

-

2003-04

4.56

-

-

-

-

- - -

4.56

-

2002-03

2.22

-

-

-

-

- - -

2.22

-

Narkatiaganj Farms

Ltd. 2004-05

1.23

-

-

-

-

- - -

1.23

-

2003-04

3.62

-

-

-

-

- - -

3.62

-

2002-03

1.03

-

-

-

-

- - -

1.03

-

Upper Ganges Sugar & 2006-07 - - - 224.14


135

Industries Ltd. - - 224.14 - - -

2005-06

-

-

245.76

-

-

- - -

245.76

-

2004-05

-

-

271.18

-

-

- - -

271.18

-

2003-04

-

-

39.39

-

-

- - -

39.39

-

2002-03

-

-

48.64

-

-

- - -

48.64

-


Assets


5.30

-

-

-

-

- - -

5.30

-

2002-03

3.34

-

-

-

-

- - -

3.34

-

Narkatiaganj Farms

Ltd. 2003-04

3.44

-

-

-

-

- - -

3.44

-

2002-03

3.25

-

-

-

-

- - -

3.25

-



-

-

970.95

-

-

- - -

970.95

-

2005-06

-

-

75.31

-

-

- - -

75.31

-

2004-05

-

-

73.51

-

-

- - -

73.51

-

2003-04

-

-

10.42

-

-

- - -

10.42

-

2002-03

-

-

13.80

-

-

- - -

13.80

-

Mrs Vedanti Sharma 2003-04

-

-

-

-

-

-

10.79

-

10.79

-

Right Issue of Shares


-

-

-

-

9.56

- - -

9.56

-

SCM Investment & 2004-05 - - - 339.98


136

Trading Company Ltd., - - 339.98 - - -

RTM Investment &


-

-

349.13

-

-

- - -

349.13

-

Others 2004-05

-

-

-

-

0.01

-

0.01

-

0.02

-

Dividend Paid


-

-

-

-

2.01

- - -

2.01

-

2005-06

-

-

-

-

1.12

- - -

1.12

2004-05

-

-

-

-

0.64

- - -

0.64

-

SCM Investment &


-

-

87.42

-

-

- - -

87.42

-

2005-06

-

-

39.66

-

-

- - -

39.66

-

2004-05

-

-

25.79

-

-

- - -

25.79

-

RTM Investment &


-

-

73.32

-

-

- - -

73.32

-

2005-06

-

-

40.73

-

-

- - -

40.73

-

2004-05

-

-

25.90

-

-

- - -

25.90

Uttar Pradesh Trading

Co.Ltd., 2006-07

-

-

88.34

-

-

- - -

88.34

-

2005-06

-

-

49.08

-

-

- - -

49.08

-

Others 2004-05

-

-

-

-

0.02

-

0.11

-

0.13

-

Interest Paid


0.34

-

-

-

-

- - -

0.34

-

2003-04

1.13

-

-

-

-

- - -

1.13

-

Narkatiaganj Farms

Ltd. 2004-05

0.42

-

-

-

-

- - -

0.42

-


137

2003-04

0.91

-

-

-

-

- - -

0.91

-

2002-03

0.27

-

-

-

-

- - -

0.27

-

Sutlej Textiles &


-

-

62.43

-

-

- - -

62.43

-


Formerly Sutlej


-

-

140.71

-

-

- - -

140.71

-

2003-04

-

-

47.15

-

-

- - -

47.15

-

2002-03

-

-

68.00

-

-

- - -

68.00

-

SCM Investment &


-

-

102.63

-

-

- - -

102.63

-

2003-04

-

-

150.26

-

-

- - -

150.26

-

2002-03

-

-

26.43

-

-

- - -

26.43

-

RTM Investment &


-

-

53.25

-

-

- - -

53.25

-

2003-04

-

-

103.96

-

-

- - -

103.96

-

2002-03

-

-

17.47

-

-

- - -

17.47

-

Others 2005-06

-

-

-

-

0.10

-

3.59

-

3.69

-

2004-05

-

-

5.90

-

0.42

0.10

3.88

4.09

10.20

4.19

2003-04

-

-

13.75

-

0.28

-

4.65

3.58

18.68

3.58

2002-03

-

-

13.26

-

0.28

-

3.60

-

17.14

-

Loans Repaid / Given

Champaran Marketing


168.00

39.50

-

-

-

- - -

168.00

39.50


138

2005-06

5.00

-

-

-

-

- - -

5.00

-

2004-05

5.00

-

-

-

-

- - -

5.00

-

2003-04

22.50

-

-

-

-

- - -

22.50

-

2002-03

7.75

-

-

-

-

- - -

7.75

-


16.00

-

-

-

-

- - -

16.00

-

2003-04

6.19

-

-

-

-

- - -

6.19

-

2002-03

2.08

-

-

-

-

- - -

2.08

-

Narkatiaganj Farms

Ltd. 2004-05

17.50

-

-

-

-

- - -

17.50

-

2003-04

5.65

-

-

-

-

- - -

5.65

-

2002-03

2.17

-

-

-

-

- - -

2.17

-

OSM Investment &


55.50

-

-

-

-

- - -

55.50

-

2005-06

7.50

-

-

-

-

- - -

7.50

-

2004-05

3.50

-

-

-

-

- - -

3.50

-

2003-04

2.50

6.00

-

-

-

- - -

2.50

6.00

2002-03

14.50

26.50

-

-

-

- - -

14.50

26.50



122.50

-

-

-

-

- - -

122.50

-

2005-06

5.75

-

-

-

-

- - -

5.75

-

2004-05

0.25

-

-

-

-

- - -

0.25

-


139

2003-04

24.75

3.25

-

-

-

- - -

24.75

3.25

2002-03

80.46

22.50

-

-

-

- - -

80.46

22.50


39.75

7.36

-

-

-

- - -

39.75

7.36

2004-05

0.04

0.04

-

-

-

- - -

0.04

0.04

Sutlej Textiles &


-

-

1,500.0

-

-

- - -

1,500.00

-


Formerly Sutlej


-

-

2,100.0

-

-

- - -

2,100.00

-

2003-04

-

-

300.00

-

-

- - -

300.00

-

2002-03

-

-

1,405.00

-

-

- - -

1,405.00

-

SCM Investment &


-

-

2,150.00

-

-

- - -

2,150.00

-

2003-04

-

-

2,300.00

-

-

- - -

2,300.00

-

2002-03

-

-

550.00

-

-

- - -

550.00

-

RTM Investment &


-

-

2,225.00

-

-

- - -

2,225.00

-

2003-04

-

-

2,800.00

-

-

- - -

2,800.00

-

2002-03

-

-

300.00

-

-

- - -

300.00

-

Others 2005-06

-

-

-

4.00

-

11.57

-

15.57

-

2004-05

-

-

340.00

-

2.00

-

9.50

-

351.50

-


140

2003-04

-

-

385.00

-

-

-

13.01

-

398.01

-

2002-03

-

-

340.00

-

-

-

1.40

-

341.40

-


Loans Taken


8.50

16.00

-

-

-

- - -

8.50

16.00

2002-03

19.77

13.69

-

-

-

- - -

19.77

13.69

Narkatiaganj Farms

Ltd. 2003-04

12.50

17.50

-

-

-

- - -

12.50

17.50

2002-03

13.82

10.65

-

-

-

- - -

13.82

10.65

Champaran Marketing


30.00

-

-

-

-

- - -

30.00

-

2005-06

19.75

98.50

-

-

-

- - -

19.75

98.50

2004-05

13.25

83.75

-

-

-

- - -

13.25

83.75

2003-04

22.00

75.50

-

-

-

- - -

22.00

75.50

2002-03

6.00

76.00

-

-

-

- - -

6.00

76.00

OSM Investment &


37.50

10.50

-

-

-

- - -

37.50

10.50

2005-06

24.50

28.50

-

-

-

- - -

24.50

28.50

2004-05

21.00

11.50

-

-

-

- - -

21.00

11.50

2003-04

23.00

-

-

-

-

- - -

23.00

-

2002-03

12.25

-

-

-

-

- - -

12.25

-



94.00

89.00

-

-

-

- - -

94.00

89.00


141

2005-06

69.50

117.50

-

-

-

- - -

69.50

117.50

2004-05

57.25

53.75

-

-

-

- - -

57.25

53.75

2003-04

44.00

-

-

-

-

- - -

44.00

-

2002-03

57.96

-

-

-

-

- - -

57.96

-


7.36

-

-

-

-

- - -

7.36

-

2005-06

32.43

-

-

-

-

- - -

32.43

-

Sutlej Textiles &


-

-

3,500.00

2,000.00

-

- - -

3,500.00

2,000.00


Formerly Sutlej


-

-

900.00

-

-

- - -

900.00

-

2003-04

-

-

1,200.00

1,200.00

-

- - -

1,200.00

1,200.00

2002-03

-

-

1,705.00

300.00

-

- - -

1,705.00

300.00

SCM Investment &


-

-

1,150.00

-

-

- - -

1,150.00

-

2003-04

-

-

2,900.00

1,000.00

-

- - -

2,900.00

1,000.00

2002-03

-

-

950.00

400.00

-

- - -

950.00

400.00

RTM Investment &


-

-

2,025.00

-

-

- - -

2,025.00

-

2003-04

-

-

2,500.00

200.00

-

- - -

2,500.00

200.00

2002-03

-

-

800.00

500.00

-

- - -

800.00

500.00

Others 2005-06

-

-

-

-

-

2.31

-

2.31

-

2004-05 33.47 267.16


142

- - 250.00 - 4.00 4.00 13.16 37.47

2003-04

-

-

400.00

90.00

-

2.00

9.60

33.81

409.60

125.81

2002-03

-

-

415.00

75.00

-

2.00

18.22

37.22

433.22

114.22



Credit :



-

-

-

58.02

-

- - -

-

58.02

2005-06

-

-

-

16.72

-

- - -

-

16.72

2004-05

-

-

-

14.07

-

- - -

-

14.07

2003-04

-

-

-

7.58

-

- - -

-

7.58

2002-03

-

-

-

7.42

-

- - -

-

7.42

Debit :


-

-

-

-

6.09

6.09

- -

6.09

6.09

Dividend Received



-

-

0.93

-

-

- - -

0.93

-

2005-06

-

-

0.45

-

-

- - -

0.45

-

2004-05

-

-

0.34

-

-

- - -

0.34

-

Champaran Marketing


5.22

-

-

-

-

- - -

5.22

-

OSM Investment &


12.18

-

-

-

-

- - -

12.18

-



41.24

-

-

-

-

- - -

41.24

-

Remuneration


-

-

-

-

100.31

- - -

100.31

-


143

2005-06

-

-

-

-

79.10

- - -

79.10

-

2004-05

-

-

-

-

16.80

- - -

16.80

-

2003-04

-

-

-

-

10.75

- - -

10.75

-

2002-03

-

-

-

-

10.75

- - -

10.75

-


-

-

-

-

15.91

5.29

- -

15.91

5.29

2004-05

-

-

-

-

14.59

2.90

- -

14.59

2.90

2003-04

-

-

-

-

12.35

1.29

- -

12.35

1.29

2002-03

-

-

-

-

7.90

- - -

7.90

-


1.47

1.47

1.47

1.47

Mr.M.S.Sharma 2006-07

-

-

-

-

10.51

- - -

10.51

-

2005-06

-

-

-

-

10.23

0.74

- -

10.23

0.74

2004-05

-

-

-

-

9.00

0.67

- -

9.00

0.67

2003-04

-

-

-

-

7.56

0.60

- -

7.56

0.60

2002-03

-

-

-

-

7.05

- - -

7.05

-

Mr.M.N.Agarwal 2003-04

-

-

-

-

6.53

- - -

6.53

-

2002-03

-

-

-

-

6.32

- - -

6.32

-


-

-

-

-

18.97

4.00

- -

18.97

4.00

2005-06

-

-

-

-

8.99

1.83

- -

8.99

1.83

2004-05

-

-

-

-

6.92

0.56

- -

6.92

0.56


144

2003-04

-

-

-

-

0.56

0.56

- -

0.56

0.56

Mr.P.K.Saini 2006-07

-

-

-

-

8.95

- - -

8.95

-

2005-06

-

-

-

-

0.39

0.20

- -

0.39

0.20

Mr.S.K.Premi 2006-07

-

-

-

-

10.36

- - -

10.36

-

2005-06

-

-

-

-

8.55

- - -

8.55

-

2004-05

-

-

-

-

9.15

0.07

- -

9.15

0.07

2003-04

-

-

-

-

6.88

0.49

- -

6.88

0.49

2002-03

-

-

-

-

7.32

- - -

7.32

-

Mr.S.D.Shukla 2006-07

-

-

-

-

4.74

1.42

- -

4.74

1.42


-

-

-

-

4.62

0.10

- -

4.62

0.10



145

STATEMENT OF RESTATED SEGMENTAL INFORMATION AS PER ACCOUNTING STANDARD-17 FOR

THE REPORTING PERIOD

ANNEXURE -11

(Rs. in lacs)

Year Sugar Spirits

Others Total

Co-generation

Canning Products

(a) Revenue ( net of excise duty and cess)

2006-07

37,817.54 3,919.33

766.43

1,741.15

-

44,244.45

2005-06

44,890.74 3,792.89 -

1,433.10

50,116.73

2004-05

32,078.00 2,335.20 -

1,191.37

35,604.57

2003-04 31,006.47 3,168.18 -

1,260.87 - 35,435.52

External Sales

2002-03 28,063.23 2,176.26 -

1,092.16 - 31,331.65

2006-07 2,777.18 4.00

1,425.95

- - 4,207.13

2005-06 1,197.96 13.68 -

- - 1,211.64

2004-05 826.63 - -

- - 826.63

2003-04 713.56 - -

- - 713.56

Inter-segment Sales

2002-03 736.73 - -

- - 736.73

2006-07 40,594.72 3,923.33

2,192.38

1,741.15 - 48,451.58

2005-06 46,088.70 3,806.57 -

1,433.10 - 51,328.37

2004-05 32,904.63 2,335.20 -

1,191.37 - 36,431.20

2003-04 31,720.03 3,168.18 -

1,260.87 - 36,149.08

Total Revenue

2002-03 28,799.96 2,176.26 -

1,092.16 - 32,068.38

(b) Results

2006-07 (3,643.62) 1,315.14

746.21

81.24

(0.25) (1,501.28)

2005-06 8,048.36 1,168.24 -

(2.64)

3.07 9,217.03

2004-05 6,364.12 498.67 -

(42.11)

1.60 6,822.28

2003-04 3,823.34 1,105.05 -

(87.29)

1.29 4,842.39

Segment Results

2002-03 218.66 474.53 -

(20.42)

(44.61) 628.16

Unallocated expenses net of 2006-07 346.63


146

2005-06 357.60

2004-05 331.14

2003-04 199.25

unallocated Income

2002-03 73.16

2006-07 (1,847.91)

2005-06 8,859.43

2004-05 6,491.14

2003-04 4,643.14

Operating Profit

2002-03 555.00

2006-07 2,092.87

2005-06 1,684.79

2004-05 2,701.54

2003-04 3,536.87

Interest Expenses & Finance

Charges(net)

2002-03 3,084.35

2006-07 57.15

2005-06 705.28

2004-05 201.59

2003-04 32.17

Income & Wealth Tax (net)

2002-03 1.03

2006-07 (1,103.64)

Deferred Tax Liability/(Asset)

(net)

2005-06 1,103.64

2006-07 (2,894.29)

2005-06 5,365.72

2004-05 3,588.01

2003-04 1,074.10

Net Profit / (Loss)

2002-03 (2,530.38)

(c) Total Assets

2006-07 52,227.18 5,127.94

6,501.35

880.79

1.48 64,738.74

2005-06 36,933.57 2,532.14 -

874.92

1.47 40,342.10

2004-05 34,121.45 2,417.79

765.13

10.24 37,314.61

2003-04 29,805.30 2,283.34

855.43

17.45 32,961.52

Segment Assets

2002-03 36,001.85 2,008.08

654.47

19.53 38,683.93

2006-07 1,481.88

2005-06 1,288.21

2004-05 1,300.40

Unallocated Assets

2003-04 1,276.07


147

2002-03 1,453.23

2006-07 66,220.62

2005-06 41,630.31

2004-05 38,615.01

2003-04 34,237.59

Total

2002-03 40,137.16

(d) Total Liabilities

2006-07 14,352.99 185.35

0.30

680.88

0.06 15,219.58

2005-06 3,251.37 133.53 -

600.48

0.06 3,985.44

2004-05 2,484.21 168.76 -

580.04

1.13 3,234.14

2003-04 5,176.96 202.73 -

600.81

1.12 5,981.62

Segment Liabilities

2002-03 8,559.24 149.49 -

507.46

9.91 9,226.10

2006-07 41,301.08

2005-06 25,013.59

2004-05 27,151.61

2003-04 26,922.70

Unallocated Liabilities

2002-03 30,368.55

2006-07 56,520.66

2005-06 28,999.03

2004-05 30,385.75

2003-04 32,904.32

Total

2002-03 39,594.65

(e) Other Information

(i) 2006-07 7.97 - -

- - 7.97

2005-06 13.86 - -

- -

13.86

2004-05 9.27 - -

- -

9.27

2003-04 10.25 -

-

-

- 10.25

Non cash expenses included in

Segment Expenses for arriving at

Segment Results

2002-03 8.84 -

-

-

- 8.84

(ii) 2006-07 12,520.28 2,374.08

6,035.84

6.60 - 20,936.80

2005-06 6,340.05 334.33 -

0.48 -

6,674.86

2004-05 4,187.03 419.48 -

1.45 -

4,607.96

2003-04 1,893.60 232.21 -

9.85 -

2,135.66

Capital Expenditure

2002-03 363.82 265.09 -

3.91

- 632.82

(iii) Depreciation for the period 2006-07 1,728.79 109.34 2,030.09


148

187.41 4.52 0.03

2005-06 1,465.88 89.56 -

4.22

0.02 1,559.68

2004-05 1,180.92 65.98 -

4.48

0.03 1,251.41

2003-04 1,027.59 66.36 -

3.97

0.03

1,097.95

2002-03 1,015.70 53.42 - 3.78 0.02 1,072.92

Revenue

(f) Geographical Segments

2006-07

43,127.64

2005-06

48,556.40

2004-05

35,284.60

2003-04 34,902.89

Domestic

2002-03 31,112.30

2006-07 1,116.81

2005-06 1,560.33

2004-05 319.97

2003-04 532.63

Overseas (Including through

canalising agents)

2002-03 219.35

2006-07 44,244.45

2005-06 50,116.73

2004-05 35,604.57

2003-04 35,435.52

Total

2002-03 31,331.65

Notes :

(i) Business Segment: The business segments have been identified on the basis of the products

of the Company. Accordingly, the Company has identified “Sugar”, “Spirits”, "Co-

generation" and “Canning Products” as the operating segments:

Sugar - Consists of manufacture and sale of Sugar, Molasses & Bagasse

Spirits - Consists of manufacture and sale of Industrial Spirits (including Denaturants), Fusel

Oil & Bio-Compost

Co-generation - Consists of generation and transmission of Power

Canning Products - Consists of Canned Fruits & Vegetables, Jams, Jellies, Squashes &

Juices

Others – Consist of Miscellaneous business comprising of less than 10% revenues.

(ii)

Geographical Segment: The Company primarily operates in India and therefore the analysis

of geographical segment is demarcated into its Indian and Overseas Operations.

(iii) The Company has common fixed assets located in India for producing goods for domestic

and overseas markets. Hence, separate figures for fixed assets / additions to fixed assets

thereof cannot be furnished.

(iv) The period referred to above is from 1st July to 30th June each year.


149

STATEMENT OF DIVIDENDS PAID

ANNEXURE-12


2003 2004 2005 2006 2007

No. of Equity Shares of

Rs. 10 each 10,385,790 10,385,790 18,174,570 18,174,570

18,174,570

Rate of Dividend (%) - 25% 25% 45%

-

Dividends Paid (Rs. in Lacs)

Amount of Dividend - 259.65 454.36 817.86

-

Corporate Tax on

Dividend - 33.94 63.72 114.70

-

Total - 293.59 518.08 932.56

-

STATEMENT OF TAX SHELTER BASED ON RESTATED PROFITS / (LOSSES) Annexure 13

(Rs. In

Lacs)

July 2002 to

June 2003

July 2003 to

June 2004

July 2004 to

June 2005

July 2005 to

June 2006

July 2006

to June

2007

Tax Rate Including Surcharge Refer Note no. 1 below

Net Profit / (Loss) as per Restated

Profit and Loss Account after

depreciation but before taxation

(2,529.35) 1,106.27 3,789.60

7,174.64

(3,940.78)

Permanent Difference

Dividend Received -

(0.47)

(0.54)

(0.65)

(1.21)

Others

(33.00) 26.69 5.18

24.37

30.80


150

Timing Difference

Difference in Book Depreciation &

Depreciation under Income Tax

Act 1961

(334.68)

(91.74)

(339.48)

(610.08)

(4,421.29)

Net Disallowable sum under

section 43B of the Income Tax

Act,1961 346.38

(948.44) 97.00

103.86

(366.95)

Others

(53.87)

(62.62) 83.45

265.86

29.95

Adjustment of Carry forward

losses and unabsorbed depreciation -

(29.69)

(3,635.21)

(6,958.00)

-

Notional Income Tax at Specified

Rates (Refer Note 2 below) - 88.20 320.97

808.22

-

Tax As per Accounts

(a) Current Tax (including

Wealth Tax)* 1.03 32.17 197.09

680.38

29.65

(b) Deferred Tax Liability /

(Asset) - - -

1,103.64

(1,103.64)

(c) Fringe Benefit Tax - - 4.50

24.90

27.50

Tax Shelter in form of

(a) Brought Forward Business

Loss and Unabsorbed

Depreciation 13,255.88 12,149.96 11,138.73

4,117.11

12,680.92

(b) Expenses Allowable on

Payment Basis 2,416.18 1,467.74 1,564.74

1,668.60

1,301.65

(c) Others 11.61 11.61 36.61

36.61

36.61

(d) MAT Credit entitlement - - -

696.00

721.50

Notes:

(1) As the accounting year of the Company falls in two financial years as per Income Tax Act,1961, the applicable tax

rate including surcharge has not been specified.

(2) In view of accumulated business loss and unabsorbed depreciation under the Income Tax Act, 1961, "Minimum

Alternate Tax" was payable for the year ended 30th June, 2004, 2005 and 2006, under Section-115 JB of the Income

Tax Act, 1961.

(3) The figures for the year ended 30th June, 2003, 2004, 2005, 2006 & 2007 are as provided by the Management and

not from the return of income of the company

* Net of refunds


151

ANNEXURE-14

RESTATED CAPITALISATION STATEMENT

(Rs. in Lacs)

As at 30th June, 2007

Pre-issue

As Restated for

Right issue #

Borrowings

Short-Term *

28,458.08

Long-Term

12,675.07

Total

41,133.15 -

Shareholders' Funds

Equity

1,817.49

Reserves & Surplus**

7,882.47

Total

9,699.96 -

Long-term Debt/Equity ratio 1.31 :1

* Represents loan repayable within one year and/or

on demand.

** Restated Reserves

# Ratio and price of share (including premium) etc., shall be decided at the time of preparation of final

letter of offer for submission to SEBI.


152

ANNEXURE- 15 (A)

STATEMENT OF RESTATED EARNING PER SHARE

(Rs. in Lacs)


2003 2004 2005 2006 2007

Restated Profit /

(Loss) after Tax (2,530.38) 1,074.10 3,588.01

5,365.72 (2,894.29)

Basic / Weighted

average number of

outstanding equity

Shares 10,385,790 10,385,790 15,834,696 *

18,174,570 18,174,570

Nominal Value of

Equity shares (Rs.) 10.00 10.00 10.00

10.00 10.00

Basic / diluted

Earning / (Loss) per

share (Rs.) (24.36) 10.34 22.66

29.52 (15.93)

* After considering the impact of Right Issue of Shares during the year.

ANNEXURE -15 (B)

STATEMENT OF RESTATED BALANCE OF DEBTORS

(Rs. in Lacs)

As at 30th June

2003 2004 2005 2006 2007

More than 6 Months

Considered Good

10.47

25.64 16.70 4.69 13.39

Considered Doubtful

131.61

119.51 112.38 107.44 113.76

142.08

145.15 129.08 112.13 127.15

Less than 6 Months

936.56

577.38 94.91 406.97 578.56

Total Debtors

1,078.64

722.53 223.99 519.10 705.71

Less: Provision

131.61

119.51 112.38 107.44 113.76

Net Debtors Balance

947.03

603.02 111.61 411.66 591.95


153

ANNEXURE -15 (C)

STATEMENT OF RESTATED BALANCE OF LOANS AND ADVANCES

(Rs. in

Lacs)

As at 30th June

2003 2004 2005 2006 2007

LOANS (Considered Good)

To Subsidiary Companies

49.00 9.25

0.04 7.36

39.50

To Others

8.71 44.44

50.71 48.46

39.12

ADVANCES (Considered Good)

Advances recoverable in cash or in kind

or for value to be received or pending

adjustments

513.43 585.93

850.8

4 801.80

661.26

Sales tax, Purchase tax and Excise duty

payments under appeal and/or under

dispute

101.24 111.75

107.9

1 86.91

87.01

Balance with Registrar, Allahabad High

Court

14.18 -

- - -

Balance with Excise, Port Trust & other

Govt.Authorities

321.82 416.41

558.2

8 428.45

1,490.67

Claims and Refunds receivable

125.26 239.78

109.2

3 75.72

148.19

Advance payment of Tax,Refunds

receivable and Tax deducted at source

(after adjusting provisions)

11.17 46.23

57.36 -

148.01

Sundry Deposits

43.41 51.25

50.74 41.89

31.74

ADVANCES (Considered Doubtful)

227.45 179.02

149.8

9 205.21

235.70

Total Loans and Advances

1,415.67 1,684.06

1,935

.00 1,695.80

2,881.20

Less: Provisions

227.45 179.02

149.8

9 205.21

235.70

Net Loans and Advances

1,188.22 1,505.04

1,785

.11 1,490.59

2,645.50

Details of Loans to Subsidiary Companies

OSM Investment & Trading Company

Ltd.

26.50 6.00

- - -

Hargaon Investment & Trading

Company Ltd.

22.50 3.25

- - -

Hargaon Properties Ltd.,

- -

0.04 7.36 -

Champaran Marketing Company Ltd.,

- -

- -

39.50

49.00 9.25

0.04 7.36

39.50


154

ANNEXURE -15 (D)

STATEMENT OF RESTATED OTHER INCOME

(Rs. in

Lacs)


2003 2004 2005 2006 2007

Income from Long Term

Investments(Gross)

Dividend

58.80

0.47 0.54 0.65

1.21

Interest

0.06

- - - -

Insurance & Other Claims

29.80

14.08 42.98 7.64

11.85

Export Incentive

3.18

20.47 - 23.21

14.11

Holding Charges on Buffer stock

118.34

246.76 135.10 -

54.92

Rent & Hire charges

4.91

6.65 16.42 18.10

19.95

Miscellaneous Receipts

59.06

5.23 8.59 22.31

10.31

Unspent liabilities,excess provisions and

unclaimed balances Written back

(net)

32.50

27.88 55.82 44.45

48.80

Profit on sale of Fixed Assets

-

- 5.34 - -

Exchange Rate Fluctuations (Net)

-

- 22.46 0.99

0.01

Profit on sale of Investments

-

23.36 - - -

Total

306.65

344.90 287.25 117.35

161.16

Note: All the items of other Income as given except for profit on sale of investment are generally recurring

in nature and are related to business activities carried out by the Company.


155

ANNEXURE -15

(E)

STATEMENT OF RESTATED SECURED LOANS

(Rs. in

Lacs)

As at 30th June

Particulars 2003 2004 2005 2006 2007

Term Loans

From Financial Institution(s) / Bank(s)

:

Under Corporate Loan

2,850.00 2,250.00

1,65

0.00 1,050.00

450.00

Under Project Finance Scheme

2,945.00 2,945.00

4,68

5.00 6,000.00

9,262.58

Short Term Loan from a Bank

250.00 250.00

- - -

From Others

6,00

0.00 4,800.00

3,600.00

From Government of India (Sugar

Development Fund)

4,022.61 3,824.91

3,60

0.42 3,373.42

2,861.23

Other Loans

From Scheduled Banks on Cash Credit

Account :

State Bank of India

15,924.85 11,840.95

8,34

6.75 * 5,331.73

11,079.18

Punjab National Bank

769.39 783.90

- - -

Total

26,761.85 21,894.76

24,2

82.1

7 20,555.15

27,252.99

* Including Working Capital Demand Loan of Rs.6500 lans.


156

(Rs. in Lacs.)

Sl.no.

NAME OF

BANK/INSTIT

UTION/

OTHERS

SANCTI

ONED

AMOUN

T

RATE OF

INTEREST

(%) p.a.

Outstandin

g as on

30th

June,2007

NATURE OF

SECURITY

REPAYMEN

T

SCHEDULE

1.

TERM

LOANS

a)

3,000.00

10.00%

Payable

Quarterly

450.00

Secured by first

mortgage/charge on all

the immovable/movable

assets,(save and except

book debts), present and

future,of the Company's

Sugar units at

Narkatiaganj & Hargaon

and Distillery unit at

Hargaon, ranking pari-

pasu amongst the various

lenders, subject to prior

charges created on

movables for working

capital borrowings from

the Company's bankers.

Quarterly

installments of

Rs. 150.00 lacs

each

Industrial

Development

Bank of India

(IDBI)

b)

941.15

4.00%

Payable

Yearly

297.46

Secured by a second

charge on all the

immovable / movable

assets (save and except

book debts) present and

future of the Company's

Sugar units at Rosa

including Rs.109.23 lacs

towards interest which, as

per stipulated terms,is

payable on a long term

basis

Five yearly

instalments

commenced

from Ist

Oct.,2003

(Four

installments

already paid.)

Government of

India (Sugar

Development

Fund)

1,800.00

4.00%

Payable

Yearly

2,563.77

Secured by a second

charge on all the

immovable / movable

assets (save and except

book debts) present and

future of the Company's

Sugar units at

Narkatiaganj including

Rs.943.77 lacs towards

interest which, as per

stipulated terms,is

payable on a long term

basis

10 instalments

in five years

commencing

from 2nd

June,2007

(One

instalment

already paid.)


157

Sl.no.

NAME OF

BANK/INSTIT

UTION/

OTHERS

SANCTI

ONED

AMOUN

T

RATE OF

INTEREST

(%) p.a.

Outstandin

g as on

30th

June,2007

NATURE OF

SECURITY

REPAYMEN

T

SCHEDULE

2,741.15

2,861.23

c) Rabo India

Finance

6,000.00

8.30%&8.43

5% Payable

Quarterly

3,600.00

Secured by first






Sugar units at

Narkatiaganj, Hargaon &

Rosa and Distillery unit

at Hargaon, ranking pari-



charges created on




Half yearly

installments of

Rs. 600.00 lacs

each

commencing

from Oct.,05

(Four

instalments

already paid.)

d) UTI Bank

4,235.00

11.00%

Payable

Monthly

3,479.82

Secured by first






Sugar units at Hargaon


Hargaon ranking pari-



charges created on



the Company's

bankers.(Including

Rs.38.88 lacs towards

interest.)

16th Quarterly

installments of

Rs. 264.6875

lacs each

commencing

from Oct.,06(

Three

installemnt

already paid)

e) State Bank Of

India

4,300.00

11.00%

Payable

Monthly

4,300.00

Secured by first






Sugar units at Hargaon


Hargaon ranking pari-



charges created on




20th Quarterly

installments of

Rs. 215 lacs

each

commencing

from Dec.,07


158

Sl.no.

NAME OF

BANK/INSTIT

UTION/

OTHERS

SANCTI

ONED

AMOUN

T

RATE OF

INTEREST

(%) p.a.

Outstandin

g as on

30th

June,2007

NATURE OF

SECURITY

REPAYMEN

T

SCHEDULE

f) State Bank Of

Hydrabad

1,650.00

9.00%

Payable

Monthly

1,482.76

To be Secured by first






Narkatiaganj unit ,

ranking pari-pasu

amongst the various


charges created on




20th Quarterly

installments of

Rs. 82.50 lacs

each

commencing

from June,08

2 CASH CREDIT

ACCOUNT

a) State

Bank of

India,

(SBI)

19,785.00

11.75%

Payable

Monthly

11,079.18

Secured by

hypothecation of entire

current assets of the

Company and further

secured by a charge on

the immovable assets of

the company as follows :-

On Demand

a.Canning factory at

Allahabad - First Charge

b. Hargaon Sugar &

Distllery units - Second

Charge

c. Narkatiaganj & Rosa

Sugar units - Third

Charge

Total

27,252.99


159

ANNEXURE -15 (F)

DETAILS OF UNSECURED LOANS (Rs. in Lacs)

As at 30th June

Particulars 2003 2004 2005 2006 2007

Intercorporate Deposits from

Promoters' Companies

985.00

765.00

-

Associate / Promoters' Group

Companies

1,300.00

1,300.00

190.00

55.00

4,045.00

Others

765.00

2,040.00

255.00

175.00

900.00

Sub Total

3,050.00

4,105.00

445.00

230.00

4,945.00

From Subsidiary Companies

100.34

109.00

149.00

244.50

99.50

25-10.35% Short Term non-

convertible debentures of Rs. 100

lacs each ( Reedemable at par on 6th

July,07)

-

-

-

-

2,500.00

From State Bank of India - Against

crop Loan to Growers

-

-

-

-

354.15

Short Term Loan from Scheduled

Banks

-

-

1,000.00

1,000.00

5,440.00

From Trade & deposits( partly not

bearing interest)

58.39

63.09

57.10

75.48

91.78

Fixed Deposits from :

Key management Personnel and

their relatives

39.22

35.81

37.47

-

-

Others

302.41

379.78

612.19

686.50

449.73

Total

3,550.36

4,692.68

2,300.76

2,236.48

13,880.16

BREAK-UP OF RESTATED INTERCORPORATE DEPOSITS AS ON 30TH JUNE,2007

S

l

N

o. Particulars

Interest

payment

schedule

Rate of

Interest

Amount

Re-

payment

Schedule

1

From Associate / Promoters'Group

Companies:

SIL Investments Limited Monthly 14.00% 525.00

On

demand

Sutlej Textiles & Industries Limited Monthly 13.00% 2,000.00

On

demand

Chambal Fertilizers & Chemicals

Ltd. Quarterly 13.00% 1,000.00

28-09-

2007

H.T.Media Ltd., Quarterly 10.00% 500.00

On

demand

Pollock Traders (P) Ltd. Quarterly 10.00% 20.00

4,045.00

19-04-

2008

2 From others Monthly

14% -

15%

900.00

On

various

dates

From

Oct.,07 to

March,08

Total

4,945.00


160

BREAK-UP OF LOANS FROM SUBSIDIARY COMPANIES(NOT

BEARING INTEREST)

1 Hargaon Investment & Trading Company Limited 89.00

2 Osm Investment & Trading Company Limited 10.50

TOTAL 99.50

ANNEXURE -

15 (G)

DETAILS OF INVESTMENTS

(Rs. in

Lacs)

Particulars As at 30th June

2003 2004 2005 2006 2007

Quoted Investments

In Associate / Promoter's Group

Companies

4.96

2.26

2.26

2.26

13.23

Others

1.13

1.13

1.13

1.13

1.13

Total

6.09

3.39

3.39

3.39

14.36

Unquoted Investments

In Subsidiaries

1,073.16

1,073.16

1,063.16

1,063.16

1,063.16

Others

39.13

38.59

48.59

48.59

38.61

Total

1,112.29

1,111.75

1,111.75

1,111.75

1,101.77

Grand Total

1,118.38

1,115.14

1,115.14

1,115.14

1,116.13

Less: Provison for diminution in

value of Investments

11.61

11.61

36.61

36.61

36.61

Net Investments

1,106.77

1,103.53

1,078.53

1,078.53

1,079.52

Market Value of Quoted Investments

11.18

8.06

22.47

19.83

15.08


161

AUDITORS’ REPORT

To,

The Board of Directors


9/1 R N Mukherjee Road

Kolkata 700 001

Dear Sirs,

1. We have examined the attached financial information of The Oudh Sugar Mills Limited (hereinafter referred

to as the Company) and its subsidiaries as approved by the Committee of Directors of the Company, prepared

in terms of the requirements of Paragraph B, Part II of Schedule II of the Companies Act, 1956 (“the Act”)

and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 as

amended to date (SEBI Guidelines) and in terms of our engagement agreed upon with you in accordance with

our engagement letter dated 22nd October,2007 in connection with the proposed Rights Issue of Equity

shares along with detachable warrants of the Company.

2. These information have been extracted by the Management from the Consolidated financial statements for the

years ended on 30th

June 2003, 2004, 2005, 2006 and 2007.

We have not audited the financial statements of the subsidiaries viz. Rajpur Farms Limited, Narkatiaganj

Farms Limited for the financial years ended March 31, 2003, 2004 & 2005 (ceased to be subsidiaries from

19.10.04), OSM Investment & Trading Company Limited, Hargaon Investment & Trading Company

Limited, Champaran Marketing Company Limited and Hargaon Properties Limited for the financial years

ended on March 31, 2003, 2004, 2005, 2006 and 2007 and three months period ended June 30, 2007 whose

financial statements reflect total assets of Rs. 48.87 lacs, Rs. 49.36 lacs, 487.36 lacs, Rs. 1317.69 lacs, 519.65

lacs & Rs. 48.26 lacs and total revenues of Rs. 0.75 lacs, Rs. 0.78 lacs, Rs. 39.86 lacs, Rs. 100.06 lacs, Rs.

35.42 lacs & Rs. 1.05 lacs respectively. The financial statements of the subsidiaries have been audited by

other auditors, whose reports have been furnished to us and our opinion, insofar as it relates to the amounts

included in these Consolidated Restated Summary Statement of Assets & Liabilities, Consolidated Restated

Summary Statement of Profit & Loss and Consolidated Restated Summary Statement of Cash Flows are

based solely on the reports of other auditors as well as management representation as enumerated vide note

no. 1(c) to the Annexure-5 enclosed with this report.

3. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI Guidelines

and in terms of our engagement agreed with you, we further report that:

e) The ‘Consolidated Restated Summary of Assets and Liabilities’ of the Company and its subsidiaries as at

30th

June 2003, 2004, 2005, 2006 and 2007 examined by us, as set out in Annexure-1 to this report are

after making such adjustments and regroupings as in our opinion were appropriate and as are more fully

described in Significant Accounting Policies and Notes and Statement of Adjustments (Refer Annexures

4A, 4B, 5 & 6).

b) The ‘Consolidated Restated Summary Statement of Profits and Losses’ of the Company and its

subsidiaries for each of the years ended on 30th June 2003, 2004, 2005, 2006 and 2007 examined by us,

as set out in Annexure-2 to this report are after making such adjustments and regroupings as in our

opinion were appropriate and as are more fully described in Significant Accounting Policies & Notes and

Statement of Adjustments (Refer Annexures 4A, 4B, 5 & 6).

c) The ‘Consolidated Restated Statement of Cash Flows’ of the Company and its subsidiaries in respect of

each of the years ended on 30th

June 2003, 2004, 2005, 2006 and 2007 examined by us, as set out in

Annexure-3 to this report, in our opinion, have been prepared by the Company in accordance with the

requirements of Accounting Standard 3 (Cash Flow Statements) issued by the Institute of Chartered

Accountants of India.

d) Without qualifying our opinion, we draw attention to the fact that for the purpose of these summary

statements, due to practical difficulties in retrospective application of Accounting Standard 29 on

“Provisions, Contingent Liabilities and Contingent Assets” as detailed vide Note No. 5 on Annexure-6,


162

such standard has been applied from the date it became applicable to the Company and not for all the

periods restated.

e) Based on the above and also as per the reliance placed on the audit/review reports submitted by other

auditors for the subsidiaries for the respective years, we confirm that-

i. the restated financial information have been made after incorporating:

a. Adjustments for the changes in accounting policies retrospectively in the respective financial

years to reflect the same accounting treatment as per changed accounting policies for all the

reporting periods.

b. Adjustments for the material amounts in the respective financial years to which they relate

except to the extent mentioned in clause iii below;

ii. There are no extra-ordinary items that need to be disclosed separately in the Summary

Statements; and

iii. All qualifications in the auditors’ reports, which require any adjustments to the summary

statements, have been adjusted except for the Note nos. 1(a) and 1(b) on Annexure-6

regarding non-adjustment of certain realisations in earlier years aggregating to Rs.

165.51 lacs and non-provision of interest payable thereon, if any, in case of refund of such

realisations. As the matters are under adjudication / not yet settled, the impact of above

non-adjustment on the Company’s profits / (losses) is not presently ascertainable;

f) At your request, we have also examined the following other Consolidated financial information prepared

by the management and approved by the Committee of Directors relating to the Company and its

subsidiaries for the year ended on 30th

June 2003, 2004, 2005, 2006 and 2007:

i. Statement of Changes in Accounting Policies enclosed as Annexure-7

ii. Statement of Qualifications in Auditors Report enclosed as Annexure-8

iii. Statement of Accounting Ratios based on the adjusted profits / (losses) relating to earning

per share, net assets value, return on net worth, enclosed as Annexure-9.

iv. Statement of Related Party Transactions enclosed as Annexure-10.

v. Statement of Segment Reporting enclosed as Annexure-11.

vi. Statement of Dividend Paid enclosed as Annexure-12.

vii. Statement of Tax Shelter enclosed as Annexure-13.

viii. Capitalisation Statement as at 30th

June, 2007 enclosed as Annexure-14.

ix. Statement of Earning Per Share enclosed as Annexure-15A.

x. Statement of Balance of Debtors enclosed as Annexure-15B.

xi. Statement of Loans & Advances enclosed as Annexure-15C.

xii. Statement of Other Income enclosed as Annexure-15D

xiii. Statement of Secured and Unsecured Loans enclosed as Annexure- 15E & 15F.

xiv. Statement of Investments enclosed as Annexure -15G.

In our opinion, the financial information contained in Annexures 7 to 15G of this report read along with the

Significant Accounting Policies and Notes (Refer Annexures- 5&6) prepared after making such adjustments

and regroupings as were considered appropriate, have been prepared in accordance with Part IIB of Schedule

II of the Act and the SEBI Guidelines.

We report that subject to our observation in Para 3 (e) (iii) above, the information mentioned in clauses 1 to

3 above have been correctly computed / compiled with reference to the various statements enclosed vide

Annexures 1 to 15G of this report.

4. This report should not be in any way construed as a reissuance or redating of any of the previous audit reports

issued by us or by other firm of Chartered Accountants, nor should this report be construed as a new opinion

on any of the financial statements referred to herein.

Our report is intended solely for use of the management and for inclusion in the Letter of Offer in connection

with the proposed Rights Issue of the Company. Our report should not be used for any other purpose except

with our consent in writing.


163

For S. R. BATLIBOI & CO.

CHARTERED ACCOUNTANTS

Place: Kolkata

Dated: December 11, 2007 Per R K AGRAWAL Partner

Membership No.

16667


164

ANNEXURE -1

STATEMENT OF RESTATED CONSOLIDATED ASSETS AND LIABILITIES OF THE OUDH SUGAR

MILLS LIMITED AND ITS SUBSIDIARIES

(Rs. In Lacs)

Particulars As at 3oth June

2003 2004 2005 2006 2007


Assets

A Fixed Assets

Gross Block 21,932.37 22,646.55 26,987.69 30,429.97 41,796.03

Less : Depreciation 8,386.99 9,375.18 10,446.97 11,780.40 13,254.85

Net Block 13,545.38 13,271.37 16,540.72 18,649.57 28,541.18

Capital Work in Progress 306.92 174.66 190.09 202.11 256.09

Capital Expenditure on Expansion /

New Projects - 1,415.50 1,443.10 4,421.31 13,224.76

13,852.30 14,861.53 18,173.91 23,272.99 42,022.03

B Investments 1,524.99 1,537.16 1,513.52 1,366.15 2,123.60

C Current assets, loans and advances

Inventories 22,798.05 16,046.02 17,326.19 15,143.37 19,473.86

Sundry Debtors 947.03 603.02 111.61 411.66 591.95

Cash & Bank Balances 329.30 199.38 206.35 347.06 513.27

Loans and advances 1,145.45 1,497.85 1,786.00 1,938.77 2,606.64

Other Current Assets 5.33 3.90 4.08 2.52 3.54

Total 25,225.16 18,350.17 19,434.23 17,843.38 23,189.26

TOTAL ASSETS 40,602.45 34,748.86 39,121.66 42,482.52 67,334.89

D Deferred Tax Liability (net) - - - 1,103.64 -


Secured Loans 26,761.85 21,894.76 24,282.17 20,555.15 27,252.99

Unsecured Loans 3,450.02 4,583.68 2,151.76 1,991.98 13,780.66

Current Liabilities 9,289.65 6,027.94 3,272.70 3,997.40 15,311.71

Provisions - 293.59 530.47 1,104.72 77.50

TOTAL LIABILITIES 39,501.52 32,799.97 30,237.10 27,649.25 56,422.86

F Liability to preference shareholders 45.00 45.00 45.00 45.00 -

G Net Worth (A+B+C-D-E) 1,055.93 1,903.89 8,839.56 13,684.63 10,912.03

H Represented by :

Shareholder's Funds

a. Share Capital 1,038.62 1,038.62 1,817.49 1,817.49 1,817.49

b. Reserves and Surplus 3,674.96 3,697.49 7,022.60 11,867.54 9,094.77

4,713.58 4,736.11 8,840.09 13,685.03 10,912.26

Less:

Profit and Loss Account Debit

Balance 3657.65 2831.57

Miscellaneous Expenditure (to the

extent not written off or Restated) - 0.65 0.53 0.40 0.23

Total 1,055.93 1,903.89 8,839.56 13,684.63 10,912.03

Notes:

(1) The above figures should be read with the Statement on Significant Accounting Policies and Statement of Notes

on the Restated Consolidated Profits and Losses and Restated Consolidated Assets and Liabilities as appearing in

Annexures 5 and 6 respectively.


165

(2) Necessary adjustments have been made to the audited financial statements in accordance with the requirements

of paragraph 6.10.2 of The Securities and Exchange Board of India (Disclosure and Investor Protection)

Guidelines, 2000.


166

ANNEXURE -2 STATEMENT OF RESTATED CONSOLIDATED PROFITS AND

LOSSES OF THE OUDH SUGAR MILLS LIMITED AND ITS

SUBSIDIARIES

(Rs. In Lacs)


Particulars 2003 2004 2005 2006 2007

Income

Sales of Products (Net of excise duty) 31,331.65 35,435.52 35,604.57 50,116.73 44,244.45

Increase / (Decrease) in Inventories (352.38) (6,353.86) 1,077.83 (2,099.02) 3,708.61

Other Income 310.24 407.25 379.26 543.88 326.89

Total 31,289.51 29,488.91 37,061.66 48,561.59 48,279.95

Expenditure

Purchase of Semi-finished Goods 47.76 173.05 998.83 62.59 34.73

Raw Materials Consumed 23,551.05 17,247.94 21,528.91 29,727.34 38,765.85

Staff Cost 1,933.45 1,918.45 2,028.78 2,401.92 2,748.37

Other Manufacturing Expenses 2,858.63 3,001.23 3,152.67 3,973.93 4,752.87

Administrative and Other Expenses 768.14 764.49 1,048.78 995.38 1,090.43

Selling and Distribution Expenses 507.91 581.96 476.37 558.13 543.90

Interest & Finance Charges (Net) 3,081.43 3,533.65 2,700.26 1,652.63 2,090.74

Depreciation 1,072.72 1,097.79 1,251.28 1,558.68 2,028.67

Total 33,821.09 28,318.56 33,185.88 40,930.60 52,055.56

Net Profit / (Loss) Before Tax (2,531.58) 1,170.35 3,875.78 7,630.99 (3,775.61)

Taxation :

Current Tax (net of refunds) 6.95 33.33 197.84 688.69 33.32

Fringe Benefit Tax - - 4.50 24.90 27.50

Deferred Tax Liability /(Asset) - - - 1,103.64 (1,103.64)

Net Profit / (Loss) after tax (2,538.53) 1,137.02 3,673.44 5,813.76 (2,732.79)

Notes:

1.The above figures should be read with the Statement on Significant Accounting Policies and Statement of Notes

on the Restated Consolidated Profit and Losses and Assets and Liabilities as appearing in Annexures 5 and 6

respectively

2. Necessary adjustments have been made to the audited financial statements in accordance with the requirements of

paragraph 6.10.2 of The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines,

2000.


167

ANNEXURE – 3 STATEMENT OF RESTATED CONSOLIDATED CASH FLOWS THE

OUDH SUGAR MILLS LIMITED AND ITS SUBSIDIARIES

(Rs. in lacs)


2003 2004 2005 2006 2007

(A) CASH FLOW FROM OPERATING

ACTIVITIES :

Restated Profit /(Loss) before Tax (2,531.58) 1,170.35 3,875.78 7,630.99

(3,775.61)

Adjustments for :

Loss of Subsidiary companies ceased during the

period - - 3.94 -

-

Depreciation as per Restated Profit & Loss 1,072.72 1,097.79 1,251.28 1,558.68

2,028.67

Depreciation on Agriculture Equipments 0.25 0.24 0.12 1.00

1.42

Preliminary Expenses Written off - - 0.12 0.13

0.17

Interest Expenses (net of capitalisation) 3,162.53 3,588.34 2,728.69 1,725.16

2,177.62

Molasses Storage and Maintenance Reserve 8.84 10.25 9.27 13.86

7.97

Provision for deminution in value of Investments - - 25.00 -

-

Loss / (Profit) on Fixed Assets sold / discarded 9.93 18.19 (5.41) 34.24

41.40

Interest & Dividend Income (120.04) (128.16) (120.22) (171.12)

(250.28)

Profit on Share Transactions - (12.71) (0.46) (328.59)

(3.54)

Operating Profit before Working Capital

Changes : 1,602.65 5,744.29 7,768.11 10,464.35

227.82

Adjustments for :

Trade Payables 1,442.98 (3,220.66) (2,754.54) 757.84

9,404.64

Trade & Other Receivables (658.91) 30.45 197.97 (92.05)

(1,164.36)

Inventories 251.80 6,752.03 (1,274.33) 2,182.82

(4,330.49)

1,035.87 3,561.82 (3,830.90) 2,848.61

3,909.79

Cash Generated from Operations : 2,638.52 9,306.11 3,937.21 13,312.96

4,137.61

Direct Taxes( Paid) / Refunds (19.92) (63.73) (208.00) (544.78)

(323.33)

Net Cash from Operating Activities 2,618.60 9,242.38 3,729.21 12,768.18

3,814.28

(B) CASH FLOW FROM INVESTING

ACTIVITIES :

Sale of Fixed Assets 0.86 10.21 57.00 64.89

116.27

Loans (Given)/Refunds 13.82 (32.52) (6.27) (461.20)

464.34

Interest & Dividend Received 119.67 129.59 120.31 172.68

249.26

Capital Subsidy Received - - 15.00 -

-

Purchase of Fixed Assets (643.30) (2,105.19) (4,513.87) (6,569.92)


168

(18,517.49)

Sale/(Purchase) of Investments 2.50 (12.17) 12.12 147.37

(753.91)

Profit on Share Transactions - 12.71 0.46 328.59

Net Cash from Investing Activities (506.45) (1,997.37) (4,315.25) (6,317.59)

(18,441.53)

(C)CASH FLOW FROM FINANCING

ACTIVITIES :

Proceeds from Borrowings 2,553.05 1,133.66 12,574.07 2,935.00

40,568.24

Repayment of Loans (1,639.97) (4,937.62) (12,618.58) (6,821.80)

(21,937.76)

Right Issue of Shares - - 778.87 -

-

Premium on Right Issue of Shares - - 3,115.51 -

-

Right Issue of Share Expenses - - (92.62) -

-

Redemption of Preference Share - - - -

(45.00)

Share Application money received by subsidiary

companies - - (42.00) -

-

Prliminary Expenses - (0.65) - -

-

Interest Paid (2,962.36) (3,564.90) (2,826.43) (1,900.61)

(2,863.29)

Dividend Paid (5.14) (5.42) (295.81) (522.47)

(928.73)

Net Cash from Financing Activities (2,054.42) (7,374.93) 593.01 (6,309.88)

14,793.46

NET CHANGES IN CASH & CASH

EQUIVALENTS (A+B+C) 57.73 (129.92) 6.97 140.71

166.21

Cash & Cash equivalents - Opening Balance 271.57 329.30 199.38 206.35

347.06

Cash & Cash equivalents - Closing Balance 329.30 199.38 206.35 347.06

513.27


169

ANNEXURE - 4A

Statement of the adjustments made to the Consolidated Audited Financial Statements of The Oudh Sugar Mills

Limited and its Subsidiaries

Rs. In Lacs

Statement of Adjustments on Consolidated profit and loss account carried out in accordance with Part II of Schedule II of the Companies Act, 1956 and the Securities and Exchange Board of India (Disclosure and Investor Protection)

Guidelines, 2000.


Particulars 2003 2004 2005 2006 2007

Net Profit / (Loss) as per Audited Profit and Loss

Account

(1,184.68)

1,475.39

1,201.47 4,984.55

(2,527.87)

Add: Exceptional Item Considered Below Separately - -

2,237.45 - -

Adjustments on account of :

Profit / (Loss) with respect to Subsidiaries of the

Company on updation of their accounts upto 30th June as

against 31st March followed for the purpose of Audited

Accounts under the Companies Act,1956 - - - -

(0.18)

Differential cane price *

(1,602.23)

(480.21) - - -

Increase / (Decrease) in valuation of process and

finished stock **

945.90

(648.27)

(297.63) - -

Provision for doubtful debts

81.67

10.25

7.13 22.19 -

Provision for doubtful Loans & Advances

(45.46)

31.04

18.43 91.91 -

Swap Transactions

(3.93)

3.93 - - -

Items pertaining to previous years

(5.03)

(28.50)

2.79

(0.22) 2.32

Interest from Items pertaining to previous years

23.51 - - - -

Provision for Leave liability & Gratuity

(0.50)

(0.41)

(0.27) 6.57 -

Total adjustments before tax

(606.07)

(1,112.17)

1,967.90 120.45 2.14

Adjustments for Taxation

Provision for current income tax -

(3.01)

(26.88) 29.89 -

MAT Credit entitlement - - -

(696.00)

(25.50)

Deferred tax

(747.78)

776.81

530.95 1,374.87

(181.56)

Total adjustments for taxation

(747.78)

773.80

504.07 708.76

(207.06)

Total adjustments

(1,353.85)

(338.37)

2,471.97 829.21

(204.92)

Profit / (Loss) after adjustments

(2,538.53)

1,137.02

3,673.44 5,813.76

(2,732.79)

* Differential Cane Price of Rs. 155.01 Lacs for the season 1996-97 has been restated against the opening

Reserve in the year 2003.

** Arisen due to Consideration of differential cane price as a part of cost.


170

ANNEXURE - 4B

Statement of adjustments on Consolidated Assets and Liabilities carried out in accordance with Part II of Schedule II of the Companies Act, 1956 and the Securities and Exchange Board of India (Disclosure

and Investor Protection) Guidelines, 2000.

Rs. In Lacs

As at 30th June

Particulars 2003 2004 2005 2006 2007

Net Adjustments ( as per Annexure 4A)

(1,353.85)

(338.37) 2,471.97 829.21

(204.92)

Adjusted from opening Reserves *

Opening Deferred Tax Liability

(1,934.85)

Doubtful Debts

(121.24)

Doubtful loans &advances

(95.92)

Exceptional Item ( differential cane price

for sugar season 1996-97)

(155.01)

Item pertaining to previous years 5.13

Provision for Leave liability& Gratuity

(5.39)

Increase / (Decrease) in Reserves

(3,661.13)

(338.37) 2,471.97 829.21

(204.92)

Cummulative Increase / (Decrease) in

Reserves

(3,661.13)

(3,999.50) (1,527.53) (698.32)

(903.24)

* Adjustments related to prior of reporting period


171

ANNEXURE -5

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES ON RESTATED CONSOLIDATED

PROFITS & LOSSES ACCOUNT AND RESTATED CONSOLIDATED ASSETS & LIABILITIES OF

THE THE OUDH SUGAR MILLS LIMITED AND ITS SUBSIDIARIES

1. PRINCIPLES OF CONSOLIDATED FINANCIAL STATEMENT :

The consolidated financial statements which relate to The Oudh Sugar Mills Ltd. and its subsidiary companies

have been prepared on the following basis:

a) The financial statements of the Company and its subsidiaries are combined on a line-by-line basis by

adding together the book values of like items of assets, liabilities, income and expenditure, after fully

eliminating intra group balances, intra group transactions and any unrealized profit/loss included therein.

b) The consolidated financial statements have been prepared using uniform accounting policies, except stated

otherwise, for like transactions and are prepared, to the extent possible, in the same manner as the

Company’s separate financial statements.

(c) As the financial year of the holding Company and subsidiaries closes on 30th June and 31

st March

respectively, the financial statements of the Subsidiaries are considered after making certain adjustments

in order to eliminate the intra group transactions during the intervening period from 1st April to 30

th June

each year, except for the year ended 30th June,2007, where the accounts of subsidiary companies were

considered for the fifteen months period ended 30th June,2007.

d) The difference between the cost of the Company’s investments in the subsidiaries and their respective

equity as on the date of investment is treated as Goodwill / Capital Reserve, as the case may be, in the

financial statements.

e) The Subsidiary Companies considered in the financial statements are as follows:

Name Country of Incorporation % of voting power as on

30th June, 2007

Hargaon Investment & Trading Company Ltd. India 100

OSM Investment & Trading Company Ltd. India 100

Champaran Marketing Company Ltd. India 100

Hargaon Properties Ltd India 100

(f) M/s M/s Rajpur Farms Limited and M/s Narkatiaganj Farms Limited ceased to be subsidiaries of the

Company w.e.f. 19.10.2004 and accordingly, the financial results of these companies are incorporated

upto the respective dates.


172

2. ACCOUNTING POLICIES :

(i) Basis of Accounting :

The Company follows mercantile system of accounting and recognizes income and expenditure on

accrual basis, as per normally accepted accounting principles, except for the following which due to

uncertainty in realisation, are maintained on cash/ acceptance basis: –

(a) Insurance and other claims.

(d) Interest on doubtful loans and advances to cane growers.

(e) Compensation receivable in respect of land surrendered to / acquired by the Government.

(ii) Revenue Recognition :

Revenue from the sale of goods is recognized upon passage of title to the customers which

generally coincides with delivery thereof.

(iii) Fixed Assets :

Fixed assets are stated at cost of acquisition inclusive of duties (net of cenvat credit), taxes,

incidental expenses and erection/commissioning expenses etc. upto the date the asset is ready for its

intended use. Expenses incurred on major modernization programs including Projects under

implementation are capitalized.

Machinery spares which can be used only in connection with an item of fixed assets and whose

use as per technical assessment is expected to be irregular, are capitalised and depreciated over the

residual life of the respective assets.

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there

is any indication of impairment based on external/internal factors. An impairment loss is

recognized wherever the carrying amount of an asset exceeds its recoverable amount which

represents the greater of the net selling price and ‘Value in use’ of the assets. The estimated future

cash flows considered for determining the value in use, are discounted to their present value at the

weighted average cost of capital.

Assets awaiting disposal are valued at the lower of written down value and net realisable value

and disclosed separately.

(iv) Depreciation :

(e) The classification of plant and machinery into continuous and non-continuous process is

done as per technical certification and depreciation thereon is provided accordingly.

(f) Depreciation on fixed assets is provided as under:


173

A) On assets valuing Rs. 4.62 lacs, at the rate applicable under the Bihar Agricultural

Income Tax Act, 1949.

B) On assets valuing Rs. 43.11 lacs, on written-down value method, at the rates

prescribed in schedule XIV of the Companies Act, 1956.

C) On other assets, as per straight line method, at the rates prescribed in schedule XIV

of the Companies Act, 1956.

(g) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata

basis, with reference to the date of addition / disposal.

(h) In case of impairment, if any, depreciation is provided on the revised carrying amount of the

assets over its remaining useful life.

(w) Borrowing Costs :

Borrowing costs relating to acquisition / construction of qualifying assets are capitalized until the time

all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A

qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.

All other borrowing costs are charged to revenue.

(vi) Investments :

Current Quoted Investments are stated at lower of cost and market rate on individual investment

basis. Unquoted / long term investments are considered “at cost” on individual investment basis,

unless there is a decline other than temporary in the value, in which case adequate provision is made

against such diminution in the value of investments.

(vii) Inventories :

(a) Inventories (including Power - Banked) are valued at lower of cost (computed on annual

weighted average basis for raw materials, stores and spares etc.) and net realisable value.

However, Country Crop, by products and saleable scrap, whose cost is not identifiable, are

valued at estimated net realisable value.

(b) In case of inter-transferred materials, the transfer price is considered as cost for the purpose

of valuation of closing stock.

(viii) Foreign Currency Transactions :

(a) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the

foreign currency amount the exchange rate between the reporting currency and the foreign

currency at the date of the transaction.

(b) Conversion


174

Foreign currency monetary items are reported using the closing rate. Non-monetary items

which are carried in terms of historical cost denominated in a foreign currency are reported

using the exchange rate at the date of the transaction, and non-monetary items which are

carried at fair value or other similar valuation denominated in a foreign currency are

reported using the exchange rates that existed when the values were determined.

(c) Exchange Differences

Exchange differences arising on the settlement/conversion of monetary items are

recognized as income or expenses in the year in which they arise except those relating to

acquisition of fixed assets outside India, in which case such exchange differences are

capitalized.

The premium or discount arising at the inception of forward exchange contracts is

amortized as expenses or income over the life of the respective contracts. Exchange

differences on such contracts are recognized in the statement of profit and loss in the year

in which the exchange rates change. Any profit or loss arising on cancellation or renewal

of forward exchange contract is recognized as income or as expense for the year.

(x) Retirement Benefits :

(a) The Company has created an approved gratuity fund which has taken a group gratuity

insurance policy with Life Insurance Corporation of India (LIC), for future payment of

gratuity to the employees. The Company accounts for gratuity liability equivalent to the

premium amount payable to LIC every year based on actuarial valuation carried out by

them as on 31st March each year, which together with annual contribution in subsequent

years, would be sufficient to cover the gratuity liability as and when it accrues for payment.

(c) Leave liability is provided for on the basis of actuarial valuation carried on at the year end.

(c) Retirement benefits in the form of provident fund / pension schemes and superannuation funds

are charged to the Profit & Loss Account of the year when the contributions to the respective

funds are due.

(x) Taxation :

Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe

benefit tax are measured at the amount expected to be paid to tax authorities in accordance with

Income Tax Act, 1961. Deferred income taxes reflect the impact of current year timing differences

between taxable income for the year and reversal of timing differences of earlier years.

The deferred tax for timing differences between the book and tax profit for the year is accounted

for using the tax rates and laws that have been substantively enacted as of the Balance Sheet date.

Deferred tax asset are recognized only to the extent that there is reasonable certainty that sufficient

future taxable income will be available against which such deferred tax asset can be realized. If the

company has carry forward unabsorbed depreciation and tax losses, deferred tax asset are


175

recognized only to the extent that there is virtual certainty supported by convincing evidence that

sufficient taxable income will be available against which such deferred tax asset can be realized.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent

there is convincing evidence that the company will pay normal income tax during the specified

period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be

recognized as an asset in accordance with the recommendations contained in guidance Note

issued by the Institute of Chartered Accountants of India, the said asset is created by way of a

credit to the profit and loss account and shown as MAT Credit Entitlement. The Company

reviews the same at each balance sheet date and writes down the carrying amount of MAT

Credit Entitlement to the extent there is no longer convincing evidence to the effect that

Company will pay normal Income Tax during the specified period.

(xi) Segment Reporting :

(c) Identification of Segments :

The Company has identified that its operating segments are the primary segments. The Company’s

operating businesses are organized and managed separately according to the nature of products, with

each segment representing a strategic business unit that offers different products and serves different

markets. The analysis of geographical segments is based on the areas in which the customers of the

Company are located.

(d) Inter Segment Transfers :

The Company accounts for inter segment transfers at mutually agreed transfer prices.

(c) Allocation of Common Costs :

Common allocable costs are allocated to each segment on case to case basis applying the

ratio, appropriate to each relevant case. Revenue and expenses which relate to the enterprise

as a whole and are not allocable to segments on a reasonable basis are included under the

head “Unallocated – Common”.

The accounting policies adopted for segment reporting are in line with those of the Company.

(xiv) Share Issue Expenses:

Share issue expenses are adjusted against Securities Premium Account.

(xv) Earning per Share :

Basic Earning per Share are calculated by dividing the net profit or loss for the year attributable to

equity shareholders by the weighted number of equity shares outstanding during the year.

For the purpose of calculating diluted earning per share, net profit or loss for the period

attributable to equity share holders and the weighted average number of shares outstanding during

the period are adjusted for the effect of all dilutive potential equity shares.


176

(xiv) Excise Duty :

Excise Duty is accounted for at the point of manufacture of goods and accordingly, is considered

for valuation of stocks as on the Balance Sheet date.

(xv) Hedging :

The Company uses derivative financial instruments including forward exchange contracts to hedge

its risk associated with foreign currency fluctuations.

The premium or discount arising at the inception of forward exchange contracts is amortized as

expense or income over the life of the contract except those relating to acquisition of fixed assets

outside India, in which case such exchange differences are capitalized.

(xvi) Research & Development :

Research and Development expenditure of revenue nature are charged to the Profit & Loss Account,

while capital expenditure are added to the cost of fixed assets in the year in which these are incurred.

(xvii) Premium on Redemption of Debentures :

Premium on redemption of debentures is accounted for in the year of payment.

(xviii)Provisions :

A provision is recognized when an enterprise has a present obligation as a result of past event and

it is probable that an outflow of resources will be required to settle the obligation, in respect of

which a reliable estimate can be made. Provisions made in terms of Accounting Standard 29 are

not discounted to its present value and are determined based on management estimate required to

settle the obligation, at the Balance Sheet date. These are reviewed at each Balance Sheet date

and adjusted to reflect the current management estimates.

(xix) Contingencies :

Liabilities which are material and whose future outcome cannot be ascertained with reasonable

certainty are treated as contingent and disclosed by way of notes to the accounts.


177

Annexure -6

STATEMENT OF NOTES ON THE “RESTATED CONSOLIDATED PROFITS AND LOSSES” AND

RESTATED CONSOLIDATED ASSETS AND LIABILITIES” OF THE OUDH SUGAR MILLS

LIMITED AND ITS SUBSIDIARIES.

2. As required by paragraph 6.10.2 of The Securities and Exchange Board of India (Disclosure and

Investor Protection) Guidelines, 2000, the Statement of Restated Consolidated Profits and Losses for

the year ended 30th

June, 2003, 2004, 2005, 2006 and 2007 as well as Statement of Restated

Consolidated Assets and Liabilities as at 30th

June, 2003, 2004, 2005, 2006 and 2007 have been

reinstated for the changes in accounting policies as well as audit qualifications. However, certain audit

qualifications the impact whereof could not be ascertained presently, for the reasons mentioned in the

respective notes, have not been Restated and are indicated herein below:

(a) Pending disposal of writs/appeals by the court with regard to levy sugar prices for some years,

Rs.113.46 lacs (net) received as excess levy sugar price, against which bank guarantees furnished by

the Company for Rs. 84.88 lacs, are in force in terms of the Court Orders, is included under the head

'Current Liabilities'. Necessary adjustment for the above amount together with interest, if any, in this

regard will be made in the accounts as and when the matter will be finally settled.

(b) Pending decisions of the various courts on writ petitions filed by/ against the Company, no credit

has been taken in the Profit and Loss Account in respect of certain realizations aggregating to

Rs.52.05 lacs in earlier years, which is shown under the head ‘Current Liabilities’. Against the

above, fixed deposits receipts / bank guarantees for similar amount have been furnished by the

Company.

(c) No provision has been made towards diminution in the value of certain long term investments

based on the year end quoted price. The said diminution in the opinion of the management is

temporary in nature and hence no provision has been considered necessary in this regard.

(Rs. In Lacs)


June

2003

2004 2005

2006 2007

272.88 143.99 ---- 132.57 132.57

2.Sundry creditors include Rs. 8.55 lacs due to Small Scale Industrial undertakings (SSI) to the extent such

parties have been identified from the available documents / information. The Company has normally made

payments to the SSI units in due time and also there being no claims from the parties, interest, if any, on

overdue payments, is not expected to be material and thus not provided for.

3. Based on the information / documents available with the company, no creditor is covered under Micro,

Small and Medium Enterprises Development Act, 2006. As a result, no interest provisions / payments

have been made by the company to such creditors, if any, and no disclosures thereof are made in these

accounts.

4. (a) Pending execution of the conveyance deed, no adjustment has been made in respect of 0.75 acre of

land sold by the Company in earlier years.

(b) An application filed by the Company for exemption of 3,785.19 sq. mtrs. of land at Bamrauli under

the Urban Land (Ceiling and Regulation) Act, 1976, is pending with the concerned authority.


178

5. Accounts are nor restated for the periods prior to the date when the Accounting Standard 29 on

Provisions, Contingent Liabilities and Contingent Assets, became effective from the period

commencing on or after 01-.04-2004 .

6. The year wise break up of contingent liabilities is as under :

Rs. In lacs



2003

2004 2005 2006 2007

Demands/Claims against the

Company not acknowledged

as debts

205.86 105.43 212.18 615.87

658.14

750.00 750.00 750.00 750.00 1500.00 Guarantees given to a bank

against loans to cane

growers

Against the above, the loan

facilities actually availed as

on the balance sheet date 749.98 749.84 749.50 750.00

1074.37

Customs duty in respect of

pending export obligations

against duty free imports

493.13

Unredeemed Bank

Guarantees

19.01 21.39 16.48 1.32 0.96

Bills discounted from bank

under L/C

66.65

7. The year wise break up of the estimated amount of contracts remaining to

be executed on capital items and not provided for is as under:

Rs. In lacs


June

2003 2004

2005

2006 2007

34.65 2331.01 1216.49 4739.61 18672.67


179

ANNEXURE - 7

STATEMENT OF SIGNIFICANT CHANGES IN ACCOUNTING POLCIES DURING THE

REPORTING PERIOD OF THE OUDH SUGAR MILLS LIMITED AND ITS SUBSIDIARIES

There is no change in the accounting policies during reporting period.


180

ANNEXURE - 8

CONSOLIDATED STATEMENT OF QUALIFICATIONS IN AUDITORS’ REPORT DURING THE REPORTING PERIOD OF THE OUDH SUGAR MILLS LIMITED AND ITS SUBSIDIARIES

(Rs. In lacs)


Sl

No.

Particulars of audit qualifications

2003 2004 2005 2006 2007

1 Non provision of doubtful debts,loans and

advances the impact whereof on the Company's

profit/ (loss) is not presently ascertainable.

180.95 139.66 114.10 - -

2 Non provision of various government demands

/ dues, the impact whereof is not presently

ascertainable due to pending appeals

495.44 392.16 312.47 - -

3 Non adjustment of certain realizations in earlier

years and non provision of interest payable

thereon, if any, in case of refund of any such

realization. As the matters are under

adjudication / not yet settled, the impact of the

above adjustment on the Co

179.23 174.98 174.98 165.51 165.51

4 Recognition of Deferred tax Asset (net), based

on the future profitability projections made by

the management. However, we are unable to

express any opinion on the above projections

and their consequent impact, if any, on such

recognition of deferred tax asset(net)

2,682.63 1,905.82 1,374.87 - 181.56

5 Non provision of gratuity and leave liability on

differential wages and salaries at the

Company's Allahabad Unit.

Amount not ascertained - -

6 Non provision towards diminution in the value

of certain investments , as the same in the

opinion of management, is not of permanent

nature

272.88 143.99 - - -

7 Non provision of Income Tax liability,if any,

for the period from 1st April to 30th June,2005

- - Amount not

ascertained

- -

8 Recognition of Minimum Alternate Tax (MAT)

Credit entitlement in terms of Section 115JB of

the Income Tax Act,1961 which being availabe

as tax credit for set-off in the future years, as

per section 115 JAA of the Income Tax

Act,1961 has been carried forward as

recoverable under "MAT Credit Entitlement".

- - - - 721.50


181

CONSOLIDATED STATEMENT OF RESTATED ACCOUNTING

RATIOS OF THE OUDH SUGAR MILLS LIMITED AND ITS SUBSIDIARIES

ANNEXURE – 9


Accounting

Ratios 2003 2004 2005 2006 2007

Earnings per

Share ( Rs.) (24.49) 10.90 23.17 31.96 (15.05)

(Nominal

Value Rs. 10

Per Share)

Return on Net

Worth(%) (240.00) 60.00 42.00 42.00 (25.00)

Net Asset

Value per

Share (Rs.) 10.17 18.33 55.82 75.30 60.04

NOTES:

Defination of ratios:

a) Earning per share ( EPS)

Restated Profit/(Loss) after tax as per statement of Restated Profits/(Losses), attributed to Equity

Shareholders,divided by the weighted average number of outstanding equity shares during the year.

b)Return on net worth

Profit/(Loss)after tax as per statement of Restated Profits and Losses, divided by net worth.

c) Net Assests Value

Net worth as per statement of Restated Assets and Liabilities, divided by the weighted average number of

outstanding equity shares during the year.


182

CONSOLIDATED RELATED PARTY DISCLOSURES

ANNEXURE – 10

Names of the related

parties:




Shri V.P.Singh –Executive President, Rosa Unit (From 4th June, 2004)

-- Executive President, Hargaon (From 16th June 2006)




Shri M.N.Agarwal – Executive President, Rosa Unit (Upto 2nd June, 2004)

Shri S.D. Shukla – Sr. Executive Vice President, Hata Unit

Shri S. K. Premi – Executive President, Allahabad Unit




Shri Ansul Sharma- Son of Shri M. S. Sharma * (upto 18th June,2007)

Smt. Vedanti Sharma- Wife of Shri M. S. Sharma * (upto 18th June,2007)

Smt. Ritu Sharma- Duaghter of Shri M. S. Sharma * (upto 18th June,2007)

Smt. Urmila Lakhotia- Wife of Shri P K Lakhotia * (upto 15th June,2006)

Miss. Garima Lakhotia- Daughter of Shri P K Lakhotia * (upto 15th June,2006)

Miss. Abha Lakhotia- Daughter of Shri P K Lakhotia * (upto 15th June,2006)

Miss. Astha Lakhotia- Daughter of Shri P K Lakhotia * (upto 15th June,2006)

Mr. Mohit Lakhotia- Son of Shri P K Lakhotia * (upto 15th June,2006)

Miss. Anamika- Daughter of Shri M N Agarwal * (upto 2nd June,2004)

Miss. Annapurna- Daughter of Shri M N Agarwal * (upto 2nd June,2004)










* Ceased to be related parties in term of Accounting Standard- 18 from the respective date. Accordingly all the transactions

are considerred only upto the said dates and also their outstanding balances, if any, as on Balance Sheet date has not been

disclosed.

Consolidated Statement of Aggregated Related Party Transactions as per Accounting Standard-18 for the reporting


183

period

(Rs. In lacs.)

Enterprises


Key


Particulars

Personnel or


Year

Transac

tions Balance

Transac

tions Balance

Transac

tions Balance

Transacti

ons Balance

Value

Outstan

ding Value

Outstandin

g Value

Outstand

ing Value Outstanding

as on as on as on as on

30th

June 30th June

30th

June 30th June

Sale of Goods/

Fixed Assets

Upper

Ganges

Sugar &

Industries

Ltd.

2006-

07

224.14

-

-

-

-

-

224.14 -

2005-

06

245.76

-

-

-

-

-

245.76 -

2004-

05

271.18

-

-

-

-

-

271.18 -

2003-

04

39.39

-

-

-

-

-

39.39 -

2002-

03

48.64

-

-

-

-

-

48.64 -


Assets

Upper

Ganges

Sugar &

Industries

Ltd.

2006-

07

970.95

-

-

-

-

-

970.95 -

2005-

06

75.31

-

-

-

-

-

75.31 -

2004-

05

73.51

-

-

-

-

-

73.51 -

2003-

04

10.42

-

-

-

-

-

10.42 -

2002-

03

13.80

-

-

-

-

-

13.80 -

Mrs

Vedanti

Sharma

2003-

04

-

-

-

-

10.79

-

10.79 -

Right Issue of

Shares

Mr.

C.S.Nopan

y

2004-

05

-

-

9.56

-

-

-

9.56 -

SCM

Investment

& Trading

Company

2004-

05

339.98

-

-

-

-

-

339.98 -


184

Ltd.,

RTM

Investment

& Trading

Company

Ltd.,

2004-

05

349.13

-

-

-

-

-

349.13 -

Others

2004-

05

-

-

0.01

-

0.01

-

0.02 -

Dividend Paid

Mr.

C.S.Nopan

y

2006-

07

-

-

2.01

-

-

-

2.01 -

2005-

06

-

-

1.12

-

-

-

1.12

2004-

05

-

-

0.64

-

-

-

0.64 -

SCM

Investment

& Trading

Company

Ltd.,

2006-

07

87.42

-

-

-

-

-

87.42 -

2005-

06

39.66

-

-

-

-

-

39.66 -

2004-

05

25.79

-

-

-

-

-

25.79 -

RTM

Investment

& Trading

Company

Ltd.,

2006-

07

73.32

-

-

-

-

-

73.32 -

2005-

06

40.73

-

-

-

-

-

40.73 -

2004-

05

25.90

-

-

-

-

-

25.90

Uttar

Pradesh

Trading

Co.Ltd.,

2006-

07

88.34

-

-

-

-

-

88.34 -

2005-

06

49.08

-

-

-

-

-

49.08 -

Others

2004-

05

-

-

0.02

-

0.11

0.13 -

Interest Paid

Sutlej

Textiles &

Industries

Limited

2006-

07

62.43

-

-

-

-

-

62.43 -

SIL

Investment

s

Ltd.,(Form

erly Sutlej

Industries

Limited)

2004-

05

140.71

-

-

-

-

-

140.71 -

2003-

04

47.15

-

-

-

-

-

47.15 -

2002-

03

68.00

-

-

-

-

-

68.00 -


185

SCM

Investment

& Trading

Co. Ltd.

2004-

05

102.63

-

-

-

-

-

102.63 -

2003-

04

150.26

-

-

-

-

-

150.26 -

2002-

03

26.43

-

-

-

-

-

26.43 -

RTM

Investment

& Trading

Co. Ltd.

2004-

05

53.25

-

-

-

-

-

53.25 -

2003-

04

103.96

-

-

-

-

-

103.96 -

2002-

03

17.47

-

-

-

-

-

17.47 -

Others

2005-

06

-

-

0.10

3.59

3.69 -

2004-

05

5.90

0.42

0.10

3.88

4.09

10.20

4.19

2003-

04

13.75

-

0.28

-

4.65

3.58

18.68

3.58

2002-

03

13.26

-

0.28

-

3.60

-

17.14 -

Loans Repaid /

Given

Upper

Ganges

Sugar &

Industries

Ltd.

2005-

06

455.00

455.00

-

-

-

-

455.00

455.00

Sutlej

Textiles &

Industries

Limited

2006-

07

1,500.0

-

-

-

-

-

1,500.00 -

SIL

Investment

s

Ltd.,(Form

erly Sutlej

Industries

Limited)

2004-

05

2,100.0

-

-

-

-

-

2,100.00 -

2003-

04

300.00

-

-

-

-

-

300.00 -

2002-

03

1,405.0

0

-

-

-

-

-

1,405.00 -

SCM

Investment

& Trading

Co. Ltd.

2004-

05

2,150.0

0

-

-

-

-

-

2,150.00 -

2003-

04

2,300.0

0

-

-

-

-

-

2,300.00 -

2002-

03

550.00

-

-

-

-

-

550.00 -

RTM

Investment

& Trading

Co. Ltd.

2004-

05

2,225.0

0

-

-

-

-

-

2,225.00 -

2003- - -


186

04 2,800.0

0

- - - - 2,800.00

2002-

03

300.00

-

-

-

-

-

300.00 -

Others

2005-

06

-

-

4.00

-

11.57

-

15.57 -

2004-

05

340.00

-

2.00

-

9.50

-

351.50 -

2003-

04

385.00

-

-

-

13.01

-

398.01 -

2002-

03

340.00

-

-

-

1.40

-

341.40 -

Loans/Intercor

porate Loans

Taken

Upper

Ganges

Sugar &

Industries

Ltd.

2006-

07

455.00

-

-

-

-

-

455.00

Sutlej

Textiles &

Industries

Limited

2006-

07

3,500.0

0

2,000.0

0

-

-

-

-

3,500.00

2,000.00

SIL

Investment

s

Ltd.,(Form

erly Sutlej

Industries

Limited)

2004-

05

900.00

-

-

-

-

-

900.00 -

2003-

04

1,200.0

0

1,200.0

0

-

-

-

-

1,200.00

1,200.00

2002-

03

1,705.0

0

300.00

-

-

-

-

1,705.00

300.00

SCM

Investment

& Trading

Co. Ltd.

2004-

05

1,150.0

0

-

-

-

-

-

1,150.00 -

2003-

04

2,900.0

0

1,000.0

0

-

-

-

-

2,900.00

1,000.00

2002-

03

950.00

400.00

-

-

-

-

950.00

400.00

RTM

Investment

& Trading

Co. Ltd.

2004-

05

2,025.0

0

-

-

-

-

-

2,025.00 -

2003-

04

2,500.0

0

200.00

-

-

-

-

2,500.00

200.00

2002-03

800.00

500.00

-

-

-

-

800.00

500.00

Others 2005-06

-

-

-

-

2.31

-

2.31 -

2004-05

250.00

-

4.00

4.00

13.16

33.47

267.16

37.47

2003-04

400.00

90.00

-

2.00

9.60

33.81

409.60

125.81


187

2002-03

415.00

75.00

-

2.00

18.22

35.96

433.22

112.96

Balance

Outstanding on

Current

Accounts (net)

Credit :

Upper

Ganges

Sugar &

Industries

Ltd. 2006-07

-

58.02

-

-

-

-

-

58.02

2005-06

-

16.72

-

-

-

-

-

16.72

2004-05

-

14.07

-

-

-

-

-

14.07

2003-04

-

7.58

-

-

-

-

-

7.58

2002-03

-

7.42

-

-

-

-

-

7.42

Debit :

Mr.

C.S.Nopan

y 2006-07

-

-

6.09

6.09

-

-

6.09

6.09

Interest

Received

Upper

Ganges

Sugar &

Industries

Ltd. 2006-07

2.15

-

-

-

-

-

2.15 -

2005-06

32.17

-

-

-

-

-

32.17 -

Dividend

Received

Sutlej

Textiles &

Industries

Limited 2006-07

70.93

-

-

-

-

-

70.93 -

SIL

Investment

s

Ltd.,(Form

erly Sutlej

Industries

Limited) 2005-06

65.93

-

-

-

-

-

65.93 -

2004-05

65.93

-

-

-

-

-

65.93 -

2003-04

65.93

65.93

2002-03

61.53

61.53

Upper

Ganges

Sugar &

Industries

Ltd. 2006-07

58.61

-

-

-

-

-

58.61 -

2005-06

27.02

-

-

-

-

-

27.02 -

2004-05

25.67

-

-

-

-

-

25.67 -


188

-

-

-

-

-

- -

Remuneration

Mr.

C.S.Nopan

y 2006-07

-

-

100.31

-

-

-

100.31 -

2005-06

-

-

79.10

-

-

-

79.10

2004-05

-

-

16.80

-

-

-

16.80

2003-04

-

-

10.75

-

-

-

10.75 -

2002-03

-

-

10.75

-

-

-

10.75 -

Mr.

P.K.Lakhot

ia 2005-06

-

-

15.91

5.29

-

-

15.91

5.29

2004-05

-

-

14.59

2.90

-

-

14.59

2.90

2003-04

-

-

12.35

1.29

-

-

12.35

1.29

2002-03

-

-

7.90

-

-

-

7.90 -

Mr.

Chandra

Mohan 2006-07

-

-

1.47

1.47

-

-

1.47

1.47

Mr.M.S.Sh

arma 2006-07

-

-

10.51

-

-

-

10.51 -

2005-06

-

-

10.23

0.74

-

-

10.23

0.74

2004-05

-

-

9.00

0.67

-

-

9.00

0.67

2003-04

-

-

7.56

0.60

-

-

7.56

0.60

2002-03

-

-

7.05

-

-

-

7.05 -

Mr.M.N.Ag

arwal 2003-04

-

-

6.53

-

-

-

6.53 -

2002-03

-

-

6.32

-

-

-

6.32 -

Mr.V.P.Sin

gh 2006-07

-

-

18.97

4.00

-

-

18.97

4.00

2005-06

-

-

8.99

1.83

-

-

8.99

1.83

2004-05

-

-

6.92

0.56

-

-

6.92

0.56

2003-04

-

-

0.56

0.56

-

-

0.56

0.56

Mr.P.K.Sai

ni 2006-07

-

-

8.95

-

-

-

8.95 -

2005-06

-

-

0.39

0.20

-

-

0.39

0.20

Mr.S.K.Pre

mi 2006-07

-

-

10.36

-

-

-

10.36 -

2005-06

-

-

8.55

-

-

-

8.55 -

2004-05

-

-

9.15

0.07

-

-

9.15

0.07

2003-04

-

-

6.88

0.49

-

-

6.88

0.49


189

2002-03

-

-

7.32

-

-

-

7.32 -

Mr.S.D.Shu

kla 2006-07

-

-

4.74

1.42

-

-

4.74

1.42

Mr.D.J.Dar

ji 2006-07

-

-

4.62

0.10

-

-

4.62

0.10



190

CONSOLIDATED STATEMENT OF RESTATED SEGMENTAL INFORMATION AS PER ACCOUNTING

STANDARD-17 FOR THE REPORTING PERIOD

ANNEXURE -

11

(Rs. in lacs)

Year Sugar Spirits

Co-generation

Canning Products Others Total

Revenue ( net of excise duty and cess)

2006-07

37,817.54

3,919.33

766.43

1,741.15

-

44,244.45

2005-06

44,890.74

3,792.89

-

1,433.10

-

50,116.73

2004-05

32,078.00

2,335.20

-

1,191.37

-

35,604.57

2003-04

31,006.47

3,168.18

-

1,260.87

-

35,435.52

External Sales

2002-03

28,063.23

2,176.26

-

1,092.16

-

31,331.65

2006-07

2,777.18

4.00

1,425.95

-

-

4,207.13

2005-06

1,197.96

13.68

-

-

-

1,211.64

2004-05

826.63

-

-

-

-

826.63

2003-04

713.56

-

-

-

-

713.56

Inter-segment Sales

2002-03

736.73

-

-

-

-

736.73

2006-07

40,594.72

3,923.33

2,192.38

1,741.15

-

48,451.58

2005-06

46,088.70

3,806.57

-

1,433.10

-

51,328.37

2004-05

32,904.63

2,335.20 -

1,191.37

-

36,431.20

2003-04

31,720.03

3,168.18

-

1,260.87

-

36,149.08

Total Revenue

2002-03

28,799.96

2,176.26

-

1,092.16

-

32,068.38

Results

2006-07

(3,643.62)

1,315.14

746.21

81.24

(0.25)

(1,501.28)

2005-06

8,048.36

1,168.24

-

(2.64)

3.07

9,217.03

2004-05

6,364.12

498.67

-

(42.11)

86.95

6,907.63

2003-04

3,823.34

1,105.05

-

(87.29)

62.65

4,903.75

Segment Results

2002-03

218.66

474.53

-

(20.42)

(52.91

)

619.86

2006-07

183.59

Unallocated expenses net of

unallocated Income

2005-06

(66.59)


191

2004-05

331.59

2003-04

199.75

2002-03

70.01

2006-07

(1,684.87)

2005-06

9,283.62

2004-05

6,576.04

2003-04

4,704.00

Operating Profit

2002-03

549.85

2006-07

2,090.74

2005-06

1,652.63

2004-05

2,700.26

2003-04

3,533.65

Interest Expenses & Finance

Charges(net)

2002-03

3,081.43

2006-07

60.82

2005-06

713.59

2004-05

202.34

2003-04

33.33

Income, Wealth Tax & Fringe

Benefit Tax (net)

2002-03

6.95

2006-07

(1,103.64)

Deferred Tax Liability/(Asset)

(net)

2005-06

1,103.64

2006-07

(2,732.79)

2005-06

5,813.76

2004-05

3,673.44

2003-04

1,137.02

Net Profit / (Loss)

2002-03

(2,538.53)

Total Assets

2006-07

52,227.18

5,127.94

6,501.35

880.79

2.48

64,739.74

Segment Assets

2005-06


192

36,933.57 2,532.14 - 874.92 117.88 40,458.51

2004-05

34,121.45

2,417.79

-

765.13

81.90

37,386.27

2003-04

29,805.30

2,283.34

-

855.43

95.09

33,039.16

2002-03

36,001.85

2,008.08

-

654.47

107.68

38,772.08

2006-07

2,595.38

2005-06

2,024.41

2004-05

1,735.92

2003-04

1,710.35

Unallocated Assets

2002-03

1,830.37

2006-07

67,335.12

2005-06

42,482.92

2004-05

39,122.19

2003-04

34,749.51

Total

2002-03

40,602.45

Total Liabilities

2006-07

14,352.99

185.35

0.30

680.88

0.06

15,219.58

2005-06

3,251.37

133.53

-

600.48

0.06

3,985.44

2004-05

2,484.21

168.76

-

580.04

1.48

3,234.49

2003-04

5,176.96

202.73

-

600.81

5.77

5,986.27

Segment Liabilities

2002-03

8,559.24

149.49

-

507.46

19.72

9,235.91

2006-07

41,203.28

2005-06

24,767.45

2004-05

27,002.61

2003-04

26,813.70

Unallocated Liabilities

2002-03

30,265.61

2006-07

56,422.86

2005-06

28,752.89

2004-05

30,237.10

Total

2003-04


193

32,799.97

2002-03

39,501.52

Other Information

2006-07

7.97

-

-

-

-

7.97

2005-06

13.86

-

-

-

-

13.86

2004-05

9.27

-

-

-

-

9.27

2003-04

10.25

-

-

-

-

10.25

Non cash expenses included in

Segment Expenses for arriving

at Segment Results

2002-03

8.84

-

-

-

-

8.84

2006-07

12,520.28

2,374.08

6,035.84

6.60

-

20,936.80

2005-06

6,340.05

334.33

-

0.48

39.79

6,714.65

2004-05

4,187.03

419.48

-

1.45

7.45

4,615.41

2003-04

1,893.60

232.21

-

9.85

-

2,135.66

Capital Expenditure

2002-03

363.82

265.09

-

3.91

19.85

652.67

2006-07

1,728.79

109.34

187.41

4.52

0.03

2,030.09

2005-06

1,465.88

89.56

-

4.22

0.02

1,559.68

2004-05

1,180.92

65.98

-

4.48

0.07

1,251.45

2003-04

1,027.59

66.36

-

3.97

0.11

1,098.03

Depreciation for the period

2002-03

1,015.70

53.42

-

3.78

0.07

1,072.97

Revenue

Geographical Segments

2006-07

43,127.64

2005-06

48,556.40

2004-05

35,284.60

2003-04

34,902.89

Domestic

2002-03

31,112.30

2006-07

1,116.81

2005-06

1,560.33

2004-05

319.97

2003-04

532.63

Overseas (Including through

canalising agents)

2002-03

219.35


194

2006-07

44,244.45

2005-06

50,116.73

2004-05

35,604.57

2003-04

35,435.52

Total

2002-03

31,331.65

Notes: (i). Business Segment: The business segments have been identified on the basis of the products of the Company.

Accordingly, the Company has identified “Sugar”, “Spirits”, "Co-generation" and “Canning Products” as the

operating segments:

Sugar - Consists of manufacture and sale of Sugar, Molasses & Bagasse

Spirits - Consists of manufacture and sale of Industrial Spirits (including Denaturants), Fusel Oil & Bio-Compost

Co-generation - Consists of generation and transmission of Power

Canning Products - Consists of Canned Fruits & Vegetables, Jams,

Jellies, Squashes & Juices

Others – Consist of Miscellaneous business comprising of less than 10%

revenues.

(ii) Geographical Segment: The Company primarily operates in India and therefore the analysis of geographical

segment is demarcated into its Indian and Overseas Operations.

(iii) The Company has common fixed assets located in India for producing goods for domestic and overseas

markets. Hence, separate figures for fixed assets / additions to fixed assets thereof cannot be furnished.

(iv) The period referred to above is from 1st July to 30th June each year.


195

CONSOLIDATED STATEMENT OF DIVIDEND PAID

ANNEXURE -12


EQUITY SHARES 2003 2004 2005 2006 2007

No. of Equity Shares of Rs. 10

each 10,385,790 10,385,790 18,174,570 18,174,570 18,174,570

Rate of Dividend (%) - 25% 25% 45% -

Dividend Paid (Rs. in Lacs)

Amount of Dividend - 259.65 454.36 817.86 -

Corporate Tax on Dividend - 33.94 63.72 114.70 -

Total - 293.59 518.08 932.56 -


PREFERENCE SHARES 2003 2004 2005 2006 2007

No. of Preference Shares of Rs. 10

each 450,000 450,000 450,000 450,000

450,000*

Rate of Dividend (%) 10% 10% 10% 10% 10%

Dividend Paid (Rs. in Lacs)

Amount of Dividend 4.50 4.50 4.50 4.50 2.52

Corporate Tax on Dividend - 0.57 0.63 0.62 0.43

Total 4.50 5.07 5.13 5.12 2.95

* Redeemed on 21.10.2006


196

ANNEXURE -13

STATEMENT OF CONSOLIDATED TAX SHELTER BASED ON RESTATED

PROFITS / (LOSSES)

(Rs. In Lacs)

July 2002

to June

2003

July 2003 to

June 2004

July 2004

to June

2005

July 2005 to

June 2006

July 2006 to June

2007

Tax Rate Including Surcharge Refer Note no. 1 below

Net Profit / (Loss) as per

Consolidated Restated Profit and

Loss Account after depreciation

but before taxation

(2,531.58)

1,170.35

3,875.78

7,630.99 (3,775.61)

Permanent Difference

Dividend Received

-

(73.24)

(91.79)

(98.59) (163.40)

Others

(17.27)

27.98

12.19

26.18 32.93

Timing Difference

Difference in Book Depreciation

& Depreciation under Income

Tax Act 1961

(334.68)

(91.74)

(339.48)

(610.08) (4,421.29)

Net Disallowable sum under

section 43B of the Income Tax

Act, 1961.

346.38

(948.44)

97.00

103.86 (366.95)

Others

(53.87)

(62.62)

83.45

265.86 29.95

Adjustment of Carry forward

losses and unabsorbed

depreciation

-

(29.69)

(3,635.21)

(6,958.00) -

Notional Income Tax at Specified

Rates (Refer Note 2 below)

5.92

89.36

321.72

816.53 3.67

Tax As per Accounts

(a) Current Tax (including

Wealth Tax)*

6.95

33.33

197.84

688.69 33.32

(b) Deferred Tax Liability /

(Asset)

-

-

-

1,103.64 (1,103.64)

(c) Fringe Benefit Tax

-

-

4.50

24.90 27.50

Tax Shelter in form of

(a) Brought Forward Business

Loss and Unabsorbed

Depreciation

13,255.88

12,149.96

11,138.73

4,117.11 12,680.92

(b) Expenses Allowable on

Payment Basis

2,416.18

1,467.74

1,564.74

1,668.60 1,301.65

(c) Others

16.61

16.61

36.61

36.61 36.61

(d) MAT Credit entitlement

-

-

-

696.00 721.50

Notes:

(1) As the accounting year of the holding Company falls in two financial years as per Income tax Act,1961, the

applicable tax rate including sur-charge has not been specified.


197

(2) Includes "Minimum Alternate Tax" under Section 115 JB of the Income Tax Act, 1961 of Rs. 88.20 lacs for the

period from July 2003 to June 2004, Rs. 320.97 lacs for the period from July 2004 to June 2005 and Rs. 808.22 lacs

for the period July 2005 to June 2006 payable by the holding company in view of accumulated business loss and

unabsorbed depreciation under the Income tax Act, 1961.

(3) The figures for the year ended year ended 30th June, 2003, 2004, 2005,2006 & 2007 are as provided by the

management and not from the return of income of the Company.

* Net of refunds


198

CONSOLIDATED RESTATED CAPITALISATION STATEMENT

(Annexure-14)

(Rs. in Lacs)

As at 30th June, 2007

Pre-issue

As Restated for Right

issue #

Borrowings

Short-Term* 28,358.58

Long-Term 12,675.07

Total 41,033.65

-

Shareholders' Funds

Equity 1,817.49

Reserves & Surplus** 9,094.77

Total 10,912.26

-

Long-term Debt/Equity ratio 1.16 :1

* Represents loan payable within one year and/or on demand.

** Restated Reserves

# Ratio and price of share (including premium) etc, shall be decided at the time of preparation of final letter of offer for

subussion to SEBI.


199

ANNEXURE - 15 B

CONSOLIDATED STATEMENT OF RESTATED BALANCE OF DEBTORS (UNSECURED)

(Rs. in Lacs)

As at 30th June

2003 2004 2005 2006 2007

More than 6 Months

Considered Good

10.47

25.64

16.70

4.70 13.39

Considered Doubtful

131.61

119.51

112.38

107.44 113.76

142.08

145.15

129.08

112.14 127.15

Other

Debtors(Considered

good)

936.56

577.38

94.91

406.96 578.56

Total Debtors

1,078.64

722.53

223.99

519.10 705.71

Less: Provision

131.61

119.51

112.38

107.44 113.76

Net Debtors Balance

947.03

603.02

111.61

411.66 591.95

ANNEXURE - 15 C

CONSOLIDATED STATEMENT OF RESTATED BALANCE OF LOANS AND ADVANCES

(Rs. in Lacs)

As at 30th

June

2003 2004 2005 2006 2007

LOANS UNSECURED

(Considered Good)

To Promotor's Group

Company - - - 455.00

-

To Others 8.71 44.44

50.71 48.46

39.12

ANNEXURE - 15 A

CONSOLIDATED STATEMENT OF RESTATED EARNING PER SHARE

(Rs. in Lacs)


2003 2004 2005 2006 2007

Restated Profit / (Loss)

after Tax

(2,538.53)

1,137.02

3,673.44

5,813.76 (2,732.79)

Less : Dividend on

Preference Shares

4.50

4.50

4.50

4.50 2.52

Net Profit/(Loss)

(2,543.03)

1,132.52

3,668.94

5,809.26 (2,735.31)

Basic / Weighted average

number of outstanding

equity Shares

10,385,790

10,385,790

15,834,696 *

18,174,570 18,174,570

Nominal Value of Equity

shares (Rs.)

10.00

10.00

10.00

10.00 10.00

Basic / diluted Earning /

(Loss) per share (Rs.)

(24.49)

10.90

23.17

31.96 (15.05)

* After considering the impact of Right Issue of Shares during the year.


200

ADVANCES

UNSECURED

(Considered Good)

Advances recoverable in

cash or in kind or for

value to be received or

pending adjustments 513.92 587.48

851.93 802.34

661.77

Sales tax, Purchase tax

and Excise duty payments

under appeal and/or under

dispute 101.24 111.75

107.91 86.91

87.01

Balance with Registrar,

Allahabad High Court 14.18 -

Balance with Excise, Port

Trust & other

Govt.Authorities 321.82 416.41

558.28 428.45

1,490.67

Claims and Refunds

receivable 125.26 239.78

109.23 75.72

148.19

Advance payment of

Tax,Refunds receivable

and Tax deducted at

source (after adjusting

provisions) 16.91 46.74

57.20 -

148.14

Sundry Deposits 43.41 51.25

50.74 41.89

31.74

Advances (Considered

Doubtful) 227.45 179.02

149.89 205.21

235.70

Total Loans and

Advances 1,372.90 1,676.87

1,935.89 2,143.98

2,842.34

Less: Provisions 227.45 179.02

149.89 205.21

235.70

Net Loans and Advances 1,145.45 1,497.85

1,786.00 1,938.77

2,606.64

ANNEXURE - 15 D

CONSOLIDATED STATEMENT OF RESTATED OTHER INCOME

(Rs. in Lacs)


201


2003 2004 2005 2006 2007

Income from Long Term

Investments(Gross)

Dividend

61.70

73.24

91.79

98.59

163.40

Interest 0.75 0.23

Insurance & Other

Claims

29.80

14.08

42.98 7.64

11.85

Export Incentives 3.18

20.47 -

23.21

14.11

Holding charges on

Buffer stock

118.34

246.76

135.10 -

54.92

Rent & Hire charges 4.91 6.65

16.42

18.10

19.95

Miscellaneous Receipts

59.06 5.23

8.59

22.31

10.31

Unspent liabilities,excess

provisions and

unclaimed balances

Written back (net)

32.50

27.88

56.12

44.45

48.80

Profit on sale of Fixed

Assets - -

5.34 -

-

Exchange Rate

Fluctuations(Net) - -

22.46 0.99

0.01

Profit on sale of

Investments(Net) -

12.71

0.46

328.59

3.54

Total

310.24

407.25

379.26

543.88

326.89

Note: All the items of Other Income as given above except for Profit on sale of Investment are generally

recurring in nature and are related to business activities carried out by the Company.

ANNEXURE - 15 E

CONSOLIDATED STATEMENT OF RESTATED SECURED LOANS

(Rs. In Lacs)

As at 30th June

2003 2004 2005 2006 2007

Term Loans

From Financial Institution(s)/Bank(s)

:

Under Corporate Loan

2,850.00

2,250.00

1,650.00

1,050.00

450.00

Under Project Finance Scheme

2,945.00

2,945.00

4,685.00

6,000.00

9,262.58

Short Term Loan from a Bank

250.00

250.00

-

-

-

From Others

-

-

6,000.00

4,800.00

3,600.00

From Government of India (Sugar

Development Fund)

4,022.61

3,824.91

3,600.42

3,373.42

2,861.23

Other Loans

From Scheduled Banks on Cash

Credit Account :

State Bank of India

15,924.85

11,840.95

8,346.75 *

5,331.73

11,079.18

Punjab National Bank

769.39

783.90

-

-

-

Total

26,761.85

21,894.76

24,282.17

20,555.15

27,252.99


202

BREAK-UP OF CONSOLIDATED SECURED LOANS AS AT 30TH JUNE,2007

(Rs. In Lacs)

Sl.no

.

NAME OF

BANK/INSTITUT

ION/ OTHERS

SANCTION

ED

AMOUNT

RATE OF

INTEREST

(%) p.a.

Outstandin

g as on

30th

June,2007

NATURE OF

SECURITY

REPAYMEN

T

SCHEDULE

1.

TER

M

LOAN

S

a) Industrial

Development Bank

of India (IDBI)

3,000.00

10.00%

Payable

Quarterly

450.00

Secured by first

mortgage/charge

on all the

immovable/movab

le assets,(save and

except book

debts), present and

future,of the

Company's Sugar

units at

Narkatiaganj &

Hargaon and

Distillery unit at

Hargaon, ranking

pari-pasu amongst

the various

lenders,

Quarterly

installments

of Rs. 150.00

lacs each

b)

941.15

4.00%

Payable

Yearly

297.46

Government of

India (Sugar

Development Fund)

1,800.00

4.00%

Payable

Yearly

2,563.77

2,741.15

2,861.23

Secured by a

second charge on

all the immovable

/ movable assets

(save and except

book debts)

present and future

of the Company's

Sugar units at

Rosa including

Rs.109.23 lacs

towards interest

which, as per

stipulated terms,is

payable on a long

te

Five yearly

instalments

commenced

from Ist

Oct.,2003

(Four

installments

already paid.)

c) Rabo India Finance 6,000.00

8.30%&8.435

% Payable

Quarterly

3,600.00

* Including working capital demand loan of Rs. 6500 lacs.


203

d) UTI Bank

4,235.00

11.00%

Payable

Monthly

3,479.82

Secured by a

second charge on

all the immovable

/ movable assets

(save and except

book debts)

present and future

of the Company's

Sugar units at

Narkatiaganj

including

Rs.943.77 lacs

towards interest

which, as per

stipulated terms,is

payable on a

10 instalments

in five years

commencing

from 2nd

June,2007

(One

instalment

already paid.)

e) State Bank Of India 4,300.00

11.00%

Payable

Monthly

4,300.00

f) State Bank Of

Hydrabad

1,650.00

9.00%

Payable

Monthly

1,482.76

Secured by first

mortgage/charge

on all the

immovable/movab

le assets,(save and

except book

debts), present and

future,of the

Company's Sugar

units at

Narkatiaganj,

Hargaon & Rosa

and Distillery unit

at Hargaon,

ranking pari-pasu

amongst the

various lend

Half yearly

installments

of Rs. 600.00

lacs each

commencing

from Oct.,05

(Four

instalments

already paid.)

2 CASH CREDIT ACCOUNT

a) State Bank of

India, (SBI)

19,785.00

11.75%

Payable

Monthly

11,079.18

Secured by

first

mortgage/c

harge on all

the

immovable

/movable

assets,(save

and except

book

debts),

present and

future,of

the

Company's

Sugar units

at Hargaon

and

Distillery

unit at

Hargaon

ranking

pari-pasu

16th

Quarterly

installments of Rs.

264.6875 lacs each

commencing from

Oct.,06( Three

installemnt already

paid)


204

amongst

the various

lenders,

subject to

pr

Secured by

first

mortgage/c

harge on all

the

immovable

/movable

assets,(save

and except

book

debts),

present and

future,of

the

Company's

Sugar units

at Hargaon

and

Distillery

unit at

Hargaon

ranking

pari-pasu

amongst

the various

lenders,

subject to

pr

20th

Quarterly

installments of Rs.

215 lacs each

commencing from

Dec.,07

Total

27,252.99

To be

Secured by

first

mortgage/c

harge on all

the

immovable

/movable

assets,(save

and except

book

debts),

present and

future,of

the

Company's

Narkatiaga

nj unit ,

ranking

pari-pasu

amongst

the various

lenders,

subject to

prior

charges

created on

movabl

20th

Quarterly

installments of Rs.

82.50 lacs each

commencing from

June,08

Secured by On Demand


205

hypothecati

on of

entire

current

assets of

the

Company

and further

secured by

a charge on

the

immovable

assets of

the

company as

follows :-

a.Canning

factory at

Allahabad -

First

Charge

b. Hargaon

Sugar &

Distllery

units -

Second

Charge

c.

Narkatiaga

nj & Rosa

Sugar units

- Third

Charge


206

ANNEXURE - 15 F

CONSOLIDATED STATEMENT OF RESTATED UNSECURED LOANS

(Rs. in Lacs)

As at 30th June

Particulars 2003 2004 2005 2006 2007

Intercorporate Deposits

from

Promoters' Companies 985.00

765.00

- - -

Associate / Promoters'

Group Companies 1,300.00

1,300.00

190.00 55.00 4,045.00

Others 765.00

2,040.00

255.00 175.00 900.00

Sub Total 3,050.00

4,105.00

445.00 230.00 4,945.00

25-10.35% Short Term

non-convertible

debentures of Rs. 100 lacs

each ( Reedemable at par

on 6th July,2007) - -

- - 2,500.00

From State Bank of India

- Against crop Loan to

Growers - - 354.15

Short Term Loan from

Schedule Bank - -

1,000.00 1,000.00 5,440.00

From Trade & deposits(

partly not bearing

interest) 58.39

63.09

57.10 75.48 91.78

Fixed Deposits from :

Key management

Personnel and their

relatives 39.22

35.81

37.47 - -

Others 302.41

379.78

612.19 686.50 449.73

Total 3,450.02

4,583.68

2,151.76 1,991.98 13,780.66

BREAK-UP OF RESTATED INTERCORPORATE DEPOSITS AS ON 30TH JUNE,2007

Sl

No. Particulars

Interest

payment

schedule

Rate of

Interest

Amount

Re-payment

Schedule

1

From Associate /

Promoters'Group

Companies:

SIL Investments Limited Monthly 14.00%

525.00 On demand

Sutlej Textiles &

Industries Limited Monthly 13.00%

2,000.00 On demand

Chambal Fertilizers &

Chemicals Ltd. Quarterly 13.00%

1,000.00 28-09-2007

H.T.Media Ltd., Quarterly 10.00%

500.00 On demand

Pollock Traders (P) Ltd. Quarterly 10.00%

20.00 4,045.00 19-04-2007

2 From others Monthly 14% - 15% 900.00 On various dates

from Oct.,07 to

March,08

Total 4,945.00 ANNEXURE - 15 G


207

CONSOLIDATED STATEMENT OF RESTATED INVESTMENTS

(Rs. in Lacs)

Particulars As at 30th June

2003 2004 2005 2006 2007

Quoted Investments

In Promoter's Company 250.19

212.63

212.63 212.63 212.63

In Associate/Promoter's

Group Companies 1,163.58

1,174.44

1,171.29 1,053.33 1,833.20

Others 11.60

50.03

42.73 13.32 6.73

Total 1,425.37

1,437.10

1,426.65 1,279.28 2,052.56

Unquoted Investments

In Promoter's Company -

0.49

12.00 12.00 -

Others 116.23

116.18

111.48 111.48 107.65

Total 116.23

116.67

123.48 123.48 107.65

Grand Total 1,541.60

1,553.77

1,550.13 1,402.76 2,160.21

Less: Provison for

diminution in value of

Investments 16.61

16.61

36.61 36.61 36.61

Net Investments 1,524.99

1,537.16

1,513.52 1,366.15 2,123.60

Market Value of Quoted

Investments 1,236.63

1,813.19

5,215.30 3,567.16 4,950.81


208

PROMOTER GROUP COMPANIES

Since there are more than five listed companies promoted by promoters, financial information of top five listed

group companies are disclosed hereunder in terms of Clause 6.10.3.2 of SEBI (DIP) Guidelines read with

Clause 6.10.3.1 are as follows:

Upper Ganges Sugar & Industries Limited (“UGSIL”)

UGSIL was incorporated on August 10, 1932 under the name and style of Upper Ganges Sugar Mills Limited

under the Indian Companies Act, 1913. The name of the Company was subsequently changed to Upper Ganges

Sugar & Industries Limited on September 3, 1984.

As per its Memorandum of Association, the main object of the company is to carry on the business of sugar

manufacture and refinery and the manufacture of any other material that may be decided upon by or on behalf of

the company.

Currently, the company is engaged in manufacture of sugar and its by-products, industrial alcohol / ethanol, Bio-

compost and tea.


Shareholding Pattern of UGSIL as on September 30, 2007 was as follows:

Sl Name of the Share Holder No of Shares %

1 Promoters 56,83,206 49.17

2 Banks, FI, FIIs, Insurance Companies, Mutual fund 5,70,769 4.94

3 Private Bodies Corporate 12,76,716 11.04

4 Resident Individuals 39,55,105 34.22

5 NRIs/ OCBs 71,443 0.63

Total 11557239 100

Board of Directors

Board of Directors of UGSIL as on September 30, 2007 comprised of:

1. Smt. Nandini Nopany (Chairperson cum Managing Director)

2. Shri C. S. Nopany

3. Shri R. K. Choudhury

4. Shri G. K. Bhagat

5. Lt. Gen. K. Chiman Singh (Retd.)

6. Shri Gaurav Swarup

7. Shri Supriya Gupta

8. Shri Sunil Kanoria

9. Shri I P Singh Roy

10. Shri P.K.Lakhotia


The operating results of UGSIL as at and for the years ended June 30, 2005, 2006 and 2007 are set forth below:

(all figures in Rs. lacs, except per share data)

Particulars 2005 2006 2007

Total Income 35830.37 41527.89 32565.01

Profit/(Loss) After Tax 1369.44 2862.29 (2826.13)

Equity Capital(of Rs.10 each) 697.94 700.44 1155.73

Reserves and Surplus 7250.41 9387.74 12767.89

Earning per Share 65.70 40.86 (25.15)

Book Value per Share (excluding

deferred tax liability and net of

miscellaneous expenditure)

113.92 144.03 120.47


209

Share Quotation

The equity shares of UGSIL are listed on BSE, NSE and The Calcutta Stock Exchange Association Limited.The

highest and lowest market price of shares of UGSIL on the Stock Exchanges during the preceding six months

are as follows:

BSE NSE CSE

Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)

June, 2007 85.50 68.10 84.40 68.00 - -

July, 2007 84.00 67.00 83.35 68.70 - -

August, 2007 78.50 58.00 78.50 58.25 - -

September, 2007 87.00 66.80 89.80 66.00 - -

October 2007 83.70 66.20 83.00 61.00 - -

November 2007 102.00 65.10 102.40 67.45 - -

Previous Issues made in last three years

UGSIL had made a Rights Issue of 4552,852 Equity Shares of Rs.10/-each at a premium of Rs. 140/- per share

(i.e. at a price of Rs. 150/- per share) in the ratio of thirteen Equity Share for every one Equity Share held during

the financial year i.e. 2005-06.

Issue opened on June 28, 2006

Issue closed on July 27, 2006

Date of completion of dispatch of

delivery of security certificates

August 7, 2006

Object of the issue The issue of the Equity Shares was made to repay working

capital borrowings and to meet the expenses of the issue.

Rate of dividend paid prior to the

issue 40 %

Particulars of changes in the capital structure are given below:

Particulars


(Rs. Lacs)

Share Premium

(Rs. Lacs)

Prior to the issue 700.44 387.69

After the Rights issue 1155.73 6761.68

After retention of 15% over-

subscription

N. A. N. A.

Common Pursuits

Upper is also in sugar production and and trading business. Presence of Upper in the same line of business may

lead to the conflict of interest between us and our promoters and our promoters may pursue such policies which

are favourable for Upper but not for us.

Mechanism for redressal of Investors’ Grievances

UGSIL has an Investor’s Grievance Committee which oversees the performance of the Registrar and Share

Transfer Agent of the Company and recommends measures to improve the level of investor related services. The

Committee deals with applications for transfer/ tramsmission of shares, sub division and consolidation of share

certificates and other related matters. There was no pending investors’ complaint as on September 30, 2007.

Texmaco Limited (“Texmaco”)

Texmaco was incorporated on August 4, 1939 under the Indian Companies Act, 1913 as “Textile Machinery

Corporation Limited”. The name of the company was subsequently changed to Texmaco Limited on September

18, 1973.


210

As per the Memorandum of Association of Texmaco, the main object of the company is to carry on the business

of manufacturing machinery, engines, turbines, tanks, ships, bodies, tools, implements, accessories, equipments

and other materials and products in India or elsewhere.

Currently, Texmaco is engaged in manufacturing heavy and precision engineering products, including Railway

wagons, Hydro-mechanical equipment for Dams and Barrages, Structurals, Industrial Boilers and Pressure

Vessels, Sugar Mill Machinery, Textile Spinning Machinery, Switches & Crossings for Railway Tracks, Steel

Castings, Forgings, Agro Mechanical Equipments and other related equipments. Texmaco has 4 engineering

plants in the state of West Bengal engaged in manufacture of heavy engineering goods and steel foundry.


Shareholding Pattern of Texmaco as on September 30, 2007 was as follows:

Sl No Name of the Share Holder No of Shares %

1 Promoters 5424890 52.54

2 Banks, FI, FIIs, Insurance Companies, Mutual fund 1785198 17.29

3 Private Bodies Corporate 1377418 13.34

4 Resident Individuals 1578345 15.29

5 NRIs/ OCBs 79643 0.77

6 Others 3115672 30.17

Total 10325760 100.00

Board of Directors

Board of Directors of Texmaco as on September 30, 2007 comprised of following

1. Dr. K. K. Birla (Chairman)

2. Shri S. K. Poddar (Vice Chairman)

3. Shri B. P. Bajoria

4. Shri H. C. Gandhi

5. Shri A. C. Chakrabortti

6. Dr. H. Sadhak (Nominee of LIC)

7. Shri B. Rai

8. Shri Manish Gupta

9. Shri A. Dhasarathy

10. Shri A. K. Nanda – Wholetime Director


The operating results of Texmaco for the years ended March 31, 2005, 2006 and 2007 are set forth below:

(All figures in Rs. lacs, except per share data)


Total Income 30,598.04 39,475.82 47,933.00

Profit/(Loss) After Tax 1,566.43 1,901.39 2,847.61

Equity Capital

( face value of Rs.10/- each)

1,032.58 1,032.58 1,032.58

Reserves & Surplus

(excluding revaluation reserves, if any) 9,897.43 11,445.60 13,809.99

Earnings per Share 17.01 18.41 27.58

Net Asset Value per Share (excluding deferred tax liabilities

and net of miscellaneous expenditure not written off)

103.88 118.78 142.03

Share Quotation

The equity shares of Texmaco are currently listed on BSE, The Calcutta Stock Exchange Association Limited

and NSE.


211

The highest and lowest market price of shares of Texmaco as listed on the exchanges during the preceding six

months is as follows:

BSE NSE

Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)

June, 2007 1115.00 875.20 1100.00 856.70

July, 2007 1300.00 1015.25 1305.00 1020.00

August, 2007 1205.00 1007.00 1200.00 994.10

September, 2007 1279.00 1080.00 1203.00 1060.25

October, 2007 1686.40 1010.00 1496.00 1001.00

November 2007 1900.00 1350.00 1922.00 1350.00

The equity shares of Texmaco were not traded on The Calcutta Stock Exchange in last six months.


Texmaco has not made any Public Issue or a Rights Issue in last three years


Texmaco has formed a committee to dealt with the investor’s grievances. There was no pending investors’

complaint as on September 30, 2007.

Sutlej Textiles and Industries Limited (“Sutlej”)

Sutlej was incorporated on 22nd June, 2005 and was created out of a corporate restructuring exercise in which

the Textiles Divisions of Sutlej Industries Limited (SIL) and Damanganga Processors Limited (DPL) were

demerged into Sutlej with effect from July 1, 2005. The restructuring is aimed at making Sutlej into a focused

and an integrated company in the Textiles Industry with its range of products varying from yarn to fabrics to

home furnishing and now garments.

As per the Memorandum of Association of Sutlej, the main object of the company is to carry on the business of

spineers, weavers, manufacturers, ginners, balers and pressers of cotton kapas, yarn, cotton waste, yarn waste,

hemp, jute and any other fibrous material and the cultivation thereof and the business of buyers, sellers and

dealers of cotton kapas, cotton waste, yarn waste, hemp, jute and any other fibrous material, oil seeds, and

any other seeds and produce and of any goods or merchandise whatsoever business that may be necessary or

expedient and to purchase and vend the raw material and manufactured articles and to carry on or be interested

in the business of ginning and pressing factory proprietors.

The company is currently engaged in business of manufacture of Cotton Yarn, Staple Yarn, Synthetic Yarn,

Fabrics. The plants of Sutlej are located in the states of Rajasthan, Jammu and Kashmir and Gujarat engaged in

manufacture of cotton yarn, manmade fibre yarns and fabrics respectively.

Sutlej is today an integrated player in the textiles industry with a value chain extending from yarn at one end and

extending to fabric, garments and home textiles at the other, enabling it to address opportunities in every

intervening segment.


Shareholding Pattern of Sutlej as on September 30, 2007 was as follows:

Sl No Name of the Share Holder No of Shares %

1 Promoters 65,51,134 61.83

2 Banks, FI, FIIs, Insurance Companies, Mutual

fund

2,78,576 2.63

3 Private Corporate Bodies 22,13,296 20.89

4 Resident Individuals 15,46,173 14.59

5 NRIs/ OCBs 6,681 0.06

Total 1,05,95,860 100.00

Board of Directors


212

Board of Directors of Sutlej as on September 30, 2007 comprised of following


2. Shri C. S. Nopany (Vice Chairman)

3. Shri K. R. Podar

4. Shri U. K. Khaitan

5. Shri Amit Dalal

6. Shri J. S. Varshneya

7. Shri S. M. Agarwal

8. Shri Bodhishwar Rai

9. Shri R. N. Laddha – Wholetime Director


The operating results of Sutlej for the years ended March 31, 2006 and 2007 are set forth below:

(all figures inRs.Lacs except per share data)

Particulars 2006 2007

Total Income 47041.22 72036.60

Profit/(Loss) After Tax 2067.38 3631.49

Equity Capital (of Rs.10 each) 1092.19 1092.19

Reserves & Surplus(excluding

revaluation reserve, if any) 11167.20 14223.68

Earnings per Share 18.93 33.26

Net Asset Value per Share (excluding

deferred tax liability and net of

miscellaneous expenditure not written

off)

112.25 140.23

Share Quotation

The equity shares of Sutlej are listed on BSE and NSE.

The highest and lowest market prices of shares of Sutlej as listed on the exchanges during the preceding six

months are as follows:

BSE NSE

Month High

(Rs.)

Low

(Rs.)

High

(Rs.)

Low

(Rs.)

June, 2007 167.40 139.60 167.70 135.00

July, 2007 174.00 140.05 173.00 129.00

August, 2007 158.00 122.55 167.95 112.00

September, 2007 170.00 134.00 164.80 127.00

October 2007 156.70 121.35 156.00 112.25

November 2007 148.95 120.00 143.95 104.30


No public or rights issue has been made by Sutlej in the preceding three years.


Sutlej has formed an Investors Grievance Committee to specifically look into the redressing of shareholders and

investors complaints relating to transfer of shares, non-receipt of dividend and other related matters. As on

September 30, 2007; there were no pending investors’ complaints.


213

Zuari Industries Limited. (“Zuari”)

The company was incorporated on May 12, 1967 under the Companies Act, 1956 in the name and style of

“Zuari Agro Chemicals Limited”. Subsequently the name of the company was changed to “Zuari Industries

Limited” on February 12, 1998.

As per the Memorandum of Association of Zuari, the main object of the company is to manufacture agriculture

chemicals, fertilizers formulations used in fertilizers,manures, mixtures and their formulations and all clasees

and kinds of chemicals, source materials, ingredient, mixtures,derivatives and compounds thereof.

The company is currently engaged in business of manufacture and sale of urea and complex fertilisers. The

plants of the company are located in state of Goa and it produces ammonia, urea and fertilizers of various

grades.


Shareholding Pattern of Zuari as on September 30, 2007 was as follows:

Sl No Category No of Shares %

1 Promoters 10042838 34.11

2 Banks, FI, FIIs, Insurance Companies,

Mutual fund

5182524 17.60



5 NRIs/ OCBs 7984825 27.12

6 Others - -

Total 2,94,40,604 100.00

Board of Directors Board of Directors of Zuari as on September 30, 2007 comprised of following

1. Dr. K.K. Birla (Chairman)

2. Shri Saroj Kumar Poddar (Co-Chairman)

3. Shri H.S. Bawa (Managing Director)

4. Shri Shyam Bhartia

5. Shri Arun Duggal

6. Shri D.B. Engineer

7. Shri M.D. Locke (Alternate – Shri K.H. Captain)

8. Shri S.V. Muzumdar

9. Shri Marco Wadia

10. Shri J.N. Godbole – Additional Director


Brief audited financials of Zuari for the years ended March 31, 2005, 2006 and 2007 are as follows :

(All figures in Rs. Lacs, except per share data)


Total Income 179012.78 221123.21 241536.99

Profit/(Loss) After Tax 2681.90 2617.48 39354.51

Equity Share Capital (of Rs.10/- each) 2944.11 2944.11 2944.11



Net Asset Value per Share (excluding deferred tax liabilities

and net of miscellaneous expenditure not written off)

128.05

134.66 265.41

Share Quotation

The equity shares of Zuari are listed on BSE and NSE.


214

The highest and lowest market price of shares of Zuari as listed on the exchanges during the preceding six


BSE NSE

Month High(Rs.) Low

(Rs.)

High (Rs.) Low (Rs.)

June 2007

July 2007

August 2007

September 2007

October 2007

November 2007

174.50

250.75

254.90

303.80

290.00

369.40

156.65

162.30

190.05

229.00

201.00

211.00

175.00

249.75

254.35

305.00

288.00

N.A

153.00

161.00

189.25

226.00

204.05

N.A


No public or rights issue has been made by Zuari in the preceding three years.


Zuari has formed an Investors’ Grievance Committee to oversee the performance of share transfer work and to

recommend measures to improve the level of investor services. As on September 30, 2007 there were no

pending investors’ complaints.

Chambal Fertilisers & Chemicals Limited. (“Chambal”)

Chambal was incorporated on May 7, 1985 in the name and style of “Aravali Fertilizers Limited” under the

Companies Act, 1956. Subsequently the name of the company was changed to “Chambal Fertilizers and

Chemicals Limited” on January 12, 1989.

As per the Memorandum of Association of Chambal, the main object of the company is to manufacture,

produce, refine, process, formulate all classes and kinds of agricultural chemicals, fertilizers, manures, their

bye-products, intermediarires, derivatives and compounds and remedies of all kinds for agricultural, humans and

animals by any process whether chemical, mechanical, electrical or otherwise.

The company is currently engaged in business of manufacture of agricultural inputs. Chambal’s fertilizers plants

are located in Rajasthan, textile mills in Himachal Pradesh and food processing unit in Haryana.


Shareholding Pattern of Chambal as on Septemeber 30, 2007; was as follows:

Sl No Name of the Shareholder No of Shares %

1 Promoters 207890579 49.95

2 Banks, FI, FIIs, Insurance Companies, Mutual

fund 70288422 16.89



5 NRIs/ OCBs 12251809 2.94

6 Others 1105000 0.27

Total 416207852 100.00

Board of Directors

Board of Directors of Chambal as on September 30, 2007 comprised of following:


2. Shri S. K. Poddar (Co-Chairman)

3. Shri H. S. Bawa (Vice Chairman)

4. Shri Anil Kapoor (Managing Director)

5. Shri A. J. A. Tauro

6. Shri Dipankar Basu

7. Shri Marco P.A. Wadia

8. Shri M. D. Locke (Alternate – Shri. C. S. Nopany)


215

9. Shri R. N. Bansal

10. Shri Shyam S. Bhartia


The operating results of Chambal for the years ended March 31, 2005, 2006 and 2007 are set forth below:

(All Figures in Rs. lacs except per share data)


Total Income 267946.99 274062.03 259130.60

Profit After Tax 22062.52 20312.05 15113.10

Equity Capital (of Rs. 10 each) 41620.79 41620.79 41620.79

Reserves & Surplus

(excluding revaluation reserves) 42729.82 54495.55 60590.71


Net Assets Value per Equity Share (Rs.) 20.07 22.99 24.51

Share Quotation

The equity shares of Chambal are listed on BSE and NSE.

The highest and lowest market price of shares of Chambal as listed on the exchanges during the preceding six


BSE NSE

Month High

(Rs.)

Low (Rs.) High

(Rs.)

Low (Rs.)

June, 2007 36.80 32.85 36.95 32.70

July, 2007 37.80 34.45 37.45 34.35

August, 2007 51.70 32..00 54.00 32.15

September, 2007 62.75 48.10 62.80 47.10

October, 2007 40.00 60.90 40.00 60.85

November, 2007 45.40 80.70 44.40 80.65


No public or rights issue has been made by Chambal Fertilisers & Chemicals Limited in the preceding three

years.


Chambal has formed an Investors’ Grievance Committee to approve the matters relating to allotment of

securities, issue of duplicate certificates, review and redressal of investor grievances and other related matters.

As on Septemebr 30, 2007 there 7 cases pending with respect to investors’ complaints.


216

RECENT DEVELOPMENT

QUARTERLY LIMITED REVIEW REPORT (STANDALONE) FOR QUARTER ENDED

SEPTEMBER 30, 2007

Type UnAudited Audited UnAudited UnAudited UnAudited Audited

Period Ending 30 Sep 07 30 Jun 07 31 Mar 07 31 Dec 06 30 Sep 06 30 Jun 07

No Of Months 3 3 3 3 3 12

Description

Net Sales /

Interest Earned

/ Operating

Income

733.00 1,321.71 951.75 1,050.00 1,100.99 4,424.45

Other Income 14.90 9.94 2.74 1.54 1.90 16.12

Total Income 747.90 1,331.65 954.49 1,051.53 1,102.89 4,440.56

Expenditure -835.98 -1,600.36 -848.32 -950.30 -1,023.74 -4,422.72

Operating

Profit -88.08 -268.72 106.17 101.24 79.15 17.84

Interest -83.16 -86.97 -64.13 -26.12 -32.07 -209.29

Profit Before

Depreciation

and Tax

-171.24 -355.69 42.04 75.11 47.09 -191.44

Depreciation -53.64 -63.87 -47.06 -48.49 -43.45 -202.87

Profit before

Tax -224.88 -419.55 -5.02 26.63 3.64 -394.31

Tax 75.70 136.20 0.90 -9.83 -1.92 125.36

Net Profit -149.19 -283.35 -4.13 16.80 1.72 -268.96

Equity Capital 181.75 181.75 181.75 181.75 181.75 181.75

Basic And

Diluted EPS

after

Extraordinary

item

-8.21 -15.59 -0.23 0.92 0.09 -14.80

Nos. of Shares

- Public 9,479,963.00 9,479,963.00 9,479,963.00 9,479,963.00 - 9,479,963.00

Percent of

Shares-Public 52.16 52.16 52.16 52.16 - 52.16

Operating

Profit Margin -12.02 -20.33 11.16 9.64 7.19 0.40

Net Profit

Margin -20.35 -21.44 -0.43 1.60 0.16 -6.08

Cash EPS -5.26 - - - - -

1. Sugar is a seasonal industry where crushing takes place during the period between November and May while

sales are distributed throughout the year. As such the above quarterly results are not indicative of the likely

results for the year.

2. The Auditors in their report on the Accounts for the year ended June 30, 2007 had commented upon (i) non

adjustment of certain realizations in earlier years due to pending appeals and (ii) recognition of Deferred Tax

Asset (net) and MAT Credit entitlement based on future profitability projections, the impact whereof on the

aforesaid financial results is not presently ascertainable.

3. The construction of Company´s Greenfield integrated Sugar project of 7000 TCD along with Co-generation at

Hata Kushinagar (U.P.) and Distillery at Hargaon is in progress.

4. There was no exceptional / extraordinary items during the quarter ended September 30, 2007.


217

5. The previous period figures have been re-grouped, wherever necessary, to conform to the current year figures.

6. The above results have been reviewed by the Audit Committee and taken on record by the Board of Directors

at its meeting held on October 27, 2007 and October 29, 2007 respectively.

Expenditure Includes

Decrease in stock (After adjusting

excise duty & cess on stock) Rs 822.093 million

Consumption of Raw Material Rs 577.164 million

Purchase of Semi-finished goods Rs 2.012 million

Staff Cost Rs 65.308 million

Stores, Spares & packing materials consumed Rs 58.387 million

Other expenditure Rs 75.397 million

Tax Includes Provision for

Provision for Tax Rs (0.431)million

MAT Credit Entitlement Rs 0.846 million

Fringe Benefit Tax Rs 0.400 million

Deferred Tax Liability Rs (137.017)million

EPS is Basic & Diluted

1. The Auditors in their report on the Accounts for the year ended June 30, 2007 had commented upon (i) non

adjustment of certain realizations in earlier years due to pending appeals, (ii) recognition of Deferred Tax Asset

(MAT Credit entitlement based on future profitability, projections and impact thereof on the aforesaid financial

results is not presently ascertainable.

2. The construction of Company´s Greenfield integrated Sugar project of 7000 TCD along with Co-generation at

Hata Kushi Nagar (U.P.) is in progress.

3. The previous period figures have been re-grouped, where necessary, to conform to the current year figures.

4. The above results have been reviewed by the Audit Committee as on September 27, 2007 and taken on record

by the Board of Directors at their meetings held on the September 28, 2007.


218

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATION AS REFLECTED IN THE FINANCIAL STATEMENT

You should read the following discussion on financial conditions and results of operations together with audited

unconsolidated financial statements (as restated) for the years ended June 30, 2003, 2004, 2005, 2006 and 2007

under Indian GAAP including schedules, annexures and notes thereto and reports thereon, which appear in the

Financial Statement of the Issuer Company section of this Draft Letter of Offer.

OVERVIEW OF OUR BUSINESS

Our Company was promoted by Late R.D.Birla in 1932 with the main object of carrying on business of


Hargaon (District : Sitapur, Uttarpradesh) with a crushing capacity of 400 tcd. We further established a distillery

at Hargaon in 1945. Subsequently, our company purchased a sugar factory namely Rosa Sugar Works at Rosa

(Dist. Shahanjapur, Uttar Pradesh) in 1976 with a crushing capacity of 1000 tcd. In 1984, The New Swadeshi

Sugar Mills Limited having a sugar mill, distillery at Narkatiaganj (Bihar), a fruit and vegetable canning factory

at Allahabad and a paint factory under lease at Calcutta was merged with our Company. The lease of the paint

factory was terminated in April, 1997. Over the period we have expanded our capacities of sugar production,

industrial alcohol/ethanol and canning products.Presently we have three sugar factories at Hargaon, Rosa in

Uttarpradesh and at Narkatiaganj in Bihar with a combined crushing capacity of 21,700 tcd alongwith 25 M.W.

Co-generation. Our Company is also having two distilleries at Hargaon and at Narkatiaganj with a total installed

capacity 22.50 million litres per annum. Our fruits and vegetable canning factory is situated at Bamrauli near

Allahabad. The Company is in process of setting up a Greenfield Sugar unit at Hatta, Gorakhpur, U.P with a

capacity 7,000 tcd and co-generation power plant of 35 M.W.

DETAILS OF OUR PRODUCTS

As stated above, we manufacture the following four main categories of products:

• Sugar

• Co-generation



In addition, we also have arrangement for manufacturing of bio-compost at Hargaon and Narkatiagang by using

press-mud from sugar factory and spent wash from distillery. Bio-Compositing culture purchased from Vasant

Dada Sugar Institute, Pune are added and by Aerobic Bio-composting process in 45-60 days Bio-Compost is

being made. This fertilizer having Nitrogen, Phosphorus and Potash and other chemicals is being widely used in

cane, wheat, vegetables & Flowers cultivation. Bio-Compost produced by us is marketed under the brand name

“Oudh Jaivik Khad” at Hargaon.

Share of different segments in our total sales for the last three years is as follows:

(Rs. in Lacs)

2004-05 2005-06 2006-07

Amount % to total

sales

Amount % to total

sales

Amount % to

total

sales

Sugar 32078.00 90.10 44890.74 89.57 37817.54 85.47

Co-generation - 0 0 0 766.43 1.73

Industrial Spirits

(including

Denaturants), Fusel

Oil & Bio-

Compost

2335.20 6.56 3792.89 7.57 3919.33 8.86

Canning Products 1191.37 3.34 1433.10 2.86 1741.15 3.94

Total 35604.57 100.00 50116.73 100 44244.45 100


219

SIGNIFICANT DEVELOPMENTS SINCE THE DATE OF LAST FINANCIAL STATEMENT

The Company has declared its quaterly unadudited results for the 3 months period ended 30th

Septemeber 2007,

which has been limited reviewed by the Statutory Auditors of the Company in accordance with the requirement

of amended clause 41 of the Listing Agreement with the Stock Exchange.

For details please refer to section title recent developments beginning on page no. 216

There are no other material developments after the date of the latest balance sheet save and except as stated

above.

RESULTS OF OPERATIONS

Analysis of Income and Sales trend for the last five financial years ended June 30, 2007 as per restated

accounts are as follows:

(Rs. In lacs)

For the year ended 30th June Particulars

2003 2004 2005 2006 2007

Sale of Products (net of exice duty) 31331.65 35435.52 35604.57 50116.73 44244.45

Total Income 31,285.92 29,426.56

36,969.65

48,135.06

48,114.22

Profit before Interest, Depreciation,

Tax

1627.72 5740.93 7742.42 10418.11 180.76

Net Profit/(Loss) Before Tax

(2,529.35)

1,106.27

3,789.60

7,174.64

(3,940.78)

Net Profit/(Loss) after tax

(2,530.38)

1,074.10

3,588.01

5,365.72

(2,894.29)

The company has achieved sale of products of Rs. 44244.45 lacs during the financial year 2006-07 as compared

to Rs. 50116.73 lacs during the preceding year 2005-06. This was mainly on account of low realization of

sugar, reduction in sugar price,s overall decrease in turnover of sugar. In fiscal 2006 - 2007 we have commenced

generation and transmission of power which has realized Rs. 766.43 lacs. Further our sale of spirit has increased

from Rs. 3998.00 lacs in fiscal 2006 to Rs. 4214.81 lacs in fiscal 2007 mainly due to efficient marketing and

distribution skills and better utilization of capacity. Further we have also realized Rs. 1740.04 lacs in fiscal 2007

as compared to Rs 1432.11 lacs in fiscal 2006 from sale of Canned Fruits and Vegetables this is due to increase

in export sales.

Sugar Sales* 2002-03 2003-04 2004-05 2005-06 2006-07

Sugar (Qty in Quintals) 2281667 2340121 1911643 2515824 2419637

Sales Value (in Rs. Lacs) 29098.19 32327.95 32087.73 45372.22 38215.71

Average Realisation (Rs. Per

quintal)

1275.30 1381.46 1678.54 1803.47 1579.40

Spirit Sales* 2002-03 2003-04 2004-05 2005-06 2006-07

Spirit (in Litres) 18396818 20898490 12077789 18907809 19007939

Sales Value (in Rs. Lacs) 2350.08 3483.00 2449.27 3998.00 4214.81

Average Realisation(Rs./ Ltr) 12.77 16.67 20.28 21.14 22.17

(*The quantity sold includes inter-segment sale and sales value is gross of excise and cess as per audited

accounts)

The average price per liter of spirit is increasing over period of five years due to overall increase in molasses

(basic raw material) price and efficient marketing skill.


220

COMPARISON OF RESULTS OF OPERATION

Fiscal Year ended June 30, 2007 compared to Fiscal Year ended June 30, 2006

Sale of products

The company has achieved sale of products of Rs. 44244.45 lacs during the financial year 2006-07 as compared

to Rs. 50116.73 lacs during the preceding year 2005-06. This was mainly on account of low realization of

sugar, reduction in sugar price,s overall decrease in turnover of sugar. In fiscal 2006 - 2007 we have commenced

generation and transmission of power which has realized Rs. 766.43 lacs. Further our sale of spirit has increased

from Rs. 3998.00 lacs in fiscal 2006 to Rs. 4214.81 lacs in fiscal 2007 mainly due to efficient marketing and

distribution skills and better utilization of capacity. Further we have also realized Rs. 1740.04 lacs in fiscal 2007

as compared to Rs 1432.11 lacs in fiscal 2006 from sale of Canned Fruits and Vegetables this is due to increase

in export sales.

Raw materials consumed

We have consumed raw material of the value of Rs. 38765.85 lacs in fiscal 2007 as compared to our

consumption of raw materials of Rs. 29727.34 lacs in fiscal 2006. This increase is primarily due to increase in

crushing from 233.60 lacs quintals of sugarcane in fiscal 2006 to 290.03 lacs quintals in fiscal 2007 and increase

in sugarcane prices. During fiscal 2007, our consumption of sugarcane has also increased due to increase in the

overall crushing capacity.

Other Expenses

The other expenses includes purchase of trading/semi finished goods, staff cost and other manufacturing,

administrative and selling expenses. In fiscal 2006, other expenses were Rs. 7989.61, which is increased to Rs.

9167.61 lacs in fiscal 2007. This increase is mainly duly to increase in manufacturing expenses and staff cost

because of higher crushing. Further in fiscal 2007 the there was overall revision in wages and salaries.

Profit before Interest, Depreciation and Tax (PBIDT)

PBIDT of Rs. 10418.11 lacs in fiscal 2006 was reduced to Rs. 180.76 lacs in fiscal 2007 due to higher prices of

sugar crane coupled with low price of sugar.

Interest

The net interest cost for the fiscal 2007 was Rs. 2092.87 lacs as compared to interest cost of Rs. 1684.79 lacs in

fiscal 2006. This increase is mainly due to increase in borrowing cost and overall increase in secured and

unsecured loan.

Tax (including Fringe Benefit Tax)

We have paid Rs. 705.28 lacs as net tax for fiscal 2006 whereas for fiscal 2007 we have paid Rs. 57.15 lacs as

net tax. The decrease is due to net loss before taxation in fiscal 2007 as compared to profit in fiscal 2006.

Net Profit /(Loss) after tax

The net profit after tax which was Rs. 5365.72 lacs for fiscal 2006 has reduced to net loss of Rs. 2894.29 lacs in

fiscal 2007.

Fixed Assets

Net fixed assets including capital work in progress and capital Expenditure on expansion/new projects increased

from Rs. 23164.94 lacs in fiscal 2006 to Rs. 41913.98 lacs in fiscal 2007. This increase is due to expansion of

our existing capacities at Hargaon and Narkatiaganj sugar unit, setting up new sugar plant with co-generation at

our unit at Hatta (UP) and expansion of distillery plant at Hargaon to capacity of 100 KLPD.


221

Current Assets, Loans & Advances

The current assets, loans and advances was Rs. 23227.12 lacs as on June 30, 2007 as compared to Rs. 17386.84

lacs as on June 30, 2006. This increase was mainly on account of increase in inventory levels of sugar.

Liabilities & Provisions

The total liability has increase from Rs. 27895.39 lacs in fiscal 2006 to Rs. 56520.66 lacs in fiscal 2007. This

increase is mainly on account of increase in our overall borrowing such as secured and unsecured loan and

current liabilities.


Major Development:

- Expansion of capacity at our Hargaon unit

Sale of products

Our sales of products during fiscal 2006 was increase to Rs. 50116.73 lacs from Rs. 35604.57 lacs in fiscal

2005, this increase was mainly due to better realization as well as increase in turnover of sugar. Further sale of

spirit was also increase from Rs. 2449.27 lacs in fiscal 2005 to Rs. 3998.00 lacs in fiscal 2006.


We have consumed raw material of the value of Rs. 29727.34 lacs in fiscal 2006 as compared to our

consumption of raw materials of Rs. 21528.91 in fiscal 2005. This increase is primarily due to increase in

crushing from 182.00 lacs quintals of sugarcane in fiscal 2005 to 233.60 lacs quintals in fiscal 2006 and increase

in sugarcane prices.

Other Expenses


administrative and selling expenses. In fiscal 2005, other expenses were Rs. 7698.32, which is increased to Rs.

7989.61 lacs in fiscal 2006. This increase is mainly duly to increase in manufacturing expenses and staff cost

because of higher crushing. However there was reduction in purchase of raw sugars by Rs, 943.31 lacs in fiscal

2006 as compared to fiscal 2005.


PBIDT of Rs. 7742.42 lacs in fiscal 2005 was increased to Rs. 10418.11 lacs in fiscal 2006 due to increase in

overall turnover and better realization.

Interest


fiscal 2006. This decrease is due to reduction in overall indebtedness of the Company.

Tax (including Fringe Benefit Tax)

We have paid Rs. 201.59 lacs as net tax for fiscal 2005 whereas for fiscal 2006 we have paid Rs. 705.28 lacs as

net tax. This increase is due to higher PBT.

Net Profit after tax

The net profit after tax was increased from Rs. 3588.01 lacs for fiscal 2005 to Rs. 5365.72 lacs for fiscal 2006.

This increase is due to increase in overall volume and better realization.


222

Fixed Assets


from Rs. 18105.66 in fiscal 2005 to Rs. 23164.94 lacs in fiscal 2006. This increase is due to expansion of our

existing capacities at Hargaon.


The current assets, loans and advances was reduced to Rs. 17386.84 lacs as on June 30, 2006 from Rs. 19430.82

lacs. This decrease was on account of decrease in inventory levels of sugar.


The total liability has decreased from Rs. 30385.75 lacs in fiscal 2005 to Rs. 27895.39 lacs in fiscal 2006. This

decrease is mainly on account of repayment of overall debts.


Major Development:

- Expansion of capacity at our Hargaon unit

- Issuance of Rights issue equity shares in the ratio of 3:4 of aggregating to Rs. 3894.39 lacs

Sale of products

Our sales of products during fiscal 2005 was marginally increased to Rs. 35604.57 lacs from Rs. 35435.54 lacs

in fiscal 2004.


We have consumed raw material of the value of Rs. 21528.91 in fiscal 2005 as compared to Rs. 17247.94 lacs in

fiscal 2004. This is primarily due to increase in crushing from 168.96 lacs quintals in fiscal 2004 to 182.00 lacs

quintals in fiscal 2005 and increase in sugarcane prices.

Other Expenses


administrative and selling expenses. In fiscal 2005, other expenses increased to Rs. 7698.32, from Rs. 6437.69

lacs in fiscal 2004. This increase is mainly due to purchase of raw sugar amounting to Rs. 943.31 lacs in fiscal

2005.


PBIDT of Rs. 5740.93 lacs in fiscal 2004 were increased to Rs. 7742.42 lacs in fiscal 2005 due to better

realization.

Interest


fiscal 2004. This decrease is due to reduction in overall reduction of interest rate and reduction in overall

borrowings.

Tax

We have paid Rs. 201.59 lacs as net tax (including fringe benefit tax) for fiscal 2005 whereas for fiscal 2004 we

have paid Rs. 32.17 lacs as net tax. This increase is due increase in profit eligible for taxation.

Net Profit after tax

The net profit after tax was increased to Rs. 3588.01 lacs for fiscal 2005 from Rs. 1074.10 lacs in fiscal 2004.

This increase is due to better realization and reduction in interest outgo.


223

Fixed Assets


to Rs. 18105.66 in fiscal 2005 from Rs.14798.96 lacs in fiscal 2004. This increase is due to expansion of our

existing capacities at Hargaon.


The current assets, loans and advances was marginally increased from Rs. 18335.10 lacs in fiscal 2004 to Rs.

19430.82 lacs as on June 30, 2005. This increase was mainly due increase in inventory levels of sugar.


The total liability has decreased from Rs. 32904.32 lacs in fiscal 2004 to Rs. 30385.75 lacs in fiscal 2005. This

decrease is mainly due to reduction in unsecured loans and current liabilities which was partly offset by increase

in secured loans.

ECONOMIC ENVIRONMENT AND COMPANY PERFORMANCE

Sugarcane is the main raw material for sugar industry and accounts for 70% of the cost of production of sugar.

It is also the major source of income for millions of farmers. The determination of price for sugarcane is,

therefore, a matter of critical importance both for the sugar industry and the cane growers. The Central

Government fixes a Statutory Minimum Price factory wise, in terms of Clause 3 of the Sugarcane (Control)

Order, 1966 in respect of each sugar season

Further, under the Clause 5A of the Sugarcane (Control) Order 1966, the farmer is entitled to an additional

payment out of the price realization by the factories.

The Central Government before the onset of crushing season declares the SMP. For season 2005-06, 2006-07

and 2007-08, SMP of sugarcane was fixed at Rs. 79.50, 80.25, 81.18 per quintal respectively linked to a base

recovery rate of 9.0% with a premium for higher recovery.

The Uttar Pradesh sugar factories has paid / provided Rs. 125 per quintal for the sugar season 2006-07, based

on the prices announced by the U.P Government, which is also referred to as SAP. However the Company

alongwith other sugar factories has also challenged the said price, before the honble High Court of Allahabad.

The judgement is awaited. Further the Bihar sugar factories have paid / provided a contractual price of Rs. 115/-

per quintal, higher than the SMP, for the sugar season 2006-07.

For the sugar seasons 2007-08, the Uttar Pradesh State Government has announced SAP of Rs. 125/- per

quintals which has been challenged by the UP Sugar Mills Association before Hon’ble Allahabad High Court

(Lucknow Bench), Lucknow. The court in its interim order dated November 15, 2007 has provided that the

sugar factories, till the next date of listing of the case, shall pay the cost of sugar cane to the cane growers at the

rate of Rs. 110/- per quintal which shall be subject to further order of the Court and the sugar factories shall start

the crushing forthwith. The above interim order has been further challenged in the Honble Supreme Court of

India by the sugar factories.

The Indian Sugar scenario is right now passing through recession attributable to the glut in the sugarcane

production throughout the country. During sugar season 2006–07 Indian sugar industry has registered ever high

production of sugar by 285 lacs tons which lead to crash in the free sale sugar prices in the domestic market.

Surplus production coupled with carry forward stocks led to depressed sugar prices. Depressed sugar prices,

impacted the sugar mills performance which inturn led to accumulation of arrears of cane payment by the mills

to the farmers.

UNUSUAL OR INFREQUENT EVENTS OR TRANSACTIONS

The Food Ministry has created a 5 million tonnes sugar buffer to bail out the ailing industry. The buffer would

basically transfer the cost of interest, storage and insurance payable on the total allocated quantity from the

sugar mills to the Union Government's account. The money for buffer stock will come from the Sugar

Development Fund.


224

The Central Government through Minsitry of Consumer Affiars, Food and Public Distribution (Department of

Food and Public Distribution) by its notification dated 7th

December 2007 has announced a Scheme for

extending financial assistance to the Sugar Undertaking to improve the liquidity position of Sugar factories to

enable them to clear the cane price arrears of sugar season 2006-07 and cane price of sugar season 2007-08

relating to SMP. The said loan will be equivalent to notional central excise duty (net of sugar cess) on the total

production of sugar during sugar season 2006-07 and sugar season 2007-08 for a period of four years including

morotium of 2 years. The Government will subsidise interest on the said loan to the extent of 12 % p.a.

KNOWN TRENDS OR UNCERTAINTIES

Sugar is cyclical industries and dependent to a large extent on the availability of sugarcane. Also, the output of

sugar being agro-based products is influenced by climatic conditions. The Company has diversified into

Alcohol, Ethanol Co-generation and Bio-compost to achieve value addition and reduce dependence on its core

product “sugar”.

FUTURE RELATIONSHIP BETWEEN COSTS AND REVENUES

In sugar industry, costs depend upon sugarcane prices, which account for about 70% of the costs. The revenue

depends on Government policies relating to sugarcane pricing as well as free sale quotas, international markets,

and availability of sugar. The Company’s future sale prices will be determined by the demand-supply situation,

government policies and sugarcane availability and prices.

TURNOVER FROM THE COMPANY’S MAJOR INDUSTRY SEGMENTS

The Company operates in the four segments namely Sugar, Industrial Alcohol/Ethanol, Co-generation and

Canning Product. The contribution of these divisions to the total turnover of the Company is as under :

Division Sales for the year 2006-07 (Rs. in lacs) *

Sugar 37817.54

Industrial Alcohol/Ethanol 3919.33

Co-generation 766.43

Canning Product 1741.15

Total 44244.45

*(net of Inter-segment sales, excise duty and cess – as per restated accounts)

STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCTS OR BUSINESS SEGMENTS

For further details on our expansion plans, please refer to the section titled “Business Strategy” on page no.63 of

this Draft Letter of Offer.

SEASONALITY OF THE BUSINESS

Sugar production is dependent on the availability and quality of cane. To some extent, sugarcane is a weather

resistant crop and is unaffected by moderately high or low rainfall. However, any drastic changes in climatic

conditions may impact sugarcane crop and hence sugar production.

COMPETITIVE CONDITIONS

While our Company, The Oudh Sugar Mills Limited is one of the operationally profitable producers of sugar in

India , we are consciously working towards reducing overall borrowing costs, in order to increase its

profitability. The Company also uses its by-products -molasses for Alcohol and Ethanol production and bagasse

for co-generation to obtain sustainable profits.

The Company is not dependent on a single or few suppliers or customers.


225

SECTION VIII: LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATIONS

Except as described below, there are no outstanding litigations, suits or criminal or civil prosecutions,

proceedings or tax liabilities against our Company, and there are no defaults, non payment of statutory dues,

over dues to banks/financial institutions, defaults against banks/financial institutions, defaults in dues payable

to holders to any debentures, bonds or fixed deposits issued by the Company (including past cases where

penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i)

of Part 1 of Schedule XIII of the Companies Act, 1956

(A) CASES FILED BY THE COMPANY (OSML)

I. CIVIL CASES

Brief Particulars and contentions Claim

amount

(Rs. in

Lakhs)

Court/Forum/

Case number

Current Status


V/s.

Shipping Corporation of India Ltd.

The matter is regarding outstanding

dues claimed by erstwhile unit of

OSML, Macfarlane Paints, which

is now a part of Texmaco Ltd.

51.28 Bombay High

Court O.O.C.J. Suit

No. 1208 of 1997

The matter has been transferred to the list

of long cause suit and is pending for

recording evidence.

OSM Vs Nagar Panchayat,

Hargaon

The Company has challenged the

alleged demand of House Tax by

Nagar Panchayat, Hargaon from the

Company

0.77 C.S.No.271/99 before

Addl. Civil Judge,

Sr.Div.Sitapur

Pending for arguments.

Mohd. Adil Vs The Oudh Sugar

Mills Ltd.

Compensation matter decided aginst

the Company by lower court at

Lkhimpur, Appeal filed before High

Court

0.40

Case no. W.C.No. High

Court,

Lucknow

Pending before High Court, Company has

deposited Rs. 20000/- as per direction of

court.

OSML vs State of UP & Ors

The Company has challenged the

Recovery certificate received by the

Company (Hargaon Unit Rs

2911.03 lacs & Rosa Unit 1426.72

lacss), issued by the Cane

Commissioner, U P, Lucknow

demanding cane dues pertaining to

season 2006-07 and cane

commission of the said season

along with interest.

4337.75 WP No. 8055 of 2007

before Allahabad High

Court, Lucknow Bench

The Hon’ble High Court, Lucknow bench

has vide its order dated 29.10.07 stayed

the demands in the recovery certificate on

the condition to pay 25% of the said

demand within 5 weeks. Accordingly

company has paid Rs 728.04 lacs for

Hargaon unit and Rs 356.94 lacs for their

Rosa Unit.

The East Sugar Mills Association &

Ors have challenged the fixation of

price of sugar cane for crushing

season 2007-08 at Rs 125 per

quintal by the UP State

Government.

Not

ascertanable

Civil Misc. W P no. 8548

(M/B) of 2007

Allahabad High Court

(Lucknow Bench)

The Allahabad High Court (Lucknow

Bench) by its interim order dated

15.11.2007 have directed sugar mills to

pay sugarcane growers at the rate of Rs

110 per quintal till further orders of the

Court.


226


amount

(Rs. in

Lakhs)

Court/Forum/

Case number

Current Status

The Company is part of the

Association.

Simbholi Sugar Mills Ltd & Ors Vs

State of UP and Ors

Simbholi Sugar Mills Ltd & Ors

have challenged the fixation of




Government..

The Company is party to the

litigation.

Not

ascertainable

Civil Misc. W P no.

43536/07

Allahabad High Court

The Allahabad High Court have reserved

the Orders in the said matter

OSML (Narkatiaganj unit) has filed 40 recovery suits against various cane growers, all of which are pending

before the Munsif/ Sub-Judge of Civil Court at Bettiah. The cumulative amount claimed under all these suits,

aggregate to Rs.79.16 lacs.

II. EXCISE, CUSTOMS AND SERVICE TAX MATTERS

HARGAON SUGAR & DISTILLERY UNITS

Brief Particulars

( Name of Parties)

Claim

Amount (Rs. in

lacs)

Court/Forum

With Case No.

Current Status

The Oudh Sugar Mills Ltd. Vs. State of U.P. &

Ors.

OSML filed a Writ Petition against the State of

U.P., Secretary Excise & Others restraining the

State from incorrectly levying and claiming to

recover administrative charges on molasses

produced by the Sugar Unit of OSML and

transfer the same to its own Distillery Unit

solely for the purpose of captive consumption.

OSML was granted stay against the recovery of

said administrative charges, subject to

furnishing a bank guarantee for Rs. 1.00 lakh.

Accordingly OSML has furnished a bank

guarantee which is still in force. OSML had

paid administrative charges from the year 2001

under protest. Thereafter by an interim order

dated 10.03.2005, the High Court permitted

transfer of molasses to its Distillery without

any imposition of administrative charges.

OSML has filed an Appeal for refund of the

Administrative charges already paid.

233.21 Writ Petition

No.237(M/B)/1986 at

High Court, Allahabad,

Lucknow Bench.

Appeal pending for final hearing


227

Brief Particulars

( Name of Parties)

Claim

Amount

(Rs. in

lacs)

Court/Forum

With Case No.

Current Status

The Oudh Sugar Mills Ltd. Vs. Union of India

& Ors.

The Central Government has allowed excise

duty rebate during the sugar season 1981-82 &

1982-83 by way of various notifications which

was subsequently amended by the Government

and were challenged. Rs.26.91 Lacs was

allowed in terms of the interim order of the

Kolkata High Court subject to furnishing of

Bank Guarantee for equivalent amount. OSML

had filed Transfer Petition No.144 & 145/1985

before the Supreme Court of India. The said

Petition was allowed by order dated

04.04.1985.

26.91 C.R.No.8298

(W)/1983 &

9263(w)/1983 at Kolkata

High Court.

The matter is pending for hearing.

The Oudh Sugar Mills Ltd. & Anr. Vs. Union

of India & Ors.

OSML’s Hargaon Sugar Unit was earlier

placed in the Central U.P. Zone of State of U.P.

and was accordingly allowed the levy sugar

prices. OSML filed a writ petition praying that

its Sugar Factory be placed in the East U.P.

Zone for the production years 1984-85 and

1985-86 and be allowed to charge price of levy

sugar as admissible in East U.P. Zone. The

Court, vide its interim order passed in October,

1986 has permitted OSML to charge levy sugar

prices applicable to the East U.P. Zone on

furnishing a bank guarantee for the differential

amount between the levy sugar prices for

Central and East U.P. Zone. Hon’ble Allahabad

High Court (Lucknow Bench) by its order

dated 18.07.06 has dismissed the Petition

against which the company has filed SLP No.

20946 of 2006 before the Supreme Court. The

Company has also filed Review Petition No.

253 of 2006 before the Allahabad High Court

(Lucknow Bench) and the same was also

dismissed. The Company has also filed SLP

before the Supreme Court.

17.56 SLP (C) No. 20946 /06 &

Review SLP No 22878

/07

Before the Supreme Court

Pending hearing

Bihar Sugar Mills Association & Ors. Vs.

Union of India & Ors.

OSML filed writ petitions before Kolkata High

Court challenging the fixation of the levy sugar

price for the sugar season 1974-75. Interim

price was allowed by the Court by directing

OSML to furnish bank guarantee. The matter

was ultimately decided by the Supreme Court

and the Supreme Court had directed the Central

Government to re-fix the prices. Accordingly,

prices for the sugar season 1974-75 were re-

fixed by way of a notification dated

13.04.1999. However the said prices were

applicable only in respect of deliveries made

from 12.07.1975. Subsequently, a writ

29.57 L.P.A.No.609/2003 at

High Court Delhi in

which OSML is a

Petitioner.

Pending for final hearing.


228

Brief Particulars

( Name of Parties)

Claim

Amount

(Rs. in

lacs)

Court/Forum

With Case No.

Current Status

petition was filed before Delhi High Court

challenging the Government levy sugar price

notification dated 13.04.1999 for the sugar

season 1974-75 as the price notified for 1974-

75 (effective from 12.07.1975) was fixed

without taking into account the loss caused to

producers (including OSML) for sugar sold at

the low interim price fixed on 28.11.1974.

The Oudh Sugar Mills Ltd. Vs. U.P. State

Electricity Board

The U.P. State Electricity Board demanded

electricity duty on OSML’s own generation

which was challenged by OSML. The Court

has granted stay against the recovery of the

amount of duty and has directed OSML to

furnish a bank guarantee.

4.32 Writ Petition

No.3006(M/B)/1984 at

High Court Allahabad

Lucknow Bench.


The Oudh Sugar Mills Ltd. Vs. Assistant

Commissioner, Central Excise, Sitapur

OSML, vide its letter dated 12.06.1998 claimed

a refund on the following ground:

OSML had deposited excise duty of Rs. 22.12

lacs on transfer of molasses for captive

consumption in distillery and the same was not

claimed as MODVAT. Subsequently, the

company also paid Rs. 14.10 lacs by way of

reversal of 8% as duty on clearance of alcohol

manufactured by use of duty paid molasses.

The claim for refund of excise duty was

rejected by the Assistant Commissioner,

Sitapur. OSML had filed an appeal with the

Commissioner (Appeals) Lucknow. The

Commissioner (Appeals) decided against

OSML vide his order dated 24.06.2005. The

Company has filed an appeal before the

CESTAT.

22.12 Appeal no.3135/05-CEX

before CESTAT

Pending before CESTAT

The Oudh Sugar Mills Ltd. Vs Uttar Pradesh

Power Corporation

The Uttar Pradesh Power Corporation has

raised an electricity bill on OSML. OSML has

filed this present suit contesting the disputed

amount as stated in the bill due to a mistake in

the calculation of the amount.

0.91 C.S.No.124/1998 before

Jr. Civil Judge, Sitapur.

Pending for evidence.

The Oudh Sugar Mills Ltd., Vs State of U.P.

The matter relates to land owned by OSML on

which a Hospital has been constructed by the

Government. OSML has claimed equivalent

land in exchange of the subject land.

Not

ascertain

able

Exe.12/2000 before Civil

Judge, Sitapur.


The Oudh Sugar Mills Ltd. Vs Umar Ahemed Not C.S.No.740/89 before Pending for recording evidence.


229

Brief Particulars

( Name of Parties)

Claim

Amount

(Rs. in

lacs)

Court/Forum

With Case No.

Current Status

The matter relates to declaration of title

asserted by OSML on the grounds of adverse

possession.

ascertain

able

Addl. Civil Judge, Sitapur

The Oudh Sugar Mills Ltd.Vs Hasina Begum

The matter relates to declaration of title

asserted by OSML on the grounds of adverse

possession.

Not

ascertain

able

C.S.No.465/2000 before

Addl. Civil Judge, Sitapur

Pending for recording evidence.

The Oudh Sugar Mills Ltd. Vs Sharda Devi

Kedia

The matter relates to an encroachment of land

owned by OSML by the defendant. The

defendant has filed a counter case claiming

ownership on the ground of adverse possession.

Not

ascertain

able

Case no. C.S.NO.29/95

before Addl. Civil Judge,

Lakhimpur.

Pending for recording evidence.

OSML has filed 5 recovery suits against various parties, all of which are pending before the Civil Court, Sitapur.

The cumulative amount claimed under these suits aggregate to Rs.11.40 lacs.

OSML has filed 6 cases before Additional District Judge, Lakhimpur and Civil Judge, Sitapur for vacation of

Company’s land/quarters ownded by OSML encroached by various parties. No amount claimed can be

quantifiable.

Narkatiaganj Sugar & Distillery Units

Brief Particulars

( Name of Parties)

Claim

Amount (Rs. in

lacs)

Court/Forum

With Case No.

Current Status

New Swadeshi Sugar Mills Vs. State of Bihar

The Government of Bihar vide notification

dated 10.01.2000 imposed administrative

charges on the sale and supply of molasses to

the distilleries within the State of Bihar as well

as on transfer of molasses from a sugar unit to

the distillery for captive consumption. OSML

filed writ petition challenging the aforesaid

notification. In the meantime, Government of

Bihar through Superintendent of Excise,

Narkatiaganj Distillery raised a demand for

administrative charges on the molasses

transferred by OSML’s sugar factory to the

distillery with retrospective effect from the year

1995 till the date of notification. The said

demand was challenged by OSML by filing

another writ petition. The Hon’ble Court

directed OSML to deposit 25% of the total

amount of the demand and the balance demand

has been stayed. Accordingly, OSML had

deposited Rs.38.76 Lacs. OSML is regularly

depositing the administrative charges from the

date of notification.

155.05 Writ Petition No.CWJC

No.3829/2000 &

1048/2003

High Court, Patna


New Swadeshi Sugar Mills Vs. Union of India

OSML has challenged the levy sugar price

fixed for sugar season 1973-74 and the High

32.28 Civil Writ Petition No.

5047(W)/1974 and CAN

No. 2254/2002 at

High Court, Kolkata.

The matter is pending hearing.


230

Brief Particulars

( Name of Parties)

Claim

Amount

(Rs. in

lacs)

Court/Forum

With Case No.

Current Status

Court, by way of interim order has allowed

additional levy prices provided OSML

furnishes a bank guarantee. Accordingly

OSML has furnished a bank guarantee of Rs.

26.90 lacs towards additional levy price and the

same is in force.

Bihar Sugar Mills Association and Others Vs.

State of Bihar and Other

The Association (The Company being one of

the party) filed a writ petition challenging the

demand of electricity duty chargeable @6% on

the value of energy as per notification no.

So137 dated 21.10.2002, for captive

consumption out of own generation. During the

pendency of the petition the Bihar Government

through Notification dated04.03.2005 has

amended the earlier Notification and imposed

electricity duty @ 6% of the value of energy

which shall be equivalent to the energy tariff as

fixed by Bihar State Electricity Board. The said

Notification was also challenged by the Bihar

Sugar Mills Associations, in which the

company is one of the party. There is no further

demand made by the authorities till date.

Amount

unascerta

inable

CWJC No. 4613 of 2003

& CWJC No. 13614 of

2006

Petition has been admitted. Pending

hearing.

The Department of Excise has directed OSML

to deposit a security amount against distillery

licence. OSML has challenged the said demand

by filing a writ petition. The petition has been

admitted and stay has been granted.

10.00 CWJC No. 12024 of

1996, High Court, Patna

Pending for hearing.

ROSA SUGAR WORKS

Brief Particulars

(Name of parties)

Claim

Amount

(Rs.)

Court/Forum

And Case No.

Current Status

OSML (Rosa Sugar Works)

Vs.

Mukesh Dixit & Ram Prakash Dixit

In the year 2001, OSML filed the present case

to restrain nuisance caused by the unauthorized

entry of the Defendants in area- Bunglow No.

5. The stay application has been allowed.

N.A. Case No. 26/2001 Civil

Judge Senior Division

Shahjahanpur

The case is fixed for statement.

Ram Prakash Dixit

Vs.


The plaintiff has prayed for a stay in the

construction carried out by OSML on plot no.

504 (area 0.174 hectare) and plot no. 506 (area

0.231 hectare)

N.A. Case No. 492/2004

Civil Judge Senior

Division Shahjahanpur

The case is fixed for statement.


231

Brief Particulars

(Name of parties)

Claim

Amount

(Rs.)

Court/Forum

And Case No.

Current Status

Rashid Husain

Vs.


Matter relates to recovery of amount paid as

advance for cane transportation, as he has not

performed transportation work.

0.28 Case No. 483/2000

Addl.Civil Judge Senior

Division Shahjahanpur

Pending for statement.

ALLAHABAD CANNING COMPANY

Brief Particulars ( Name of Parties)

Claim Amount

(Rs. in

lacs)

Court/Forum With Case No.

Current Status

OSML (Allahabad Canning Company) Vs. Reil

Products Ltd., New Delhi

Pursuant to a dispute relating to non payment

of outstanding dues arising out of a supply

agreement entered into by OSML with Reil

Products Ltd. OSML served the defendant a

legal notice for winding up under Section

433/434 of the Companies Act, 1956.

35.40 CA1459/98 in CP No.

156/98

Hon’ble High Court New

Delhi,


OSML (Allahabad Canning Company) Vs.

Regional Provident Fund Commissioner

The Company has challenged the show cause

notice issued by the Regional Provident Fund

Commissioner for levy of damages u/s. 14B of

the Provident Fund Act regarding contribution

to Provident Fund payable for the period April,

1972 to June, 1984.

0.60

Writ Petition No.

45/190/92 High Court

Allahabad,



Regional Director, Employee State Insurance

Corporation (ESIC)

This is a suit filed by the Company challenging

the notice issued under Section 45© by

Regional Director, Employee State Insurance

Corporation for non-contribution on wages

paid for building repairs during February, 1989

to March, 1989.

0.09 Civil Judge Allahabad

Civil Case No. 4/93

Re-application to the additional plea to be

filed.


State of U. P. and Bamrauli Canning Co.

Mazdoor Union.

The Company has challenged Notifications

issued by the U. P. Government in 1984, 1990

& 1996 relating to connection with payment of

minimum wages to workers. Latest notification

for the year 1997 has been stayed by the Court

on 22.05.1997

Amount

unascerta

inable.

Writ Petition No.

17701/1997. High Court

Allahabad

Pending hearing


232

Brief Particulars

( Name of Parties)

Claim

Amount

(Rs. in

lacs)

Court/Forum

With Case No.

Current Status

OSML (Allahabad Canning Company) Vs The

Chief Director of Purchase, Army Purchase

Organisation, Ministry of Defence

The Company had filed this suit bearing

C.M.P.no. 88/2006 for recovery of dues

towards the supply made to the Defendants by

the Company. The said claim was rejected by

the Allahabad High Court on 12.10.2007. The

Company is proprosing to file SLP before the

Supreme Court

5.31 SLP to be filed.

OSML (Allahabad Canning Company) Vs The

Regional Director, ESIC, Kanpur

The Company has challenged the alleged

demand of ESIC contribution or Rs 4.46 lacs

issued by the ESIC Officer Kanpur before the

High Court Allahbad. The Single Judge bench

of High Court By its order dated 15.4.98 had

dismissed the Companies Plea. The Company

has now chanlleged the said Order of the Single

Judge vide Special Appeal No. 472 of 1998

before the Division Bench of the High Court

Allahabad.

In the mean time the department by its letter

dated 4.10.02 had demanded the said amount.

The Company has already deposited the said

amount pursuant to the said demand.

4.46

Amount

deposited

High Court Allahabad,

Special Appeal no 472 of

1998

Pending Hearing

B. CASES FILED AGAINST THE COMPANY (OSML)

I. Civil Cases


amount

(Rs. In Lacs)

Court/Forum Current Status

Vineet Kumar Mathur

Vs.

Union of India

The Petitioner along with other social workers

had filed a Public Interest Litigation before the

Allahbad High Court, (Lucknow Bench), which

was subsequently transferred to the Supreme

Court of India. OSML is one of the several

Respondents in the petition. The petition has been

filed in connection with the provisions of the

Environment Protection Act, 1986 with regard to

alleged pollution of river Gomti near Lucknow.

The Court directed certain respondents to set up

Effluent Treatment Plants (ETP) in their factory

premises. OSML had already established an ETP

in its Hargaon factory. OSML has filed a Reply to

the said Writ Petition. Till date, no adverse

N.A. Writ Petition No.

327/1990

Supreme Court of India



233


amount

(Rs. In

Lacs)


direction or order has been passed against OSML.

Union of India vs The Oudh Sugar Mills Limited

OSML was served with a Demand Notice dated

26.07.2004 by North Eastern Railway, Lucknow

in connection with arrears of siding charges

allegedly payable to the Railway Authorities for

the years 1984 to 2004. OSML had responded to

the said notice and has filed the present suit

disputing the said demand. The Suit was decreed

in favour of the Company. The Union of India has

now preferred an appeal before the High Court.

30.00 C.S. No. 643/2004 Civil

Judge

Sr.Div.Sitapurdecided on

29.04.06 in favour of

company, opposite party

file Appeal before High

Court,

WP.no.151/06

Pending before High Court

M. C. Mehta Vs. Union of India

The petitioner has prayed for the prevention of

degradation of the quality of water of river

Ganga. OSML is one of the several respondents

to the petition. OSML has filed its Reply. Till

date, no adverse direction or order has been

passed against OSML.

N.A. Writ Petition No.

3727/1985

Supreme Court of India

Pending for hearing

Shri Pankaj Kumar Nevatia

V/s.

28 Others

OSML is only a formal party.

The case relates to a family dispute regarding the

ownership of shares of OSML. The number of

shares involved are 3300 bearing distinctive nos.

06022441-06025740.

As per the directions of the Court the OSML has

noted “Stop Transfer” against the subject shares.

Nil Madras High Court

(Civil Appellate

Jurisdiction)

C.M.P. Nos. 12298

and 2851 of 2002

in O.S.A. No. 239

of 2001

Pending hearing

Shri Devendra Bangur

V/s.

The Oudh Sugar Mills Limited and Subhash Jain

The matter is regarding non-receipt of 300 shares

sent by the Plaintiff to OSML on 9th

September,

1997 and the same were transferred in the name

of Shri Subhash Jain on 2nd

February, 1998.

OSML further received transfer deeds duly

executed by Shri. Subhash Jain as transferor in

favour of various transferees in respect of the

subject shares and the same were transferred in

favour of the said parties and are now in

dematerialised form. The suit was initiated by the

Plaintiff for declaration of permanent injunction

and to stop transfer or deal with the subject shares

bearing distinctive nos. 06105161-460 and

benefits arising therefrom.

Nil Calcutta City Civil

Court, Title Suit

No. 1934 of 1999.

Company has filed written statement.

Amit Kumar Vs The Oudh Sugar Mills Ltd.,

Mr Amit Kumar, the Plaintiff has filed a suti

claiming outstanding dues in connection with

transportation work carried out by him in the

Company. OSML has filled a counter claim

against the plaintiff for Rs. 0.33 lacs.

0.07 C.S.No.265/99

beforeAddl.Civil Judge,

Sitapur and counter case

no.273/99 Civil Judge

Sr.Div.Sitapur


Gayatri Devi Vs The Oudh Sugar Mills Ltd.

N.A. C.S.No.699/04 Civil

Judge Sr.Div.Sitapur

Pending for framing issues.


234


amount

(Rs. In

Lacs)


The suit has been filed by Gayatri Devi, the

Plaintiff, to restrain OSML from discharging

waste water from the factory outlets into the land

of the Plaintiff. OSML has contested the

plaintiff’s allegation and has filed written

statement in this regard. OSML is in the process

of out of settlement.

Wilayat Ahmed Vs The Oudh Sugar Mills Ltd.

The case relates to a dispute pertaining to the use

of a Chuck-Road. The parties are in the process of

reaching a mutual amicable settlement.

Not

ascertai

nable

C.S.No.592/2000 before

Civil Judge Jr.Div.,

Sitapur

M.C.S.No.28/2005 before

Civil Judge Jr.Div.,

Sitapur

Both the cases are pending for hearing

Bitti Devi W/O Late Barister Singh Vs The Oudh

Sugar Mills Ltd.

The case relates to compensation claimed for the

death of the petitioner’s husband during service

with the Company.

Not

ascertai

nable

Case no. W.C.No.28/2002

before D.L.C.Lucknow


OSM Vs State

Case filed by the Company related to Land at

Distellary at Hargaon for injunction

Not

ascertai

nable

Case no. 489/06

C.J.(S.D.) Sitapur

Matter Pending before court

OSM Vs Gram Sabha, Saidipur Khurd

Case filed by the Company for declaration of land

for use in industrial purpose.

Not

ascertai

nable

Case no. 213

S.D.M. Lakhimpur


Ram Kumar & Others Vs The Oudh Sugar Mills

Ltd.

Mr Ram Kumar, the plaintiff, has prayed for an

injunction order restraining the Company from

evicting him from the factory’s land occupied and

used by him. The Company has filed a counter

case against the plaintiff on the ground that the

land belongs to the Company.

Not

ascertai

nable

Case No.C.S.No.35/95

before Civil Judge,

Sitapur. Counter case

filled by Company -

C.A.No.34/2000 before

ADJ (VIII) Sitapur.

Both the cases are pending for arguments.


235

Rosa Sugar Works

Brief Particulars

( Name of Parties)

Claim

Amount

(Rs. in lacs)

Court/Forum

With Case No.

Current Status

Saf Yeast Co. Ltd.

Vs.


Saf Yeast Co. Ltd, the plaintiff, has

disputed the quality of molasses

delivered to him by the Defendant

Company. Thereafter, the Company

filed a counter claim against the

Plaintiff for claiming an additional

amount of Rs.2.53 lacs for the loss

incurred by the Company due to non

lifting of 6218.70 qtls of Molasses

which was sold at Rs. 95 per qtl. to

another party as against the contract

price Rs. 184 per qtl to M/s. Saf Yeast,

i.e. loss of Rs. 5.53 lacs against which

the Company had adjusted Rs. 3.01

lacs

3.01 Civil Judge Sr.

Division,

Hardoi

Civil Juged (Jr.

Division),

Shahjahanpur

Case No.

87/2002

Pending for filing of Written

Statement by the Company.

Government of Uttar Pradesh

Vs


This case is connected with land

situated in Chaudera village on which

we have constructed a sugar godown.

The land has been exchanged with the

Gram Samaj under an agreement and a

confirmation from the Court in this

regard, is awaited.

7.76 Tehsildar

Judicial,

Shahjahanpur

Case fixed for Statement

Gram Samaj

Vs.


This case is connected with land in

Rausar village located near bungalow

No. 5 and 6.

11.44 District

Magistrate

Court,

Shahjahanpur

against the order

dated 24.8.06

passed by Upper

Tehsildar

(Judicial)

against the

Company.

The case is fixed for hearing.

Smt. Som Lata W/o Ashok Kumar

Singh & others

Vs.


The case has been filed for claiming

compensation from OSML in relation

to the death of her husband, a

workman of OSML. The case was

decided in favour of OSML. The

opponent has preferred an appeal

before the High Court.

1.92 High Court of

Uttaranchal,

Nainital Appeal

(Appeal No.

46/2004)



236

Brief Particulars

( Name of Parties)

Claim

Amount

(Rs. in

lacs)

Court/Forum

With Case No.

Current Status

Union Of India Vs OSML( Rosa Sugar

works)

Union of India has challenged the

order dated 21.11.06 passed by

CESTAT, Delhi wherein the CESTAT

had allowed the appeals filed by the

Company in the matter of show cause

notice no.

V(30)Tech/Rem/154/2003/3855 dated

05.07.2004 from Commissioner,

Lucknow regarding duty on molasses

lost during storage.

2.08 WP.no.

F.A.F.O.666/20

07

Pending before High Court

Smt. Mahima Devi and others Vs.

OSML( Rosa Sugar works)

The Petitioners, being villagers of the

Daniyapur village, Shahjahanpur

challenged the land exchange order no.

8/97/1/97 dated 09.09.1997 of the

SDM Sadar, Shahjahanpur regarding

exchange of plot no. 51 of OSML with

plot no. 39 of Gram Samaj, Chaudera,

District Shahjahanpur

N.A. Case No.

8/97/1/98

Court of SDM

sadar

Shahjahanpur

The case is fixed for hearing

Smt. Mahima Devi and others Vs.

OSML( Rosa Sugar works)

The petitioners, being villagers of

village Daniyapur, Shahjahanpur filed

a case praying for restraining OSML

from growing plantations behind the

factory wall of the Company.

N.A. Case No.

293/2004

Civil Judge

(Junior

Division)

Shahjahanpur

The stay application is pending

hearing.

Gram Samaj Vs OSML( Rosa Sugar

works)

Matter relates to Cane Purchase centre

installed on Gram Sabha Land

0.80 Case no. 2/2006

dated

13.10.2006 in

the court of

Tehsildar Sadar,

Shahjahanpur

Notice u/s 122B of Jamidari (

Abolition & Regulation)Act

Sh.Raja Ram Vs OSML( Rosa Sugar

works)

Matter relates to alleged dues against

supply of cane.

0.30 Case no.

204/2005 dated

19.04.2005 in

the court of

Civil Judge,

Sr.Div.,

Shahjahanpur

Pending for argument

Mangoo Lal Vs OSML( Rosa Sugar

works)


supply of cane.

0.15 Case no.

162/2005 in the

court of Civil

Judge, Jr.Div.,

Shahjahanpur


Jamir Hasan Vs OSML( Rosa Sugar

works)


supply of cane.

0.09 Case no.

13/2006 in the

court of Sub

Divisional

Magistrate,

Sadar,

Shahjahanpur



237

HATA UNIT

Brief Particulars

(Name of parties)

Claim

Amoun

t (Rs. in

lacs)

Court/Forum

And Case No.

Current Status

Anil Kumar S/O Mohan Prahlad Vs

OSML(Hata)

The Company by Registered deed dated

22.12.2006, registered with the Sub-Registrar of

Assurances, Hata Tehsil bearing no. 5028 &

5029 of 2006 purchase land admeasuring 1.841

Hectare from Smt. Dhaneshwari Devi , the

mother of Plantiff. It is case of the plantiff that

smt. Dhaneshwari Devi who though according

to the mutation entry in the Revenue records is

the sole owner of the said land, she does not

have the right to sell the said land. The company

has filed its reply challenging the same.

16.54 Cane no. 237/2007 &case

no. 80/2007 before Civil

Judge, Jr.Div.Kushinagar

.

Pending before court.

II. INCOME TAX CASES


amount

(Rs. In

Lakhs)

Court/Forum/Cas

e number

Current Status

Income Tax related -

CIT, WBIV, Kolkata Vs. The Oudh Sugar Mills

Ltd.

For assessment years 1993-94, 1994-95 and 1995-

96 -

OSML was valuing closing stock of the sugar at

cost or market whichever is lower. In working out

the cost OSML was not adding depreciation as an

element of cost. The Income-tax Department took

a view that depreciation should also be taken as

part of the cost sheet. On appeal the Income-tax

Appellate Tribunal, Kolkata Bench has held that

depreciation should not be taken as part of the

cost as the assessee has been following a

consistent and regular method of valuation.

Not

ascertai

nable

Kolkata High Court

I.T.A No.

266/2002

The Income-tax Department has filed

several applications under Section 260A

of Income-tax Act. In all the applications

the High Court has yet to decide under

Section 260A of Income-tax Act.

The application filed by Central

Government for condonation of delay in

filing the Reference was granted by the

High Court. No further proceedings have

been served on OSML.

CIT, WB-I, Kolkata Vs. The Oudh Sugar Mills

Ltd. -

For assessment years 1993-94, 1994-95 and 1995-

96 –

OSML was valuing the closing stock of sugar at

cost or market whichever is lower. In the closing

stock which was not cleared from the factory, the

excise duty payable was neither debited to Profit

& Loss Account nor included in the valuation of

closing stock sugar. The Income-tax Department

took a view that the closing stock of sugar should

Not

ascertai

nable

Kolkata High Court

I.T.A. No. 267/2002

The Income-tax Department has filed

applications under Section 260A of

Income-tax Act and the same are pending

for admission in the High Court. The

High Court has yet to decide whether

there is a substantial question of law

involved in the applications filed by

Income-tax Department. The application

by Central Government for condonation

of delay in filing the Reference was

granted by the High Court. No further

proceedings have been served on OSML.


238


amount

(Rs. In

Lakhs)

Court/Forum/Cas

e number

Current Status

be valued taking the excise duty as part of the

stock valuation.

III. CASES FILED UNDER LABOUR LAWS

HARGAON SUGAR & DISTILLERY UNITS

Brief Particulars

( Name of Parties)

Claim

Amoun

t

(Rs. In

lacs)

Court/Forum

With Case No.

Current Status

State Trading Corporation of India Vs. The

Oudh Sugar Mills Ltd.

Pursuant to a dispute arising out of contract

entered into by OSML with State Trading

Corporation (STC), in connection with loss

incurred by OSML for non-lifting of sugar, an

arbitration award was passed in favour of

OSML. Thereafter, the STC filed an appeal with

the Delhi High Court. As directed by the High

Court Plaintiff deposited Rs. 25.14 lacs. OSML

has been permitted to withdraw the said amount

by furnishing a bank guarantee of an equivalent

amount. Accordingly, OSML has withdrawn the

said amount by furnishing the required bank

guarantee.

25.14 FAO (OS) 53/86 at the

High Court, Delhi


NARKATIAGANJ SUGAR & DISTILLERY UNITS


amount

(Rs. in

Lakhs)

Court/Forum/Cas

e number

Current Status

Deputy Labour Commissioner Vs. New Swadeshi

Sugar Mills, Narkatiaganj (OSML)

The Labour Union has raised certain demands

relating to workman status in the factory.

Amount

not

ascertai

nable

Case No. 2/99

Labour Court,

Motihari

Case pending for Final hearing.

Madan Kishor Srivastava Vs. New Swadeshi

Sugar Mills, ( Distillery Division)

Narkatiaganj (OSML)

Workman dismissal case.

Amount

not

ascertai

nable

Case No. 1/2006

Labour Court,

Motihari

Case pending for hearing.

There are 8 labour related cases pending against OSML with the following authorities - Labour Commissioner,

Lucknow, Industrial Tribunal, Lucknow, District Magistrate, Sitapur, filed during the period 2001 to 2004

where the amount is not ascertainable.


239

IV CASES FILED UNDER CRIMINAL LAWS

Brief Particulars

( Name of Parties)

Claim

Amoun

t (Rs.)

Court/Forum

With Case No.

Current Status

State Vs P.K. Lakhotia & Others

Effluent discharge from the factory of OSML

entered the land of one Mr. Wilayat Ahmed who

filed a First Information Report against the

respondent, an employee of OSML. The

Department of Police carried out investigation in

this regard and thereafter submitted a final

Report to the Court.

Not

ascertai

nable

M.C.S.No.957/2004

before Chief Judicial

Magistrate Sitapur.

Final Report is pending acceptance by

Court.

State Vs P.N. Singh & Others

The case has been filed in connection with the

death of Shri Mahinder an employee of OSML

at the Bio Compost Plant situated at Hargaon.

The Police carried out investigation in this

regard and thereafter submitted a final Report to

the Court.

In the similar matter before Dy. Labour

Commissioner, Lucknow, another case no. WC

203/04 was filed for compensation, the same is

finalised by court Rs. 1.60 lacs, OSML has

deposited the same with appropriate authority on

23.07.07

Not

ascertai

nable

M.C.S.No.948/2004

before Chief Judicial

Magistrate Sitapur.

Pending for final hearing.

State Vs Manager OSM

The case has been filed against the company

under section 133 of Cr. P C. with regards to the

pollution imitated from the distillery unit of the

company at Hargaon.

Not

ascertai

nable

Case No.4/2006 before

Sub Divisional

Magistrate, Sitapur.


Allahabad Canning Unit

State through Food Inspector, Jallandhar Vs The

Oudh Sugar Mills Limited (Allahabad Canning

Works) and the Directors of the Company

Matter relates to complaint u/s 7/16 of the

Prevention of Food Adultration Act, 1954 and

Rules 32 and 50 thereof( Against Directors also)

Not

ascertai

nable

Criminal case no.

304/7/2002 in court of

Addl.Chief Jud. Mag.,

Jallandhar

Pending for hearing


240

V. CASES RELATING TO SALES TAX DEMANDS

Particulars

Amount

(Rs. in

lacs)

Deman

ded


Current Status

Under the U. P. Sales tax laws, for Assessment

year 2000-2001, the Assessing Officer imposed

tax on the purchases from unregistered parties.

OSML filed an appeal before the Deputy

Commissioner (Appeals) Sitapur, which was

decided in favour of OSML. Thereafter, Sales

tax department filed an appeal contesting the

aforesaid order before the Tribunal.

1.18 Appellate Tribunal,

Lucknow

OSML has deposited an amount of Rs.

110887.00. Appeal is pending for

hearing.

Interest & penalty imposed by the Assessing

Officer on late deposit of Entry Tax on sale of

sugar during the year 2000-2001.The Appellate

Authority and Tribunal upheld the order. OSML

has now filed an appeal before the High Court,

Lucknow Bench

6.73 Allahabad High Court ,

Lucknow Bench


323062.00 Appeal is pending for hearing.

Entry Tax imposed by Assessing officer on inter

State sale of sugar during the year 2000-2001 by

treating the same as sale within the State of U.P.

OSML filed an appeal with the Dy.

Com.(Appeal) Sitapur. The case has been

remanded back to Assessing Officer for re-

examination. The Assessing Officer and Jt.

Commissioner (Appeal),Sitapur maintained

their earlier order. Thereafter, OSML filed

Appeal before Tribunal, Lucknow.

0.63 Tribunal, Lucknow. OSML has deposited an amount of Rs.

43,762.00. Appeal is pending for hearing.





Com.(Appeal) Sitapur. The case has been

remanded back to Assessing Officer for re-

examination. The Assessing Officer and Jt.

Commissioner (Appeal),Sitapur maintained

their earlier order. Thereafter, OSML filed

Appeal before Tribunal, Lucknow.

1.03 Tribunal, Lucknow. OSML has deposited an amount of Rs.






Com.(Appeal) Sitapur.

1.10 Dy.Comm.(A) Sitapur OSML has deposited an amount of Rs.



241

Particulars

Amoun

t

(Rs. in

lacs)

Demanded

Court/Forum With Case

No.

Current Status

The Central Sales tax authorities imposed tax on

sale of alcohol out of the State of U.P. OSML

has challenged the applicability of such

imposition.

Assessment Amount Amount

Year Demanded Deposited

(Rs.) (Rs.)

1977-78 31509.00 50400.00

1978-79 39920.29 27200.00

1979-80 125068.00 35100.00

1980-81 231376.00 13675.75

1981-82 29333.00 500.00

Total 457206.29 126875.75

4.57

Allahabad High Court,

Lucknow Bench


126875.75. Petition is still pending for

hearing.

• The above table reflects consolidated amounts pertaining to both, Hargaon unit as well as Rosa unit.

Narkatiaganj Sugar & Distillery units

Nature of Government demand and particulars in

brief

Amount under dispute

(Rs. in lacs)

Current status

(a) Bihar Sales Tax

Sales tax was imposed on the supply of spirit to

country spirit ware - houses. The Company has

contested such imposition on the grounds of the

applicability of the rate of sales tax.

For the year 1984-85 6.88 OSML has deposited an amount of Rs.

687813.59 with the authorities. Appeal

No. MZ/123/99 is pending with

Commercial Taxes Tribunal, Patna, Bihar.


140000.00 with the authorities. Appeal.

CWJC No. 3476 of 1996 is pending at

Hon’ble High Court, Patna.






145000 with the authorities. Appeal




100000 with the authorities. Appeal




443854.47 with the authorities. The Case

has been remanded back to the Assistant

Commissioner, Commercial Taxes,

Bettiah and the same is pending.


242

Nature of Government demand and particulars in

brief

Amount under dispute

(Rs. in lacs)

Current status

Non-submission of declaration form to be submitted

by Indian Drugs and Pharmaceutical Ltd. (IDPL) for

spirit supply at a concessional rate to IDPL,

Muzaffarpur. Non submitance was due to the winding

up of IDPL.



No. MZ4666/2006 is pending with

Commercial Taxes Tribunal,Bihar,Patna.

Sales Tax on sale of denatured spirit against

declaration forms at concessional rate of 2%

disallowed.



CN MZ/38/2004 is pending with




CN MZ/39/2004 is pending with




No. ST/BT-10/05-06 is pending with Joint

Commissioner (A), Commercial Taxes,

Muzaffarpur.

[b] Central Sales Tax

Non-submission of declaration forms for spirit supply.



Case No. CST54/1991 with Joint


Appeals, Muzaffarpur has been remanded.

It is pending for hearing in the Court of

Assistant Commissioner, Commercial

Taxes, Bettiah.

2.34 OSML has deposited an amount of Rs.


Case No. CST11/1995-96 with Joint


Appeals, Muzaffarpur has been remanded.

It is pending for hearing in the Court of

Assistant Commissioner, Commercial

Taxes, Bettiah.

Matter relates to taxability on account of non-receipt of

Sales Tax declaration form , liability arrises for

differential sales tax amount.

2.75 Case no. C.W.J.C.No. 1670/ 2006 pending

before High Court, Patna.

ALLAHABAD CANNING

There are 9 cases of Central Sales Tax amounting to Rs 12.54 lacs and 2 cases under the Uttar Pradesh Trade

Tax amounting to Rs 0.14 lacs against the demand of alleged Sales tax which pending before the Salex Tax

Authorites.


243

HATTA UNIT

The Assistant Commissioner Trade Tax has imposed penalty of Rs 1.21. lacs on the material received by the

Company from Bihar. The Company has deposited the said amount for taking delivery of material and filed an

refund application

VI. CASES RELATING TO EXCISE, CUSTOMS AND SERVICES LAWS

Particulars

Amount (Rs. in lacs)

Demanded


Current Status

OSML received a Show Cause Notice No.

Nil dated 05.05.1989 vide letter No.

27/DEM/MOL/89/669 regarding the Central

Excise duty on 112054.00 quintals of

molasses stored in pits, which was

deteorated during storage and unfit for

distillation.

14.12 An Order in Original

No. 77/92 dated

18.09.1992 was

passed by A.C.Sitapur

upholding the

demand. Case

remanded back to

A.C.Sitapur in Appeal

No. 2-CE/93 under

Case No.

132/APPL/KNP/92/48

dated 20.01.1993

passed by

Commissioner(A).

Pending before Assistant Commissioner,

Sitapur: order is awaited.


Nil dated 15.12.1992 vide letter no.

VI(30)78/92/4150-52 regarding the central

excise duty on 100667.65 quintals of

molasses in pits which was detoriated

during storage and unfit for distillation. An

Order in Original No. 32/92 dated

02.07.1993 was passed by A.C.Sitapur

upholding the demand and the same was

remanded back to A.C.Sitapur in No.

899/94NR passed by Comm (A), Lucknow.

17.37 Assistant

Commissioner,

Sitapur

Pending for Orders


Nil dated 08.04.1980 vide letter No.

3b/gl/79/441 against rebate of Duty as per

incentive policy announced by Central

Govt.for the year 1977-78. An Order in

Original No. 67/92 dated 26.08.1992 was

passed by A.C.Sitapur upholding the

demand and the same was confirmed in

Appeal order no.E/953/93-D passed by

Commissioner(A),Lucknow. Further writ

petition filed before High Court, Lucknow

bench and stay was granted.

1.66 W.P.No. 1023/99 Matter pending before High Court,

Lucknow bench.


Nil dated 25.10.1980 vide letter No. 6-

GL/Misc/80/1412 regarding duty on

reprocessing loss of sugar during 77-78. An

Order in Original No. Jun-80 dated

27.08.1982 was passed by A.C.Sitapur

upholding the demand.

0.05 Commissioner

(Appeal)

Appeal dated 25/11/82 still pending.


244

Particulars

Amount

(Rs. in lacs)

Demanded

Court/Forum With

Case No.

Current Status


10/LMP/2000 dated 12.06.2000 vide letter

No 1-HAR/2000/425 regarding excise duty

on loss of undenatured ethyl alcohol during

storage. The Company has challenged the

order passed by the Commissioner (A),

Lucknow before the CESTAT, New Delhi

0.23

The aforesaid

amount

includes a

penalty of 0.02

Appeal of OSML no.

E5343/06 dated

20.09.06. CESTAT

Appeal Pending


EP/5136 dated 05.04.1991 against our

application for remission of central excise

duty on 76355.25 quintals of molasses, not

fit for consumption. An Order in Original

No. 09/Lko/02 dated 03.10.2002 was passed

by A.C.Sitapur upholding the demand and

the same was confirmed in Appeal No.

05/Lko/04 dated 31.08.04 passed. F.No.

982/2003-B dated 19.11.2003 passed by

Commissioner(A),Lucknow.

15.27 Appeal (Appeal No.

E/5690/04) filed

before CESTAT

Appeal pending.


36/STP/04 dated 27.04.04 vide letter No.

V(30)/79/2004/1999 regarding MODVAT

credit taken by the Company on M.S.Plate,

Angles, bars & rods and electrodes etc.

Matter decided against the Company

confirming demand of Rs. 2.92 Lacs,

penalty set aside by Commissioner (A),

Appeal filed before CESTAT.

2.92

CESTAT Appeal No.

E/10/06

Pening before CESTAT.



V(30)/83/2004/3060 regarding MODVAT

credit taken by OSML on Welding

Electrodes decided aginst the company,

penalty set aside by CESTAT, appeal filed

before High Cort.

1.41

O-I-O no. 443-CE/05,

order no. 375/06-SM

dated 28.02.06 from

CESTAT. W.P.

No. 4867/06 (Misc.)

Pending before High Court.

OSML received Show Cause Notice No.

110/STP/04 dated 21.12.2004 vide letter

No. V(30)/117/2004/4844 regarding

CENVAT credit taken by the Company on

HREC & GP Sheet and Plates, decided

against the company by Commissioner(A),

penalty set aside.Appeal filed before

CESTAT.

1.39

Appeal no E/2006/06 Appeal pending before CESTAT, Stay

order no. 753 dated 20.07.06 passed by

CESTAT.


111/STP/04 dated 21.12.2004 vide letter

No. V(30)/117/2004/4842 regarding

CENVAT credit taken by the Company on

Welding Electrodes disallowed by

AC(STP), upheld by Commissioner(A) and

CESTAT, Appeal filed before High Court.

1.76

WP no. 5300/06 Pending before High Court.


245

Particulars

Amount

(Rs. in lacs)

Demanded

Court/Forum With

Case No.

Current Status



V(30)/81/04/3155 regarding CENVAT

credit taken by the Company on

M.S.Plates,Angles,Bars & Rods, Joist &

H.R.Sheet, decided against the company by

AC(STP) and Commissioner(A). Appeal

filed before CESTAT

4.36

CESTAT, Appeal no

E/2007/ 06

Appeal pending before CESTAT, Stay

order no. 754 dated 20.07.06 passed by

CESTAT.





Aluminium coil, M.S.Plates,Tor steel,Bars,

shape & section decided against the

company by AC(STP) and

Commissioner(A). Appeal filed before

CESTAT

4.68

CESTAT, Appeal no

E/2437/06


application dismissed, restoration filed.

OSML received a show cause notice No.



credit taken by the Company on Shape&

section M.S.Angle etc. decided against the

company by AC(STP) and

Commissioner(A).Appeal filed before

CESTAT

4.77

CESTAT. appeal no

E/167/06


order no. 264-265/07 dated 23.02.07

passed by CESTAT





M.S.Angle, channel,welding electrodes etc.

decided against the company by AC(STP)

and Commissioner(A).Appeal filed before

CESTAT

4.39

CESTAT, Appeal no

E/166/06


order no. 264-265 dated 23.02.07 passed

by CESTAT, Rs. 1.50 lacs deposited as per

stay order.


04/Addl Comm/LKO/03 dated 7.08.03 vide

letter No. V(30)/Adj/210/2000/10568-71

dated 7.8.03 regarding loss of sugar during

reprocess of brown sugar pertaining to the

season 1994-95 and 1996-07 total 11230

quitalas.

9.55 and

penalty of

9.55

Denovo Order-in-

Original No. 26/Add

Comm./LKO/2007

dated 24.09.07 passed

by the Additional

Commissioner

Lucknow. Appeal

filed before

Commissioner (A),

Lucknow under appeal

no. 181/07 dated

29.11.07

Appeal pending before Commissioner (A),

Lucknow


02/Jt. Comm/LKO/05 dated 25.01.05 vide

letter No. V(30)/Adj/9/2005/977-979 dated

25.01.05 regarding loss of sugar during

reprocess of brown sugar pertaining to the

season 1997-98 to 2001-02 total 11581

quitalas.

9.85 and

penalty of

9.85

Denovo Order-in-

Original No. 27/Add

Comm./LKO/2007

dated 24.09.07 passed

by the Additional

Commissioner

Lucknow. Appeal

filed before

Commissioner (A),

Lucknow under appeal

no. 180/07 dated

29.11.07

Appeal pending before Commissioner (A),

Lucknow


246

Particulars

Amount

(Rs. in lacs)

Demanded

Court/Forum With

Case No.

Current Status

OSML received show cause notice No.

12/Dem//06 dated 31.08.06 vide letter No.

V(30)24-Dem/06/2546 regarding CENVAT

credit taken by the Company on Welding

electrodes decided against the company by

AC(STP) , appeal filed before

Commissioner(A).

3.28

The aforesaid

amount

includes a

penality of Rs.

1.64 lakhs.

Appeal no 139/2007

filed before

Commissioner(A)

Appeal pending (A).

Narkatiaganj Sugar & Distillery units

Central Excise duty on alleged wrong

availment of MODVAT credit on use of

Molasses for production of Rectified Sprit.

Commissioner, Central Excise, Patna vide

order no. O-I-O no. 47/MP/Com/2005 dated

22.12.2005 confirmed the demand against

the company, Appeal filed before CESTAT.

101.12

The aforesaid

amount

includes a

penalty of Rs.

50.56 lakhs

Appeal no.

EDM/126/05

CESTAT, Kolkata.

Pending before CESTAT, Kolkata Stay

granted against recovery vide order no. S-

961/Kol/06 dated 7.7.06.

Rosa Sugar Works Unit

RSW received a Show Cause Notice

No.VI(30) 35 –Dem/64/2000/1258 dated

31.05.2001 regarding Cenvat Credit taken

on welding electrodes & spare parts. An

Order in Original No.

222/DC(S)/Stp/Dem/2001 dated 27.11.2001


demand and the same was upheld by

Appellate Commissioner, Lucknow vide O-

I-A no. 261-CE/2004 dated 31.08.2004.

Company filed Appeal before CESTAT and

the same was rejected vide order no. 551/06

dated 04.04.2006. Company had filed

Appeal before High Court.

0.39 Company file Appeal

before High Court,

WP no. 4866/06

Pending before High Court.


No.VI(30)Rem/117/2003/6465 dated

07.10.2004 regarding storage loss on

molasses. Order in Original No.

07/com./Lko/Rem/2005 dated 16.03.2005

passed by Commissioner, Central Excise,

Lucknow aginst the company, appeal filed

before CESTAT.

0.08 Appeal no. E/2018/05

CESTAT

Pending before CESTAT.


regarding storage loss on molasses. Order in

Original No. 37-39/CE/2006 dated 31.03.06


Lucknow aginst the company,and the

Com(A) confirmed the demand , Company

filed appeal before CESTAT.

2.50 Appeal no.E/3498-

3500 CESTAT



247

RSW received a Show Cause Notice no.

V(15) 25-Sez./Adj./2005/2634 dated

08.07.2005 regarding seizure of molasses.

Order in Original No. 61-AC/STP/Dem/05

dated 07.12.05 passed by Commissioner,

Central Excise, Lucknow against the

company imposing Redemption fine of Rs.

1 lacs ,and the Com(A) confirmed the

demand vide order no.133CE/Lko/06 dated

30.08.06, Company filed appeal before

CESTAT.

0.50 Appeal no.161/07

CESTAT



No.VI(30) 60 –Dem/05/2005/2269 dated

01.06.2005 regarding Cenvat Credit taken

on welding electrodes & iron material. An

Order in Original No.

71/AC/STP/Dem/2005 dated 29.12.2005


demand and the same was upheld by

Appellate Commissioner, Lucknow vide O-

I-A no. 192-CE/2006 dated 26.12.2006.

Company filed Appeal before CESTAT,

stay application rejected, company

deposited Rs. 0.81 lacs Appeal pending

before CESTAT.

0.81 Appeal no.

E/566/2007



No.VI(30) 66 –Dem/05/2001/3302 dated

07.11.02 regarding storage loss on

molasses. Order in Original No.

16/Com./Tech/Rem/Lko/2006 dated 29.9.06


Lucknow aginst the company,and the

Com(A) confirmed the demand , Company

filed appeal before CESTAT.

0.25 Appeal no. E/210/07

CESTAT



No.VI(30) Tech/Rem/119/2003/

2348 dated 14.03.05 regarding storage loss

on molasses. Order in Original No.

15/Comm./Tech/Rem/Lko/2006 dated

29.09.2006passed by Commissioner,

Central Excise, Lucknow aginst the

company,and the Com(A) confirmed the

demand , Company filed appeal before

CESTAT.

0.58 Stay application

rejected Appeal no.

E/211/07


RSW received a SCN No. V(30)

107/Demand/Cenvet/2005/3122/dt 26.10.05

regarding cenvet credit availed by the

Company on the Wielding electrodes and

other spare parts. Asst Commissioner by

his Order in Original no. 09

AC/STP/Demand/2006 dated 29.09.06

confirmed the duty demanded in the SCN.

The Company filed Appeal before the

Commissioner Appeals Lucknow, wherein

the Commissioner Appeals by his Order in

Appeal No. 48 CE/LKO/07 dated

24.05.2007 confirmed the said order passed

by the Assistant Commissioner. The

Company has filed an appeal against the

Order in Appeal before the CESTAT Delhi

0.17 CESTAT Delhi,

Appeal no 2454/07.

Stay Application vide

order dated 15.10.07

decided by directing

Company to deposit

the said amount of Rs

0.17

Appeal Pending


248

The Department has filed an Appeal bearing

No before the CESTAT, Delhi challenging

the Order in Appeal No 426/CE/2005 dated

31.08.2005 wherein the Commissioner

Appeals has allowed the Appeal filed by the

Company. The Company had taken modvat

credit of RS 97332 in place of Rs 22400 in

RG 23C Part II vide entry no. 620 dated

30.11.95 and reversed the excess amount of

Rs 74932 vide entry no. 98 dt 29.04.98

before the issuance of the Show cause

notice. The Department issued a Show

cause notice No. V(15)

0ff/no/Adj/Kc1116/99/10522 dt 04.11.2000.

The Company has filed its cross objection

to the said appeal.

0.99.

This includes

Rs 0.02

towards

Penalty

CESTAT New Delhi Appeal Pending

RSW had received a SCN NoV(30)/70

Demand /STP /2004 /70/dt 29.06.04

regarding loss of molasses stored by the

Company. Asst Commissioner by his Order

in Original no. 27 AC/STP/Demand/2006

dated 30.11.06 confirmed the duty

demanded in the SCN. The Company has

filed Appeal before the Commissioner

Appeals Lucknow

5.48

The aforesaid

amount

includes

penalty of Rs.

2.74 lacs.

Commissioner

Appeals Lucknow

Appeal Pending

MOTOR ACCIDENT CASES

There are 6 cases pending before the Motor Accidnet Cliams Tribunal, at Sitapur, U P, in which the Company is

one of the Respondents. The aggregate amount claimed is Rs 34 lacs.

SHOW CASUSE NOTICES RECEIVED BY THE COMPANY

The Company has received 38 show cause notices (20 to Rosa Sugar Works Unit & 18 to Hargaon Unit) from

the Central Excise Authories demanding a aggregate of Rs 175.32 lacs ( Rs 81.49 lacs + Rs 93.83 lacs)

disputing the Cenvat Credit availed by the Company and also raised demands. Company has duily responded to

the said show cause notices.

PENALTIES IMPOSED ON THE COMPANY

SEBI vide its letter dated 23.07.2004 made certain allegations against OSML under Regulations 6 & 8 of the

SEBI Takeover Code. On receipt of the aforesaid letter, we, vide letter dated 9.08.04 duly responded to SEBI,

clearly denying the said allegations and settling forth relevant facts and explanations in that regard. OSML

further requested SEBI to withdraw the allegations made. Though we believe that there is no violation of SEBI

(SAST) Regulations, there has been no formal communication received from SEBI in this regard. OSML has

however as a matter of abundant caution sent a reminder letter to SEBI on 09.03.2005. There is no further

correspondence exchanges between the Company and SEBI.

C. Cases against the Directors of the Company

Shri C. S. Nopany

Pursuant to an Amnesty Scheme introduced by the Government under the Income tax (I.T.) and Wealth tax

(W.T.) Acts for the assessment year 1986-87, a self assessment was made by our promoter Shri C.S.Nopnay

whereby two cheques were deposited and a token receipt against such deposit was attached to the applications


249

which were duly submitted to the Income Tax / Wealth Tax Officer. However, the cheques were dishonoured by

the bank. The Income Tax Officer & Wealth Tax Officer thus filed criminal cases (under Section 420 of the

Indian Penal Code,1860 read with Section 35D of the Wealth Act and Section 277 of the Income Tax Act, 1961)

at the Court of Metropolitan Magistrate at Kolkata in 1989 in this regard. Subsequently, both the amounts

claimed (Rs. 53,500/- under the I.T. and Rs. 1,11,400/- under the W.T.), have been paid to the concerned

Authorities. Moreover, interest / penalties for both the claims have also been waived by the concerned

Authorities. The cases are now pending for final orders.

CASES PENDING UNDER THE CRIMINAL LAWS

Stae through Food Inspector, Jullandhar Vs

Allahabad Canning and the Directors of the

Company


Prevention of Food Adultration Act, 1954

and Rules 32 and 50 thereof

Not ascertainable Criminal case no.

304/7/02 in court of

Addl.Chief Jud.

Mag., Jallandhar

Pending for hearing

Shri S V Muzumdar


State through Food Inspector, Jallandhar Vs


Company





304/7/2002 in court

of Addl.Chief Jud.

Mag., Jallandhar

Pending for hearing

SHRI ASHVIN C DALAL


Stae through Food Inspector, Jallandhar Vs


Company





304/7/2002 in court

of Addl.Chief Jud.

Mag., Jallandhar

Pending for hearing

SHRI C B PATODIA


Stae through Food Inspector, Jallandhar Vs


Company





304/7/2002 in court

of Addl.Chief Jud.

Mag., Jallandhar

Pending for hearing


250

(F) LITIGATION BY / AGAINST THE TOP FIVE LISTED COMPANIES PROMOTED BY PROMOTERS

A. ZUARI INDUSTRIES LIMITED

Brief Particulars and contentions Claim amount

(Rs. in Lakhs) Court/Forum/

Case number

Current Status

ZIL Vs Land Acquisition Officer, Govt. of

Goa. There arose a dispute regarding

Compensation received by the Company

from the Government of Goa with respect to

Acquisition of the Company's land. The

Company had Preferred an appeal for

enhanced compensation for the total land

acquired 168424 sq.mts.

N.A. Hon’ble High Court of

Bombay at Goa

Appeal is pending before the

Hon’ble High Court of Bombay at

Goa for hearing

Zuari Vs. Hindustan Dorr- Oliver (HDO) The

Company has challenged the order and

decree passed by the Addl Civil Judge Sr

Division, Goa, entitling Zuari to recover

23.27 crore from HDO and 5% of 23.27

crore from HDO & GP jointly and severaly

with 18% interest from the date of

realization. Company has filed an appeal to

recover a sum of FF 501,247 with 18%

interest from GP from the date of passing the

decree till realization which was paid to GP.

Also for interest of 18% on 23.27 crore

awarded to Zuari.

Subsequently, the defendant has filed a

counter claim at the Bombay High Court

claiming Rs. 688 Lacs which Includes

interest at 18.50%. Both the suits are pending

in the Respective Courts.

15490.00 Hon’ble High Court of

Bombay at Goa

Pending hearing

Disputed tax liability relating to payment to foreign concerns for services, there are

certain decisions of the Appellate Tribunal/Commissioner (Appeals) favourable to the Company, which are contested by the Department.

57.32 Department of

Income Tax

Pending

Demand of Andhra Pradesh Sales Tax

authorities on second sale of pesticide (trade

mark sales under section 5AA) considered

sales as firm and not considered for tax

concession enjoyed by first manufacturer.

19.98 Sales Tax Authorities The Company has filed an appeal

in the High Court of Hyderabad

Demand of Rajastan Sales Tax under self

declared assessment scheme towards penalty

and interest.

0.03 Sales Tax authorities Pending

Demand of Sales Tax on refunds of tax on

subsidy.

35.58 Appeal pending before Appellate

Tribunal

Demand to levy Professional Tax on each

branch and godown.

22.80 Karnataka Sales Tax

Authorities.

Writ filed in Hon’ble High Court

of Karnataka

Demand from Commercial Tax Department

Bangalore.

24.62 Commercial Tax

Department

Bangalore

Appeal filed before the Appellate

Tribunal

Demand from South Central Railways 209.19 Pending in High court of Bombay

at Goa.

The Revenue Department of Goa Hon’ble High Court Pending hearing, Status quo is


251



Case number

Current Status

Government has issued a notification

proposing to acquire 159700 sq. mts. Of land.

The Company has filed an appeal in the

Hon’ble the High Court of Bombay at Goa.

of Bombay at Goa maintained.

The Company has received a demand of Rs.

1426.16 lacs for the assessment year 2001-02

pertaining to the penalty on capital gains on

transfer of the Cement undertaking.

1426.16 Income Tax

Authorities.

pending

Way leave charges payable to MPT towards

storage of Phosphoric acid.

22.84 Pending

During the year, pursuant to the order of the

High Court of Punjab & Haryana, the

Company has made a payment of Rs. 210.54

lacs for purchase /allotment of land at

gurgaon from Haryana Urban Development

Authority ( HUDA) HUDA has filed an

appeal with the division bench of the High

Court challenging the Order.

330.41 Appeal No. 88/07

Hon’ble High Court

of Punjab and

Haryana

Pending for hearing. Cout has

ordered to maintain status quo.

Consequent to the outbreak of fire in 1998-99

the company has raised an insurance claim of

Rs. 900.00 lacs with the insurers. The

Insurance Company disallowed the claim.

The Company went to the National

Consumer Dispute Redressal Forum, which

ruled in favour of the company. Against the

said Order, the Insurance Company has filed

an appeal with the Hon’ble Supreme Court.

The Supreme Court has allowed the

Company to withdraw the money deposited

by the Insurance Company on furnishing the

security bond.

1331.17 Hon’ble Supreme

Court



252

B. TEXMACO LIMITED



Case number

Current Status

Daulat Shetkari Sahakari

Sakhar Karkhana Ltd. has instituted a suit at

Gadhinglaj Court for recovery of Rs. 785.27

lacs for delay in delivery and non-

performance of the mill & boilers.

785.27 16/1997

Court of the Civil

Judge

Senior Divn.

Gadhinglaj

The Bombay High Court has

granted the say order vide interim

order dated 31.01.2006.

Shri Sant Damaji S S K has filed their claim

for recovery of Rs.2992 lacs. The Company

has filed a counter claim of Rs.3151 lacs.

2992.00 18/7/1999. Before the

Arbitrators Justice

Mr. S. C. Pratap

(Retd.) Justice Mr. A.

N. Mody (Retd.)

Justice Mr. S. B.

Shete (retd.)

Arbitration proceedings are in

progress.

The Board of Trustees of the Port of Calcutta

filed a suit for specific performance of the

contract, recovery of money and damages.

148.20 38 of 1992

Court of 6th

Assistant

District Judge,

Alipore

The case is contested by the

Company at District Court level.

M/s. Prakash Cotton Mills Pvt. Ltd., filed a

suit for recovery of losses and non-supply of

materials valued at Rs. 92.26 lacs and amount

of interest. The suit was decreed ex-party on

24.10.2002.

In terms of the order, the High Court on

21.12.2002 approved following decreetal

amounts, which are recoverable from the

Company.

a) Rs. 92.26 lacs towards debts

b) Rs. 397.94 lacs towards interest on debts

@21% per annum

c) Rs. 0.30 lac towards cost of suit

d) Further interest on the sum of Rs. 490.50

lacs @21% p.a. from the date of decree.

First notice for the suit for execution of

decree was served on the Company on

12.05.2005

92.26 Execution

Application No. 159

of 2005.

Notice No. 649 of

2005 in Suit No.

1586 of 1982

Mumbai High Court.

On 18.08.2006 Bombay High

Court passed an interim order for

stay of ex-party decree dated

24.10.2002

Shri G.Veera Reddy vs Texmaco Limited

Against the arbitration award awarding a sum

of Rs.19.08 lacs as claim and Rs.51.81 lacs

as interest, an order against Appeal was

made.

The Company has filed an appeal before the

High Court of Andhra Pradesh. The appeal

was allowed and the matter was remanded

back to the Lower Court.

70.89 O.P. No. 1090 of

2000.

Court of Chief Judge

City Civil Court at

Hyderabad

Hearing in Dist. Court concluded

the judgement yet not delivered.

M/s Green Force Engineers (P) Ltd vs

Texmaco Limited

the plaintiff filed the suit for recovery of

Rs.1.25 lacs plus interest for alleged

deficiency of Wet Scrubber System.

1.25 Appeal No. of 2006

in the Court of Dist.

Judge, Chandigarh

M/s. Green Force file an appeal

against the order dated 24.10.2006

pass by Civil Judge (Jr. Divn.),

Chandigarh, we have taken up with

the Court as the case is not

maintainable.


253

C. CHAMBAL FERTILISERS & CHEMICALS LIMITED

Brief Particulars Claim amount (Rs.

in Lacs)

Court/Forum/Case

number

Current Status

The company filed a winding up petition

against erstwhile Modiluft Ltd. now Spice

Jet Ltd.

400.00 and interest

there on

High Court of Delhi The matter is pending in the court.

Remarks:

M/s Spice Jet Ltd. has submitted a

Scheme of Arrangement with its

Creditors. The said scheme was

approved by Hon’ble Delhi High

Court. As per the scheme, Spice Jet

Limited will pay to CFCL 70% of

the principal amount towards full

and final settlement of the claim in

two instalments. The first

instalment of Rs. 1.20 crore

has already been received by

CFCL.

The company filed a writ petition against

State of Rajasthan and others pertaining to

bills of Rs. 1.99 crores towards water

charges raised by Executive Engineer,

Irrigation Dept., Govt. of Rajasthan.

N. A. High Court of

Rajasthan

Stay has been granted and the

matter is pending before the Court

for final disposal.

The company filed a writ petition against

Jaipur Vidyut Vitran Nigam Ltd. for refund

of advance deposited by the company with

Rajasthan State Electricity Board.

306.00 High Court of

Rajasthan

Pending

Erstwhile India Steamship Company

Limited (since amalgamated with CFCL)

had filed a winding up petition in Calcutta

High Court against Nihat Shipping

Company Ltd. (Nihat) due to non payment

of dues by Nihat.

230.33

Calcutta HIGH Court The matter is pending before the

court

Civil case filed before challenging the

demand of West Central Railway

53.54 Railways Rats

Tribunal, Chennai

Pending

Differential Purchases Tax, Interest &

Penalty Demands for the Asstt.year 1996-97

to 2001-02 (01.04.01 to 30.05.01) up to

30.6.2007

pertaining to the purchases of Natural Gas

for Generation of power.

Rs.16.01

Crore Rajasthan High

Court

The Company has obtained a stay

from Rajasthan High Court in

July,2001

Sub Registrar (Digod) issued assessment

order along with demand notice dated

29.12.2006 for deposit of Land Tax, u/s 42

of the Rajasthan Finance Act 2006

Rs.40.02 Lacs High Court,

Jaipur.

An appeal with 50% deposit has

been filed before High Court,

jaipur.

The Company has received the Show Cause

Notice dated 26.3.2007 from Central Excise

Additional Commissioner, Jaipur about the

recovery of excise duty on shortage of Urea

manufactured by the Company.

Rs.20.46 Lacs Central Excise

Commissioner,

Jaipur

Show cause notice has been replied

and hearings are yet to commence.

Commercial Taxes department vide its

order dated 8.12.06 asked to show cause as

to why input tax credit of Rs.22.18 lacs

claimed on opening stock of finished goods

as on 1.4.2006 should not be disallowed.

(VAT-Assessment Year 2006-07)

22.18 Deputy

Commissioner

(Appeals)

Appeal against the above order is

filed before the Deputy

Commissioner (Appeals) on

22.2.2007

Central Excise Commissioner,Jaipur has

issued the notice dated 22.5.2006 &

5.9.2006 as to why Service Tax amounting

to Rs.85.06 lacs should not be recovered

from the Company on Goods Transport

Agency Services received by the Company.

85.06 Central Excise

Commissioner,

Jaipur

The notice has been replied and

hearings are yet to commence.


254

Brief Particulars Claim amount (Rs.

in Lacs)

Court/Forum/Case

number

Current Status

Central Excise Additional Commissioner,

Jaipur has issued show cause notice dated

15.3.2007 as to why Service Tax amounting

to Rs.22.73 Lacs should not be recovered

from the Company on consulting

Engineering Services and Maintenance &

Repair Services received by the Company

from Non-resident.

22.73 Central Excise

Commissioner,

Jaipur

The notice has been replied and

hearings are yet to commence.

Dy.Commissioner of Central Excise,

Udaipur has issued an show cause notice

dated 21.4.2006 for Rs.0.92 Lacs being the

tax on the abatement of 75% availed

pursuant to notifications.

0.92 Dy.Commissio

ner of Central

Excise,

Udaipur

Dy. Commissioner of Central

Excise, Udaipur

Chambal Fertilisers & Chemicals Limited

1. Under the Jute packaging Material (Compulsory use of Packing Commodities) Act, 1987, a specified percentage of fertilizers

dispatched were required to be supplied in jute bags up to 31.8.2001.The provisions of the said Act were challenged in the

Supreme Court, which upheld the constitutional validity of this Act in its judgment in 1996.Inspite of making conscious

efforts to step up use of jute packaging material, the Company had been unable to adhere to the specified percentage, due to

strong customer resistance to use of jute bags. The Company had received show cause notice from the Office of the Jute

Commissioner, Kolkatta, for levying a penalty of Rs.7380.36 lacs for non compliance of the provisions of the said Act. The

Company has obtained a stay order from Delhi High Court against the above show cause notice and has been advised that the

said levy is not tenable in law.

2. The Company has received a demand of Rs.352.34 lacs (previous year Rs.352.34 lacs) from Sales Tax Deptt., Kota towards

use of Natural Gas for Ammonia fuel, power and steam generation, for the period April, 1996 May, 2001.The Company has

obtained a stay from Hon’ble High Court, of Rajasthan , Jodhpur on July 11, 2001.However, in the event of the Company

having to pay the above, it is reimbursable by FICC/Govt of India under subsidy scheme.

3. There are 29 cases relating to the Essential Commodities Act, 1955.

4. There were 24 cases under Labour Laws, 61 civil cases,4 cases pending with the Consumer Forum and 12 under

Miscellaneous Acts where amounts are not ascertainable

5. There are 2 civil cases pending against the company involving a cumulative amount of Rs.4.14 lacs.

6. There are 12 consumer forum cases pending against the company involving a cumulative amount of Rs. 3.20 lacs.

7. One Criminal Case u/s 420 & 407 of Indian Penal Code 1861

8. One case of Arbitration CFCL vs NFL

9. 4 cases under section 138 of Negotiable Instruments Act, 1881

D. Sutlej Textiles and Industries Limited

Details of outstanding litigation under Income Tax Act, 1961

Brief Particulars (See note below)

Claim Amount

(Rs.) Lacs

Court/Case No.

Current Status

Assessment Year 1985-86

CIT, New Delhi Vs. Sutlej Industries Ltd.

Additions on account of Purchases allowed by ITAT.

55.17 Delhi High

Court

ITC No.

18/2000

Deptt. Appeal

admitted, pending

listing for final

hearing.


255


Claim Amount

(Rs.) Lacs

Court/Case No.

Current Status



Additions on account of Purchases allowed by ITAT.

99.35

Delhi High

Court

ITC No.

17/2000

Deptt. Appeal

admitted, pending

listing for final

hearing.



1) Provision for Incentive to Staff and Workers allowed

by ITAT in Computing book Profit u/s 115J of the

I.T. Act.

2) Deduction u/s 80I allowed without reducing

deduction u/s 80HH

3)1/7th Premium on redemption of debentures allowed

by ITAT

15.00

1.01

0.71

Delhi High

Court

ITA No.95/99

Deptt. Appeal admitted, pending

listing for final hearing.




by ITAT

2) Deduction u/s 80HH allowed without adjustment of

B/F business losses of earlier Years by ITAT.

3) Deduction u/s 80I allowed without reducing

deduction u/s 80HH by ITAT.

2.86

10.24

3.62

Delhi High

Court

ITA No.

127/2000

Deptt. Appeal

admitted, pending

listing for final

hearing.



1) Deduction u/s 80I allowed without reducing u/s

80HH by ITAT.


by ITAT.

1.41

2.86

Delhi High

Court

ITA No.

138/2001

Deptt. Appeal

admitted, pending

listing for final

hearing.



Deduction u/s 80HH & 80I allowed on interest, rent &

misc. income, etc. received being disputed by deptt. in

Order u/s 147 which was quashed by ITAT, New Delhi.

18.28

Delhi High

Court

ITA No.

522/2004

Deptt. Appeal

admitted & pending listing for

final hearing.



Deduction u/s 80HH & 80I allowed on interest, rent &

misc. income, etc. received being disputed by deptt. In

Order u/s 147 which was quashed by ITAT, New Delhi.

15.50

Delhi High

Court

ITA No.

523/2004

Deptt. Appeal admitted &

pending listing for final hearing.



Deduction u/s 80IA allowed without adjusting brought

forward losses of earlier years from the total business

profit of the current year by ITAT.

19.10

Delhi High

Court

ITA No.

437/2004

Deptt. Appeal admitted and

pending listing for final hearing.


Deduction u/s 80I allowed without reducing deduction

allowed u/s 80HH

Delhi High

Court

ITA No.

81/2004

Deptt. Appeal

admitted & pending listing

for final hearing.


256


Claim Amount

(Rs.) Lacs

Court/Case No.

Current Status


Sutlej Industries Ltd. Vs. CIT, New Delhi

Interest u/s 244A not allowed on Rs.2588954/- for the

period from Dec.,1994 to June,97

on amount become refundable out of Self assessment

taxes paid, not allowed by ITAT.

-

Delhi High

Court

ITA No.

493/2003

Our Appeal admitted, pending

listing for final

hearing.


Sutlej Industries Ltd. Vs. CIT, New Delhi

Interest u/s 244A not allowed on Rs.423873/- from

December, 1995 to June, 1997 as amount become

refundable out of Self assessment taxes paid, not

allowed by ITAT.

-

Delhi High

Court

ITA No.

120/2004

Deptt. Appeal admitted, pending

listing for final

hearing.


CIT New Delhi Vs. Sutlej Industries Ltd.

Interest u/s 244A allowed on refund of self-assessment

tax Rs.6690474/- for the period 1.4.1998 to 30.4.2002.

-

Delhi High

Court

ITA No.

1204/2005

Hearing pending


Sutlej Industries Ltd. Vs. ITO, New Delhi

Appeal filed to CIT(A) against order passed u/s 147 in

the re-assessment proceedings for not allowing

deduction u/s 80HHC on DEPB benefits.

143.46 CIT(A)XII,

New Delhi

Appeal to CIT(A).

Hearing pending.


Notice issued u/s 148 to initiate re-assessment

proceedings for not allowing


335.62 I.T.O.

Ward No.9(4)

C.R.Building

New Delhi

Return filed u/s

148, pending

re-assessment proceedings.


Notice issued u/s 148 to initiate re-assessment

proceedings for not allowing


357.72 I.T.O.

Ward No.9(4)

C.R.Building

New Delhi

Return filed u/s

148, pending

re-assessment proceedings.



Appeal filed to CIT(A) for not allowing deduction u/s

80HHC on DEPB benefits. Besides appeal was filed on

other issues too having no tax impact

289.79 CIT(A)-XII

New Dehli

Appeal to CIT(A)

hearing completed.

Order yet to receive.



Appeal filed to CIT(A) for not allowing deduction u/s

80HHC on DEPB benefits. Besides appeal was filed on

other issues too having no tax impact

169.36 CIT(A)-XII

New Dehli

Appeal to CIT(A)

hearing pending.

Note: The issues in the above appeals were related to textiles division of Sutlej Industries Ltd. which are now

vested with Sutlej Textiles and Industries Ltd. as per Scheme of Arrangement, from the appointed date

1.7.2005. All taxation liabilities pertaining to the Textiles division as on the appointed date transferred

and vested in the Company as per Scheme of Arrangement.


257

Details of outstanding litigation under Central Excise Act

Brief Particulars

Claim

Amount (Rs.)

Court/Case No. Current Status

Sutlej Textiles and Industries Limited

Unit : Rajasthan Textile Mills

(Reversal of Cenvat credit on inputs

Furnace Oil and Coolants used in generation of

electricity which used in

exempted final products. Period

of dispute - May 1999 to Feb. 2002)

8.50/-

E-1253/05-06

(Deptt.Approval)

Deptt. Filed Appeal in CESTAT

New Delhi against

Commissioner (A)'s

order which is in our favour

Pending at CESTAT, New Delhi



-Penalty

(Service Tax on GTA payment through Cenvat Credit)

13.17/-

14.17

ST/113/2007




- Penalty

(Service Tax Credit on

CHA Services)

1.26

1.26

CESTAT, New

Delhi




(Refund of Input Services used in export of goods)

2.16 ST/251/2006

(Deptt. Appeal)




-Penalty

(Service Tax on overseas commission)

1.82

1.82

The

Commissioner

(Appeal) – 1

Jaipur

Pending at The Commissioner

(Appeal) – 1, Jaipur


Unit: Rajasthan Textile Mills

(Irregular availment of exemption Notification 30/2004-

CE dated 9.7.2004

Period of dispute: May, 2005 to Feb. 2007)

105.21

782.49

The

Commissioner

Central Excise

Jaipur-I

Deptt. issued Show Cause

Notice

and reply submitted by us.



(Wrong availment of exemption Notification 32/2004

ST- dated 3.12.2004 in case of payment of service tax

on freight to GTA. Period of dispute: April, 2005 to

March, 2006).

50.22 The

Commissioner

Central Excise

Jaipur-I

Deptt. issued Show Cause

Notice




(Service Tax on GTA paid through Cenvat Credit)

8.42 The

Commissioner

Central excise

Jaipur-I

Deptt. Issued show cause notice


Sutlej Textiles an Industries Ltd.

Unit Rajasthan Textile Mills

(Service Tax on commission paid to Overseas Agent

period Dec.05 to Oct.06)

13.29 The

Commissioner

Central Excise

Jaipur

Reply to Show Cause Notice

submitted.



(Cenvat credit of service tax on Banking services on

Improper documents)

0.50 The Assistant

Commissioner

C.Excise Division

Kota


submitted


258

Brief Particulars

Claim

Amount (Rs.)




(Service Tax on GTA paid through Cenvat Balances)

4.32 The Assistant

Commissioner

C.Excise Division

Kota


Submitted.

Appeal filed before Customs, Excise & Service Tax

Appealate Tribunal, A’Bad against order of

Commissioner (Appeals) Central Excise & Customs,

Vapi order no. KU/439to KU 442/VAPI/2005 dated

14.12.05

A’Bad Tribunal allowed appeals with consequential

relief through order no A/1734 to 1737/WZB/A HO107

dated 06.07.07

24.51 Commissioner

(Appeal) Vapi

Refund of T & T

Show cause notice dated 28.11.05 issued by Dy.

Commissioner for disallowing of rebate claim of T & T

refund under Rule 5

15.53 Deputy

Commissioner

Of Central

Excise &

Customs,Vapi

Reply of the show cause notice

given vide reply dated

4.01.2006,

Labour Court Case filed against company Rajendra N

Hazare vs. Sutlej Industries Ltd.

15.00 Illegal

Termination of

Worker

last date of hearing was on

4.03.2006 .Case no.10/2202

Case filed by the company Sutlej Industries ltd. v/s P.K.

Industries Bilimora

0.65 Supply of Beam

To Beam

rewinding

machine

Case is still pending .No hearing

date fixed so far case no.

1630/201

Criminal Case filed by the company Sutlej Industries

ltd. v/s Rajesh Nand Kishore Tripathi

69.19 Withdrawal of

money through

fraudlent

cheques

Case is still pending before court

Show cause notice no.V( Ch.54)3-104/DEM/2003 dated

4.04.2006 issued by Commissioner Central Excise &

Customs,Vapi for disallowing deemed modvat credit &

recovery of under Rule 12 of the Cenvat Credit

Rules,2001/2002 read with provision 11 A( 1 ) of

Central Excise Act,1944.

750.04 along

with interest &

penalty if any

Commissioner

Of Central

Excise &

Customs,Vapi

Reply of the show cause notice

given vide reply dated

10.04.2006. The matter pertains

to availment of deemed credit on

grey fabrics during the

periodfrom March 2001 to

March 2003.

Criminal Case Sutlej Industries Ltd. v/s Dae Hung

Precision Company Ltd.,Seth Enterprises Ltd.& Sonal

Industries

2.45 Supply of Faulty

machinery parts

/Stores material

Case is still pending before

court. Case was filed on

30.08.2004. Case is not opened

so far.


259

RAJASTHAN TEXTILE MILLS, (BHAWANIMANDI UNIT)

Cases Pending under Labour Laws

There 32 cases filed against the Company seeking stay on termination and suspension of their jobs by the

Rajasthan Textile Mills, (Bhawanimandi Unit).

Cases Pending Before Payment of Gratuity Authority Jhalawar

There 3 cases pending before the Payment of Gratuity Authority Jhalawar against the Company aggregating to

amount of Rs 0.61 lacs.

Cases Pending Before Labour Department Government of Rajasthan Jaipur

There are 4 cases pending before the Payment the Labour Department, Jaipur, Government of Rajasthan seeking

permission for prosecution.

Cases pending under section 138 of the Negotiable Instruments Act 1881 before the ACJM, Court

Bhawani Mandi

There are 6 cases filed by the Company which are pending before the ACJM, Court Bhawani Mandi under

section 138 of the Negotiable Instrument Act 1881 aggregating to Rs 8.95Lacs

CTM Unit

Brief Particulars


C.T.M. V/s Ind. Tribunal & Others

Mr Abhimanyu was suspended pending enquiry, but was not paid

subsistence allowance. Ind. Tribunal passed order dated 21.5.02

against the Company. Company moved to H.C. where stay granted

after deposit award amount of Rs.17,332 in H.C.

555/2002

High Court

Jammu

Workman filed objection on

26.10.02. Rejoinder to be filed by

Company

Abhimanyu V/s C.T.M

Workman dismissed on 22.6.1997 after domestic enquiry.

Workman filed claim for reinstatement with full back wages &

other benefits. Evidence of workman completed.

623/ 2002

Labour Court

Jammu

Arguments heard of both

representatives.

Final order awaited.

Dharampal V/s C.T.M

Workman abandoned services from 6.2.1997. He filed claim for

reinstatement with full back wages & other benefits. Evidence of

workman completed. Partly evidence of co. completed.

625/ 2002

Labour Court

Jammu

Arguments heard of both

representatives.


Sushant V/s C.T.M.

Workman abandoned service from 11.3.1997. He filed claim for

reinstatement with full wages. Evidence or workman completed.

Partly evidence of Co. completed.

664/ 2002

Labour Court

Jammu

Workers and his representative were

absent, hence Case adjourned.



260

Civil Litigation filed by the Company

Brief Particulars

Claim

Amount (Rs.

In lacs)


S.I.L. vs.Gupta Cotton

Traders Batala

Case against recovery of additional

Sales tax paid for non-receipt of C Form.

0.33.00

Sub Judge, Kathua The Court has passed the order

for recovery of the amount in

favour of CTM.

Execution of decree is still

pending.

CTM V/s Pilaniwala Synt.

Pilaniwala Textile Mills P. Ltd

The Mill has filed Civil Suit against the parties for

recovery of amount U/s XXXVII of CPC The District

Court of Kathua has given the direction to the Defendant

to submit the Surety of the entire amount. Defendant

appealed against the decision, in High Court and then in

Supreme Court, but Supreme court again ordered the

Defendant to submit the Surety.

24.05

District Judge

Kathua

Pending for decision against

the objection for admission of

bond and surety given by

defendant

Sutlej Industries Ltd V/s

Sirohiya Synthetics P Ltd.

We sold the yarn to Party. But the party

did not make the payment.

52.04

Additional District

Judge,

Kathua

Reply is submitted in the court

to the objection filed by

opposite party.

Sutlej Industries Ltd V/s

Mohit Garg

Defendant Mohit Garg appointed as a senior Asst. in

accounts department and gave an undertaking to serve

for 3 years and if he resigns from the Job, then he is

liable for Six month's salary as damages. He has left the

job in violation of the terms of the service bond.

0.40

Sub Judge

Kathua

Recovery Suit for breach of

contract.

Case is decided; final decree is

passed by the court. Execution

of decree is still pending.

STIL V/s Sanjay Bhan

He left the job within the bond period in violation of the

terms and conditions of the bond

0.60 District Judge

Kathua

Summons is sent

STIL V/s Anil Shiekhar

He Left the job within the bond period in violation of the


0.60 District Judge

Kathua

Summons is Sent

STIL V/S Viney Janu


terms and conditions of the bond.

0.40 District Judge

Kathua

Summons is sent

STIL V/s Pushkar Bharadwaj



0.37 District Judge

Kathua

Summons is sent

CTM V/s Ramesh Pandey

He left job in violation of the bond undertaken by him.

3.04 CJM

Kathua

Accused presented himself in

the court.


261

Criminal Cases

Brief Particulars

Claim

Amount (Rs.)

Court. Current Status

CTM V/s Shri Uttam Fabrics Delhi

CTM has sold yarn to accused. The accused issued

cheques but cheque got

dishonoured. The Party has filed objection for which the

court has decided against the M/s Uttam Fabrics

1.26

Chief Judicial

Magistrate

Kathua

Accused filed the revision

petition in the High Court &

the said petition is rejected by

the High Court & now the

case transferred at Kathua for

Statement.

Summon is sent to call the

witness.

CTM V/s Samurai Synthetics

5 Case Bhilwara ( 3 Case Transffered at Munsif

Magistrate 1st Class


cheques but cheque got dishonoured

3.03

District Mobile

Magistrate.

Summon is sent.

CTM V/s N.B.Sadiwala

Khambat ( South Gujarat )


cheques but cheque got dishonoured

0.31

Distt. Mobile

Magistrate,

Kathua

Summons Sent By Court we

have deposit the Reg. AD

Envelope in the court.

CTM V/s Vijay Gupta

Jammu

U/s 500/501 R.P.C. accused who is editor of Jammu

Today. He published a news about Sexual Harassment of

lady worker in the mill. So we filed a Criminal

Complaint against him.

N.A District Mobile

Magistrate,

Kathua.

To execute the Warrant.

CTM V/s Chitra Synthetics

Bhilwara


cheques but cheque got dishonored

1.65 Distt. Mobile

Magistrate

Kathua

To execute summons.

CTM V/s Samurai Synt.

2 Case Bhilwara

CTM has sold yarn to accused. The

accused issued cheques but cheque

got dishonored

3.03 Distt. Mobile

Magistrate

Kathua

Summons Sent Directly

at Surat.

STIL V/s Berger Paints. 28.50 Consumer court,

Jammu

Objections to be filed by

opposite party.

SIL V/s R.K.Textile NA District Judge Final decree awaited.

STIL V/s Tarun Export

Cheque dishonoured.

53.23 Chief Judicial

Magistrate,

Kathua

Summons is sent.


262

UPPER GANGES SUGAR & INDUSTRIES LTD

LITIGATION AGAINST THE COMPANY

A. LABOUR LAW CASES (SEOHARA SUGAR UNIT)

1. There are 4 cases of reinstatement of employees field against the Company imposing a liability of around

Rs.9.75 Lacs. Further, there are 19 cases of reinstatement of employees/claiming regular (permanent)

employment (amount is not ascertainable in these cases)

2. Other than the above there is a case fled by Mr. Sukh Lal Singh & others, contract laborers, who

have claimed outstanding dues under the provision of Payment of Wages Act, 1936. The Assistant Labor

Commissioner, Bijnor has passed an award payment on wages to the tune of Rs. 1.27 Lakhs. The Company has

filed an appeal (Appeal No. 74/2002) in the District Court, Bijnor. The amount awarded by the Commissioner

has been deposited before in the District Court, Bijnor.

B CRIMINAL CASES

(SEOHARA SUGAR UNIT)

Sr.N

o.

Name of the complainant Court where

pending & suit

petition no.

Amount

involved (Rs.

In Lacs)

Nature of the cases, particulars and current

status

1. Sunil Kumar Kaushik Chief Judicial

Magistrate Bijnor.

The said matter is

pending filing of

charge sheet.

Nil One Mr. Sunil Kumar Kaushik, was a seasonal

clerk. He was made permanent w.e.f.

01.11.1995. However, he filed a criminal

complaint against the Executive President of the

Company Mr. B.K. Malpani before CJ

Magistrate, Bijnor that he has deliberately

tampered with the attendance register with

regard to the attendance of the complainant. The

Magistrate has issued an ad-interim order dated

27.11.1997 and the Dept. of Police to carry out

investigation under section 156(3) of Criminal

Procedure Code against the Accused. The

operation of said order was stayed by the

Allahabad High Court in Writ Petition No.

176/1998 filed by the Company vide order dated

16.1.1998.

2.

State of Uttar Pradesh through

Assistant Cane Commission,

Bijnor

Chief Judicial

Magistrate Bijnor

317/1997

Nil The Assistant Cane Commissioner, Bijnor filed

a criminal complaint against the company

alleging that the company has tagged the cash

credit limits at lower percentage in Sugar season

1996-97. The Chief Judicial Magistrate issued

process against which the Company has filed a

petition in the Allahabad High Court. The said

order is stayed by Hon’ble Allahabad High

Court Order dated 17.11.1998 in Writ Petition

1350/1998.

3. Food Inspector Lucknow Addl Chief Judicial

Magistrate

Amount not

ascertainable

On 10th

December 1991, the food Inspector

lucknow had taken sample of sugar from the

shop of PCF Godown Barah Birbah, Lucknow.

The Sugar is alleged to have been manufactured

by Sugar Mill Seohara. As per instruction report

the sample were found having moisture and

foreign substances in excess of the limit. The

Company has been issued notice by ACJ Court.


263

SEOHARA DISTILLERY UNIT

Sr.N

o.


pending & suit

petition no.

Amount

involved (Rs.

In Lacs)


status

1. State of Uttar Pradesh & Others

Ist Additional

Chief Judicial

Magistrate, Bijnor

1616 of 1990.

Nil The District Excise Officer, Bijnor has filed a

case under sections 64/88 of the U P Excise Act

in connection with non delivery of Rectified

Spirit against allotment order dated 26.6.1989 of

the Excise Commissioner Allahabad. The said

Complaint is stayed by the order of Hon’ble

Allahabad High Court by its order dated

7.2.1991 in C.M. A Mo. 1895/1991.

BHARAT SUGAR MILLS

Sr.N

o.


pending & suit

petition no.

Amount

involved (Rs.

In Lacs)


status

1.

State of Bihar SDJM Gopalganj

Case no. 124/05 &

126/05

Nil The Bihar State Pollution Control Board through

its Member Secetary filed Criminal Complaints

(24(M)/1987 and 33(M)/1988) under Water

(Prevention and Control of Pollution ) Act,1974

against Bharat Sugar Mills (a unit of the the

Company) before SDJM, Patna. The said cases

were transferred to SDJM Gopal Ganj for trial.

The Company has filed petitions (CWJC

21109/05 and 21998/05) before the Patna High

Court. The High Court has by its order dated

31.03.2006 stayed the proceeding pending

before SDJM Gopalganj.

2. State of Bihar Chief judicial

Magistrate

Gopalganj

CCNo.2065/05

Nil This is a Complaint pending against one Mr.

P.R. Gupta the Security person of Bharat Sugar

Mills for firing a gun in the air to disperse the

agitated cane growers. The case is pending for

hearing.

3. State of Bihar Chief judicial

Magistrate

Gopalganj

CCNo.23/05

Nil The Cane Officer, Gopalganj filed a criminal

complaint against Mr. B.K. Sureka of Bharat

Sugar Mills for purchasing excess quantity of

cane as against quantity allotted by the Cane

Commissioner in sugar season 1999-2000 under

the provisions of Bihar Sugarcane (Regulation

of Supply and Purchase) Act, 1981. The Court

had taken cognizance of the said complaint.

Against this order the Company filed petition

before the Patna High Court (W.P. No.

22561/2000). The Patna High Court stayed the

said proceeding before CJM, Gopalganj by its

order dated 14.03.2002.


264

HASANPUR SUGAR MILLS

Sr.N

o.


pending & suit

petition no.

Amount

involved (Rs.

In Lacs)


status

1. Ram Pirey Prasad Singh

Vs Ram Nandan Pathak

JMFC, Rosera

TR No.147/1997

Nil The Complainant has filed a complaint

against then field officer of the Company for

manhandling in the factory premises. Case is

under trial before the Court.

2.

Bihar State Pollution Control

Board Vs Upper Ganges

Sugar & Industries Ltd. (New

India Sugar Mills)

SDJM, Samastipur

Case No.32 (M) of

1998/T R

No.984/2004

Nil The Bihar State Pollution Control Board

through its member secretary filed criminal

complaint u/s 41, 43 & 44 under the Water

(Prevention Control of Pollution) Act, 1974

against New India Sugar Mills( a unit of the

Company) before SDJM, Patna. The said case

was transferred to SDJM, Samastipur for trial.

The Company has filed a petition against the

Cognizance taken by the S.D.J.M Court,

Patna. The case stayed till the decision of the

Hon'ble Patna Court, Patna. This case is

pending for hearing in the High Court,

Patna.

C. CIVIL CASES

(SEOHARA SUGAR UNIT`)

Sr.N

o.

Parties Amount involved

(Rs. In Lacs)

Court where

pending & suit/ petition

no.

Nature of the cases and particulars

1. State Trading Corporation of

India Ltd. (STC) Vs. Upper

Ganges Sugar & Industries Ltd.

And others

Rs.18.33 Lakhs High Court,

Delhi

FAO(OS) 53

of 1986

Pursuant to a dispute arising out of a contract

entered into by the Company (for its units

namely Seohara Sugar Mills & New India Sugar

Mills) with STC, in connection with loss

incurred by the Company for non lifting of

sugar, an arbitration award was passes in favor

of the Company. Thereafter STC filed an appeal

before Delhi High Court. The Delhi High Court

by its order dated 09.02.87 directed STC to

deposit the decretal amount in court within a

period of 4 months. Further, the High Court

permitted the Company to withdraw the amount

subject to our Company furnishing Bank

Guarantee for the amount so availed. The bank

guarantee has been furnished by our Company.

2 The East Sugar Mills

Association & Ors have

challenged the fixation of price

of sugar cane for crushing



Government.

The Company is part of the

Association.

Not ascertanable Civil Misc. W

P no. 8548

(M/B) of 2007

Allahabad

High Court

(Lucknow

Bench)

The Allahabad High Court (Lucknow Bench) by

its interim order dated 15.11.2007 have directed

sugar mills to pay sugarcane growers at the rate

of Rs 110 per quintal till further orders of this

Court.

3 Simbholi Sugar Mills Ltd & Ors

Vs State of UP and Ors

Not ascertainable Civil Misc. W

P no. 43536/07

Allahabad

The Allahabad High Court have reserved the

Orders in the said matter


265

Sr.N

o.

Parties Amount involved

(Rs. In Lacs)

Court where

pending &

suit/ petition

no.


Simbholi Sugar Mills Ltd & Ors

have challenged the fixation of




Government..

The Company is party to the

litigation.

High Court

4 USML vs State of UP & Ors

The Company has challenged

the Recovery certificate dated

18.10.2007 received by the

Company issued by the Cane

Commissioner, U P, Lucknow

demanding cane dues pertaining

to season 2006-07 and cane

commission of the said season

along with interest.

3770.17 WP No. 8148

/2007 before

Allahabad

High Court

The Hon’ble High Court, Lucknow bench has

vide its order dated 29.10.07 stayed the demands

in the recovery certificate on the condition to

pay 25% of the said demand within 5 weeks.

Accordingly company has paid Rs 955 lacs.


Sr.No.

Parties Court where pending & suit/

petition no.

Amount involved (Rs.

In Lacs)


1. State of Uttar Pradesh Vs.


Industries Ltd.

Supreme Court of

India

Special Leave

Petition (SLP) No.

16780/2005

Rs. 3.11 Lakhs The Uttar Pradesh State Excise Authorities has

filed a Special Leave Petition before the

Supreme Court of India against an order dated

11.04.2005 passed by the Allahabad High Court

in Writ Petition No. 906 of 1995 (M/B). The

said Writ Petition was filed by the Company

challenging the notifications issued by the State

Government under the U P Excise Act, 1910.

The Hon’ble High Court by its order quashed

the demand by the State Excise Authority on

loss of rectified spirit in transit due to accident.

During the pendency of the said writ petition the

demand amount was deposited by the Company.

The Supreme Court by its interim order dated

22.08.2005 has issued notice to the Respondents

and stayed the operation of the judgment and

order passed by the Allahabad High Court.


266

BHARAT SUGAR MILLS

Sr.N

o.

Parties Court where

pending & suit/

petition no.

Amount

involved (Rs.

In Lacs)


1. State of Bihar Vs Upper Ganges

Sugar and Industries Ltd.,

(Bharat Sugar Mills)

Certificate Officer,

Gopalganj

& CWJC

13242/06,

13744/06,

13451/06 and

13604/06

Case No. 2/02-03,

7/02-03, 11/02-03,

15/02-03,

Rs.4.33 Lacs The Cane Officer, Gopalganj filed recovery of

interest amount due on late depositing of cane

tax under section 49(1) of the Bihar Sugarcane

(Supply & Purchase) Act, 1981 for the season

1984-85 to 1989-90, 1990-91, 2000-2001 and

2001-02 before Certificate Officer under the

provision of Bihar & Orissa Public Demand

Recovery Act, 1914 order passed by Certificate,

Gopalganj to pay Rs. 432936.61. The factory

filed writ petition against above order of

Certificate Officer in the High Court. The High

Court had stayed the order of Certificate Officer.

The Certificate Officer, Gopalganj issued

demand notice for payment. Company has filed

its objection as the demand is time barred and

Cane Officer is not empowered in Section 49 of

the Cane Act, 1981 to raise this demand of

Rs.4.33 lacs as public demand


Sr.N

o.

Parties Court where

pending & suit/

petition no.

Amount

involved (Rs.

In Lacs)


1. The State of Bihar Vs Upper

Ganges Sugar & Industries Ltd.,

(New India Sugar Mills)


Samastipur Case

No.1,4,5/202-03

Rs.1.89 Lakh Cane Officer, Samastipur filed recovery of

interest amount on late depositing of cane tax

under section 49(1) of the Bihar Sugarcane

(Supply & Purchase) Act, 1981 for the sugar

seasons 1980-81 to 1986-87, 1991-92 and 1994-

95 to 1998-99 before Certifate Officer, as public

demand. Certificate officer, Samastipur issued

demand notice for payment. The Company has

filed objection as the demand is time barred and

Cane Officer is not empowered under Section 49

of the Cane Act, 1981 to rise this demand as

public demand.

2. The State of Bihar Vs Upper

Ganges Sugar & Industries

Ltd., (Hasanpur Sugar Mills)


Samastipur Case

No.1/2006-07

Rs.1.48 Lakh Cane Officer, Samastipur filed recovery of

interest amount on late of Cane Tax under 49(1)

of the Bihar Sugarcane (Supply & Purchase)

Act, 1981 for the sugar season 2003-04 & 2004-

05 before Certificate Officer, as Public demand.

The case is pending before the Court.

D. MOTOR ACCIDENT CLAIMS There are 4 cases pending before the Motor Accident Claim Tribunals at Meerut/ Bijnor in which the

Company is one of the respondents. The aggregate amount claimed under these cases is Rs.49.75 Lakhs.

E. CANE RESERVATION CENTRE There are two appeals pending before the Appellate Authority against the Company with respect to reservation

of cane centres in favour of the Company under the provision of UP Sugarcane (Regulation of Supply &

Purchase) Act 1953


267

(LITIGATION BY THE COMPNY)

A. CRIMINAL CASES


Sr.No.

Name of the Respondent Court where pending suit/

petition no.

Amount involved (Rs.)

Nature of the cases & particulars

1. State of Uttar Pradesh Allahabad High

Court Writ Petition

No. 176/1998

Not

ascertainable

This is the Petition filed under section 482 of Cr.

P.C. challenging the order passed by the Chief

Judicial Magistrate issuing directions to conduct

investigation under Section 156(3) of Cr.P.C.

against Mr. B.K. Malpani, Executive President

of the Company. The Hon’ble High Court has

stayed the proceeding of the lower court its


2 State of Uttar Pradesh Allahabad High

Court Writ Petition

No. 1350/1998

Not

ascertainable

This is the Petition filed by the Company against

the order dated 27.4.1998 passed by the Chief

Judicial Magistrate Bijnor, issuing process

against the Company in the complaint filed by

the Assistant Cane Commissioner, Bijnor before

the CJM, Bijnor. It was alleged by the Asst.

Commissioner that the Company has tagged the

Cash Credit Limit at lower percentage in sugar

season 1996-97. The Hon’ble High Court stayed

the said proceedings by its order dated 17.11.98

BHARAT SUGAR MILLS

Sr.N

o.

Name of the Respondent Court where

pending suit/

petition no.

Amount

involved (Rs.)

Nature of the cases & particulars

1. Guddu Singh & Others 246/01 CJM

Gopalganj

Not

ascertainable

The matter relates to assault (man handling) of

the Company's Sr. Officer by the Respondent.

First information Report was filed on

21.12.2001. The Deptt of Police carried out the

investigation and submitted the charge sheet in

Court. The Court has taken cognizance against

the Respondent.

2 The State of Bihar Patna High Court

Writ Petition No.

21109/2005 &

21998/05

Not

ascertainable

This is the Petition filed under section 482 of the

Criminal Procedure Code filed by Bharat Sugar

Mills against the Bihar State Pollution Control

Board for quashing of the Criminal complaints

filed against Bharat Sugar Mills, a unit of the

Company before the SDJM at Gopalganj. (Case

No.124/05 & 126/05)

3. The State of Bihar Patna High Court

Writ Petition No.

22561/2000

Not

ascertainable

This is the Petition filed under section 482 of the

Criminal Procedure Code filed by Bharat Sugar

Mills, a unit of the company against the Cane

Commissioner for quashing of the Criminal

complaint filed against B.K. Sureka of Bharat

Sugar Mills before the CJM Gopalganj (CC

No.23/05). The Hon’ble High Court had stayed

the proceeding before the lower court by its



268

B.SALES TAX CASES


Sr.N

o.

Authority / Court Amount involved

(Rs. in Lacs)


1. Allahabad High Court Nil The Company has challenged the validity of the imposition of the

CST on bagasse. During the A.Y. 2000-01 the Trade Tax

Authorities raised the demand on sale of bagasse to the parties

situated in the newly formed state of Uttaranchal w.e.f.

10.11.2000. The demand ultimately was confirmed by Trade Tax

Tribunal Moradabad and the same was deposited by the company

under protest and charged to expenses.

2. Trade Tax Tribunal

Moradabad

Appeal No. 295/05

Not ascertainable The Company has filed an appeal before the Trade Tax Tribunal,

Moradabad against the order of Jt. Commissioner (Appeals)

upholding the CST demand raised by the assessing officer for

A.Y.2001-02 on bagasse along with interest. The Jt.

Commissioner (Appeal) however, upheld the demand but

remanded the matter with regards to computation of interest to Dy.

Commissioner (assessment) who has since dropped the demand of

interest. The original demand has been paid under protest and

charged to expenses.

3. Trade Tax Tribunal,

Moradabad

Not Ascertainable The Company has challenged the order passed by the Jt.

Commissioner (Appeals) Bijnor wherein the Jt. Commissioner has

upheld the demand raised by the assessing officer for A.Y. 2002-

03 demanding CST on sale of bagasse along with interest.

However, the original demand has been paid by the company

under protest and charged to expenses.

4. Trade Tax Tribunal,

Moradabad

Nil The Company has challenged the order passed by the Jt.

Commissioner (Appeals) Bijnor upholding the demand raised by

the Trade Tax Authority for the AY 2002-2003 on sale of old

trucks along with interest. However, the original demand has been

paid by the Company under protest.

5. Allahabad High Court

Not ascertainable

The Company has challenged the order passed by the Trade Tax

Tribunal, Moradabad where in the demand of CST on sale of

bagasse was upheld by the tribunal. for A.Y.2003-04. However,

the original demand has been paid by the company under protest

and charged to expenses

6. .Jt.Commissioner (Appeals)

Trade Tax, Bijnor

Rs.5.68 Lacs The Company had challenged the order passed by the Jt.

Commissioner Appeals upholding the orders of Dy Commissioner

Assessment Trade Tax Dhampur where in

the Dy. Commissioner has raised demand for A.Y.2003-04

demanding Entry Tax on sale of Sugar, before Trade Tax

Tribunal, Moradabad. The Tribunal had remanded the case to the

Dy. Commissioner Assessment Trade Tax Dhampur for passing

fresh orders in view of the directions given by the Tribunal.

Now the Dy. Commissioner Assessment Trade Tax

Dhampur has passed fresh orders raising the same demand for

Rs.5.68 Lacs against which the Company had earlier deposited a

sum of Rs.1.89 Lacs under protest. Now the Company is going to

file a fresh appeal before the Jt. Commissioner Appeals, Bijnor

challenging the fresh order passed by the Dy. Commissioner

Assessment Trade Tax Dhampur.

7. Jt. Commissioner (Appeals)

Trade Tax, Bijnor

Not ascertainable The Company has challenged the order passed by the Dy

Commissioner Assessment Trade Tax Dhampur where in the Dy

Commissioner has raised demand for A.Y.2004-05 demanding

CST on sale of bagasse. However, the original demand has been

paid by the company under protest and realized from customers.


Trade Tax, Bijnor

Not ascertainable The Company has challenged the order passed by the Dy

Commissioner Assessment Trade Tax Dhampur where in the Dy.


Sales Tax on purchase of sand from unregistered dealers with

interest. However, the original demand has been paid by the


269

Sr.N

o.


(Rs. in Lacs)


company under protest and charged to expenses.


Trade Tax, Bijnor

Rs. 5.32 lacs The Company has challenged the order passed by the Dy

Commissioner Assessment Trade Tax Dhampur where in the Dy.


Entry Tax and interest, amounting to Rs. 16.15 Lac including

Rs.5.32 lac on import of raw sugar during the year, Rs.10.56 lac

and Rs.0.27 lac respectively on purchase of diesel and coal from

outside local area during the year for which form ‘E’ were

required to be submitted. The assessing officer allowed time upto

30.06.07 to submit these Forms which the Company deposited in

time (except for certain purchases of Coal on which Entry Tax

Liability amounting to Rs.0.07 Lac has arisen.)

Now the Dy. Commissioner has passed another Order revising

the Demand of Entry Tax from Rs.16.15 Lac to Rs.5.39 Lac

including Rs.5.32 Lac on import of raw sugar and Rs.0.07 Lac on

purchase of Coal without Form E. The sum of Rs.0.07 Lac is

being deposited by the Company which will be charged to

expenses, leaving a net Demand of Rs.5.32 Lac to be contested

before the Jt. Commissioner (Appeals) Trade Tax, Bijnor.

(CINNATOLLIAH TEA GARDEN)

Sr.N

o.


(Rs. in Lacs)


1. Joint Commossioner of Taxes,

Assam

Rs. 8.46 Lakhs The Company has challenged the imposition of Central Sales Tax

of AY 1999-2000 on rejection of Form F by the Superintendent of

Taxes North Lakhimpur. The Company has deposited a sum of

Rs.0.37 Lakhs with the authorities.

C. CIVIL CASES


Sr.

No.

Name of the

Respondent/Defendant

Court where

pending Suit/

Petition No.

Amount

involved ( Rs.

In Lacs)

Nature of the Cases & particular

1. Bihar Sugar Millls

Association & others

Vs.Union of India &

Others

Delhi High Court

Letters Patent

Appeal No. 609 of

2003

Rs. 8.30 lacs Bihar Sugar Mills Association & others ( including the

company) filed before the Delhi High Court

Challenging the levy sugar price notification dated.

13.4.1999 for the sugar season 1974-75, since the price

notified for 1974-75 was fixed without taken into

account the loss caused to sugar producers due to

sugar sold at low interim price fixed on 28.11.1974.

The said writ petition was dismissed . The Bihar Sugar

Association & others have challenged the said order of

the single judge dismissing the writ petition.

2. Upper Ganges Sugar &

Industries Ltd. Vs. Union

of India & others

Kolkata High Court

C.R.no. 8384

(W)/1983 & 9265

(W)/1983

Supreme Court of

India

Transfer Petition

Nos. 143/1985 and

146/1985

Rs.26.14 lacs The Central Government has allowed excise duty rebate

during the sugar season 1981-82 & 1982-83 by way of

various notifications which were subsequently amended

by the Government and the same were challenged. The

Kolkata High Court by its interim order has allowed

excise duty rebate of Rs. 26.14 lacs subject to

furnishing of bank guarantee for equivalent amount.

The Company has filed Transfer Petitions No. 143 and

146/1985 before the Supreme Court of India and the

said petition were allowed by order dated 4.4.1985.


3. Upper Ganges Sugar & High Court of Claim in Our Company has filed a writ petition against the state


270

Sr.

No.

Name of the


Court where

pending Suit/

Petition No.

Amount

involved ( Rs.

In Lacs)


Industries Ltd. Vs. State

of U.P.

Allahabad

Writ Petition No.

2308 (M/B)/1986

Petition Rs.

277.83 lacs

of U.P., Secretary Excise & others restraining the State

from incorrectly levying and claiming to recover

administrative Charges on molasses produced by the

sugar unit of the company and transferred to its own

distillery for its own consumption. Our Company was

granted stay against said recovery subject to furnishing

of bank guarantee of Rs. 1.00 lacs . The Company has

furnished the bank guarantee. Our Company has paid

Administrative charges from 1.11.97 to 26.03.2005

under protest. Thereafter by an interm order dated

10.3.2005 the High Court extended the stay and

permitted the Company to transfer the molasses from

sugar unit to the distillery without any imposition of

administrative charges. Our Company has filed an

appeal for refund these charges which is pending.


Sr.

No.

Name of the


Court where

pending Suit/

Petition No.

Amount

involved ( Rs.

In Lacs)



Industries Ltd. Vs.

Andhra Pradesh

Government Power

Alcohol Factory

Andhra Pradesh High

Court.

Civil Misc. Petition

No. 3202 of 1991

Rs. 2.55

Lakhs

The Company has filed the said writ petition against

Andhra Pradesh Government Power Alcohol Factory.

The respondent had filed a recovery Suit No. 50/83

before Additional Chief Judge, City Civil Court,

Secundrabad, against the Company for recovery of

Export Duty of Rs. 1.68 lacs along with interest. The

respondent earlier paid the said amount to the Company

1973-74 while taking the delivery of Rectified Spirit and

the Company deposited the same with the State Excise

Authorities. On challenging the applicability of the

provisions related to export duty, the Hon’ble Allahabad

High Court in its order dated 31.01.1977 declared the

said duty as illegal and allowed the refund to the

Company, thereafter, the party demanded the refund of

the said duty. The Additional Chief Judge, Civil Court,

Secundrabad in its decree and judgment dated

18.11.1989 has directed the Company to refund the said

amount along with the interest @18% p.a. The Company

subsequently filed an appeal before High Court of

Andhra Pradesh Hyderabad challenging the said

judgment and decree. The Hon’ble Court in its interim

order dated 16.3.1991 has stayed half the decree amount.


Industries Ltd. Vs.

Additional Excise

Commissioner

UP Allahabad

Supreme Court

SLP No. (c )

657/2007

Rs 2.94 Lakhs The Company has filed an appeal before the Hon’ble

High Court challenging the order 28.9.2005 passed by

the Principal Excise Secretary Govt. of U.P. wherein the

demand raised by U P State Excise Authorities on loss of

rectified spirit on its way to siliguri due to accident has

been confirmed. The Hon’ble High Court in its order

dated 05.01.2006 granted an interim stay to the Company

subject to furnishing of the Bank guarantee for the

equivalent amount of the demand raised by the

Authorities. However the department has recovered the

said amount from the Company. The Hon’ble High Court

of Allahabad vide its order dated 18.5.2006 quashed the

demand. The State Govt. has filed SLP no, (c ) 657/2007

before the Hon’ble Supreme Court. The matter is

pending for hearing.

3. U.P.Distillers Allahabad High Nil The Company through Uttar Pradesh Distillers


271

Sr.

No.

Name of the


Court where

pending Suit/

Petition No.

Amount

involved ( Rs.

In Lacs)


Association & others

Vs. State of Uttar

Pradesh & Others

Court

Writ Petition No.

1084/(M/B) of 1996

Association has challenged the applicability of the

provisions with regards to export permit fees imposed on

the supply of Industrial alcohol out of U.P. which the

State Government has brought in by way of amendment

in the Uttar Pradesh Transport & Possession of

Denatured Spirit (Nineteenth Amendment) Rule 1996.

The amount of export permit fees are deposited by the

company with the state excise authorities.


Industries Ltd. Vs.

U.P.State Sugar

Corporation; Ltd.

Doiwala, Dehradun

Civil Judge Senior

Division Dehradun

Suit No. 407/1997

Rs. 3.97 lacs The Company has filed a recovery suit for the recovery

of Rs. 3.97 lacs along with interest. The said amount was

paid by the company as advance to the respondent

against purchase of molasses in the year 1995 but a part

of the delivery could not be effected due to heavy rains.

The Respondent had forfeited the said amount .

Respondent has filed its written statement. The Company

has filed evidence.


Industries Ltd. Vs.

U.P.Pollution Control

Board, Lucknow

Allahabad High

Court, Bench at

Lucknow

Writ Petition No.

9278 of 1989

Rs. 1.41 lacs The Company has challenged the order dated 7.8.1989

passed by the Appellate authority of U.P. Pollution

Control Board. The respondent had raised a demand of

Rs, 4.37 lacs ( including interest of Rs. 1.56 lacs )

towards water cess for the period from April 1978 to

December 1988. The Company challenged the said

demand. The Appellate Authority set aside the interest

demand and confirmed the cess demand. The Company

Subsequently challenged the said order before Allahabad

High Court. The Hon’ble High Court stayed half of the

demand subject to Company furnishing bank guarantee

as a security and directed the Company to pay the

balance amount which has been paid.

BHARAT SUGAR MILLS

Sr.

No.

Name of the


Court where

pending Suit/

Petition No.

Amount

involved ( Rs.

In Lacs)



Industries Ltd. (Bharat

Sugar Mills) Vs.

Agriculture Produce

Market Committee

Patna High Court

First Appeal No.

414/1985

Rs.2.06 Lakhs The Market Committee Gopalganj issued demand

notice for the period from 15.11.76 to 31-05-77 on

sugarcane purchased by the Company. The Company

filed Suit No. 52 of 1978 in the court of Sub-Judge,

Gopalganj and the Court ultimately dismissed Suit.

The Company by this Appeal has challenged the

judgment and decree dated 31.05.1985 in the High

Court passed by the Sub-Judge, Gopalganj

dismissing the Suit filed by the Company.

2. Bihar Sugar Mills

Association and others Vs.

State of Bihar & others

High Court, Pana

Writ Petition (CWJC)

No.4613 of 2003 &

13614 of 2006

Not

ascertainable

The Association (The Co. being the party for

Sidhwalia & Hasanpur Unit) filed a writ petition

challenging the demand of electricity duty

chargeable @6% on the value of energy as per

Notification No.SO137 dated 21.10.2002, generated

for own consumption. During the pendency of the

Petition the Bihar Government through Notification

dated 04.03.2005 has amended the earlier

Notification and imposed electricity duty @6% of

the value of energy which shall be equivalent to the

energy tariff as fixed by BSEB. The said Notification

was also challenged by the Bihar Sugar Mills


272

Sr.

No.

Name of the


Court where

pending Suit/

Petition No.

Amount

involved ( Rs.

In Lacs)


Associations, in which the company is one of the

party. There is no further demand made by the

Authorities till date.

Petition has been admitted.


Ind. Ltd. (Bharat Sugar

Mills & New India Sugar

Mill) vs. Union of India

High Court of

Kolkata writ Petition

No. 5045 (W) & 5046

(W) / 1974

Rs. 45.81

Lakhs

The Company has for its Unit namely Bharat Sugar

Mills & Hasanpur Sugar Mills has challenged the

levy sugar price fixed for sugar season 1973-74 and

the High Court, Kolkata by way of interim order has

allowed additional levy price provided the Company

furnished a bank guarantee. According the Company

has furnishes a bank guarantee of Rs.41.53 lakhs

towards additional levy price.


Ind. Ltd. (Bharat Sugar

Mills) vs. Union of India

High Court, Patna

CWJC/4452/1999

Rs. 46.51

Lakhs

The Company had realized additional levy sugar

price in terms of order dated 8.08.83 of the Delhi

High Court for the sugar season 1982-83. Though

the Company had refunded the said additional levy

sugar price in terms of order dated 19.08.1998 of the

Hon’ble Supreme Court, the Government of India

through Ministry of Food and Consumer Affairs

(Department of Sugar & Edible Oil) New Delhi

through its letter dated 15.02.1999 raised the demand

towards interest on the aforesaid additional amount.

The said demand has been challenged by the

Company in these proceedings. The said demand has

been stayed by the High Court, Patna by its order

dated 13.5.1999


Sr.

No.

Name of the

Party

Claim amount (Rs.

In Lakhs)

Court /

Fourm /Case

No.

Brief Particulars & Current Status

1. Upper Ganges

Sugar &

Industries Ltd.

(New India Sugar

Mills) Vs Asst.

Commissioner,

Leharia Sarai

1.44 Lakhs Patna High

Court

The Company challenged before the Patna High Court, the

order passed by the ACGM Court, Rosera wherein the lower

Court has confirmedthe demand raised by the Asst

Commissioner, Laheriasarai against the destruction of

molasses in August 1987 due to floods. The writ petitionis

pending for admission.


273

C. EXCISE LAW CASES


Sr.N

o.

Authority / Court Amount

involved (Rs. In Lacs)


1. Assistant Commissioner,

Moradabad

Disallowed

modvat credit

of Rs. 1.53

lacs

Our Company received a Show Cause Notice No. (17) (15)

32/OFF/Adj/95/416 dated 22.01.95 stating that credit taken by our

Company on certain goods is inadmissible as such goods do not fall

within the definition of ‘admissible capital goods’. The Asstt.

Commissioner in its order disallowed modvat credit of Rs.1.53 lacs and

imposed penalty of Rs.10000. On an appeal by the Company, the

Commissioner (Appeals) has remanded the case to the Asstt.

Commissioner for re-examination and de novo adjudication.

2. Commissioner (Appeals),

Meerut (O.I.A. No. 10-

CE/MRT-II/2004)

Duty demand

Rs.0.26 lacs

penalty

Rs.0.45 lacs

Disallowed

Modvat Credit

Rs. 1.45 lacs

Our company received a show cause notice No. 20/UGS/97/580 dated

24.06.97 stating that credit taken by the Company on certain goods is

inadmissible as such goods do not fall within the definition of

‘admissible capital goods’ and also demand duty on storage loss of sugar.

The Asstt. Commissioner in its Order-in-original No. 69/MBD/Dem/01-

02 dated 16.04.02 confirmed duty of Rs.26350 and imposed penalty of

Rs.45000 and disallowed modvat credit of Rs.1.45 lacs. This appeal is

filed by our Company against the order of Asstt. Commissioner Dated

16.04.02. In the said appeal the Commissioner (Appeals) has admitted

the appeal subject to pre deposit of Rs.100000. Penalty and demand of

Rs. 26350 are stayed.


Meerut

Appeal No. 217-

CE/MRT/2000

Dated27.3.2000

Disallowed

Modvat credit

Rs.2.40 lacs

Our Company received a show cause notice No. 20/UGS/97/374 dated

04.06.98 stating that credit taken by our Company on certain goods is

inadmissible as such goods do not fall within the definition of admissible

‘inputs’. The Asstt. Commissioner In its order (O.I.O.No.75/MBD/99

dated 24.12.99) disallowed credit of Rs.2.40 lacs which was upheld by

the commissioner (Appeals), In the appeal (Appeal No. E/1016/03-

NB(SM) before the CESTAT, the matter has been remanded to the

commissioner (Appeals) for re-adjudication by the CESTAT’s order No.

A/1417/03 dated 17.11.03

4. High Court of Allahabad Rs. 0.31 lacs This appeal is filed by our Company against the order of CESTAT dated

11.01.2004.

Our Company received a show cause notice No. 20/Seohara/SCN/99/490

dated 21.12.99 stating that credit taken by our company on certain goods

is inadmissible ‘capital goods’. The Dy. Commissioner in its order

(O.I.O. No.37/MBD/2000 dated 5.10.2000) confirmed the show cause

notice demand of Rs.31215 which was upheld by the commissioner

(Appeals) by its order dated 13.10.2003. The CESTAT has confirmed the

demand by its order no. A/1399-1401/04/NB(SM) dated 11.10.2004. Our

company has filed an appeal in the Allahabad High Court against the

CESTAT order.

5. High Court of Allahabad Rs.1.83 lacs This appeal is filed by our Company against the order of CESTAT dated

11.10.2004.

Our Company received 3 show cause notice bearing Nos.

20/Seo/SCN/99/212 dated 14.03.02, No.20/Seo/SCN/DPR/99/632 dated

6/07/02 and no. V(30) 21/DEM/2001/1513 dated 25/05/01 stating that

credit taken by the Company on certain goods is inadmissible as such

goods do not fall within the definition of admissible ‘Capital Goods’. A

single order no. 39-42/MBD/DEM/01-02 dated 30.10.2001 was passed

by the Asstt. Commissioner Allowing the entire credit of Rs.217160. On

an appeal by the department, the Commissioner (Appeals) allowed

Modvat credit to Rs. 14000 and confirmed rest of duty demanded in the

show cause notice. The CESTAT, on an appeal (Appeal No. E/3680/04,

E/82/04 & E/83/04-NB(SM) by the Company, by its order dated

11.10.2004 has allowed credit of Rs. 20000 and confirmed the balance

demand of Rs.182624. Our Company has filed an appeal in the

Allahabad High Court against the CESTAT order.

6 High Court of Allahabad Disallowed The Company has filed an appeal before High Court against the


274

Sr.N

o.


involved (Rs.

In Lacs)


credit of Rs.

1.44 lacs

CESTAT Final order No. 1009/07-SM/(BR) 1.06.2007.

Our Company received a show cause notice no.

V(30)231/DEM/2001/5066 dated 3.7.02 stating that credit taken by the

company on certain goods is inadmissible as such goods do not fall

within the definition of admissible ‘capital goods’. The Deputy

Commissioner by its order disallowed credit of Rs. 151198 and imposed

penalty of Rs. 147822 and interest. The commissioner (Appeals) by order

No. 62/CE/MRT-II/05 dated 3.05.2005 disallowed credit in respect of

welding electrodes for Rs. 1.44 lacs and set aside the penalty. Our

Company has filed an Appeal No. E/2548/05 in CESTAT, Delhi. In the

interim Order CESTAT has directed the Company to deposit the duty

under dispute which has been paid.

CESTAT has rejected the appeal vide their final order no.1009/07-

SM/(BR) 01.06.07 and upheld the demand passed by the Commissioner

Appeals, Meerut II.

7. CESTAT, New Delhi

E/S/355/06 in E/399/06

Disallowed

Credit Rs.1.19

lacs Penalty

Rs.1.19 Lacs

The company was granted stay from CESTAT vide their stay order no.

383/06-SM/(BR) after pre deposited Rs.0.35 lacs against the order passed

by the Commissioner (Appeals) wherein the Commissioner (Appeals)

has vide its order dated 19.10.2005 dismissed the Appeal filed by the

Company. The Commissioner (Appeals) has upheld the order dated

17.02.2005 passed by the adjudicating officer Dy. Commissioner.

Our Company received a show cause notice No. V(30)269/Dem/02/7779

dated 03.01.2003 stating the credit taken by our company on certain

goods is inadmissible as such goods do not fall within the definition of

admissible ‘capital goods’. The Deputy Commissioner by its order-in-

original no. 212(3/03) Dem/03/05 dated 17.02.2005 disallowed credit of

Rs. 1.19 lacs and imposed penalty for an equal amount along with

interest thereon.


E/S/153-154/06

Disallowed

Credit Rs.1.66

lacs Penalty

Rs.2.94 Lacs

The company was granted stay from CESTAT after pre deposited Rs.

0.50 lacs against the order passed by the Commissioner (Appeals)

Meerut wherein, the Commissioner (Appeals) has partly allowed the

Appeal filed by the Company allowing the credit of Rs.1.28 lacs which

was disallowed by the order dated 17.02.2005 passed by the adjudicating

officer, Deputy Commissioner.

Our Company received a show cause notice No. V(30)376/Dem/02/99

MBD-I/34/M-II/02 dated 08.03.2003 stating the credit taken by our

company on goods such as Iron material , V. Belt Welding electrode etc.

is inadmissible as such goods do not fall within the definition of

admissible ‘capital goods’ on which credit is admissible.

The Deputy Commissioner by its order-in-original no. 212(3/03)

Dem/03/05 dated 17.02.2005 confirmed the show cause notice duty

demand of Rs. 2.94 lacs and imposed penalty for an equal amount along

with interest thereon.


Appeal No.E/172/06/MBS

Disallowed

credit Rs. 2.23

lacs Penalty

Rs. 3.25 lacs

The Company was granted stay order no 403/404/06/SM dated 17.4.06

from CESTST after pre-deposit 0.50 lacs against draft O-I-A no.

243/244/EE/MRT-II/05 dated 19.10.05 passed by the Commissioner (A),

Meerut., the Commissioner (Appeals) has partly allowed the appeal filed

by the Company allowing the credit of Rs. 1.02 lacs which was

disallowed by the order dated 17.2.2005 passed by the adjudicating

officer, Deputy Commissioner.

Our Company received a Show Cause Notice No. V(30)64/Dem/03

dated 29.8.03 stating that Credit taken by our Company on certain goods


admissible ‘capital goods/input’. The Dy. Commissioner by order-in-

original No. 211(64/Dem/03/05) dated 17.2.2005 confirmed demand of

Rs. 3.25 lacs and imposed penalty of equal amount and interest.

10. CESTAT, Delhi (E/158/2005) Disallowed

Credit Rs. 7.87

This Appeal filed by our Company against the order of Commissioner (

Appeals) dated 23.11.2004.


275

Sr.N

o.


involved (Rs.

In Lacs)


lacs

Penalty Rs.

8.66 lacs

Our Company received a Show Cause Notice V(30)374/Dem/02/306

dated 7.2.2003 stating that Credit taken by the Company on certain goods


admissible ‘inputs’/’capital goods’. By its order dated 31.12.2003, the

Additional Commissioner confirmed duty demand of Rs. 8,65,902 and

imposed penalty of equal amount along with interest thereon. In appeal

the commissioner (Appeals) by its order dated 23.11.04 confirmed duty

demand of Rs. 7,86,731 and penalty of Rs. 8,65,902. Against this order

the Company has filed an appeal No. E/158/2005 along with stay

application before the CESTAT New Delhi . The CESTAT vide its order

No. 114/05-13 dated 15.2.2005 stayed the demand and penalty subject to

pre-depositing Rs. 1 lac which has been duly complied with.

11 High Court of Allahabad

(Appeal No. 13/2004)

Rs. 2.69 lacs This Appeal filed by our Company against the order of CESTAT, New

Delhi dated 28.01.2004.

Our Company received a Show Cause Notice No. V(15)(17)

143/Off.96/255 dated 3.04..96 stating that Credit taken by the Company

on certain goods is inadmissible as such goods do not fall within the

definition of admissible’ capital goods’. By its order dated 17.7.02, the

Asst. Commissioner confirmed duty demand of Rs. 2.74 lacs and

imposed penalty of Rs.1,25,000. On appeal preferred by the Company,

the Commissioner (Appeals) confirmed duty of Rs. 2.74 lacs and

imposed a reduced penalty of Rs. 25,000. Our Company filed an appeal

before CESTAT New Delhi challenging the order of the Commissioner

(Appeals). The CESTAT vide its order No. A/187/04-NB(SM) dated

28.1.04 has allowed credit of Rs. 5000 and confirmed the balance. The

penalty was also set aside. The entire demand of Rs. 2.69 lacs was

reversed by the Company under protest. Our Company has filed an

appeal No. 13/2004 with High Court Allahabad.


Meerut

(Appeal No.

47/CE/Appeal/MRT/02

CESTAT New Delhi

Duty demand

Rs. 2.49 lacs

Penalty Rs.

0.50 lacs

0.33 lacs

This Appeal is filed by our Company against the order of Jt.

Commissioner confirming duty demand of Rs. 2.49 lacs and imposing

penalty of Rs. 50,000.

Our Company received Show Cause Notice No. V(15)

Off/Adj/Noida/67/02/5979 dated 22.03.02 as regards storage wastage of;

4983.90 Qtls. of molasses and demanding duty of Rs. 2.49 lacs along

with penalty and interest thereon. The Jt. Commissioner confirmed the

show cause notice duty demand and imposed penalty of Rs. 50,000. Our

Company has filed an Appeal dated 2.9.2002 to Commissioner

(Appeals), Meerut. The order is awaited.

Our Company has also filed applications for remission of duty on

molasses wastage. The Commissioner, Meerut vide order No. 01/

Comm/MRT-II/2003 dated 10.11.2003 has rejected the remission

application and confirmed the duty of Rs. 0.33 lacs on part of the

quantity covered under above application.

An appeal No. E/810/NB dated 15.10.2004 was filed before CESTAT

New Delhi challenging the order of the Commissioner Excise, Meerut.

The CESTAT New Delhi vide its order No. A/1404/04/NB dated

9.9.2004 has remanded the matter to Commissioner for fresh decision.

The Commissioner by its order dated 24.10.2005 has rejected the

remission application and confirmed the duty of Rs. 0.33 lacs. The

Company has filed an appeal before the CESTAT on 23.1.2006. The

same is pending for the hearing.

13. Commissioner (Appeals), Duty Demand This Appeal is filed by our Company against the order of Deputy


276

Sr.N

o.


involved (Rs.

In Lacs)


Meerut

(Appeal No.11/04)

CESTAT, New Delhi

Rs.1.54 lacs

Rs.0.35 lacs

Commissioner confirming duty demand of Rs.1.54 lacs along with

interest.

Our Company received a Show Cause Notice No. 20/Seo/SCN/99/488

dated 17.12.99 as regards wastage of 3074.07 qtls of molasses and

demanding duty of Rs. 1.54 lacs. The Deputy Commissioner confirmed

the show cause notice duty demand and imposed interest thereon.

Against the order of the Deputy Commissioner of Company has filed an

Appeal ( No. 11/04) to Commissioner ( Appeals), Meerut dated

23.01.2004. The order is awaited.

Our Company has also filed applications for remission of duty on

molasses wastage. The Commissioner, Meerut vide its order No.

01/Comm/MRT-II/2003 dated 10.11.2003 has rejected the remission

application and confirmed the duty of Rs. 0.35 lacs on part of the

quantity covered under above application.

An appeal No.E/810/NB dated 15.10.2004 was filed before CESTAT

New Delhi, challenging the order dated 10.11.2003.

The CESTATE New Delhi vide its order No. A/1404/NB dated 9.9.2004

has remanded the matter to Commissioner for fresh decision. The

Commissioner by its order dated 24.10.2005 has rejected the remission

application and confirmed the duty of Rs. 0.35 lacs. The company has

filed an appeal before the CESTAT on 23.1.2006. The same is pending

for the hearing.

14. Additional Commissioner

(Meerut)

Duty Demand-

Rs. 17.06 lacs

The Company had filed an appeal before the Commissioner(Appeals)

Meerut against the order of Additional Commissioner confirming duty

demand of Rs. 17.06 lacs along with interest.

Our Company received Show Cause Notice No. 20/UGS/95/410 dated

6.06.95 as regards duty on 20,076 Qtls of sugar lost due to fire and

demanding duty of Rs. 17.06 lacs The Additional Commissioner by its

order in original dated 30.6.2005 received by the Company on 12.1.2006

confirmed the duty demand in the show cause notice. The Company has

filed an appeal against the said order before the Commissioner (

Appeals). Our Company has filed a remission application before the

Commissioner Meerut which is still pending for final disposal.

The Commissioner Appeals by its order dated 28.4.2006 remand the

matter to Additional Commissioner.

15. CESTAT New Delhi

Appeal No. 795/06

Demand for

redemption Rs.

30.00 lacs

Duty demand-

Rs. 4.74 lacs

Penalty- Rs.

5.00 lacs

The Company has filed an appeal before CESTAT along with stay

application. The Company was granted stay from CESTAT after pre-

deposited Rs. 4.00 lacs against the order dated 30.11.2005 passed by the

Commissioner ( Appeals) upholding the order passed by the Asst.

Commissioner. Our Company received a Show Cause Notice No. V(30)

Seiz/Off/28/2002/4990 dated 28.06.02 alleging discrepancy in season

wise sugar stocks. The Asst. Commissioner by order No. 135/MBD/AUG

dated 11.8.2005 has confiscated 5577 Qtls of sugar providing for

redemption opportunity to our Company by paying Rs.30 lacs and

demanding duty of Rs. 4.74 lacs. The Asst. Commissioner has further

imposed penalty of Rs. 5 lacs and interest thereon.


E/1280-84, 1370/2006

1923/2006

Disallowed

credit of Rs.

16.10 lacs

The Company has filed the appeal before CESTAT New Delhi and was

granted stay vide order dated 17.05.06 in appeal Nos. E/1280-84 after

pre-deposit Rs.1.50 lacs against the order passed by Commissioner

(Appeals) Meerut dated 30.1.2006 . The Company has received 7 show


277

Sr.N

o.


involved (Rs.

In Lacs)


Penalty Rs.

16.10 lacs

cause notice stating that the credit of Rs. 17.83 lacs availed by the

company on certain items are not admissible as such goods do not fit

within the definition of capital goods or inputs.

Asst. Commissioner Moradabad has allowed part of Appeal by Rs. 1.73

lacs and confirmed the balance show cause notice demand duty of Rs.

16.10 lacs and also imposed penalty of equal amount along with interest

thereon, against which the Appeal before the Commissioner (Appeals)

Meerut was filed. The Commissioner (Appeals) Meerut –II upheld the

order passed by Dy. Commissioner Moradabad.

17 CESTAT New Delhi

Appeal No. E/2860-2861/06

of 2006

Disallowed

Credit of Rs.

0.87 lacs

Penalty Rs.

0.50 lacs

The Company has filed an appeal before CESTAT New Delhi and was

granted stay from CESTAT by their stay order No. 1164-65/06 dated

6.10.2006. The Company has received show cause notice stating that the

credit taken by the company of Rs..3.38 lacs on certain items are

inadmissible as such goods do not fall with the definition of capital goods

or inputs on which the Credit is admissible. Dy. Commissioner

Moradabad in its order dated 21.12.2005 has allowed part of the disputed

credit availed by the Company of Rs. 2.51 lacs and confirmed the

balance demand of Rs. 0.87 lacs and also imposed penalty of Rs. 0.50

lacs

The Commissioner (Appeals) has by its stay order dated 8.3.2006

directed the Company to pre-deposit 50% of the duty confirmed within

two weeks and has waived the pre-deposit of the payment of penalty

amount till the disposal of the appeal. Commissioner (Appeals) Meerut

has disposed off the appeal and upheld the demand by their O.I.A. No.

125-126CE/MRT-II/06 dated 30.6.06.


Appeal No. E/2860-2861/06

of 2006

Disallowed

credit of Rs.

2.65 lacs and

Penalty of Rs.

0.50 lacs

The Company was granted stay from CESTAT by their stay order No.

1164-65 /06 dated 6.10.06. The Company has received show cause notice

stating that the credit taken by the Company of Rs. 3.36 lacs on certain

items are inadmissible as such goods do not fall with the definition of

capital goods or inputs on which the Credit is admissible. Asst.

Commissioner Moradabad in its order dated 23.12.2005 has partly

allowed the credit of Rs.0.71 lacs and confirmed the balance demand of

Rs.. 2.65 lacs and also imposed penalty of Rs. 0.50 lacs

The Commissioner( Appeals) has by its stay order dated 8.3.2006

directed the Company to pre-deposit 50% of the duty confirmed within

two weeks and has waived the pre-deposit of the payment of penalty till

the disposal of the appeal. Commissioner Appeals has disposed off the

appeal and upheld the demand passed by Dy. Commissioner Moradabad

vide their O.I.A. No. 125-126-CE/MER-II/06 dated 30.6.06.

19. CESTAT New Delhi Disallowed

Credit Rs. 7.90

lacs

Penalty Rs.

7.90 lacs

The Company is in process of filling an appeal before CESTAT

challenging the order dated 30.7.2007 passed by the Commissioner (

Appeals) upholding the order passed by the Addl. Commissioner Meerut-

II . Our Company received a show cause notice No. V(15)Adj/M-

II/UGS/ 3/06/4875 dated 2.5.06 stating that the credit taken by the

Company on certain items are inadmissible as such goods do not fall with

the definition of capital goods or inputs on which the Credit is

admissible.. The Addl. Commissioner Meerut II confirmed the demand

Rs. 8.17 lacs and imposed penalty for equal amount along with interest.

The Commissioner (Appeals ) Meerut allowed credit of Rs. 27020 and

the reduced penalty with the same amount vide their in order in appeal

No. 183-184 CE/MRT-II/07 dated 30.7.2007 after pre-deposited Rs.

4.09 lacs .


Disallowed

credit Rs. 0.07

The Company has filed an appeal along with stay application before the

CESTAT and obtained stay order no 632/07 dated 27/07/07 against


278

Sr.N

o.


involved (Rs.

In Lacs)


Appeal No. 1397 of 2007 –

SM(BR)

& Penalty Rs.

0.10

O.I.A. No. 78-CE/MRT-II/2007 dated 30.3.2007.

The Company received a show cause notice No. V(30)

Dem/MBD/553/06 9494 dated 17.8.06 for Rs. 94361.00 stating that the

credit taken by the Company on certain items are inadmissible as such

goods do not fall with the definition of capital goods or inputs on which

the Credit is admissible.Dy. Commissioner Moradabad allowed Rs.

87209.00 and disallow Rs. 7152.0 and imposed penalty Rs. 10000.00.

The Commissioner (Appeals) Meerut upheld the order (passed by Dy.

Commissioner Moradabad) vide their O.I.A. No. 78-CE/MRT-II/2007

dated 30.3.2007.


Appeal No. 464-465 of 2007 -

SM

Disallowed

credit Rs. 4.25

lacs

Penalty Rs. 1

Lacs

The Company has filed appeal along with stay application before the

CESTAT New Delhi against the O.I.A. No. 216-217 –CE/MRT-II/2006

dated 30.11.06. The Company was granted stay order from CESTAT

after pre-deposited Rs..0.50 lacs of penalty amount vide their stay order

No.314-315/07-SM(BR)

The Company received show cause notice No. V(30)

Dem/UGSIL/454/MBD/05/8001 dated 14.12.2005 stating that the credit

taken by the Company on certain items are inadmissible as such goods do

not fall with the definition of capital goods or inputs on which the Credit

is admissible.. The Deputy Commissioner Moradabad vide its order No.

96-MBD/2006 dated 14.3.2006 had upheld the demand and also imposed

penalty Rs. 1 lacs. The Company filed an appeal before Commissioner

Appeal Meerut and obtained stay order after pre deposited Rs. 2.12 lacs.

Commissioner (Appeals) Meerut has disposed off the appeal and has

uplehd the order passed by Dy. Commissioner, Moradabad.

22 CESTAT New Delhi

Appeal No. 464-465 of 2007 –

SM

Disallowed

credit Rs. 3.58

lac

Penalty Rs.

1.00 lacs

The Company has filed an appeal along with stay application before the

CESTAT New Delhi against the O.I.A. No. 216-217 –CE/MRT-II/2006

dated 30.11.06. and was granted stay order from CESTAT after pre-

deposited Rs..0.50 lacs of vide their stay order No.314-315/07-SM(BR).

The Company received show cause notice No. V(30)

Dem/UGSIL/456/MBD/05/8003 dated 14.12.2005 stating that the credit

taken by the Company on certain items are inadmissible as such goods do

not fall with the definition of capital goods or inputs on which the Credit

is admissible.. The Deputy Commissioner Moradabad vide its order No.

90-MBD/2006 dated 14.3.2006 had upheld the demand and also imposed

penalty Rs. 1.00 lacs. The Company filed an appeal before

Commissioner Appeal Meerut and obtained stay after pre deposited Rs.

1.79 lacs up to final hearing. Commissioner (Appeals) Meerut has

disposed off the appeal and has upheld the order passed by Dy.

Commissioner, Moradabad.


&

Revision Authority

Govt. of India

Disallowed

remission Rs.

0.32 lacs

Penalty

Rs.0.10

Lacs

The Company has filed an appeal before the CESTAT New Delhi against

the order no.17/Commissioner/MRT dated 14/03/2006 passed by

Commissioner Meerut rejecting the application on 366 qtls of sugar

burnt in fire in the Company’s Godown.

The company has also received show cause notice No. V(30)

01/Dem/U.G./2006/92 No.01/MBD/2006 dated 6/01/06, regarding

remission of duty on 366 qtls. Sugar burnt in godown Dy. Commissioner

MBD in its O.I.O no. 74/MBD/2007 dated 25/01/07 has confirmed duty

demand Rs.31,732 and imposed Penalty of Rs 10,000.

The company filed an appeal before Commissioner (Appeal) Meerut

regarding remission of duty on 366 qtls. sugar burnt in godown.

Commissioner (Appeal) upheld demand vide O.I.A. No. 117-CE/MRT-

II/2007 dated 16-05-2007. The company filed and applied before the

revision Authority Govt.of India. Both appeals are pending for hearing


279


Sr.

No.

Authority/Court Amount

involved (Rs. In lacs)

Nature of the Case and particulars

1. Commissioner ( Appeals)

Ghaziabad

(Appeal No. 423-

CE/MRT/97)

Duty Demand

– Rs. 2.50

lacs (

including

penalty of Rs.

0.20 lacs)

Our Company received a Show Cause Notice No. V(30) 125/MOD/95/2107

dated 7.04.95 regarding credit taken on original invoices. The Asst.

Commissioner , Moradabad in its order-in-original No. 3901 dated June

18,1996 up-held the demand and also imposed the penalty of Rs. 20,000/-.

The same was confirmed in an appeal filed by the Company ( No. 423-

CE/MRT/97) dated 25.03.1997 before the Commissioner (Appeals)

Ghaziabad. CESTAT in its order dated August 31, 2001 in Appeal No.

E/1235/97-NB(SM) filed by the Company has remanded the matter to

Commissioner (Appeal) for consideration.

2. CESTAT New Delhi

E/724/2006

Duty demand

Rs. 3.13 lacs

Penalty Rs.

3.13 lacs

The Company filed an appeal before CESTAT against the order passed by the

Commissioner (Appeals), Meerut. The Commissioner (Appeals) has upheld

the order passed by the Asst. Commissioner.

Our Company received Show Cause Notice No.

V(30)/DEM/MBD/718/2004/5431 dated 2.12.2004 stating that Credit taken

by our Company on certain items is inadmissible as such goods do not fall

within the definition of ‘ capital goods’ on which credit is admissible. The

show cause notice demanded a duty of Rs. 3,13,186 along with penalty and

interest. The Asst. Commissioner by its order No. 131/DEM/MBD/05 dated

27.7.05 has confirmed the demand and imposed penalty of equal amount

along with interest thereon.

The CESTAT by its order dated 13.4.2006 has passed an unconditional stay

order waiving the pre-deposit of the duty demand and the penalty.


280

Sr.

No.


involved (Rs.

In lacs)


3. CESTAT New Delhi

E/3764-65/2006

Disallowed

credit Rs.

4.27 lacs

Penalty

Rs.1.00 lacs

The Company has filed an appeal before CESTAT against the order passed by

the Commissioner (Appeal), Meerut and was granted stay after pre-deposited

Rs. 1.50 lacs Our Company received a Show Cause Notice No.

V(30)305/DEM/MBD/2005/5352 / 1/10/2005 of Rs. 4.27 Lacs stating that

credit taken by our company on certain items is inadmissible as such goods

do not fall definition of capital goods on which credit admissible .The Asst.

Commissioner by its O.I.O No. 38/MBD/2006 dated 31.1.2006 confirmed the

demand and imposed penalty of Rs. 1 lacs along with interest thereon.

The Company has filed an appeal before the Commissioner ( Appeal) Meerut

Challenging the order dated 31.1.2006 passed by Dy. Commissioner,

Moradabad. The Commissioner (Appeal) upheld the demand passed by Dy.

Commissioner Moradabad.

4. CESTAT New Delhi

E/3764-65/2006

Disallowed

credit Rs.

4.27

Penalty Rs.

1.00

The Company has filed an appeal before CESTAT against the order passed

by the Commissioner (Appeal), Meerut and was granted stay after pre-

deposited Rs. 1.50 lacs Our Company received a Show Cause Notice No.

V(30)307/DEM/MBD/2005/5356 dated 7/10/2005 of Rs. 4.27 lacs stating that

credit taken by our company on certain items is inadmissible as such goods

do not fall definition of capital goods on which credit admissible . The Asst.

Commissioner by its O.I.O No. 33/MBD/2006 dated 31.1.2006 confirmed the

demand imposed penalty of Rs. 1 lacs along with interest thereon.

The Company has filed an appeal before the Commissioner (Appeal) Meerut


Moradabad. The Commissioner (Appeal) upheld the demand passed by Dy.

Commissioner Moradabad.

5. CESTAT New Delhi

E/454-455/2007

Disallowed

credit Rs.0.58

Penalty Rs.

0.10

The Company has filed an appeal before CESTAT against the order passed

by the Commissioner (Appeal), Meerut and was granted unconditional stay .

Our Company received a Show Cause Notice No.

V(30)305/DEM/UGSIL/35/06/808 dated 31/1/2006 stating that credit taken

by our company on Iron Material is inadmissible. The Dy. Commissioner by

its O.I.O No. 105/MBD/2006 dated 18.4.2006 confirmed the demand and

imposed penalty Rs. 10000.00

The Company has filed an appeal before the Commissioner (Appeal) Meerut


Moradabad. The Commissioner Appeal upheld the demand passed by Dy.

Commissioner Moradabad vide O.I.A. No.213-214-CE/MRT-II/2006 dated

30.11.2006.

6. CESTAT New Delhi

E/454-455/2007

Disallowed

credit Rs.0.85

Penalty Rs.

0.10

The Company has filed and appeal before CESTAT against the order passed

by the Commissioner (Appeal), Meerut and was granted unconditional stay .

Our Company received a Show Cause Notice No.

V(30)/DEM/UGSIL/30/06/537 dated 20/1/2006 stating that credit taken by

our company on Iron Material is inadmissible. The Dy. Commissioner by its

O.I.O No. 106/MBD/2006 dated 18.4.2006 confirmed the demand imposed

penalty Rs. 10000.00

The Company has filed an appeal before the Commissioner ( Appeal) Meerut


Moradabad. The Commissioner Appeal upheld the demand passed by Dy.

Commissioner Moradabad vide O.I.A. No.213-214-CE/MRT-II/2006 dated


281

Sr.

No.


involved (Rs.

In lacs)


30.11.2006.

7. CESTAT New Delhi Disallowed

credit Rs.

11.63

Penalty Rs.

11.63

The Company in process of filling as appeal before CESTAT challenging the

order dated 30.7.2007 passed by the Commissioner ( Appeals) upholding the

order passed by the Addl. Commissioner Meerut-II . Our Company received a

show cause notice No. V(15)Adj/M-II/UGS/38/06 dated 28.4.06 stating that

the credit taken by the Company on certain items are inadmissible as such

goods do not fall with the definition of capital goods or inputs on which the

Credit is admissible.. The Addl. Commissioner Meerut confirmed the demand

vide their O.I.O No. 35/ADC/M-II/2006 dated 30.11.2006. The Company

filed an appeal before Commissioner ( Appeals) Meerut-II against its order.

The Commissioner (Appeals) granted stay after pre-deposited 50% amount

of total demand. The Commissioner (Appeals) upheld the demand passed by

Addl. Commissioner , Meerut vide their in order appeal No. 183-184 –

CE/MRT-II/2007 dated 30.7.2007.

8. CESTAT New Delhi

E/2269/2007

Disallowed

credit Rs.

2.75

Penalty Rs.

0.25

The company has filed an appeal before CESTAT New Delhi challenging the

order passed by the Commissioner (Appeals) Meerut . The Company

received a show cause notice No.V(30)Dem/MBD/268/06/9373 dated

3.10.2006 stating that the credit availed by the Company on Iron are not

admissible. The Dy. Commissioner Moradabad upheld the demand.

The Commissioner (Appeals) upheld the demand (passed by Dy.

Commissioner Moradabad) by their in O.I.A No. 126-CE/MER-II/2007 dated

23.5.2007.

BHARAT SUGAR MILLS

Sr.N

o.


involved (Rs.

In Lacs)


1. CESTAT, Kolkata

Service Tax

demand

Rs.1.93

This Appeal is filed against the order of Commissioner (Appeals) dated

24.02.2005.

Our Company received a Show Cause Notice No. V-4 (30) 14-ST/

C&F/99/2364 dated 10.06.2002 from Asstt. Commissioner demanding

service tax amounting to Rs. 1.93 lakhs along with interest and penalty

thereon alleging that our Company has failed to collect and deposit

service tax on discounts to sugar selling agents. The Dy. Commissioner

has confirmed the show cause notice demand and imposed equal amount

of penalty and interest. In an appeal preferred by the Company, the

Commissioner (Appeals) by order No. 82/PAT/ CEX/appeal/2005 dated

24.02.2005 has confirmed the demand of Rs. 1.93 lakhs but set aside

penalty and interest. Our Company has filed an appeal to the CESTAT

against the Order in Appeal confirming the service tax demand.

2. High Court of Kolkata CR

No.3043(W)of 1981

Duty

demanded –

Rs.1.19

This Appeal is filed against the order of the Collector of Central Excise

dated 17.07.1980.

Our Company received a Notice of demand dated 04.03.1977 from

Inspector, CE, Sidhwalia (Gopalganj) Asstt. Commissioner demanding

inadmissible rebate on sugar production amounting to Rs. 1,19,365.50.

The show cause notice was confirmed by the Asstt. Collector. In an

appeal preferred by the Company, the Collector of Central Excise

(Appeals) by its order dated 17.07.1980 dismissed our Company's appeal

and upheld the demand. Our Company went in appeal before the Kolkata

High Court, which by its interim order order dated 30.04.1981 granted a

stay on the order of CCE (Appeals) and by its order dated 20.05.1981

directed our Company to furnish a bank guarantee of Rs. 75,000 which

our Company has furnished.

3. CESTAT, Kolkata

SP-518/06 Appeal EDM-

382/06

Rs.2.53 The Unit received a Show Cause Notice No. MOI/92-93/88 dated

24.02.1993 regarding the payment of duty on 14656.33 Qtls. Of molasses

destroyed as per order of State Excise Authority.


282

E. Land/Property related Disputes /Cases

1. The Company by agreement dated 7.11.1992 purchased land admeasuring 4.05 bigha situated at

Gata No.2233 Survey No. 2671/2.2671/3 Gram Khalilpur ( Pergana Seohara ), Tehsil Dhampur

Dist. Bijnor from Ram Chandra Singh, Ghanshyam Singh, Bhudev Singh Devendra Kumar,

Yashpal Singh. The said agreement is pending registration.

The Khalilpur Gram Sabha has claimed ownership on the said property. The property is since then

pending for registration.

2. The Company was served notice under U.P. Imposition of Ceiling of Land Holding Act by the

State Government after the introduction of the U.P. Zamindari Abolition and Land Reforms Act,

1956, The Company had challenged the said notice before the Allahabad High Court vide Writ

Petition No. 8239/1980. The Court in its order dated 9.12.1996 has remanded the case before the

concerned Land Ceiling Authority, Bijnor.

3. The Company has been served with the notices under the provisions of the U.P. Zamindari

Abolition and Land Reforms Act,1956 by the Addl. Collector (City) Ghaziabad for acquiring of

additional land admeasuring 9.31 acres of land at village Sahapur Fagota, Pargana Dashana, Tehsil

Hapur Dist. Ghaziabad. The Company has filed its reply to the said notices. The Addl. Collector

(City) Ghaziabad has passed Ex-party orders dated 14.8.2006, acquiring the total land. The

company has filed appeal before the Divisional Commissioner Meerut against the order of Addl.

Collector (City) Ghaziabad.

4. Bharat Sugar Mills, was served a notice to declare 241.85 Acres of Land related to Company’s

farm as surplus land under the provisions of Bihar Land Reforms (Fixation of Ceiling Area &

Acquisition of Surplus Land) Act 1951. Against this declaration the Company filed a writ petition

before Patna High Court, and the Hon’ble High Court in its order dated 08.01.0998 remanded the

matter to S.D.O. Gopalganj for fresh hearing and the matter is pending.

5. Hasanpur Sugar Mills has filed 7 number of cases before the Civil Court, Rosera,

Distt.Samastipur, against encroachment of illegal possession of the land belonging to the

Company. Interim Injunction has been granted by the Court for maintaining status quo by the

parties. The details are:-

Suit No. Parties Current Status

T S No.54/1981 New India Sugar Mills V/s Ram

Dev Ray & Ors.

Status quo to be maintained and

case is under trial.

Civil Case Misc

Appln.

No.15/1991

New India Sugar Mills V/s Md.

Azam & Ors.

Case is under trial

T S No.54/2002 New India Sugar Mills V/s State

of Bihar & Ors.

Case is under trial

Civil Misc

No.2/2003

New India Sugar Mills V/s State

of Bihar & Ors.



Civil Misc

No.1/2004


of Bihar & Ors.



Civil T S

No.9/2003


of Bihar & Ors.



Civil T S

No.3/2003

New India Sugar Mills V/s Gyani

Devi




283

F. Recovery Cases

The Company has filed 27 recovery cases against various parties relating to recovery of Dadni and

Transportation aggregating to a claim of Rs.9.05 Lakhs.

G. Litigation pertaining to transfer / transmission of Shares of the Company There are 3 civil suits filed by certain shareholders claiming right and title to certain shares of the Company.

The Company is made a formal party to these suits and no financial claim has been made against the

Company.

III. Claim/Show Cause Notice Pending against the Company

A. Labour Laws: One Mr. Syed Suleman Ahmad an ex-employee of the company had retired from the service of the

company and has claimed arrears of Rs.2.45 lacs as differential salary as per U.P. Government

Notification dated 30.6.2002. The Company had duly responded about the non applicability of the said

notification in the case.

B. Excise Law : The Company has been served with 4 Show Cause Notices by the Central Excise Authorities disputing

the Cenvat credit availed by the Company and also raising demands otherwise. The aggregate demand

amount to Rs. 64.44 lacs. The Company has dully responded to the said Notices. The Show Cause

Notices are pending adjudication by the department. (Seohara Sugar Unit)

In Distillery Unit 2 demand notices amounting to Rs.12.60 lacs are pending for hearing adjudication by

the department.

IV. Cases Filed by Morton Confectionery & Milk Products

A. Civil Cases The Company (in relation to its Morton Confectionery & Milk Products) Division has filed 5 recovery cases

aggregating to a claim of Rs. 11.51 Lakhs.

B. Excise Cases

Sr.No.

Authority / Court Amount / Claim

involved (Rs.

In Lacs)


1. CESTAT, Kolkata

(Appeal No.ST/SM/37 of

2005)

Duty demand

– Rs.0.72

Lakhs

The Company has filed an appeal against order of the Commissioner

(Appeals) confirming duty demand of Rs.72,000 along with penalty and

interest.

Our Company received a Show Cause Notice dated 26.06.05 from Asst.

Commissioner demanding service tax amounting to Rs.72,000 along with

interest and pelanty thereon alleging that our Company has failed to

collect and deposit service tax on commission. The Asst. Commissioner

confirmed the show cause notice demand along with penalty and interest.

In appeal preferred by the company, the Commissioner (Appeal) has

upheld the Asst. Commissioner order. Our Company has filed an appeal

in the CESTAT.

C. Sales Tax Cases

Sr.N

o.

Authority / Court Amount /

Claim involved (Rs.

In Lacs)


1. Joint Commissioner (Appeals)

ST/19/88-89

Rs.0.37 Lakhs The Company has challenged the order of the Asst. Commissioner

Commercial Tax, Saran, Chapra for not considering the transfer of goods

against Form 'F' during the assessment year 1983-84

2. Joint Commissioner (Appeals)

ST/20/88-89

Rs.0.34 Lakhs The Company has challenged the order of the Asst. Commissioner

Commercial Tax, Saran, Chapra for not considering the transfer of goods


3. Joint Commissioner (Appeals) Rs.1.90 Lakhs The Company has challenged the order of the Asst. Commissioner


284

Sr.N

o.

Authority / Court Amount /

Claim

involved (Rs.

In Lacs)


ST/11/2004 Commercial Tax, Saran, Chapra for not considering the transfer of goods


4. The Commissioner of

Commercial Tax, Bihar

Revision Case No.

CC (S) 413/98-99

Rs.8.47 Lakhs The Company has challenged the passed by the Asst. Commissioner

Commercial Tax, Chapra wherein the Asst. Commissioner had levied

Sales Tax for the AY 1993-94 on the stock transfer to Delhi Branch

The Commissioner has remanded the matter back for Re-assessment and

reconsideration of Form ‘F’ submitted by the Company

5. Joint Commissioner (Appeal)

Muzaffarpur

ST/12-13/2001

Rs.17.16

Lakhs (amount

includes

penalty of

Rs.0.56 Lakhs)

The Company has challenged the order passed by the Asst.

Commissioner, Commercial Tax Saran, Chapra for not considering the

transfer of goods against From ‘F’ and arbitrarily increasing the gross

turnover and not giving credit for the taxes deposited in treasury during

AY 1997-98

(G) LITIGATION BY/ AGAINST THE SUBSIDIARIES OF THE COMPANY

There is no pending litigation by or against the subsidiaries of the Company

(H) DUES TO SMALL SCALE UNDERTAKINGS

For details, please refer to the note no 2 on Annexure 6 of the Auditor’s report in the section titled “Financial

Performace of the Issuer Company” on page no. 128 of this Draft Letter of Offer.


285

GOVERNMENT APPROVALS AND LICENSES In view of the approvals listed below, we can undertake this Rights Issue and our current business activities and

no further material approval are required from any Government authority or the RBI to continue such activities.

We have received the following Government approvals that are material to our business:

Name of the

Unit

Name of the

Act under

which licence

is granted

Name of the

licence

Licence issuing

Authority

Licence No./Date

Validity

Status

HARGAON

Sugar &

Distillery

Industries

(Development

& Regulation)

Act, 1951

For enhancing

crushing

Capacity to

10000TCD

Secretariat for

Industrial Assistance

- Ministry of

Commerce &

Industry, New Delhi

3785/SIA/IMO/2005

dated 09.08.2005

One Time

Industries

(Development

& Regulation)

Act, 1951

Industrial

Licence for

distillery upto

30000 KL per

annum

Ministry of

Commerce &

Industry, Govt. of

India, New Delhi

2919/SIA/IMO/2006

dated 30.05.06

One Time

Factories Act,

1948

Factory Licence

Director of Factories,

Lucknow

STR – 11 -009363

Upto

December,

2007.

Uttar Pradesh

Govt.

Provincial

Excise Act,

1910

Mfg. Licence of

Distillery - PD 2

Excise

Commissioner, U.P.

PD – 2

Upto March,

2008.

Petroleum

Act, 1934

Diesel Storage

Licence

District Magistrate,

Sitapur

Form - J36 dated

12.10.1989

Upto

December,

2007.

The Arms

Rules, 1962

Sulphur Storage

Licence

District Megistrate,

Sitapur

Licence No. II

Upto

December,

2007.

Rule 9,Central

Excise Rules,

2002

Central Excise

Registration

Certificate-

Hargaon Sugar

& Distillery

Assistance

Commissioner of

Central Excise,

Sitapur

AABCT0813GXM018

Certificate dated

29.05.2007

One Time

Service Tax

Rules, 1994

Central Excise

Registration for

Service Tax

Hargaon Sugar

& Distillery

Assistance

Commissioner of

Central Excise,

Sitapur

AABCT0813GST004

Certificate dated

16.05.2007

One Time

Rule 9,Central

Excise Rules,

2002

Central Excise

Registration

Certificate-

Sitapur

Godowns

Assistant

Commissioner of

Central Excise,

Sitapur

AABCT0813GXM019

Certificate dated

16.01.2003

One Time

Uttar Pradesh

Govt.

Provincial

Excise Act,

1910

For denaturant

storage &

Mixing

District Excise

Officer, Sitapur

DS-1/G-3-1/187

1991 -92)

Upto March,

2008.


286

Name of the

Unit

Name of the

Act under

which licence

is granted

Name of the

licence

Licence issuing

Authority

Licence No./Date

Validity

Status

Prevention of

Food &

Adulteration

Rules, 1976

Under Food

Adulteration Act

- For Sugar &

Molasses

District Health

Officer, Sitapur

H.G.N-82/2007-08

dated 31.05.2007

Upto March,

2008.

Central Sales

Tax Act, 1956

Trade Tax

Registration

under CST

Assistant

Commissioner, Trade

Tax, Sitapur

5000319 dated

01.07.1957

One Time

The Uttar

Pradesh Trade

Tax Act, 1948

Trade Tax

Registration

under CST

Assistant

Commissioner, Trade

Tax, Sitapur

0000237 dated

20.10.1956

TIN no. 09853600001

One Time

Oil and

Alcohol

Taxation

Rules,1977

Sale of Alcohol

Licence

District Excise

Officer, Sitapur

RC No. G- 9-3/27/92-

93 dated 28.05.92

Upto March,

2008.

Water

(Prevention

and control of

Pollution)

Act, 1974 and

Rules made

thereunder

Water Pollution

Consent for

Sugar Unit.

Uttar Pradesh

Pollution Control

Board, Lucknow

F12970/C5/Jal47/07/14

4 dated 26.02.2007

Upto

December,

2007

.

Air

(Prevention

and control of

Pollution)

Act, 1981 and

Rules made

thereunder

Air Pollution

Consent for

Sugar Unit.

Uttar Pradesh

Pollution Control

Board, Lucknow

F12969/C5/Vayu

01/07/88 dated

26.02.2007

Upto

December,

2007

.

Water

(Prevention

and control of

Pollution)

Act, 1974 and

Rules made

thereunder

Water Pollution

Consent for

Distillery unit

Uttar Pradesh

Pollution Control

Board, Lucknow

F12968/C5/Jal45/07/10

9 dated 26.02.2007

Upto

December,

2007

.

Air

(Prevention

and control of

Pollution)

Act, 1981 and

Rules made

thereunder

Air Pollution

Consent for

Distillery unit

Uttar Pradesh

Pollution Control

Board, Lucknow

F12967/C5/Vayu

94/07/50 dated

26.02.2007

Upto

December,

2007

.

Income Tax

Act, 1961 &

Income Tax

Rules, 1962

Income Tax

Permanent

Account No.

(PAN)

Office of The CCIT,

Kolkata

No. AABCT0813G

dated 23.03.2000

One Time

Income Tax

Act, 1961 &

Income Tax

Rules, 1962

Income Tax Tax

Deduction

Account No.

(TAN) – Sugar

NSDL, Mumbai

No LKNT05182C

dated 11.11.2004

One Time


287

Name of the

Unit

Name of the

Act under

which licence

is granted

Name of the

licence

Licence issuing

Authority

Licence No./Date

Validity

Status

Unit

Income Tax

Act, 1961 &

Income Tax

Rules, 1962

Income Tax Tax

Deduction

Account No.

(TAN) –

Distillery Unit

NSDL, Mumbai

No. LKNT05183D

dated 11.11.2004

One Time

Import Trade

Control Policy

Registration for

the purpose of

import of spare

parts

Directorate of Sugar,

New Delhi

78 ST 1888 dated 4th

July 1988

One Time

NARKATI-

AGANJ

Sugar &

Distillery

Factories Act,

1948, and

rules

thereunder.

Factory Licence

The Chief Inspector

of Factories, Hinoo,

Ranchi and Inspector

of Factories,

Motihari

832/CHW

Upto

December,

2007.

Bihar

Sugarcane

(Regulation of

Supply &

Purchase)

Act, 1982

Cane Crushing

Licence

The Cane

Commissioner,

Bihar, Patna

Licence No. 9 dated.

21/02/89

Applied for

the year 2007-

2008

Bihar

Sugarcane

(Regulation of

Supply &

Purchase)

Act, 1982

Licence under

Cane Act-

Appointment of

Cane Manager


Bettiah

Form IX

Applied for

the year 2007-

2008

Bihar

Molasses

(Control) Act,

1947

Molasses

Storage Licence

– Sugar unit

The Superintendent

of Excise, Bettiah

12/78

Upto

December,

2007.

Bihar Shops

&

Establishment

Act, 1953

Certificate of

Registration

Assistant Labour

Commissioner,

Bettiah

WC 72/NKJ

Upto

December,

2007

.

Insecticides

Act, 1968 and

Rules

Insecticide

Licence – Sugar

unit

Joint Director, Plant

Protection, Govt. of

Bihar, Patna

8540/19-14/73 Dated

09.05.07

Upto

December

2007

.

Fertilizer

Control Order

1985

Fertilizer

Licence – Sugar

unit

District Agriculture

Officer, Bettiah

Form B (clause 9) Upto

December,

2007

.

Water

(Prevention &

Control of

Pollution)

Act, 1974 and

rules

thereunder.

Discharge

consent (Sugar

Mill)

Bihar State Pollution

Control Board,

Patna

P/S 4-1052/86-T-92

Dated 05.01.07

Upto

December,

2007

.

Air

(Prevention &

Emission

Consent Order


Control Board,

P/S 4-2045/87-T-93

Dated 05.01.07

Upto

December,


288

Name of the

Unit

Name of the

Act under

which licence

is granted

Name of the

licence

Licence issuing

Authority

Licence No./Date

Validity

Status

Control of

Pollution)

Act, 1981 and

rules

thereunder.

(Sugar Mill)

Patna 2007.

Import/Export

Trade Control

Policy of

Govt. of India

Certificate of

Importer/Expord

er

Department of

Foreign Trade, Govt.

of India, Kolkata

No.0288032730 Dated

20-12-2000

One Time

Import Trade

Control Policy

Registration for

the purpose of

import of spare

parts

Directorate of Sugar,

New Delhi

78 ST 1890 dated 4th

July 1988

One Time

Central Excise

Rules, 2002

Central Excise

Registration

Assistant

Commissioner of

Central Excise,

Laheriasarai.

AABCT0813GXM024

One Time

Standard

Weights &

Measures

(Packed

commodities)

Rules 1977

Registration

under Packed

Commodities –

Sugar

Directorate of

Weights & Measures,

New Delhi

WM 26(11)/79 dated

14/5/1980

One Time

Bihar Value

Added Tax

Ordinance,

2005

Certificate of

Registration

Assistant

Commissioner of

Commercial Taxes,

Bettiah

TIN 10260186059

Dated 19.09.2005

One Time

Bihar Value

Added Tax

Ordinance,

2002

Certificate of

Registration

Assistant

Commissioner of

Commercial Taxes,

Bettiah

CST TIN 10260186156

Dated 01.07.1957

One Time

Industrial

(Development

& Regulation)

Act 1951

Industrial

Licence for

enhancing

capacity upto

7500 TCD –

Sugar

Secretariat for

Industrial Assistance

– Ministry of

Commerce &

Industry, New Delhi

2346/SIA/IMO/2006

Dated 03.05.06

One Time

Bihar Excise

Act, 1915

Manufacturing

Licence Spirit

for Distillery

unit

State Excise

Authority through

the District

Magistrate, Bettiah

28 A dated 31.03.07

Upto March

2008.

Bihar Excise

Act, 1915

For

Denaturation of

sprit & issue of

the same for

Distillery unit

State Excise

Authority through

the District

Magistrate, Bettiah

Form no.25 dated

31.03.07

Upto March

2008.

Water

(Prevention &

Control of

Pollution)

Act, 1974 and

rules

thereunder

Water Discharge

Consent –

Distillery unit


Control Board, Patna

P/T 1-1668/88 (Part) T-

5262 dated 02.07.07

Upto

December,

2007.

Air Air Emission Bihar State Pollution A-656 T-5261 dated Upto


289

Name of the

Unit

Name of the

Act under

which licence

is granted

Name of the

licence

Licence issuing

Authority

Licence No./Date

Validity

Status

(Prevention &

Control of

Pollution)

Act, 1981 and

rules

thereunder.

Consent –

Distillery

Control Board, Patna 02.07.07 December,

2007.

Factories Act

1948 and

Bihar

Factories

Rules, 1950

Factory Licence

– Distillery

The Chief Inspector

of Factories, Hinno,

Ranchi & The

Inspector of

Factories, Motihari

8961/CHW

Upto

December,

2007.

Bihar

Molasses

(Control) Act,

1947

Molasses

Storage licence

– Distillery

State Excise

Authority, Bihar

1/92 Upto

December,

2007.

Industries

(Development

& Regulation)

Act, 1951

Industrial

Licence for

enhancing the

capacity of

distillery upto

30000 KL per

annum

Ministry of

Commerce &

Industry, Govt. of

India, New Delhi

2748/SIA/IMO/2006

Dated 22.05.06

One Time

ROSA Sugar

Works

Factories Act,

1948

Factory Licence Deputy Director –

Factories, Bareilly

SJR – 01/010477 Upto

December,

2007

.

Industries

(Development

& Regulation)

Act, 1951

Enhanching

crushing

capacity to 5000

TCD

Secretariat for

Industrial Assistance,

New Delhi

IEM letter

No.2665/SIA/IMO/200

2 dated 11.11.2002

One Time

Air

(Prevention

and control of

Pollution)

Act, 1981 and

Rules made

thereunder

Air Pollution

Consent

Uttar Pradesh

Pollution Control

Board, Lucknow

Letter No. F12976/C-

5/Air/B-30/2007/53

dated 26.02.2007

Upto

December,

2007

.

Water

(Prevention

and control of

Pollution)

Act, 1974 and

Rules made

thereunder

Water Pollution

Consent

Uttar Pradesh

Pollution Control

Board, Lucknow

Letter No. F12975/C-

5/Water/B-30/2007/65

dated 26.02.2007

Upto

December,

2007

.

Weights and

Measures

(Packaged

Commodities)

Rules, 1977

Certificate of

Registration

Ministry of

Commerce and Civil

Supplies, New Delhi

Certificate No.

UP/76/79

Registration No. MN-

26(21)/79 dated

13.5.1980

One Time

Central Excise

Rules, 2002

Central Excise

Registration

Certificate

Assistant

Commissioner of

Central Excise,

No.AABCT0813GXM

020 dated 16.01.2003

One Time


290

Name of the

Unit

Name of the

Act under

which licence

is granted

Name of the

licence

Licence issuing

Authority

Licence No./Date

Validity

Status

Sitapur

Central Excise

Rules, 2002

Central Excise

Service Tax

Registration

Superintandent,

Central Excise,

Shahjahanpur.

275/ST2/STP/G.T.by

road/05 dated

24.01.2005

One Time

Sugar Control

Order, 1966

Cane Crushing

Licence

Secretary,

Government of Uttar

Pradesh, Sugar

Industry Section

No. 4 dated 17.10.1998 One Time

Prevention of

Food &

Adulteration

Rules, 1976

Sugar

Production

Licence

Local Authority cum

Chief Medical

Officer,

Shahjahanpur

MM04/V/2007-11

Dated 01.04.07

Upto March,

2008.

Arms Rules,

1962

Licence for

acquisition and

possession of

arms and

ammunitions –

Sulphur


Shahjahanpur

Form III Licence no.

5640 & 8

Valid Upto

16.05.2008 &

02.11.08

Petroleum

Act, 1934 and

Rules

thereunder

Licence to

import and store

Petroleum in

installation

Total capacity

(Petroleum) –

40KL

Chief Controller of

Explosive

P/HQ/UP/15/1702

(P9144) Dated

28.11.2000

Upto

December,

2008.

Hazardous

Wastes Rules,

1989

Authorisation

for collection,

reception,

treatment,

storage,

transport and

disposal of

Hazardous

Wastes

Member Secretary,

Uttar Pradesh,

Pollution Control

Board

8776C-5/HAZI-

21/2002/20 dated

10.10.2002

Upto October,

2007. Renewal

applied on

18.9.07.

Allahabad

Canning

Company

Factories Act,

1948

Factory Licence Deputy Director –

Factories, Allahabad

ALD/143 Upto

December,

2008.

Fruit Products

Order, 1955

Fruit Products

Order

(Manufacturing)

Director – Fruits &

Vegetable Products,

Ministry of Food

Processing, New

Delhi

ALD-1659 Upto

December,

2007

.

Fruit Products

Order, 1955

Fruit Products

Order

(Relabeller )

Director – Fruits &

Vegetables Products,

Ministry of Food

Processing, New

Delhi

3014-R Upto

December,

2007

Small Scale

Industries

Act, 1972

SSI Unit Director, SSI,

Allahabad

020-03-00568-PMT-

SSI/02 dated

13.12.1972

One Time

Ministry of Manufacturer Agricultural and Certificate of One Time


291

Name of the

Unit

Name of the

Act under

which licence

is granted

Name of the

licence

Licence issuing

Authority

Licence No./Date

Validity

Status

Commerce,

Govt. of India

Exporter

certificate

Processed Food

Products Export

Development

Authority, New

Delhi

Registration No.

APEDA/REGN/008772

/95-96

Trade Marks

Act, 1999

“ACCOS” Registrar of Trade

marks, Mumbai

226028 & 29 Upto

December,

2016

Trade Marks

Act, 1999

"MORTON"

Trade Marks

Registry, Kolkata

85869 & 70

Upto

September,

2017

Uttar Pradesh

Trade

Tax,1948

Uttar Pradesh

Trade Tax

Manufacture of

canned fruits

and vegetables

Commissioner of

Sales Tax, Allahabad

AD 0018762

TIN No. 09913300004

One Time

Central Sales

Tax Act, 1956

CST

Commissioner of

Sales Tax, Allahabad

AD 5012301

One Time

Central Excise

Act

Central Excise

Registration

Assistant

Commissioner

Central Excise,

Allahabad

AABCT0813 GXM017

One Time

Central Excise

& Service Tax

Rules

Service Tax

Registration

(Service:

Transport of

goods by road)

Dy. Commissioner

Central Excise,

Allahabad

AABCT0813 GST002

One Time

Municipal

Corporation

Under

Circumstances

& Property Tax

Zila Parishad,

Allahabad

49805 Upto March,

2008

Central Excise

Act

Central Excise

Registration

Superintandent

Central Excise,

Chitoor (A.P.)

AABCT0813 GXM023

One Time

Service Tax

Rules,1994

Service Tax

Registration

Assistant

Commissioner

Central Excise,

Chitoor (A.P.)

AABCT0813 GST001

One Time

Central Sales

Tax Act

Central Sales

Tax Registration

Assitant Commercial

Tax Officer-II,

Chitoor(A.P.)

CTR/04/1/3663/04-05

One Time

Andhra

Pradesh

General Sales

Tax Act

Registration of

Commercial Tax

Assitant Commercial

Tax Officer-II,

Chitoor(A.P.)

CTR/04/1/2707/04-05

One Time

Value Added

Tax

Registration

Registration of

VAT

Assitant Commercial

Tax Officer-II,

Chitoor(A.P.)

28090245763 dated

1.4.2005

One Time


292

Name of the

Unit

Name of the

Act under

which licence

is granted

Name of the

licence

Licence issuing

Authority

Licence No./Date

Validity

Status

Hata Unit Industries

(Development

& Regulation)

Act, 1951

For crushing

capacity of 7000

TCD

Secretariat for

Industrial Assistance,

New Delhi

IEM letter

No.830/SIA/IMO/2005

dated 25.02.2005 &

Amendment dated

03.07.2007

One Time

Uttar Pradesh

Pollution

Control Board

Pollution

Consent for

Sugar Unit.

Uttar Pradesh

Pollution Control

Board, Lucknow

F15124/C6/NOC/6/GK

P dated 10.04.2007

One Time

Land Ceiling

Act

Permission

under Land

Ceiling Act

Commissioner,

Gorakhpur

4705-11/Sat-38(2004-

05) Dated 22.03.07

One Time

Central Excise

Act

Central Excise

Registration

Assistant

Commissioner,

Central Excise,

Gorakhpur Division

AABCT0813 GXM025

Dated 13.12.2006

One Time

Service Tax

Rules,1994

Service Tax

Registration

(Service:

Transport of

goods by road)

Assistant

Commissioner

Central Excise,

Gorakhpur, Division

AABCT0813 GST003

Dated 14.12.2006

One Time

Income Tax

Act, 1961 &

Income Tax

Rules, 1962

Income Tax

Deduction

Account No.

(TAN)

Income Tax

Department

No ALDN 00598D

One Time

Central Sales

Tax Act, 1956

Trade Tax

Registration

under CST

Assistant

Commissioner, Trade

Tax,

Padrauna,Kushinagar

PD 5011905dated

04.01.2007

One Time

The Uttar

Pradesh Trade

Tax Act, 1948

Trade Tax

Registration

under UPST

Assistant

Commissioner, Trade

Tax,

Padrauna,Kushinagar

PD 0050736 dated

04.01.2007

TIN no. 09320602964

One Time

The Uttar

Pradesh Trade

Tax Act, 1948

Trade Tax

Registration for

3 B

Assistant

Commissioner, Trade

Tax,

Padrauna,Kushinagar

PD 0123 dated

05.12.2006

One Time

Contract

Labour

(Regulation &

Abolition)

Act,1970

Labour

Registration

Dy.Labour

Commissioner,

Gorakhpur

No. 112 dated

09.03.2007

One time

MUMBAI

Office

Maharashtra

State Tax on

Professions,

Trades,

Callings and

Employments

Act, 1975 and

Rules there

under.

Profession Tax

Registration

Assistant

Commissioner of

Profession Tax,

Bombay

PT/R/1/1/21/8012

dated 01.04.1976

One Time

Bombay Registration Inspector under the A-II-5048 Upto


293

Name of the

Unit

Name of the

Act under

which licence

is granted

Name of the

licence

Licence issuing

Authority

Licence No./Date

Validity

Status

Shops and

Establishment

s Act, 1948

Certificate of

Establishment

Bombay Shops and

Establishments Act,

1948

December,

2007

KOLKATA

Office

West Bengal

State tax on

Professions,

Trades,

Callings and

Employments

Act, 1979

Profession Tax

Registration

Profession Tax

Officer, Calcutta,

North Range

RCN 2578748 One Time

West Bengal

Shops and

Establishment

s Act, 1963

Registration

Certificate of

Establishment


294

OTHER REGULATORY AND STATUTORY DISCLOSURES

AUTHORITY FOR THE ISSUE

This Issue has been authorized by the Board of Directors at its held on 20th

August, 2007 and approved by the

members of the Company at the Extrageneral Meeting held on 22nd

September 2007 and Finance and Corporate

Affiars Committee at its meetings held on 17th

Otober 2007, wherein the Committee approved issue of Equity

Shares on rights basis along with detachable warrants to the existing equity shareholders on the Record Date, the

details of which are as follows:

Issue of [●]Equity Shares of face value of Rs. 10/- each for cash at a premium of Rs. [●] per Equity Share on



on rights basis. The issue price for the Equity Shares will be payble in two installments; [●] of the issue price

will be payable on Application; [●] of the Issue Price will become payable at the option of Our Company, on or

before 12 months from the Date of Allotment.



lacs. The Issue Price is [●] times the face value of the Equity Shares.

CONSENT OF LENDERS

The agreements in respect of some of the debt taken by us contain certain covenants inter-alia for altering our

share capital and for expansion and diversification plans. We have obtained these consents from our lenders,

where required.

PROHIBITION BY SEBI

Our Company, our subsidiaries, our affiliates, our promoters, our promoter group entities, our directors and

other companies promoted by our promoters has not been prohibited from accessing the capital markets under

any order or direction passed by SEBI. None of our directors or the promoters has been prohibited from

accessing capital market under any order or direction passed by SEBI.

ELIGIBILITY

The Oudh Sugar Mills Limited is an existing Company, whose Equity Shares are listed on BSE and NSE. It is

eligible to offer this Rights Issue in terms of Clause 2.4.1(iv) of the SEBI DIP Guidelines. The Company, its

Promoters, its Directors or any of the Company’s associates or group companies is currently not prohibited from

accessing the capital market under any order or direction passed by SEBI. Further the Promoters, their relatives

(as per the Companies Act, 1956), the Company, group companies, associate companies are not declared as

willful defaulters by RBI / Government authorities.

DISCLAIMER CLAUSE

AS REQUIRED, A COPY OF THIS DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO THE

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). IT IS TO BE DISTINCTLY UNDERSTOOD

THAT THE SUBMISSION OF THE DRAFT LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY

BE DEEMED/ CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI

DOES NOT TAKE ANY RESPOSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY

SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE

CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT LETTER

OF OFFER. THE LEAD MANAGER ENAM FINANCIAL CONSULTANTS PRIVATE LIMITED HAS

CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE GENERALLY

ADEQUATE AND ARE IN CONFORMITY WITH SEBI GUIDELINES FOR DISCLOSURE AND

INVESTOR PROTECTION IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO

FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE

PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER

COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND

DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT LETTER OF OFFER, THE LEAD

MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY


295

DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS

PURPOSE THE LEAD MANAGER ENAM SECURITES PRIVATE LIMITED HAS FURNISHED TO SEBI

A DUE DILIGENCE CERTIFICATE DATED DECEMBER 24, 2007 WHICH READS AS FOLLOWS:

1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION

LIKE COMMERCIAL DISPUTES, DISPUTES WITH COLLABORATORS, ETC. AND OTHER

MATERIALS MORE PARTICULARLY REFERRED TO IN THE ANNEXURE HERETO IN

CONNECTION WITH THE FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO

THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS

DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF

THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND

THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS

FURNISHED BY THE COMPANY;

WE CONFIRM THAT:

a) THE DRAFT LETTER OF OFFER FORWARDED TO SEBI IS IN CONFORMITY WITH THE

DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

b) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE

GUIDELINES, INSTRUCTIONS ETC., ISSUED BY SEBI, THE GOVERNMENT AND ANY

OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH;

c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND

ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS TO

INVESTMENT IN THE PROPOSED ISSUE, AND;

d. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE

DRAFT LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THAT TILL DATE

SUCH REGISTRATION IS VALID.

e. IF UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE NET WORTH OF THE

UNDERWRITERS TO FULFILL THEIR UNDERWRITING COMMITMENTS.

f. WE CERTIFY THAT WRITTEN CONSENT FROM SHAREHOLDERS HAS BEEN OBTAINED

FOR INCLUSION OF THEIR SECURITIES AS PART OF PROMOTERS CONTRIBUTION

SUBJECT TO LOCK-IN AND THE SECURITIES PROPOSED TO BE FORM PART OF

PROMOTER CONTRIBUTION SUBJECT TO LOCK-IN, WILL NOT BE DISPOSED/ SOLD/

TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE

OF FILLING THE DRAFT RED HERRING PROSPECTUS WITH THE BOARD TILL THE DATE

OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT RED HERRING

PROSPECTUS. – NOT APPLICABLE

g. WE CERTIFY THAT CLAUSE 4.6 OF THE SEBI (DISCLOSURE AND INVESTOR

PROTECTION) GUIDELINES, 2000, WHICH RELATES TO SECURITIES INELIGIBLE FOR

COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH

AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE CLAUSE HAVE BEEN

MADE IN THE DRAFT PROSPECTUS/LETTER OF OFFER. . – NOT APPLICABLE

h. WE UNDERTAKE THAT CLAUSES 4.9.1, 4.9.2, 4.9.3 AND 4.9.4 OF THE SEBI (DISCLOSURE

AND INVESTOR PROTECTION) GUIDELINES, 2000 SHALL BE COMPLIED WITH. WE

CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’

CONTRIBUTION AND SUBSCRIPTION FROM ALL FIRM ALLOTTEES WOULD BE

RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE .WE UNDERTAKE

THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE

BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE

THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A

SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE COMPANY

ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. – NOT APPLICABLE


296

i. WHERE THE REQUIREMENTS OF PROMOTERS’ CONTRIBUTION IS NOT APPLICABLE TO

THE ISSUER, WE CERTIFY THE REQUIREMENTS OF PROMOTERS’ CONTRIBUTION

UNDER CLAUSE 4.10 {SUB-CLAUSE (A), (B) OR (C), AS MAY BE APPLICABLE} ARE NOT

APPLICABLE TO THE ISSUER. . – NOT APPLICABLE

j. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS

ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAIN OBJECTS’ LISTED

IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER

OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL

NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF

ASSOCIATION.

k. WE CONFIRM THAT NECESSARY ARRANGEMENTS WILL BE MADE TO ENSURE THAT

THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK

ACCOUNT AS PER THE PROVISIONS OF SECTION 73(3) OF THE COMPANIES ACT, 1956

AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER

PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE

PROSPECTUS/LETTER OF OFFER. WE FURTHER CONFIRM THAT THE AGREEMENT TO BE

ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER

SPECIFICALLY CONTAINS THIS CONDITION.

l. WE CERTIFY THAT NO PAYMENT IN THE NATURE OF DISCOUNT, COMMISSION,

ALLOWANCE OR OTHERWISE SHALL BE MADE BY THE ISSUER OR THE PROMOTERS,

DIRECTLY OR INDIRECTLY, TO ANY PERSON WHO RECEIVES SECURITIES BY WAY OF

FIRM ALLOTMENT IN THE ISSUE.

m. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE PROSPECTUS THAT THE

INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL

MODE.

The filing of the Draft Letter of Offer does not, however, absolve the Company from any liabilities under

Section 63 or Section 68 of the Companies Act, 1956 or from the requirement of obtaining such statutory or

other clearance as may be required for the purpose of the proposed Issue. SEBI further reserves the right to take

up, at any point of time, with the Lead Manager any irregularities or lapses in the Draft Letter of Offer.

CAUTION

We and the Lead Managers accept no responsibility for statements made otherwise than in this Draft Letter of

Offer or in any advertisement or other material issued by us or by any other persons at our instance and anyone

placing reliance on any other source of information would be doing so at his own risk.

We and the Lead Managers shall make all information available to the Equity Shareholders and no selective or

additional information would be available for a section of the Equity Shareholders in any manner whatsoever

including at presentations, in research or sales report etc. after filing of this Draft Letter of Offer with SEBI.


297

DISCLAIMER STATEMENT FROM THE ISSUER AND LEAD MANAGER

The Company and the Lead Manager accept no responsibility for statements made otherwise than in this Draft

Letter of Offer or in any advertisement or other material issued by the Company or by any other persons at the

instance of the Company and anyone placing reliance on any other source of information would be doing so at

his own risk.

The Lead Manager and the Company shall make all information available to the Equity Shareholders and no

selective or additional information would be available for a section of the Equity Shareholders in any manner

whatsoever including at presentations, in research or sales reports etc. after filing of the Draft Letter of Offer

with SEBI.

DISCLAIMER WITH RESPECT TO JURISDICTION

This Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and

regulations there under. Any disputes arising out of this Issue will be subject to the jurisdiction of the

appropriate court(s) in the District of Sitapur, Uttar Pradesh, India only.

The Draft Letter of Offer has been filed with SEBI, [●], for its observations. After SEBI gives its observations,

the final Letter of Offer will be filed with the Designated Stock Exchange as per the provisions of the Act.

DISCLAIMER CLAUSE OF THE BSE

Bombay Stock Exchange Limited (“the Exchange”) has given vide its letter dated ●, 2007 permission to this

Company to use the Exchange’s name in this Draft Letter of Offer as one of the stock exchanges on which this

Company’s securities are proposed to be listed. The Exchange has scrutinized this Draft Letter of Offer for its

limited internal purpose of deciding on the matter of granting the aforesaid permission to this Company. The

Exchange does not in any manner:

i. warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Letter of Offer;

or

ii. warrant that this company’s securities will be listed or will continue to be listed on the Exchange; or

iii. take any responsibility for the financial or other soundness of this company, its Promoters, its management

or any scheme or project of this company;

and it should not for any reason be deemed or construed that this Draft Letter of Offer has been cleared or

approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this

company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim

against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or

in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated

herein or for any other reason whatsoever.

DISCLAIMER CLAUSE OF THE NSE

As required, a copy of this Draft Letter of Offer has been submitted to NSE. NSE has given vide its letter dated

●, 2007 permission to the Issuer to use the Exchange’s name in this Draft Letter of Offer as one of the Stock

Exchanges on which the Issuer’s securities are proposed to be listed. The Exchange has scrutinized this Draft

Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to

this Issuer. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be

deemed or construed that the Draft Letter of Offer has been cleared or approved by NSE; nor does it in any

manner warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Letter of

Offer; nor does it warrant that this Issuer’s securities will be listed or will continue to be listed on the Exchange;

nor does it take any responsibility for the financial or other soundness of this Issuer, its Promoters, its

management or any scheme or project of this Issuer.

Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to

independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever

by reason of any loss which may be suffered by such person consequent to or in connection with such

subscription/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason

whatsoever.


298

IMPERSONATION

As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of subsection

(1) of Section 68A of the Companies Act, 1956 which is reproduced below:

“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any

shares therein, or otherwise induces a Company to allot, or register any transfer of shares therein to him, or any

other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five

years”

GOVERNMENT APPROVALS

Our company was incorporated on July 26, 1932 under the Indian Companies Act VII of 1913. We have

obtained all necessary approvals to undertake our activities and we do not propose to enter into any new

activities through this Issue, for which further approvals may be required to be obtained, except as may be

required to be obtained in the normal course of business. For further details, please refer to Section

“Government Approvals/Licensing Arrangements”.

FILING

The Draft Letter of Offer was filed with SEBI, [●]. All the legal requirements applicable till the date of filing

the Draft Letter of Offer with the Stock Exchanges have been complied with.

The Draft Letter of Offer having attached thereto the material contracts and documents referred in this Draft

Letter of Offer, have been filed with BSE and NSE at the following address:

Bombay Stock Exchange Limited

1st Floor, Rotunda Bldg.,

B.S.Marg, Fort

Mumbai - 400 001

The National Stock Exchange of India Limited

Exchange Plaza,

Bandra-Kurla Complex, Bandra (East),

Mumbai - 400 051

LISTING

The existing Equity Shares are listed on the BSE and NSE. We have made applications to the BSE and NSE for

permission to deal in and for an official quotation in respect of the Equity Shares being offered in terms of this

Letter of Offer, [●] is the Designated Stock Exchange for this Issue. We have received in-principle approvals

from BSE and NSE by letters dated [●] and [●] respectively. We will apply to the BSE and NSE for listing of

the Equity Shares to be issued pursuant to this Issue.

If the permission to deal in and for an official quotation of the securities is not granted by any of the Stock

Exchanges mentioned above, within six weeks from the Issue Closing Date, the Company shall forthwith repay,

without interest, all monies received from applicants in pursuance of this Draft Letter of Offer. If such money is

not paid within 8 days after the Company becomes liable to repay it, then the Company and every Director of

the Company who is an officer in default shall, on and from expiry of 8 days, be jointly and severally liable to

repay the money with interest as prescribed under the Section 73 of the Act.

CONSENTS

Consents in writing of the Directors, Auditors, Lead Manager, Legal Advisor, Bankers to the Company,

Registrar to the Issue, Banker to the Issue to act in their respective capacities have been obtained and filed with

Stock Exchanges at the time of filing this Draft Letter of Offer and such consents have not been withdrawn up to

the time of delivery of the Draft Letter of Offer for registration with the stock exchanges.

The Auditors of the Company have given their written consent for the inclusion of their Report in the form and

content as appearing in the Draft Letter of Offer and also the tax benefits accruing to the Company and its


299

members and such consents and reports have not been withdrawn up to the time of delivery of the Draft Letter

of Offer for registration with the Stock Exchanges.

DEMATERIALISED DEALING

We have entered into agreements dated November 1, 1999 and October 29, 1999 with NSDL and CDSL

respectively for Equity Shares of our Company bearing ISIN Number INE594A01014.

EXPERT OPINION

We have not obtained any expert opinion in relation to this issue

EXPENSES OF THE ISSUE

The expenses for this Rights Issue are estimated at Rs [●] lacs, the break-up whereof is as follows:

Particulars

Rs. in Lacs

Fees to Lead Manager

Fees to Registrar

Fees to Auditors

Fees to Banker to the Issue

Fees to Legal Advisor to the Issue

Printing & Stationery and Postage expenses

Advertisement, Travel and other Miscellaneous Expenses

Total

UNDERWRITING COMMISSION, BROKERAGE AND SELLING COMMISSION

No underwriting commission, brokerage and selling commission will be paid for this Issue.

PROMISE VS. PERFORMANCE

Issuer Company

We made a Rights Issue of Equity Shares to our equity shareholders in 1996. The issue of 6,92,386 Equity

Shares of Rs.100/- each for cash at a premium of Rs.400/- each aggregating to Rs.3461.93 lacs was made in the

ratio of two Equity Shares for every one Equity Share held.

Issue opened on 17th

January, 1996

Issue closed on 23rd

February, 1996

Date of completion of dispatch of delivery

of security certificates

2nd

April, 1996

Object of the issue Long Term Working Capital

The promises made in the above-mentioned rights issue and actual performance achieved is as follows:


300

(Figures in Rs. lacs except per share data)

1995-96 1996-97 1997-98

Projected Actual Projected Actual Projected Actual

Business Parameters

Sales 17242.88 14744.16 21295.94 15597.38 21821.49 18699.96

PBIDT 2666.60 2583.05 3310.92 2379.75 3473.37 3022.71

Interest (net) 1521.29 1465.45 1396.28 1746.34 1176.62 2055.70

Depreciation 441.43 430.97 508.43 489.97 598.53 623.92

PBT 703.88 686.63 1406.21 143.44 1698.32 344.09

Taxation - 1.00 - 20.00 290.00 38.50

PAT 703.88 685.63 1406.21 123.44 1408.32 305.59

Dividend (%) 25 25 25 20 25 20

Equity Capital 1038.62 1038.62 1038.62 1038.62 1038.62 1038.62

Reserves & Surplus 6745.00 6757.76 7891.56 6689.87 9040.23 6846.36

Net Worth 7783.62 7796.38 8930.18 7728.49 10078.85 7884.98

EPS (Rs.) 67.77 66.02 135.39 1.19 * 135.60 2.94*

NAV (Rs.) 749.42 750.68 859.81 74.41* 970.41 75.92*

* Rs. 10/- per share on sub division

The reasons for variation between actual figures and projections for the aforesaid 3 year period are given below:

1995-96 The turnover was lower on account of lower releases of levy and free sugar. The reasons for lower profitability

were due to depressed selling price and increase in State Advisory Price by the State Government. Delayed

monsoon and poor recoveries also strained profitability.

1996-97 The turnover was lower on account of lower sugar releases of levy and free sugar. The profitability was

adversely affected due to lower production and lower recovery of sugar from sugar cane and lower sales

realisation.

1997-98: The perforamance of the Company was adeveresely affected during the year due to lower production of sugar

caused by diversion of sugar cane to gur and khandesari units and erratic climatic conditions. The lower

production during the year severly affected the turnover and profitability of the Coampny.

Details of the previous public or rights issue made in the last five years

The Company had come up with a rights issue in the year 2005. The issue was of 77,88,780 equity shares of Rs.

10/- each at a premium of Rs. 40 per share aggregating Rs. 38,94,39,000 to the equity shareholders on rights

basis in the ratio of 3 equity shares for every 4 equity shares held on the record date i.e. May 6, 2005. The issue

of the Equity Shares was made to reduce overall indebtedness of the Company and to meet the expenses of the

issue.

Details of the previous issues of shares otherwise than for cash

There was no Issue made by the Company otherwise than for cash except the following

Date of Allotment No. of Shares Face Value per Share (Rs. Particulars

February 18, 1943 19462 25 Issued as Bonus Shares

August 17, 1944 4865.5 100 Issued on cancellation of Qtr. equity

shares in the ratio 1 : 4

October 10, 1948 33207 100 Bonus Shares in the ratio of 3 : 4

May 9, 1975 77487 100 Issue of Bonus shares 1 : 1

January 27, 1987 61155 100 Issued on Amalgamation with The New

Swadeshi Sugar Mills Ltd.


301

COMMISSION OR BROKERAGE ON PREVIOUS ISSUES No commission or brokerage was paid in respect of the previous issues.

DETAILS OF CAPITAL ISSUES MADE BY THE LISTED COMPANIES UNDER SAME

MANAGEMENT

LISTED COMPANIES PROMOTED BY THE PROMOTERS

Upper Ganges Sugar & Industries Limited (UGSIL)

UGSIL had made a Rights Issue of 45,52,852 Equity Shares of Rs.10/-each at a premium of Rs.140/- per share

(i.e. at a price of Rs.150/- per share) in the ratio of thirteen Equity Shares for every twenty Equity Shares held

during the financial year 2005-06 & 2006-07.

Issue opened on June 28, 2006

Issue closed on July 27, 2006

Date of completion of dispatch of delivery August 7, 2006


Object of the issue The issue of the Equity Shares was made to

partly reduce overall indebtedness of the

Company by repaying a part of the outstanding

working capital borrowings and to meet the

expenses of the issue.

No specific promise was made in relation to the said issue.

Texmaco Limited

Texmaco had made a Rights Issue of 51,63,378 Equity Shares of Rs.10/-each at a premium of Rs.20/- per share

(i.e. at a price of Rs.30/- per share) in the ratio of one Equity Share for every one Equity Share held during the

financial year 2004-05.

Issue opened on May 7, 2004

Issue closed on June 7, 2004

Date of completion of dispatch of

delivery of security certificates

June 18, 2004

Object of the issue The issue of the Equity Shares was made to partly meet the

Working Capital requirements and to partly repay short term

loans taken to meet Working Capital requirements of the

Company and to meet the expenses of the issue.


Zuari made a rights issue of 1,31,26,400 equity shares in 1997 at price of Rs.10/-each for cash at par aggregating

Rs. 1,312.64 lacs to its equity shareholders to meet the working capital requirement of the company. No specific

promise was made in relation to the said issue.

Chambal Fertilizers and Chemicals Limited

Chambal had made a Public Issue of 2,12,00,000; 15% secured partly convertible debentures of Rs. 200 each for

cash at par aggregating to Rs. 424.00 crores to its equity shareholders.

Issue opened on April 15, 1993

Issue closed on April 26, 1993

Date of completion of dispatch of delivery -



302

Object of the issue To raise part finance for meeting Project Cost

estimated at Rs.1267.00 crores and to meet

expenses of Issue.

DETAILS OF OUTSTANDING DEBENTURES/BONDS/REDEEMABLE PREFERENCE SHARES/ OTHER INSTRUMENTS

Except as stated under “Capital Structure” on page 33 of the Draft Letter of Offer, there are no outstanding

debentures, bonds, redeemable Preference Shares.

STOCK MARKET DATA FOR EQUITY SHARES OF THE ISSUER COMPANY

The Company's shares are listed on the BSE and NSE. As the shares are actively traded on the BSE and NSE,

the Company’s stock market data have been given separate for each of these Stock Exchanges.

The high and low closing prices recorded on the BSE and NSE for the preceding three years and the number of

shares traded on the days the high and low prices were recorded are stated below:

BSE

Year ending

June, 30

High

(Rs.)

Date of High Volume

on date of

high (no. of shares)

Low (Rs.) Date of

Low

Volume on

date of low

(no. of shares)

Average

price for

the year (Rs.)

2005 125.34 February 05 103589 27.96 09 June 04 475 70.83

2006 293.45 April 06 148258 82.7 28.10.2005 14239 148.09

2007 144.25 August 06 201660 53.15 22.6.07 14131 87.33

July , 2007 60.15 July 07 76478 52.5 25.7.07 7881 56.47

August 07 52.15 August 07 36807 44.55 23.8.07 7537 48.03

September,

2007

62.6 September 07 32363 49.35 11.9.07 50085 54.63

October, 2007 64.85 10th

October

07

92794 50.90 23.10.07 8425 57.88

November,

2007

57.25 21st

November 07

20430 48.00 8.11.07 7561 52.63


303

NSE

Year ending

June, 30

High

(Rs.)

Date of

High

Volume on

date of high (no. of

shares)

Low (Rs.) Date of

Low

Volume on

date of low (no. of

shares)

Average

price for the year

(Rs.)

2005 125.18 February o5 327738 27.21 9.7.04 550 70.91

2006 293.45 April 06 324607 82.9 28.10.05 29493 148.11

2007 144.1 August

2006

288947 53.10 27.6.2007 9358 87.34

July, 2007 60.15 July 07 73966 52.85 25.7.2007 12515 56.55

August 2007 52.05 August 07 58097 44.85 21.8.07 6772 48.01

September

2007

62.65 September

07

436310 49.9 14.9.07 8564 54.71

October, 2007 69.00 1st October

07

124036 44.05 17.10.07 35538 56.53

November,2007 58.30 21st

November

07

64720 41.10 5.11.07 13211 49.70

The high and low prices and volume of shares traded on the respective dates during the last six months is as

follows:

BSE

Month High (Rs.) Date of

High

Volume on

date of

high (no. of

shares)

Low (Rs.) Date of

Low

Volume on

date of low

(no. of

shares)

Average

price for

the year

(Rs.)

April-07 70.65 30.4.07 141799 57.7 30.4.07 7451

May -07 63.2 22.5.07 35265 56.75 10.5.207 2627

June-07 59.95 1.6.2007 14743 53.15 22.6.07 14131

July , 2007 60.15 July 07 76478 52.5 25.7.07 7881 56.47

August 07 52.15 August 07 36807 44.55 23.8.07 7537 48.03

September,

2007

62.6 September

07

32363 49.35 11.9.07 50085 54.63

October,

2007

64.85 10th

October

07

92794 50.90 23.10.07 8425 57.88

November,

2007

57.25 21st

November

07

20430 48.00 8.11.07 7561 52.63

NSE

Month High (Rs.) Date of

High

Volume on

date of

high (no. of shares)

Low (Rs.) Date of

Low

Volume on

date of low

(no. of shares)

Average

price for

the year (Rs.)

April-07 71 2.4.07 234766 57.75 30.4.07 7155

May -07 63.15 22.5.07 79815 56.75 10.5.07 7662

June-07 59.95 1.6.07 33820 53.1 27.6.07 9358

July, 2007 60.15 July 07 73966 52.85 25.7.2007 12515 56.55

August 2007 52.05 August 07 58097 44.85 21.8.07 6772 48.01

September

2007

62.65 September

07

436310 49.9 14.9.07 8564 54.71

October, 2007 69.00 1st October

07

124036 44.05 17.10.07 35538 56.53

November,2007 58.30 21st

November

07

64720 41.10 5.11.07 13211 49.70


304

The market price was Rs. [●] on BSE on [●], the trading day immediately following the day on which Board

meeting was held to finalize the offer price range for the right Issue.

The market price was Rs. [●] on NSE on [●] the trading day immediately following the day on which Board

meeting was held to finalize the offer price range for the right Issue.

REDRESSAL OF INVESTORS GRIEVANCES

Investor Grievances and Redressal System

The Company has adequate arrangements for redressal of Investor complaints. Well-arranged correspondence

system has been developed for letters of routine nature. Share transfer and dematerialization is being handled by

Intime Spectrum Registry Limited, Registrars and Share Transfer Agents. Letters are filed category wise after

having attended to. Redressal norm for response time for all correspondence including shareholders complaints

is 10 days. However, the Company endeavors to redress all the complaints within 7 days of the receipt of

complaint.

Status of Complaints

As on 30th

September 2007, the Company and its Registrars have received 4 Investor complaints during the

quarter ended on that date and all were redressed. No complaint was pending as on September 30, 2007.

Investor Grievances arising out of this Issue

Our Company’s Investor grievances arising out of the Issue will be handled by Intime Spectrum Registry

Limited, Registrar to the Issue. The Registrar will have a separate team of personnel handling only our post

Issue correspondence. Investor grievances will be settled expeditiously and satisfactorily by us. The agreement

between us and the Registrar will provide for retention of records with the Registrar for a period of at least one

year from the last date of dispatch of Letter of Allotment/ share certificate / warrant/ refund order to enable the

Registrar to redress grievances of Investors.

All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as

Folio No., Client ID / DP ID No., Name and Address of the First Applicant, number and type of shares applied

for, Composite Application Form serial number, amount paid on application and the Bank Branch where the

application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the

same details of the renounces should be furnished.

The average time taken by the Registrar for attending to routine grievances will be 30 days from the date of

receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the

endeavor of the Registrar to attend to them as expeditiously ass possible. We undertake to resolve the Investor

grievances in a time bound manner.

Investors may contact the Compliance Officer in case of any pre-issue/ post -issue related problems such as non-

receipt of letters of allotment/share certificates/demat credit/refund orders etc. The Company has appointed Shri

Sanjay Mukherjee as the Compliance Officer.

Compliance Officer

The Investors may note that a Compliance Officer has been appointed by the Company who may be contacted

for any pre-Issue / post-Issue related matter. The details relating to the Compliance Officer are as under:

Shri. Sanjay Mukherjee,

9/1, R N Mukherjee Road, 5th

Floor,

Kolkata 700 001

Tel: (+91 33) 2242 9956

Fax: (+91 33) 2248 6369

E-mail: [email protected];

Website: www.birla-sugar.com

CHANGE IN AUDITORS IN LAST THREE YEARS There is no change in auditor in last three years.


305

CAPITALISATION OF RESERVE OR PROFIT DURING LAST FIVE YEARS There was no capitalisation of reserve or profit during last five years.

REVALUATION OF ASSETS DURING LAST FIVE YEARS There was no revaluation of Assets during last five years.


306

SECTION IX: OFFERING INFORMATION

TERMS OF THE ISSUE

The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of

this Draft Letter of Offer, the enclosed Composite Application Form (the CAF), the Memorandum and Articles

of Association of the Company, the approvals from the Government of India, FIPB and RBI, if applicable, the

provisions of the Act, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital

and for listing of securities issued by Government of India and/or other statutory authorities and bodies from

time to time, Listing Agreements entered into by the Company with Stock Exchanges, terms and conditions as

stipulated in the allotment advise or letter of allotment or share certificate and rules as may be applicable and

introduced from time to time.

AUTHORITY FOR THE ISSUE

This Issue has been authorized by the Board of Directors at its held on 20th

August, 2007 and approved by the

members of the Company at the Extrageneral Meeting held on 22nd

September 2007 and Finance and Corporate

Affiars Committee at its meetings held on 17th

Otober 2007, wherein the Committee approved issue of Equity

Shares on rights basis along with detachable warrants to the existing equity shareholders on the record date.

BASIS OF ISSUE

The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose

names appear as beneficial owners as per the list to be furnished by the Depositories in respect of the Equity

Shares held in the electronic form and on the Register of Members of the Company in respect of the Equity

Shares held in physical form at the close of business hours on [●] (the “Record Date”), fixed in consultation

with the Designated Stock Exchanges. The Equity Shares are being offered for subscription in the ratio of

[●](____) Equity Shares for every [●] (__) Equity Shares held on Record Date. In addition, for every [●] Equity

Share being allotted on rights basis, the Allottees will receive one detachable warrant(s) therefore aggregating

up to [●] warrants.

RIGHTS ENTITLEMENT As your name appears as beneficial owner in respect of the Equity Shares held in the electronic form or appears

in the Register of Members as an Equity Shareholder on the Record Date, you are entitled to the number of

Equity Shares shown in Block I of Part A of the enclosed Composite Application Form (“CAF”).

The eligible equity shareholders are entitled to [●] (___) Equity Shares for every [●] (____) Equity Shares held

on the Record Date. In addition, the eligible Equity Shareholders are entitled to receive ____ (___) detachable

warrants for every [●] (___) Equity Share being allotted on rights basis.

MARKET LOT

The securities of the Company are tradable only in a dematerialised form. The market lot for the Equity Shares

and detachable warrants in dematerialised mode is one. In case of physical certificates, the Company would

issue one certificate for the Equity Shares allotted to one folio and a detachable warrant with a split

performance. (the “Consolidated Certificate”). In respect of the Consolidated Certificate, the Company will,

upon receipt of a request from the equity shareholder/warrant holder, split such Consolidated Certificate into

smaller denomination within one week’s time from the request of the equity shareholder/warrant holder. The

Company shall not charge any fee for the splitting of the Consolidated Certificate.

INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE

TRADED ON THE STOCK EXCHANGES IN DEMATERIALIZED FORM ONLY.

NOMINATION FACILITY

In terms of section 109A of the Companies Act, 1956, nomination facility is available in case of Equity Shares.

The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this

purpose. A sole equity shareholder or first equity shareholder, along with other joint equity shareholders being

individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the joint

holders, as the case may be, shall become entitled to the Equity Shares. A person, being a nominee, becoming


307

entitled to the Equity Shares by reason of the death of the original equity shareholder(s), shall be entitled to the

same advantages to which he would be entitled if he were the registered holder of the Equity Shares. Where the

nominee is a minor, the equity shareholder(s) may also make a nomination to appoint, in the prescribed manner,

any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the

minority of the nominee. A nomination shall stand rescinded upon the sale of the Equity Share by the person

nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When the Equity

Share is held by two or more persons, the nominee shall become entitled to receive the amount only on the

demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at the

registered office of the Company or such other person at such addresses as may be notified by the Company.

The applicant can make the nomination by filling in the relevant portion of the CAF. Only one nomination

would be applicable for one folio. Hence, in case the Shareholder(s) has already registered the nomination with

the Company, no further nomination needs to be made for Equity Shares to be allotted in this Issue under the

same folio. In case the allotment of Equity Shares/detachable warrants is in dematerialised form, there is no

need to make a separate nomination for the Equity Shares/detachable warrants to be allotted in this Issue.

Nominations registered with respective DP of the applicant would prevail. If the applicant requires change in the

nomination, they are requested to inform their respective DP.

JOINT HOLDERS

Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the

same as joint-holders with benefits of survivorship subject to provisions contained in the Articles of Association

of the Company.

OFFER TO NON-RESIDENT EQUITY SHAREHOLDERS

Applications received from NRIs and non-residents for allotment of Equity Shares with detachable warrants

shall be inter alia, subject to the conditions imposed from time to time by the RBI under the Foreign Exchange

Management Act, 2000 (FEMA) in the matter of refund of application moneys, allotment of Equity Shares,

issue of letter of allotment/share certificates, payment of interest, dividends, etc. General permission has been

granted to any person resident outside India to purchase shares offered on rights basis by an Indian Company in

terms of FEMA and regulation 6 of notification No. FEMA 20/200-RB dated May 03, 2000. The rights shares

purchased by non-residents and the shares acquired on conversion of warrants shall be subject to the same

conditions including restrictions in regard to the repatriability as are applicable to the original shares against

which rights shares are issued.

By virtue of Circular No. 14 dated September 16, 2003 issued by the RBI, overseas corporate bodies (“OCBs”)

have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign

Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations,

2003. Accordingly, OCBs shall not be eligible to subscribe to the Equity Shares and warrants. The RBI has

however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which

are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as

incorporated non-resident entities.

Applications received from the non-resident equity shareholders for the allotment of Equity Shares with

detachable warrants shall, among other things, be subject to conditions as may be imposed, from time to time,

by the RBI, in the matter of refund of application moneys, allotment of Equity Shares/ detachable warrants,

issue of letters of allotment/ certificates/ payment of dividends etc.

In case of change of status of holders i.e. from resident to non-resident, a new demat account shall be opened for

the purpose. DETAILS OF SEPARATE COLLECTING CENTRES FOR NON-RESIDENT APPLICATIONS

SHALL BE PRINTED ON THE CAF.

The Draft Letter of Offer and CAF shall only be dispatched to non-resident equity shareholders with registered

addresses in India.

FOR RESIDENT INDIAN SHAREHOLDERS

Applications will not be accepted by the Lead Managers or by the Registrar to the Issue or by the Company at

any offices except in the case of postal applications as per instructions given in the Draft Letter of Offer. Only

applications for an amount of less than Rs.20,000 may be effected in cash and all the payments more than Rs.20,

000 shall be effected by cheque / bank draft / drawn on any bank (including a co-operative bank) which is

situated at and is a member or a sub-member of the bankers clearing house located at the center where the CAF


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is submitted and which is participating in the clearing at the time of submission of the application. Outstation

cheque / money orders / postal orders will not be accepted and CAFs accompanied by such cheque / money

orders / postal orders are liable to be rejected.

NO OFFER IN THE UNITED STATES

The rights and the Shares of our Company have not been and will not be registered under the United States

Securities Act of 1933, as amended (the "Securities Act"), or any U.S. state securities laws and may not be

offered, sold, resold or otherwise transferred within the United States or to, or for the account or benefit of,

"U.S. Persons" (as defined in Regulation S under the Securities Act), except in a transaction exempt from the

registration requirements of the Securities Act. The rights referred to in this Draft Letter of Offer are being

offered in India but not in the United States of America. The offering to which this Draft Letter of Offer relates

is not, and under no circumstances is to be construed as, an offering of any Shares or rights for sale in the United

States of America, or the territories or possessions thereof, or as a solicitation therein of an offer to buy any of

the said Shares or rights. Accordingly, this Draft Letter of Offer should not be forwarded to or transmitted in or

into the United States of America at any time except in a transaction exempt from the registration requirements

of the Securities Act. Neither we nor any person acting on our behalf will accept subscriptions from any person,

or the agent of any person, who appears to be, or who we or any person acting on our behalf has reason to

believe is, a resident of the United States of America and to whom an offer, if made, would result in requiring

registration of this Draft Letter of Offer with the United States Securities and Exchange Commission. Rights

may not be transferred or sold to any U.S. Person (as defined in Regulation S under the Securities Act).


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ISSUE PROCEDURE

The Equity Shares with warrants now being offered are subject to the provisions of the Act and the terms and

conditions of this Draft Letter of Offer, the CAF, the Memorandum and Articles of Association of the Company,

the approvals from the Government of India, FIPB and RBI, if applicable, the provisions of the Act, guidelines

issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued

by Government of India and/or other statutory authorities and bodies from time to time, Listing Agreements

entered into by the Company with Stock Exchanges, terms and conditions as stipulated in the allotment advise

or letter of allotment or share certificate and rules as may be applicable and introduced from time to time.

Face value Each Equity Share shall have the face value of Rs 10/-

Issue price

The Equity Shares of the Rs 10/- each are being offered at an Issue Price of Rs. [●] per Equity Share for cash at

a premium of Rs. [●] per Equity Share in the present rights issue.

Issue of [●] Equity Shares of face value of Rs. 10/- each for cash at a premium of Rs. [●] per Equity Share on



on rights basis. The issue price for the Equity Shares will be payable in [●] installments. In terms of Clause

8.6.1 (vi) at leaset 25% of the issue price will be payable on Application; balance Rs. [●] of the Issue Price will

become payable at the option of Our Company, on or before 12 months from the Date of Allotment.



lacs. The Issue Price is [●] times the face value of the Equity Shares. For detrails please refer to “Terms of the

Issue” on page 306 of this Draft Letter of Offer.

Minimum Subscription

In the event of undersubscription, our Promoters intend to apply for additional Equity Shares, to ensure atleast

minimum ninety percent subscription to make the Rights Issue subscribed. Allotment of shares to the Promoters

for additional Equity Shares in excess of their respective rights entitlement will not result in change in control of

management and will be governed by the regulation 3(1)(b) of SEBI (Substantial Acquisition of Shares and

Takeovers) Regulations, 1997 and amendments thereof. The promoters undertake to comply with Clause 17 of

SEBI (Delisting of Securities) Guidelines 2003 in case of non-promoter holding in the Company falls below the

level required for continuous listing requirement.


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Terms of Payment

In terms of Clause 8.6.1 (vi) at leaset 25% of the issue price will be payable on Application i.e.Rs [●], which

constitutes [●] % of the full amount of the Issue Price Rs. [●] shall be payable (“Application Money”). The

remaining [●] % of the full amount of the Issue Price shall become payable, at the option of our Company, on or

before 12 months after the Allotment Date.

Towards Share Capital Towards Share Premium

Account

On Application Rs. [●]

In terms of Clause 8.6.1 (vi) at

leaset 25% of the issue price

will be payable on

Application.

Rs [●] per Equity Shares Rs [●]

On first and final Call Rs [●] Rs [●] per Equity Share Rs [●]

If there is a failure to pay any call or installment of a call on or before the day appointed for the payment of the

same, the Board may, at any time during which any part of the call or installment remains unpaid, serve a notice

on such member of our Company requiring him to pay the same together with any interest that may have

accrued.

The notice shall fix a date and a place or places on and at which such call or installment are to be paid. The

notice shall also state that in the event of nonpayment at or before the time and at the place or places appointed,

the shares in respect of which such call was made or installment is payable and to which the notice relates will

be liable to be forfeited. If the requisites of such notice are not complied with, any shares in respect of which

such notice has been given may, at any time thereafter before payment of all calls or installments, interest and

expenses due in respect thereof, be forfeited by a resolution of the Board to that effect. Such forfeiture shall

include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture.

Neither the receipt by our Company of a portion of any money which shall from time to time be due from any

Member to our Company in respect of his shares, either by way of principle or interest, nor any indulgence

granted by our Company in respect of the payment of any such money, shall preclude our Company from

thereafter proceeding to enforce a forfeiture of such shares. Any share so forfeited shall be deemed to be the

property of our Company, and the Board may sell, re-issue or otherwise dispose of the same in such manner as

they think fit.

Payment should be made in cash (not more than Rs.20,000) or by cheque/bank demand draft/ drawn on any

bank (including a co-operative bank) which is situated at and is a member or a sub-member of the bankers

clearing house located at the center where the CAF is accepted. Outstation cheques /money orders/postal orders

will not be accepted and CAFs accompanied by such cheque/money orders/postal orders are liable to be

rejected. Where an applicant has applied for additional shares and is allotted lesser number of shares than

applied for, the excess application money shall be refunded. The monies would be refunded within 42 days from

the closure of the Issue, and if there is a delay beyond 8 days from the stipulated period, the Company will pay

interest on the monies in terms of sub-sections (2) and (2A) of section 73of the Companies Act, 1956.

Mode of payment

(i) For resident applicants - Payment(s) must be made by cheque/demand draft and drawn on any bank

(including a co-operative bank) which is situated at and is a member or a sub-member of the Bankers’ Clearing

House located at the centre where the CAF is submitted. A separate cheque/draft must accompany each CAF.

Only one mode of payment should be used. Money orders, postal orders and outstation cheques will not be

accepted and applications accompanied by any such instruments will be rejected. Shareholders/Applicants

residing at places other than those mentioned in the CA and applicants who wish to send their applications but

not having collection centres should send their application by Registered Post, ONLY to the Registrar to the

Issue enclosing a Cheque/ Demand draft drawn on a clearing Bank and payable at [●] ONLY net of bank

charges and postal charges, before the closure of the issue. Such cheque/drafts should be payable to “The Oudh

Sugar Mills Limited – RIGHTS ISSUE”. All cheque/ drafts must be crossed ‘A/c Payee only’. No receipt will

be issued for the application money received. However, the Collection Centre receiving the application will

acknowledge receipt of the application by stamping and returning the acknowledgement slip at the bottom of

each CAF. The Company is not responsible for any postal delay/ loss in transit on this account.


311

(ii) For Non-resident applicants/ FIIs - Payments by Non-Resident shareholders will be accepted by Indian

Rupee Drafts purchased abroad or cheques/drafts drawn on Non-Resident External Account (NRE Account) or

Foreign Currency Non- Resident Account (FCNR Account) maintained anywhere in India but payable at [●] or

by Telegraphic Transfer in favour of the collecting Bankers by the concerned shareholders. However, in case

shares are held on a non-repatriable basis, payment may also be made by cheques / draft drawn on Non-Resident

Ordinary Account (NRO A/c.) maintained anywhere in India but payable at [●]. Such cheques/drafts should be

drawn in favour of “The Oudh Sugar Mills Limited- RIGHTS ISSUE – NRI/FII” payable at [●], India and

shall be crossed A/c. Payee Only, Banker’s Certificate regarding source of payment must be submitted with the

CAFs wherever necessary. The CAF along with cheques/drafts should be deposited with any of the branches of

the Bankers to the Issue nominated for this purpose. The certificate of inward remittance, if any, must be sent

only to the Registrar to the Issue, Intime Spectrum Registry Limited, quoting the details of folio no. and the

name and address of the branch of the Bankers to the Issue where CAF has been deposited before the closure of

the issue.

KINDLY NOTE THAT APPLICATIONS WILL NOT BE ACCEPTED BY THE LEAD MANAGER TO THE

ISSUE OR BY THE COMPANY

Mode of payment of dividend

We shall pay dividend, if declared, to our shareholders as per the provisions of the Companies Act, 1956.

Utilisation of Issue proceeds

The Board of Directors declares that:

(i) The funds received against this Issue will be transferred to a separate bank account other than the bank

account referred to sub-section (3) of Section 73 of the Act.

(ii) Details of all moneys utilised out of the Issue shall be disclosed under an appropriate separate head in the

balance sheet of the Company indicating the purpose for which such moneys has been utilised.

(iii) Details of all such unutilised monies out of the Issue, if any, shall be disclosed under an appropriate separate

head in the balance sheet of the Company indicating the form in which such unutilised moneys have been

invested. The funds received against this Issue, except to the extent utilized by the Company from the

promoters’ entitlement in the Issue brought in the form of advance share application money for subscription, if

any, till the Issue Opening Date as mentioned above shall be kept in a separate bank account and the Company

will not have any access to such funds unless it satisfies the Designated Stock Exchange with suitable

documentary evidence that the minimum subscription of 90% of the Issue has been received by the Company.

Undertakings by the Company

The Company undertakes that –

(i) The complaints received in respect of the Issue shall be attended to by the Company expeditiously and

satisfactorily.

(ii) All steps for completion of the necessary formalities for listing and commencement of trading at all Stock

Exchanges where the securities are to be listed will be taken within seven working days of finalization of basis

of allotment.

(iii) The funds required for dispatch of refund orders/ allotment letters/ certificates by registered post shall be

made available to the Registrar to the Issue.

(iv) The certificates of the securities/ refund orders to the non-resident Indians shall be dispatched within the

specified time.

(v) No further issue of securities affecting equity capital of the Company shall be made till the securities

issued/offered through the Issue are listed or till the application moneys are refunded on account of non listing,

under-subscription etc.

(vi) The Company accepts full responsibility for the accuracy of information given in this Draft Letter of Offer

and confirms that to best of its knowledge and belief, there are no other facts the omission of which makes any

statement made in this Draft Letter of Offer misleading and further confirms that it has made all reasonable

enquiries to ascertain such facts.

(vii) All information shall be made available by the Lead Manager and the Issuer to the Investors at large and no

selective or additional information would be available for a section of the Investors in any manner whatsoever

including at road shows, presentations, in research or sales reports etc.

Notices


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All notices to the equity shareholder(s) and warrant holders required to be given by the Company shall be

published in one English national daily with wide circulation, one Hindi national daily with wide circulation, a

regional language daily where the Registered Office of the Company is situated and/or, will be sent by ordinary

post to the registered holders of the Equity Share(s) and warrants from time to time.


313

Principal terms and conditions of the issue of Equity Shares on Rights Basis

Entitlement

The Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the

ratio of [●] Equity Share(s) for every [●] Equity Share(s) held on the Record Date. An eligible shareholder can

either renounce his entitlement (in whole or in part) or apply for additional Equity Shares over and above his

entitlement. Shareholder who has either renounced a part or whole of his entitlement cannot apply for additional

shares. If there is an over subscription on account of application for additional shares, then the additional shares

will be allotted to those applicants proportionately.

Options available to the equity shareholders:

The Composite Application Form clearly indicates the number of Equity Shares that the Equity Shareholder is

entitled to. If the Equity Shareholder applies for an investment in Equity Shares, then he can –

(i) Apply for his entitlement in part

(ii) Apply for his entitlement in part and renounce the other part

(iii) Renounce his entire entitlement

(iv) Apply for his entitlement in full

(v) Apply for his entitlement in full and apply for additional Equity Shares

Renouncees for Equity Shares can apply for the Equity Shares renounced to them and also apply for additional

Equity Shares.

Rights of Equity Shareholders

Subject to the applicable laws, the Memorandum and the Articles of Association of the Company, the terms of

this Draft Letter of Offer, the shareholders are entitled to the following rights –

(i) To receive dividend, if declared;

(ii) To attend general meetings and exercise voting power, unless prohibited by law;

(iii) To vote on poll, either in person or proxy;

(iv) To receive offer for right shares and be allotted bonus shares if announced;

(v) To receive surplus on liquidation;

(vi) Free transferability of share; and

(vii) Such other rights as may be available to a shareholder of a listed public company under the Companies Act,

1956.

For more details regarding the rights available under the Articles of Association please refer to section titled

“Main Provisions of Our Articles of Association” beginning on page 327 of this Draft Letter of Offer.

Ranking of the Equity Shares

The Equity Shares issued and allotted on a rights basis as a part of this Issue shall be subject to the

Memorandum and Articles of Association of the Company and shall rank pari passu in all respects including

dividends with the existing Equity Shares of the Company.

Additional Shares

The Equity Shareholders are eligible to apply for additional equity shares provided the applicant has applied for

all the equity shares offered to him without renouncing them in full or in part. Where the number of additional

equity shares applied for exceeds the number available for allotment, the allotment would be made on a fair and

equitable basis in consultation with the Designated Stock Exchange. Renouncees can apply for additional

shares.

Fractional Entitlement

For Equity Shares being offered on a rights basis under this Issue, if the shareholding of any of the equity

shareholders is less than [●] or is not in multiples of [●] then the fractional entitlement of such Equity

Shareholders shall be rounded up to the nearest integer. The Equity Shares needed for such rounding off shall be

adjusted from the Promoter and Promoter Group’s entitlement at the time of allotment.


314

Procedure for Calls

The schedule set out below for listing and trading of the partly paid and fully paid shares is based on the current

regulatory framework applicable thereto. Accordingly, any change in the regulatory regime would accordingly

affect the schedule.

Calls

Our Company would convene meetings of the Board from time to time to pass the required resolution(s) for

making the Calls and suitable intimation would be given by our Company to the Stock Exchanges. Further,

advertisements for the same will be issued in one English national daily with wide circulation, one Hindi

national daily with wide circulation.

Record date for Calls and suspension of trading

Our Company would fix a record date giving at least 15 days prior notice to the Stock Exchanges for the

purpose of determining the list of shareholders to whom the notice for call money (“Call Money Notice”)

would be sent. Once the record date has been fixed, trading in the partly paid Equity Shares for which calls have

been made would be suspended 5 days prior to each record date that has been fixed for the call concerned.

Separate ISINs on application and call

In addition to the present ISIN for the existing fully paid up Equity Shares, Our Company would obtain separate

ISIN Nos. for its [●] paid up Equity Shares. The [●] paid up Equity Shares offered under the Issue will be traded

under a separate ISIN No. for the period from the date of listing of these Equity Shares and up to five days prior

to the record date for the first and final call. The ISIN No. representing [●] paid up Equity Shares will be

terminated after the record date for the first and final call.

On payment of the first and final call in respect of the [●] paid up Equity Shares, such shares on which final call

has been duly paid would be converted into fully paid up Equity Shares and merged with the existing ISIN for

fully paid Equity Shares of Our Company.

Listing of partly paid shares

The [●] paid up shares would be listed on the Stock Exchanges. Once, the Call Money Notice for respective

calls has been sent, the listing of then existing partly paid up Equity Shares would be terminated. Our Company

will make necessary application to BSE and NSE for listing of partly paid up shares. The [●] paid up shares will

be issued in accordance with the Letter of Offer and would be listed for the period as per the following details.

The allotment of [●] paid up shares will be made within 30 days from the closure of Issue and the same will be

listed within 10 days thereafter.

The fully paid up shares will be listed within approximately 15 days from the last date fixed for payment of first

and final call money.

The process of corporate action for crediting [●] paid up and fully paid up shares to the Demat Account may

take about two weeks time from the last date of payment of the account under the call money notice.

During this period the partly paid up shares would not be tradeable.

Payment Period for each call

As per the Articles of Association of our Company, the shareholders would be given not less than fourteen days

time for the payment of the call money for each call.

Indicative Schedule of activities for making the partly paid up equity shares fully paid up

Activity Date

Allotment is finalized with Stock Exchange A

Listing of Equity Shares [●]% paid up A + 2

Board to make first and final call for balance [●]% A + (on or before

12 months from

date of allotment)

Record date for making first and final call B

Suspension of trading of [●]% paid up shares B – 5 trading days

Send the call notice to the shareholders holding shares on the record date B + 2

Last date of payment of call money B + 23


315

Activity Date

Corporate action for credit of fully paid up shares to the demat account of shareholders

who have paid the call money

B + 35

Listing of shares fully paid up within B + 40

Principal terms and conditions of the issue of detachable warrants being issued

Face Value

Each detachable warrant is convertible into one (1) Equity Share of face value of Rs.10/- each.

Entitlement

In addition to entitlement to apply for [●] Equity Share(s) for every [●] Equity Share(s) held on the Record

Date, an eligible equity shareholder is entitled to receive [●] detachable warrants for every [●] Equity Shares

being allotted on rights basis. The warrants so issued can be freely and separately traded. The warrant holder

will be entitled to exercise his right to apply for [●] Equity Share of Rs. 10/- each for every warrant held at

Warrant Exercise Price for each warrant held, on the fixed date declared by the Company (Notice date, the

outermost date for conversion) during the Warrant Exercise Period. Warrant holders can exercise their right to

apply for the Equity Share at the Warrant Exercise Price. Warrant holder can not renounce his entitlement to

apply for the Equity Share or apply for additional Shares over and above his entitlement.

This share entitlement on each warrant shall be proportionately adjusted for any further bonus issue made by the

Company prior to the Warrant Exercise Period so as to ensure that the benefit to the warrant holder is not

prejudiced and remains the same as if the bonus would not have been declared. For example, should the

Company declare a bonus issue prior to the Warrant Exercise Period in the ratio of 1:1, then the number of

equity shares to be issued pursuant to exercise of warrant shall double.

In the event of any sub-division or consolidation of the face value, the share entitlement on each warrant shall be

proportionately increased / decreased such that the aggregate nominal value of the entitlement remains the same

as the nominal value of the Equity Shares immediately prior to such subdivision or consolidation e.g. in case the

Company decides to reduce the face value of Equity Shares to Rs.5 each, then upon exercise of each warrant by

making payment under the Warrant Exercise Price, the warrant holder would get 2 Equity Shares of Rs.5 each

instead of one Equity Share of Rs.10 each. However, in case the Company announces a rights issue during the

tenure of the warrants, neither would any adjustment be made to the share entitlement on each warrant nor

would there be any reservations for warrant holders.

Options available to warrant holder

A warrant holder has the following rights –

(i) Apply for his entitlement in part. However, the other part shall not be renounciable,

(ii) Apply for his entitlement in full,

(iii) Apply for his entitlement in full and also apply for additional shares.

Rights available to warrant holders

The warrants shall be transferable and transmittable in the same manner and to the same extent and be subject to

the same restrictions and limitations and other related matters as in the case of Equity Shares of the Company.

By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, overseas corporate bodies

(“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the

Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs))

Regulations, 2003. Accordingly, the warrants shall not be transferable (by sale or gift) in favour of OCB(s). The

warrants shall not confer upon the holders thereof any right to receive any notice of the meeting of the

Shareholders of the Company or annual report of the Company and or to attend/vote at any of the general

meetings of the Shareholders of the Company held, if any. Save and except the right of subscription to the

Company’s Equity Shares as per the terms of the issue of warrants, the holders of the warrants in their capacity

as warrant holders shall have no other rights or privileges.

The equity shares arising from the conversion of warrants shall be subject to the Memorandum and Articles of

Association of the Company and shall rank pari passu in all respects with existing Equity Shares of the

Company including dividends. Except that the shares arising from conversion of warrants shall be eligible for

dividends only after payment of Exercise Conversion Price and allotment of the Equity Shares.


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Additional shares pursuant to exercise of warrants.

A warrant holder can apply for additional shares provided that the applicant has applied for all the shares offered

to him. The application for additional shares shall be considered for allotment at the sole discretion of the Board

and in consultation if necessary with the Designated Stock Exchange. This allotment of additional shares will be

made on proportionate basis with reference to number of warrants already held by the applicant at the time of

application for issue of additional shares.

Warrant Exercise Period

Warrant Exercise Period shall be the period commencing after [●] months from the date of allotment up to [●]

months from the date of allotment. The warrant will get converted on or before a fixed date (i.e. “Notice Date,

the outermost date for conversion”) and would be made uniformly in respect of all the warrants outstanding. The

Company will fix the Record Date as any time during the Warrant Exercise Period for the purpose of warrant

conversion. The conversion of warrants into Equity Shares of the Company will be as per the Warrant Exercise

Price as mentioned under the para “Warrant Exercise Price” provided below.

WARRANTS SHALL LAPSE ON THE NOTICE DATE OR THE END OF WARRANT EXERCISE

PERIOD, WHICH EVER IS EARLIER.

Warrant Exercise Price

Warrant Exercise Price shall be lower of (a) 20% discount to the average six weekly closing prices before the

date of the public notice on Designated Stock Exchange; or (b) 20% discount to average two weekly closing

prices before the date of the public notice on the Designated Stock Exchange; or (c) Rs. [●] per Equity Share,

being the Cap Price. The Warrant Exercise Period and the Warrant Exercise Price will be notified by giving

public notice in the newspaper. The investors may also note that the cap price of Rs. [●] per share for the

purpose of conversion into Equity Shares for every detachable warrant should not be taken to be indicative of

the market price of the Equity Shares, whether presently or after the Equity Shares issued upon the exercise of

warrants are listed. No assurance can be given regarding the active / sustained trading in the Equity Shares or

the price at which the Equity Shares offered under the present Issue will trade either after the listing or at the

time of exercise of warrants.

If there is an increase in the shareholding of the Promoters / Promoter Group beyond the limit prescribed in the

Listing Agreement pursuant to the warrant conversion, the Company undertakes to ensure compliance in such

manner as may be directed by the Stock Exchanges. Such increase in their shareholding, if any, will be pursuant

to the exercise of their entitlement and shall be covered under 3(1)(b)(i) of the SEBI (Substantial Acquisition of

Shares and Takeover) Regulations, 1997. Further such increase in their shareholding, if any, will not result in

change of control of the management of the Company. In the event of the minimum public shareholding falling

below the prescribed minimum, the Company will take the necessary steps in ensuring that the minimum public

shareholding is restored in compliance with SEBI regulations. As such, other than meeting the requirements

indicated in the section on “Objects of the Issue” on page 39 of this Draft Letter of Offer, there is no other

intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments

to the Promoters, in this Issue, the Promoters’ shareholding in the Company exceeds their current shareholding.

Allotment of warrants

Subject to the provisions contained in this Draft Letter of Offer, the Articles of Association of the Company and

the approval of the Designated Stock Exchange, the Board will proceed to allot one detachable warrant for every

[●] Equity shares allotted under the rights issue. If there is any shortfall or surplus in the warrants, required on

account of rounding off as mentioned above, then the said shortfall or surplus would be adjusted against warrant

entitlement of Promoter / Promoter Group.

How to apply

Procedure for application for Equity Shares and the detachable warrants

The enclosed CAF for equity shares should be completed in all respects in its entirety before submission to the

Bankers to the Issue or their designated branches as they appear in the CAF. The forms of the CAF should not

be detached under any circumstances otherwise the application is liable to be rejected. The CAF consists of four

parts –


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(i) Part A: Form for accepting the Equity Shares and the detachable warrants and for applying for additional

Equity Shares and / or warrants

(ii) Part B: Form for renunciation of Equity Shares

(iii) Part C: Form for application for renounces of Equity Shares

(iv) Part D: Form for request for split application forms

Application for conversion into Equity Shares will be sent separately to the warrant holders as on the Record

Date.

Options available Actions required

1 Accept whole or part of your entitlement without

renouncing the balance.

Fill in and sign Part A (All joint holders must sign)

2. Accept entitlement in full and apply for additional

number of additional Equity Shares

Fill in and sign ‘Part A’ including Block III relating to the acceptance

of entitlement and Block IV relating to additional Equity Shares (All

joint holders must sign)

4. Accept a part of your entitlement and renounce the

balance to one or more renouncee(s)

OR

Renounce your entitlement to all the Equity Shares

offered to you to more than one renouncee

Fill in and sign Part D (all joint holders must sign) requesting for Split

Application Forms. Send the CAF to the Registrar to the Issue so as to

reach them on or before the last date for receiving requests for

Split Forms. Splitting will be permitted only once.

On receipt of the Split Form take action as indicated below.

For the Equity Shares you wish to accept, if any, fill in and sign Part A.

For the Equity Shares you wish to renounce, fill in and sign Part B

indicating the number of Equity Shares renounced and hand it over to

the renouncees. Each of the renouncees should fill in and sign Part C

for the Equity Shares accepted by them.

5. Introduce a joint holder or change the sequence of joint

holders

This will be treated as a renunciation. Fill in and sign Part B and the

renouncees must fill in and sign Part C.

Please note that:

• Part A of the CAF must be used only by the existing Equity Shareholders of the Company to whom the shares

are offered and must not be used by any person(s) in whose favour this entitlement has been made. If used, this

will render the application invalid.

• While applying for or renouncing equity shares joint holders must sign in the same order and as per the

specimen signatures registered with the Company.

• Request for split form should be made for a minimum of 100 Equity Shares or in multiples thereof and one

Split Application Form for the balance Equity Shares, if any.

• Request by the applicant for the Split Application Form should reach the Company on or before [●] .

• Only the person to whom this Draft Letter of Offer has been addressed to and not the renouncee(s) shall be

entitled to renounce and to apply for Split Application Forms. Forms once split cannot be split again.

• Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.

(i) Availability of duplicate CAF -In case the original CAF is not received, or is misplaced by the applicant, the

Registrar to the Issue will issue a duplicate CAF on request of the applicant who should furnish the registered

folio number, DP and Client ID no. and his/ her full name and address to the Registrar to the Issue. Please note

that those who are making the application on duplicate form should not utilize the original CAF for any purpose

including renunciation, even if it is received subsequently. If the applicant violates any of these requirements,

he/she shall face the risk of rejection of both the applications.

(ii) Applications by resident equity shareholders - Applications should be made only on the enclosed CAF

provided by the Company. The enclosed CAF should be completed in all respects, as explained in the

instructions indicated in the CAF. Applications will not be accepted by the Lead Manager or by the Registrar to

the Issue or by the Company at any offices except in the case of postal applications as per instructions given in


iii) Applications by non-resident equity shareholders - Applications received from the non-resident equity

shareholders for the allotment of Equity Shares shall, inter alia, be subject to the conditions as may be imposed

from time to time by the RBI, in the matter of refund of application moneys, allotment of Equity Shares, issue of

letters of allotment / certificates / payment of dividends etc. Non-resident equity shareholders will be required to


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represent, inter alia, that they are not excluded U.S. Persons as such term is defined in Regulation S under the

U.S. Securities Act of 1933, as amended.

(iv) For applicants residing at places other than designated bank collecting branches.- Applicants residing at

places other than the cities where the bank collection centers have been opened should send their completed

CAF by registered post/speed post to the Registrar to the Issue, along with demand drafts, net of demand draft

and postal charges, payable at [●] in favour of “The Oudh Sugar Mills Limited - Rights Issue” crossed “A/c

Payee only” so that the same are received on or before closure of the Issue i.e. [●]. The Company will not be

liable for any postal delays and applications received through mail after the closure of the Issue are liable to be

rejected and returned to the applicants. Applications by mail should not be sent in any other manner except as

mentioned below. All application forms duly completed together with cash/ Cheque /demand draft for the

application money must be submitted before the close

of the subscription list to the Bankers to the Issue named herein or to any of its branches mentioned on the

reverse of the CAF. The CAF alongwith application money must not be sent to the Company or the Lead

Manager to the Issue or the Registrar to the Issue except as mentioned above. The applications are required to

strictly adhere to these instructions. Failure to do so could result in the application being liable to be rejected by

the Company, the Lead Manager and the Registrar not having any liabilities to such applicants.

(v) Application on plain paper - An Equity Shareholder who has neither received the original CAF nor is in a

position to obtain the duplicate CAF may make an application to subscribe to the Rights Issue on plain paper,

along with a Cheque/ Demand Draft payable at [●] which should be drawn in favour of “The Oudh Sugar

Mills Limited - Rights Issue” and send the same by registered post directly to the Registrar to the Issue- Intime Spectrum Registry Limited., Mumbai. The application on plain paper, duly signed by the applicants

including joint holders, in the same order as per specimen recorded with the Company, must reach the office of

the Registrar to the Issue before the Issue Closing Date and should contain the following particulars –

(a) Name of Issuer, being The Oudh Sugar Mills Limited.

(b) Name and address of the Equity Shareholder including joint holders

(c) Registered Folio Number/ DP and Client ID no.

(d) Number of shares held as on Record Date i.e. [●]

(e) Certificate numbers and distinctive numbers, if held in physical form

(f) Number of rights Equity Shares entitled

(g) Number of rights Equity Shares applied for out of entitlement

(h) Number of additional Equity Shares applied for, if any

(i) Total number of Equity Shares applied for

(j) Total amount paid at the rate of Rs. [●]per Equity Share

(k) Particulars of cheque/draft

(l) Savings/Current Account Number and name and address of the Bank where the Equity

Shareholder will be depositing the refund order

(m) In case of Non-Resident shareholders, NRE/FCNR/NRO Account No., name and address of the bank and

branch should be given.

(n) Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of

the Company

(o) Payment in such cases, should be through a Cheque/ demand draft, net of demand draft and postal charges,

payable at [●] be drawn in favour of “Oudh Sugar Mills Limited - Rights Issue” crossed “A/c Payee only”.

Please note that those who are making the application on plain paper shall not be entitled to renounce their rights

and should not utilize the original CAF for any purpose including renunciation even if it is received

subsequently. If the applicant violates any of these requirements, he/she shall face the risk of rejection of both

the applications as well as forfeiture of amounts remitted along with the applications. The Company shall refund

such application amount to the applicant without any interest thereon.

Please note that:

(a) In case of applications or in case of an application in joint names, each of the applicants, should mention

his/her PAN allotted under the IT Act. The copy of the PAN card(s) or PAN allotment letter(s) is required to be

submitted with the Bid-cum-Application Form. Applications without this information and documents will be

considered incomplete and are liable to be rejected. It is to be specifically noted that Bidders should not submit

the GIR number instead of the PAN, as the Bid is liable to be rejected on this ground.

.

(vi) Acceptance of the Issue - You may accept the Issue and apply for the Equity Shares with detachable

warrants offered, either in full or in part by filling Block III of Part A of the enclosed CAF and submit the same

along with the application money payable to the Bankers to the Issue or any of the branches as mentioned on the


319

reverse of the CAF before the close of the banking hours on or before the Issue Closing Date or such extended

time as may be specified by the Board thereof in this regard. Applicants at centers not covered by the branches

of collecting banks can send their CAF together with the cheque drawn on a local bank in [●] / demand draft,

net of bank and postal charges, payable at [●] to the Registrar to the Issue by registered post. Such applications

sent to anyone other than the Registrar to the Issue are liable to be rejected.

Procedure for exercise of warrants being issued with Equity Shares under the Issue

Activity Date

Activity Date

Relevant date for determination of the warrant conversion price X-1

Company to give public notice for, application of Record Date, Notice Date and Warrant

Conversion Price

X

Company to apply for Record Date with the Stock Exchanges X

Stock Exchanges will suspend the trading of warrants (subject to Stock Exchanges

approval)

X + 10

Company / Registrar to dispatch exercise application form to the warrant holders X+17`

Company to give notice for the dispatch confirmation X+17

Warrant Conversion Period for Public (29 Days) during which warrant holders will

exercise their entitlement towards warrant conversion

X+17 to

X+45

Consolidated allotment of Equity Shares from the converted warrants X+46

Company to apply for listing of New Equity Shares from the converted warrants to the

Stock Exchanges

X+47

Unsubscribed portion of warrants will lapse on X+45

Notice Date (outermost date for conversion) X+45

Listing of Equity Shares from the converted warrants X+50

(approx.)

Application for conversion into Equity Shares, should be made on the prescribed warrants exercise application

form.

The Company will apply for the Record Date with the Stock Exchanges and fix the Record Date. The Company

will determine the Warrant Conversion Price on relevant date, which is the date prior to date of the public

notice. Warrant exercise application form would be sent to all the warrant holders separately as per the details

appearing in Register of warrant holders on the Record Date. On receipt of the aforesaid intimation, the sole

warrant holder / all the joint holders should follow the procedure as described in this SECTION with respect to

physical/ demat form and send the relevant documents by registered post / speed post with acknowledgment due

or by hand delivery to Registrar to the Company; Intime. The Company will give the public notice for the

warrant conversion price and the confirmation for the dispatch in the newspaper.

(i) In case of warrant held in physical mode - The warrant holder should send his application for issue of Equity

Shares to the Registrar to the Company, Intime, by filling up the requisite particulars on the warrant exercise

application form and by discharging on the reverse of the warrants certificate. For resident shareholders /

applicants and non-resident equity shareholders / applicants applying on a nonrepatriation basis, the application

should be accompanied by a cheque/demand draft favoring “The Oudh Sugar Mills Limited-Warrants Issue”

payable at [●] for the requisite amount. For non-resident equity shareholders / applicants applying on a

repatriation basis, the application should be accompanied by a cheque / demand draft favoring “The Oudh

Sugar Mills Limited-Warrant Issue-NR” payable at [●]for the requisite amount. For making the payment,

non-resident equity shareholders / applicants are required to follow the similar procedures as specified in

‘Submission of Application & Mode of Payment for Rights Issue of Equity Shares’ in this Draft Letter of Offer.

(ii) In case of warrant held in DEMAT mode - The Registrar of the Company, Intime, will before the Warrant

Exercise Period open a special depository account with NSDL “The Oudh Sugar Mills Limited- Warrant

Conversion Escrow Account” with a DP (the “Special Depository Account”). The Company will open the

Special Depository Account through the Registrar with NSDL at least 2 days prior to the commencement of the

Warrant Exercise Period and the details of the account will be included by the Company in the newspaper

notice. Shareholders of The Oudh Sugar Mills Limited having the depository account with CDSL must use inter

depository delivery instruction slip for the purpose of crediting their warrants in favour of the Special

Depository Account with the NSDL. Beneficial owners (holders of warrants in dematerialized form) who wish


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to tender their warrants for conversion, will be required to send their application for issue of equity shares on the

prescribed application form sent separately, accompanied by a cheque / demand draft favouring “The Oudh

Sugar Mills Limited” payable at [●] along with a photocopy of the delivery instruction in “off market” mode

or counterfoil of the delivery instruction in “off market” mode, duly acknowledged by the depository participant

(“DP”) in favour of the special depository account, to the Registrar of the Company, before the close of

Warrant Exercise Period. For resident shareholders / applicants and non-resident equity shareholders / applicants applying on a non-

repatriation basis, the application should be accompanied by a cheque / demand draft favoring “The Oudh

Sugar Mills Limited-Warrants Issue” payable at [●] for the requisite amount. For non-resident equity

shareholders / applicants applying on a repatriation basis, the application should be accompanied by a cheque /

demand draft favoring “The Oudh Sugar Mills Limited-Warrants Issue-NR” payable at [●] for the requisite

amount. For making the payment, non-resident equity shareholders / applicants are required to follow the similar

procedures as specified in ‘Submission of Application & Mode of Payment for Rights Issue of Equity Shares’ in


In case the warrants along with the cheques / drafts towards full payment of the Warrant Exercise Price do not reach the Registrar by the end of Warrant Exercise Period , then the same shall lapse. Warrants

with payments for lesser amounts shall be rejected & returned.

Shares allotted on exercise of valid warrants will be dispatched /credited to the applicant’s electronic account

within 10 days from the last day of the calendar month in which the application is received. On allotment,

Company shall apply for listing of these equity shares.

MODIFICATION TO THE TERMS OF THE WARRANTS ANY\ MODIFICATION TO THE TERMS

OF ISSUE AND EXERCISE OF THE WARRANTS WOULD BE CARRIED OUT ONLY WITH THE

PRIOR APPROVAL OF THE WARRANT HOLDERS. THIS WOULD BE DONE BY CONVENING

THEIR SPECIAL CLASS MEETING IN ACCORDANCE WITH THE PROVISIONS OF THE

COMPANIES ACT, 1956 AND TAKING THEIR APPROVAL BY A SIMPLE MAJORITY TO THE TERMS OF MODIFICATION SOUGHT, FROM THE WARRANT HOLDERS PRESENT AND

VOTING.

Caution:

Each warrant application form shall be accompanied by a single instrument of payment. Clubbing of

folios/securities for the purpose of making a consolidated payment is not permitted. Cheques/DD should be

payable at [●] for the full amount and upcountry instructions/payments for less amount will be rejected

Investors are advised not to close or transfer their DEMAT account between the period of application for

exercise of warrant(s) till the time of allotment/receipt of credit in their account so as to avoid rejection of credit

from the Depositories and resultant delay in receiving the intimation of allotment

Warrants may not be exercised from within United States by/or on behalf of US citizens. Each person

exercising the warrant must provide a written certification that he/she is not a US person or that the

warrant is not being exercised on behalf of US citizen. No exercise will be accepted from any person

whose address is within United States. If the Warrants are not exercised within the Warrant exercise period as described above then any unexercised

Warrant shall automatically be treated as cancelled.

Renunciations

This Issue includes a right exercisable by the eligible shareholder to renounce the Equity Shares offered to them

either in full or in part in favour of any other person or persons. The attention of the shareholder is drawn to the

fact that the Company shall not allot and / or register and Equity Shares and detachable warrnts in favour of

more than three persons (including joint holders), partnership firm(s) or their nominee(s), minors, HUF, any

trust or society (unless the same is registered under the Societies Registration Act, 1860 or the

Indian Trust Act or any other applicable law relating to societies or trusts and is authorized under its constitution

or bye-laws to hold equity shares. Any renunciation from resident indian shareholder(s) to Non-Resident

Indian(s) or from Non-Resident Indian shareholder(s) to resident Indian(s) or from Non-Resident Indian

shareholder(s) to other Non-Resident Indian(s) is subject to the renouncer(s) / renounce(s) obtaining the

approval of the FIPB and/or necessary permission of the RBI under the FEMA and such permissions should be

attached to the CAF. Applications not accompanied by the aforesaid approvals are liable to be rejected.


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Procedure for renunciation

(i) To renounce the whole offer in favour of one Renouncee – Shareholders who wish to renounce the offer

indicated in Part A, in whole, should complete Part B of the CAF. In case of joint holding, all joint holders must

sign Part B of the CAF. The person in whose favour renunciation has been made should complete and sign Part

C of the CAF. In case of joint renouncees, all joint renouncees must sign this part of the CAF.

(ii) To renounce in part / or renounce the whole to more than one person(s) – In case if any shareholder wishes

to either accept this offer in part and renounce the balance or renounce the entire offer under this Issue in favour

of two or more renouncees, the CAF must be first split into requisite number of forms.

Shareholders should indicate his/her requirement of split forms in the space provided for this purpose in Part D

of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of

business hours on the last date of receiving requests for split forms. On receipt of the required number of split

forms from the Registrar, the procedure as mentioned in paragraph above shall have to be followed.

PLEASE NOTE THAT IN CASE THE SIGNATURE OF THE EQUITY SHAREHOLDER(S), WHO

HAS RENOUNCED THE EQUITY SHARES, DOES NOT AGREE WITH THE SPECIMEN REGISTERED WITH THE COMPANY, THE APPLICATION IS LIABLE TO BE REJECTED.

(iii) Renouncee(s) – The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part

C of the Application Form and submit the entire Application Form to the Bankers to the Issue on or before the

Issue Closing Date along with the application money.

Change and / or introduction of additional holders

If you wish to apply for Equity Shares with detachable warrants jointly with any other person(s), not more than

three, who is/are not already a joint holder with you, it shall amount to renunciation and the procedure as stated

above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders

shall amount to renunciation and the procedure, as stated above shall have to be followed. However, this right of

renunciation is subject to the express condition that the Board of Directors of the Company shall be entitled in

its absolute discretion to reject the request for allotment from the renouncee(s) without assigning any reason

thereof.

Disposal of Odd Lots

The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of this Issue.

For Equity Shares being offered on a rights basis under this Issue, if the shareholding of any of the equity

shareholders is less than eight (●) or is not in multiples of eight (●), then the fractional entitlement of such

Equity Shareholders shall be rounded up to the nearest integer. The Equity Shares needed for such rounding off

shall be adjusted from the Promoter Group’s entitlement at the time of allotment.

Restriction on transfer and transmission of Shares.

Nothing contained in the Articles of Association of the Company shall prejudice any power of the Company to

refuse to register the transfer of any share. No fee shall be charged for sub-division and consolidation of share

certificates (physical form) and detachable warrants and for sub-division of letters of allotment and split,

consideration, renewal and pucca transfer receipts into denomination corresponding to the market units of

trading.

Basis of the Offer and allotment

The Equity Shares with detachable warrants are being offered for subscription for cash to those existing Equity

Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in

respect of the Equity Shares held in the electronic form and on the Register of Members of the Company in

respect of Equity Shares held in the physical form at the close of business hours on the Record Date. The

Company has in consultation with the Designated Stock Exchange fixed the Record Date for determining the

shareholders who are entitled to receive this offer for Equity Shares with detachable warrants on a rights basis.

The Equity Shares with detachable warrants are being offered for subscription in the ratio of [●] Equity Share

for every [●] Equity Shares held by the Equity Shareholders on the Record Date, also, for every [●] Equity

Share being allotted on rights basis, the shareholder would receive [●] detachable warrants. Subject to the

provisions contained in this Draft Letter of Offer, the Articles of Association of the Company and the approval

of the Designated Stock Exchange, the Board will proceed to allot the Equity Shares in the following order of

priority –


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(i) Full allotment to those Equity Shareholders who have applied for their rights entitlement either in full or in

part and also to the renouncee(s) who has/ have applied for Equity Shares renounced in their favour, in full or in

part.

(ii) For Equity Shares with detachable warrants being offered on rights’ basis under this Issue, if the equity

shareholding of any of the Equity Shareholders is less than [●] or is not in multiples of [●], then the fractional

entitlement of such holders shall be rounded up to the nearest integer. The Equity Shares needed for such

rounding off shall be adjusted from the the Promoter Group’s entitlement at the time of allotment, the allotment

would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.

(iii) Allotment to the Equity Shareholders who having applied for all the Equity Shares with detachable warrants

offered to them as part of the Issue and have also applied for additional Equity Shares and / or detachable

warrants. The allotment of such additional Equity Shares will be made as far as possible on an equitable basis

having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-

subscribed portion after making full allotment in (a) and (b) above. The allotment of such Equity Shares with

detachable warrants will be at the sole discretion of the Board/ duly authorised committee of Directors in

consultation with the Designated Stock Exchange, as a part of the Issue and not preferential allotment.

(iv) Allotment to the renouncees who having applied for all the Equity Shares renounced in their favour have

also applied for additional Equity Shares, provided there is an under-subscribed portion after making full

allotment in (i) (ii) and (iii) above. The allotment of such additional Equity Shares will be made on

proportionate basis at the sole discretion of the Board/ duly authorised committee of Directors but in

consultation with the Designated Stock Exchange, as a part of the Issue and not as a preferential allotment. After

taking into account allotment to be made under (i) and (ii) above, if there is any unsubscribed portion, the same

shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code which would

be available for allocation under (iii) and (iv) above. In the event of under-subscription, Promoters intends to

apply for additional Equity Shares. Such acquisition of additional Equity Shares, if allotted to Promoters shall be

in terms of proviso to regulation 3(1)(b)(ii) of the Takeover Code and will be exempt from the applicability of

regulation 11 of Takeover Code. Further this acquisition will not result in change of control of management of

the Company. Allotment to Promoters of any unsubscribed portion, over and above their entitlement shall be

done in compliance with Clause 40A of the Listing Agreement and the other applicable laws prevailing at that

time. The Company expects to complete the allotment of Equity Shares within a period of 42 days from the date

of closure of the Issue in accordance with the listing agreement with the Stock Exchanges.

Standby Underwriting

The Company has not entered into any underwriting arrangement.

Option to Subscribe

Applicants to the Equity Shares of the Company issued through this Rights Issue shall be allotted the securities

in dematerialized (electronic) form at the option of the applicant. The Company has signed a tripartite agreement

with National Securities Depository Limited (NSDL) and Intime Spectrum Registry Limited on [●] and with

Central Depository Services (India) Limited (CDSL) and [●] on [●], which enables the Investors to hold and

trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates.

Issue of duplicate equity share certificate

If any Equity Share Certificate(s) is/are mutilated or defaced or the pages for recording transfers of Equity

Shares are fully utilized, the Company against the surrender of such Certificate(s) may replace the same,

provided that the same will be replaced as aforesaid only if the Certificate numbers and the Distinctive numbers

are legible. If any Equity Share Certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of

proof thereof to the satisfaction of the Company and upon furnishing such indemnity/ surety and/or such other

documents as the Company may deem adequate, duplicate Equity Share Certificate(s) shall be issued.

Printing of bank particulars on refund orders

As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement,

the particulars of the applicant’s bank account are mandatorily required to be given for printing on refund

orders. Bank account particulars will be printed on the refund orders / refund warrants, which can then be

deposited only in the account specified. The Company will in no way be responsible if any loss occurs through

these instruments falling into improper hands either through forgery or fraud.


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Note on cash payment (Section 269 SS)

Having regard to the provisions of Section 269 SS of the Income Tax Act, 1961, subscriptions against

applications for securities should not be effected in cash and must be effected only by ‘Account Payee’ cheques

or ‘Account Payee’ bank drafts, if the amount payable is Rs. 20,000/- or more. In case payment is effected in

contravention of this provision, the application is liable to be rejected.

Last date for submission of CAF

The last date for receipt of CAF by the Bankers to the Issue together with the amount payable on application is

[●]. If the relevant CAF together with amount payable thereunder is not received by the Bankers/Registrar to the

Issue on or before the close of banking hours on the aforesaid last date the offer contained in this Draft Letter of

Offer shall be deemed to have been declined and the Board shall be at liberty to dispose of the equity shares

hereby offered as provided under “Basis of Allotment”.

Incomplete application

CAFs, which are not complete or are not accompanied with the application money amount payable, are liable to

be rejected.

Forfeiture

The allotment shall be made only on receipt of full application money as mentioned in “Terms of Payment”.

Application under power of attorney

In case of applications under Power of Attorney or by Limited Companies or Bodies Corporates or Societies

registered under the applicable laws, a certified copy of the Power of Attorney or the relevant authority, as the

case may be, along with the certified copy of the Memorandum and Articles of Association or Bye-laws, as the

case may be, must be lodged separately by registered post at the office of the Registrar to the Issue

simultaneously with the submission of the CAF, indicating the serial number of the CAF and the name of the

bank and the branch office where the application is submitted within 10 days of closure of the offer, failing

which the application is liable to be rejected. In case the Power of Attorney is already registered with the

Company, then the same need not be furnished again. However, the serial number of the Registration under

which the Power of Attorney has been registered with the Company must be mentioned below the signature of

the Applicant.

Bank details of the applicant

The applicant must fill in the relevant column in the CAF giving particulars of Savings Bank/Current Account

Number and the name of the Bank with whom such accounts is held, to enable the Registrar to the Issue to print

the said details in the Refund Orders, if any, after the name of the payees. Please note that provision of Bank

Account details has now been made mandatory and applications not containing such details are liable to be

rejected.

Application number on the cheque/demand draft

To avoid any misuse of instruments, the applicants are advised to write the application number and name of the

first applicant on the reverse of the cheque / demand draft.

General

All applications should be made on the printed CAF provided by the Company and should be complete in all

respects. Applications, which are not complete in all respects or are made otherwise than as herein provided or

not accompanied by proper application money in respect thereof will be refunded without interest.

(i) Please read the instructions in the enclosed CAF carefully.

(ii) All communications in connection with your application for the equity shares including any change in your

registered address should be addressed to the registrar to the issue.

(iii) Application Forms must be filled in ENGLISH in BLOCK LETTERS.

(iv) Signatures should be either in English or Hindi or the languages specified in the Eighth Schedule to the

constitution of India. Signatures other than in the aforementioned languages or thumb impressions must be

attested by a Notary Public or a Special Executive Magistrate under his/her official seal.


324

(v) In case of Joint Holders, all joint holders must sign the relevant parts of the Application Form in the same

order and as per the specimen signatures recorded with the Company.

(vi) In case of joint applicants, refunds and all payments will be made to the person whose name appears first on

the application form and all communications will be addressed to him/her. To prevent any fraudulent

encashment of refund orders by third parties, the Sole/First Applicant must indicate Saving / Current Account

number and the name of the bank and its branch with whom such account is held in the space provided in the

CAF for the purpose so that Refund Orders are printed with these details after the name. Applications without

this information are liable to be rejected.

(vii) The Application Form should be presented to the Bank in its entirety. If any of the Part(s) A, B, C and D of

the Application Form(s) is /are detached or separated, such application will forthwith be rejected.

(viii) All shareholders must submit the CAF along with remittance only to the Bankers to the Issue mentioned

elsewhere in this Draft Letter of Offer and not to the Company, the Registrar or the Lead Manager.

(ix) Any dispute or suit action or proceedings arising out of or in relation to this Draft Letter of Offer or in

respect of any matter or thing herein contained and claimed by either party against the other shall be instituted or

adjudicated upon or decided solely by the appropriate Court where Registered Office of the Company is

situated.

(x) The last date for receipt of CAF alongwith the amount payable is [●]. However, the Board will have the right

to extend the same for such period as it may determine from time to time, but not exceeding 60 days from the

date of opening of the subscription list. If the CAF together with the amount payable thereunder is not received

by the bankers to the issue on or before the closure of the banking hours on the aforesaid date, or such date as

may be extended by the Board, the offer contained in this Draft Letter of Offer shall be deemed to have been

declined and the Board shall be at liberty to dispose the Rights hereby offered. For further instructions please

read CAF carefully.

Grounds for technical rejections

Applicants are advised to note that applications are liable to be rejected on technical grounds, including the

following –

(i) Amount paid does not tally with the amount payable for;

(ii) Bank account details (for refund) are not given / or incomplete / or incorrect;

(iii) Age of First Applicant not given;

(iv) PAN photocopy/ PAN Communication

(v) In case of Application under power of attorney or by limited companies, corporate, trust, etc., relevant

documents are not submitted;

(vi) If the signature of the existing shareholder does not match with the one given on the Application Form and

for renouncees if the signature does not match with the records available with their depositories;

(vii) If the Applicant desires to have shares in electronic form, but the Application Form does not have the

Applicant’s depository account details;

(viii) Application Forms are not submitted by the Applicants within the time prescribed as per the Application

Form and the Draft Letter of Offer;

(ix) Applications not duly signed by the sole/joint Applicants;

(x) Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs to invest

in the Issue;

(xi) Applications accompanied by Stockinvest;

(xii) In case no corresponding record is available with the Depositories that matches three parameters, namely,

names of the Applicants (including the order of names of joint holders), the Depositary Participant’s identity

(DP ID) and the beneficiary’s identity;

(xiii) Applications by US persons; or

(xiv) Applications by non-eligible Non-residents (including on account of restriction or prohibition under

applicable local laws) and where last available address in India has not been provided.

Dematerialisation

As per the provisions of the Depositories Act, 1996, the shares of a body corporate may be held in

dematerialized form i.e. not in the form of physical certificates but be fungible and be represented by the

statement issued through electronic mode. The equity shares of The Oudh Sugar Mills Limited are traded in

the demat segment The Company has entered into a tripartite agreement dated [●]with the National Securities

Depository Ltd. (NSDL) and Intime Spectrum Registry Limited for dematerialization of the equity shares of the

Company. The Company has also entered into a tripartite agreement dated January 28, 2000 with the Central

Depository Services Limited (CDSL) and Intime Spectrum Registry Limited for dematerialization of the equity

shares of the Company. The ISIN No. granted to the equity shares of the Company is [●]. An applicant has the

option to seek allotment in physical or demat mode. An applicant who seeks allotment in demat mode must have


325

atleast one Beneficiary Account with any of the Depository Participants (DP) of NSDL or CDSL registered with

SEBI, prior to the application. Such applicants must necessarily fill in the details (including the Beneficiary

Account Number and Depository Participant’s ID Number) appearing under the head “Request for shares in

electronic form” in the CAF.

Applicant must indicate in the CAF, the number of shares they wish to receive in electronic form out of the total

number of equity shares applied for. In case of partial allotment, shares will first be allotted in electronic form

and the balance, if any, will be allotted in physical form. Names in the CAF should be identical to those

appearing in the account details in the Depository. Incase of joint holders, the name should necessarily be in the

same sequence as they appear in the account details in the Depository. No separate applications for demat and

physical shares are to be made. If such applications are made the application for physical shares will be treated

as multiple applications and rejected accordingly. It may be noted that electronic shares can be traded only on

the stock exchanges having electronic connectivity with NSDL and CDSL. Non-transferable allotment letters/

refund orders will be directly sent to the applicant by the Registrar of the Issue The applicant is responsible for

the correctness of the applicants demographic details given in the share application form vis-à-vis those with

his/her DP. Equity shares allotted in demat mode will be credited directly to the respective Beneficiary Account.

Disposal of application and application money

No receipt will be issued for application money received. However, the Bankers to the Issue receiving the

CAF(s) will acknowledge its receipt by stamping and returning the acknowledgement slip at the bottom of each

CAF. In the event of shares not being allotted in full, the excess amount paid on application will be refunded to

the applicant within six weeks of the date of closure of the issue. The Board reserves its full, unqualified and

absolute right to accept or reject any application in whole or in part and in either case without assigning any

reason. In case an application is rejected in full, the whole of the application money received will be refunded

and where an application is accepted in part the excess money will be refunded after adjusting the money

payable for the shares allotted. All refunds will be made within six weeks of the date of closing of the

Subscription List.

Unsubscribed equity shares

The unsubscribed portion, if any of the equity shares offered to the shareholders, after considering the

application for Rights/Renunciation and additional equity shares, as above, shall be disposed by the Board of the

Company or Committee of Directors authorised in this behalf by the Board of the Company at their full

discretion and absolute authority, in such manner as they think most beneficial to the Company and the decision

of the Board of the Company or Committee of Directors in this regard shall be final and binding. Issue of Letter

of Allotment In case the Company issues Letter(s) of Allotment, the relative Share Certificate(s) will be kept

ready within 3 months from the date of allotment thereof or such extended time as may be approved by the

Company Law Board or other applicable provisions, if any. Allottees are requested to preserve such Letters of

Allotment, which would be exchanged later for Share Certificate(s).

Allotment and refund orders

All the pay orders / refund orders and Letter(s) of Allotment / Share Certificates will be dispatched within six

weeks of the date of closure of issue to the first named / sole applicant at his / her own risk. The Refund Orders

will be payable at par in India at all the centres where the applications were originally accepted. The instruments

will be marked “Account Payee Only” and in the name of the sole/ first applicant. Bank charges, if any, for

encashing such refund orders / pay orders will be payable by the applicants. The Company undertakes that the

requisite funds will be made available to the Registrar for complying with the requirement of dispatch of refund

orders / allotment letters. The Company shall ensure dispatch of refund orders of value over Rs.1,500/- by

Registered Post only and adequate funds will be made available to the Registrar. The Company undertakes to

dispatch share certificates/refund orders, complete demat credits and submit the allotment and listing documents

to the Stock Exchange within 2 working days of the finalisation of the basis of allotment. Further, the Company

undertakes to ensure that all steps for completion of the necessary formalities for listing and commencement of

trading at the Stock Exchange where the securities are to be listed are taken within 7 working days of

finalisation of basis of allotment.

Mode of making refunds

Applicants should note that on the basis of name of the Applicants, Depository Participant’s name, Depository

Participant-Identification number and Beneficiary Account Number provided by them in the CAF, the Registrar

to the Issue will obtain from the Depository the Applicant’s bank account details including nine digits MICR


326

code. Hence, Applicants are advised to immediately update their bank account details as appearing on the

records of the depository participant. Please note that failure to do so could result in delays in credit of refunds

to Applicants at the Applicants sole risk and neither the Lead Manager nor the Bank shall have any

responsibility and undertake any liability for the same.

The payment of refund, if any, would be done through various modes in the following order of preference –

(i) Direct Credit - For investors having their Bank Account with the Banker to the Issue, the refund amount

would be credited directly to their Bank Account with the Banker to the Issue.

(ii) RTGS - Investors desirous of taking direct credit of refund through RTGS, will have to provide the IFSC

code in the CAF.

(iii) ECS - Payment of refund would be done through ECS for applicants residing at one of the [●] centres,

namely [●], where clearing houses for ECS are managed by RBI. This would be subject to availability of

complete Bank Account Details

including MICR code from the depository.

For all the other applicants except for whom payment of refund is possible through I, II and III, the refund

orders would be dispatched “Under Certificate of Posting” for refund orders less than Rs. 1500/- and through

Speed Post/ Registered Post for refund orders exceeding Rs. 1500/-.

Interest in case of delay on allotment/dispatch

The Company will issue and dispatch Letter(s) of Allotment/Share Certificate(s) and/or Letter(s) of Regret

along with the Refund Orders, if any, credit the allotted securities to the beneficiary account within a period of 6

weeks from the date of closure of the subscription list. Such refund orders, in the form of MICR

warrants/cheque/pay order, marked “Account payee” would be drawn in the name of a sole/first applicant and

will be payable at par at all the centers where the applications were originally accepted, risk, except for those

who have opted to receive refunds through the ECS facility or RTGS or Direct Credit. If such money is not

repaid within 8 days from the day the Company becomes liable to pay it, the Company shall, as stipulated under

sub-section 2 and 2A of Section 73 of the Companies Act, 1956, pay that money with interest at the rate of 15%

p.a. Letter(s) of Allotment/Refund Order(s) above the value of will be dispatched by Registered Post to the

sole/first applicant’s address. However, Refund Orders for values not exceeding Rs.1,500/- shall be sent to the

applicants under Certificate of Posting at the applicant’s sole risk at his address. The Company would make

adequate funds available to the Registrar to the Issue for this purpose.

Important

Please read this Draft Letter of Offer carefully before taking any action. The instructions contained in the

accompanying CAF are an integral part of the conditions of this Draft Letter of Offer and must be carefully

followed; otherwise the application is liable to be rejected.

All inquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for Split

Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID no., the CAF

number and the name of the first Equity Shareholder as mentioned on the CAF and super scribed “The Oudh

Sugar Mills Limited-Rights Issue” on the envelope) to the Registrar to the Issue at the following address:

Intime Spectrum Registry Limited C - 13, Pannalal Silk Mills Compound,

L.B.S. Marg, Bhandup (West),

Mumbai 400 078.

Tel: +91 22 2596 0320-28

Fax: +91 22 2596 0329

Email : [email protected]

Website: www.intimespectrum.com

Contact person: Ms Awani Thakkar

1. It is to be specifically noted that this Issue of Equity Shares is subject to Risk Factors appearing on page 7 of


2. The Rights Issue will be kept open for minimum 30 days unless extended, in which case it will be kept open

for a maximum 60 days.


327

SECTION X : MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF THE COMPANY

The regulations contained in Table ‘A’ of Schedule I to the Companies Act shall apply only in so far as the same

are not provided for or are not inconsistent with these Articles and the regulations for the management of our

Company and for observance of the members thereof and their representatives shall, subject to any exercise of

the statutory powers of our Company with reference to repeal or alteration of or addition to, its regulations by

Special Resolution, as prescribed by the Companies Act, be such as are contained in these Articles.

Pursuant to Schedule II of the Companies Act and the SEBI Guidelines, an abstract of the main provisions of the

Articles of Association of our Company is set out below:

(i) Preliminary

Title of Article Article Number and contents

Table ‘A’ not to

apply but company

to be governed by these Articles

The regulations contained in Table ‘A’ in the First Schedule to the Companies Act, 1956, shall not apply to

Company, but the regulations for the management of the Company and for the observance of the Members

thereof and their representatives, shall, subject to any exercise of the statutory powers of the Company with

reference to the repeal or alterations of, or addition to, its regulations by Special Resolution, as prescribed by

the said Companies Act, 1956 be such as are contained in these Articles.


Preliminary “The Company” means The Oudh Sugar Mills Limited.

“The Act” means the Companies Act, 1956.

“The Directors” means the Directors of the Company or as the case may be, Directors assembled at a Board

Meeting.

“The Office” means the Registered Office for the time being of the Company.

“The Register” means the Register of Members to be kept pursuant to the Act and includes the Register of

Beneficial Owners maintained by a Depository.

“The Registrar” means the Registrar of Companies of the State in which the office is situated.

“Beneficial Owner” shall mean beneficial owner as defined under Section 2(l)(a) of the Depositories Act, 1996.

“Debenture holder” means the duly registered holders from time to time of the debentures of the Company.

“Depository” shall mean a Depository as defined under Section 2(1) (e) of the Depositories Act, 1996.

“Depositories Act” shall mean Depositories Act,1996 and any rules, Regulations and bye-laws made thereunder

and any statutory modification or re-enactment thereof for the time being in force.

“Dividend” includes bonus.

“Member” means the duly registered holder from time to time of the shares of the Company and includes the

subscribers to the Memorandum of Association of the Company. Every person holding ordinary shares of the

Company and whose name is entered as beneficial owner in the records of a Depository shall be deemed to be a

member of the Company.

“Month” means calendar month.

“Participant” means a person registered as such under Section 12(1A) of the Securities and Exchange Board of

India Act, 1992.

DEFINITIONS & INTERPRETATIONS


328


“Record” includes the records maintained in the form of books or stored in computer or in such other form as

may be determined by regulation

made by SEBI in relation to the Depositories Act.

“Seal” means the Common Seal of the Company.

“SEBI” means Securities and Exchange Board of India established under Section 3 of the Securities and

Exchange Board of India Act, 1992.

“Securities” means such securities as may be specified by the SEBI from time to time.

“Share” means share in the Share Capital of the Company and includes stock except when a distinction

between stock and share is express or implied.

“In Writing” and “Written” include printing, lithography and other modes of representing or reproducing words

in a visible form.

Words importing the singular number only include the plural number and vice versa.

Words importing the masculine gender only include the feminine gender.

Words importing persons include corporations.

Words and expressions used and not defined in the Act but defined in the Depositories Act, 1996, shall have the

same meaning respectively assigned to them in that Act.

Unless the context otherwise requires words or expressions contained in these Articles shall bear the same

meaning as in the Act.

The marginal notes are inserted for convenience and shall not affect the construction of these Articles.

(ii) Articles relating to rights of members regarding voting, dividend, lien on shares, process for

modification of such rights and forfeiture of shares


Votes of members 63. On a show of hands every holder of ordinary shares entitled to vote and present in person or by proxy

shall have one vote and upon a poll every holder of ordinary shares entitled to vote and present in person

or by proxy shall have one vote for every share held by him.

Votes in

respect of

deceased,

insolvant and

insane members.

64. Subject to the provisions of the articles, any person entitled under the Transmission Article to transfer any

shares may vote at any General Meeting in respect thereof in the same manner as if he were the registered

holder of such shares, provided that seventytwo hours at least before the time of holding the meeting or

adjourned meeting as the case may be at which he proposes to vote he shall satisfy the Directors of his

right to transfer such shares, or the Directors shall have previously admitted his right to vote at such

meeting in respect thereof. If any member be a lunatic, idiot or non compos mentis, he may vote whether

on a show of hands or at a poll by his committee, curator bonis or other person recognised by the

Company as entitled to represent such member and such last mentioned persons may give their votes by

proxy.

VOTE OF MEMBERS


329


Joint Holders 65. Where there are jointholders of any share any one of such persons may vote at any meeting either

personally or by proxy in respect of such share as if he were solely entitled thereto and if more than one of

such joint-holders be present at any meeting either personally or by proxy then that one of the said persons

so present whose name stands prior in order on the Register in respect of such share shall alone be entitled

to vote in respect thereof. Several executors or administrators of a deceased member in whose name any

share stands shall for the purpose of this Article be deemed joint-holders thereof.

Instrument

appointing

proxy to be in

writing

66. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his Attorney

duly authorised in writing or if such appointor is a corporation under its common seal or the hand of its

Attorney.

Instrument

appointing

proxy to be

deposited

at the Office.

67. The instrument appointing a proxy and the Power of Attorney or other authority (if any) under which it is

signed or a notarially certified copy of that power or authority shall be deposited at the Office not less

than forty eight hours before the time for holding the meeting at which the person named in the instrument

proposes to vote and in default the instrument of proxy shall not be treated as valid.

When vote by

proxy valid

though authority

revoked.

68. A vote given in accordance with the terms of an instrument appointing a proxy shall be valid

notwithstanding the previous death or insanity of the principal or revocation of the instrument or transfer

of the share in respect of which the vote is given: Provided no intimation in writing of the death, insanity,

revocation or transfer of the share shall have been received at the Office or by the Chairman of the

Meeting before the vote is given: Provided nevertheless that the Chairman of any meeting shall be entitled

to require such evidence as he may in his discretion think fit of the due execution of an instrument of

proxy and that the same has not been revoked.

Form of

Instrument

appointing

proxy.

69. Every instrument appointing a proxy shall, as nearly as

circumstances will admit, be in the form set out in Schedule IX to the Act.

Restrictions

on voting.

70. No member shall be entitled to vote on any question either personally or by proxy or as proxy for another

member at any General Meeting or upon a poll or be reckoned in a quorum whilst any call or other sum

shall be due and payable presently to the Company in respect of any of the shares of such member.

Validity of

votes.

71. No objection shall be taken to the validity of any vote except at the meeting or poll at which such vote

shall be tendered and every vote not disallowed at such meeting or poll and whether given personally or

by proxy or otherwise shall be deemed valid for all purposes.

DIVIDENDS AND RESERVES


Division of

Profits.

101. The net profit of the Company (after making provision if any, for sinking, depreciation and reserve funds

and for carrying forward balances for the next year) shall subject to the right of holders of preference shares

and to any resolution of the Company attaching any special privileges to other shares and to the provisions

of these Articles, be divisible among the ordinary shareholders subject as provided in Article 19 in

proportion to the amounts paid up on the ordinary shares held by them respectively.


330


Capital paid

in advance

of calls.

102. When capital is paid up in advance of calls upon the footing that the same shall carry interest, such capital

shall not whilst carrying interest, confer a right to participate in profit.

Declaration

and payment

of dividends.

103. The Company in General Meeting may declare a dividend to be paid to the members according to their

rights and interest in the profits and may fix the time for payment subject to the provision of Section 207 of

the Act.

Restrictions on

amount of

dividends.

104. No larger dividend shall be declared than is recommended by the Directors, but the Company in General

Meeting may declare a smaller dividend.

Dividend out

of profits only

and not to carry

interest What to

be deemed not

profits.

105. No dividend shall be payable except out of the profits of the Company of the year or any other undistributed

profits, and no dividend shall carry interest as against the Company.

106. The declaration of the Directors as to the amount of the net profits of the Company in any year shall be

conclusive.

Interim

dividends.

107.The Directors may from time to time pay to the members such interim dividends as in their judgments the

position of the Company justifies.

Debts may

be deducted.

108. The Directors may retain any dividends on which the Company has a lien and may apply the same in or

towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists.

Company may

retain

dividends.

109. The Directors may retain the dividend payable upon shares in respect of which any person is under “The

Transmission Article” entitled to become a member or which any person under that Article is entitled to

transfer until such person shall become a member in respect thereof or shall duly transfer the same.

Dividend and

call together.

110. Any General Meeting declaring a dividend may make a call on the members of such amounts as the

meeting fixes, but so that the call on each member shall not exceed the dividend payable to him and so that

the call be made payable at the same time as the dividnd and the dividend may, if so arranged between the

Company and the members, be set off against the call.

Capitalisation

of Reserves.

111. Any General Meeting may upon the recommendation of the Directors resolve that any moneys, investments

or other assets forming part of the undivided profits of the Company standing to the credit of any reserve

fund or special account or in the hands of the Company and available for dividend and including any profits

arising from the sale of the assets of the Company or any part thereof or by reason of any other accretion to

capital assets or representing premium received on the issue of shares and standing to the credit of the share

premium account, be capitalised and distributed (in the manner and to the extent permissible under the

provisions of the Act) amongst such of the shareholders as would be entitled to receive the same if

distributed by way of dividend and in the same proportions on the footing that they become entitled thereto

as capital and that all or any part of such capitalised fund be applied on behalf of such shareholders in

paying up in full either at par or at such premium as the resolution may provide any unissued shares,

debentures or debenture stock (in the manner and to the extent aforesaid) of the Company which shall be

distributed accordingly or in or towards payment of the uncalled liability on any issued shares, or debentures

or debenturestock, and that such distribution or payment shall be accepted by such shareholders in full

satisfaction of their interest in the said capitalised surn.


331


Fractional

certificates.

112. For the purpose of giving effect to any resolution under the preceding Article, the Directors may settle any

difficulty which may arise in regard to the distribution as they think expedient and in particular may issue

fractional certificates or ignore fractions or may vest the same in trust for the persons entitled as may seem

expedient to the Directors. Where requisite a proper contract shall be filed in accordance with the provisions

of the Act and the Directors may appoint any person to sign such contract on behalf of the persons entitled

to the dividend or capitallsed fund, and such appointment shall be effective.

Any one of

Joint-holders

can give

receipts.

113. Any one of several persons who are registered as joint holders of any share may give effectual receipts for

all dividends and payments on account of dividends in respect of such shares.

Payment by

post.

114. Unless otherwise directed, any dividend may be paid by cheque, warrant or postal money order sent through

the post to the registered address of the member or person entitled thereto, or in the case of joint-holders to

the registered address of that one whose name stands first on the Register in respect of the joint-holding or

to such person and such address as the member or person entitled or such joint-holders, as the case may be,

may direct

When payment

a good

discharge.

115. The payment of every, cheque or warrant sent under the provisions of the last preceding Article shall, if such

cheque or warrant purports to be duly endorsed, be a good discharge to the Company in respect thereof :

Provided nevertheless that the Company shall not be responsible for the loss of any cheque, dividend

warrant or postal money order which shall be sent by post to any member or by his order to any other person

in respect of any dividend. Dividends unclaimed for one year after having been declared may be invested or

otherwise used by the Directors for the benefit of the Company until claimed and all dividends unclaimed

till the claim thereto becomes barred by law may be forfeited by the Directors for the benefit of the

Company. The Directors may, however, at any time annul such forfeiture and pay any such dividend.

FORFEITURE AND LIEN


If call or installment

not paid notice may

be given.

20. If any member falls to pay any call or installment on or before the day appointed for the payment of the

same, the Directors may, at any time thereafter during such time as the call or installment remains

unpaid, serve a notice on such member requiring him to pay the same, together with any interest that

may have accrued and all expenses that may have been incurred by the Company by reason of such

non-payment.

Form of notice.

21. The notice shall name a day (not being less than 21 days from the date of the notice) and a place or

places on and at which such call or installment and such interest and expenses as aforesaid are to be

paid. The notice shall also state that in the event of non-payment at or before the time, and at the place

or places appointed, the shares in respect of which such call was made or installment is payable will be

liable to be forfeited.

If notice not

complied with

shares may be

forfeited.

22. If the requisitions of any such notice as aforesaid be not complied with, any shares in respect of which

such notice has been given may, at any time thereafter before payment of all calls or installments,

interest and expenses due in respect thereof, be forfeited by a resolution of the Directors to that effect.

Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually


332

Notice after

forfeiture

paid before the forfeiture. Neither the receipt by the Company of a portion of any money which shall

from time to time be due from any member of the Company in respect of his shares, either by way of

principal or interest, nor any indulgence granted by the Company in respect of the payment of any such

money shall preclude the Company from thereafter proceeding to enforce a forfeiture-of such shares as

herein provided.

23. When any share shall have been so forfeited, notice of the forfeiture shall be given to the member in

whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture with the date

thereof, shall forthwith be made in the Register but no forfeiture shall be in any manner invalidated by

any omission or neglect to give such notice or to make such entry as aforesaid.

Forfeited share to

become property of

the Company.

24. Any share so forfeited shall be deemed to be the property of the Company, and the Directors may sell,

re-allot or otherwise dispose of the same in such manner as they think fit.

Power to annul

forfeiture.

25. The Directors may, at any time before any share so forfeited shall have been sold, re-allotted or

otherwise dispose of annul the forfeiture thereof upon such conditions as they think fit.

Arrears to be

paid not

withstanding

forfeiture.

26. Any member whose shares have been forfeited shall notwithstanding such forfeiture be liable to pay

and shall forthwith pay to the Company all calls, installments interest and expenses, owing upon or in

respect of such shares at the time of the forfeiture, together with interest thereupon, from the time of the

forfeiture until payment at 12 percent, per annum or such other rate as the Directors may determine and

th Directors may enforce the payment thereof without any deduction or allowance for the value of the

shares at the time of forfeiture but shall not be under any obligation to do so.

Effect of

forfeiture.

27. The forfeiture of a share shall involve the extinction of all interest in and also of all claims and

demands against the Company in respect of the share, and all other rights incidental to the share except

only such of those rights as by these Articles are expressly saved.

Evidence of

forfeiture.

28. A duly verified declaration in writing that the declarant is a director of the Company and that certain

shares in the Company have been duly forfeited on a date stated in the declaration shall be conclusive

evidence of the facts therein stated as against all persons claiming to be entitled to the shares and such

declaration and the receipt of the Company for the consideration, if any, given for the shares on the sale

or disposition thereof shall constitute a good title to such shares.

Company’s

lien on share.

29. The Company shall have a first and paramount lien upon all the shares (not fully paid up) registered in

the name of each member (whether solely or jointly with others), and upon the proceeds of sale thereof

for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such

shares, and no equitable interest in any share shall be created except upon the footing and condition that

Article 8 hereof is to have full effect and the said lien shall extend to all dividends from time to time

declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall

operate as a waiver of the Company’s lien, if any on such shares.

As to

enforcing lien

by sale.

Application

of proceeds of

sale

30. For the purpose of enforcing such lien, the Directors may sell the shares subject thereto in such manner

as they think fit, but no sale shall be made until such period as aforesaid shall have elapsed and until

notice in writing of the intention to sell shall have been served on such member, his executors or

administrators or his committee, curator bonis or other person recognised by the Company as entitled to

represent such member and default shall have been made by him or them in the payment of the sum

payable as aforesaid for seven days after such notice. The net proceeds of any such sale shall be applied

in or towards satisfaction of such part of the amount in respect of which the lien exists as is presently


333

MODIFICATION OF CLASS RIGHTS


Power to

modify rights.

50. Whenever the capital (by reason of the issue of preference shares or otherwise) is divided into different

classes of shares, all or any of the rights and privileges attached to each class may be varied in the

manner provided in Section 106 of the Act and all the provisions hereinafter contained as to General

Meeting shall, mutatis mutandis, apply as regard class Meetings. Provided that the rights conferred upon

the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise

expressly provided by the terms of issue of the shares of that class, be deemed to be varied under this

Article by the creation or issue of further shares and such new shares may be issued with such

preferential rights as may be decided at the time of issue thereof.

UNDERTAKING AND BROKERAGE


Power to pay

certain

Commission for

placing shares.

Brokerage

6. The Company may, subject to the compliance with the provisions of Section 76 of the Act exercise the

powers of paying commission on the issue of shares and debentures. The commission may be paid or

satisfied in cash or in Shares, debentures or debenture stock of the Company.

7. The Company may pay a reasonable sum for brokerage.

payable by such member and the residue (if any) paid to such member, his executors, administrators, or

other representatives or persons so recognised as aforesaid.

Validity of

sales.

31. Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers by these

presents given, the Directors may appoint some person to execute an instrument of transfer of the

shares sold and cause the purchaser’s name to be entered in the Register in respect of the shares sold,

and the purchaser shall not be bound to see to the regularity of the proceedings, nor to the application

of the purchase money and after his name has been entered in the Register in respect of such shares his

title to such shares shall not be affected by any irregularity or invalidity in the proceedings in reference

to such forfeiture, sale or disposition, nor impeached by any person and the remedy of any person

aggrieved by the sale shall be in damages only and against the Company exclusive.

Power to

issue new

certificate.

32. Where any shares under the powers in that behalf herein contained are sold by the Directors and the

certificate thereof has not been delivered to the Company by the former holder of the said shares the

Directors may issue a new certificate for such shares distinguishing it in such manner as they may think

fit from the certificate not so delivered up.


334

(iii) Other provisions of Articles of Association

CAPITAL AND ALTERATION OF CAPITAL


Redeemable

Preference Shares

3. Subject to the provisions of these Articles and of Section 80 of the Act, the Company shall have power to

issue preference shares, which are, or at the option of the Company are to be liable to be redeemed on

such terms and in such manner as the Company may determine.

Allotment of

Shares

Further issue

Of Capital by

Director

4. Subject to the provisions of these Articles, the shares shall be under the control of the Directors who may

allot or otherwise dispose of the same to such persons on such terms and conditions, and at such times, as

the Directors think fit and with power to issue any shares as fully paid up in consideration of services

rendered to the Company in its formation or otherwise. Provided that where the Directors decide to

increase the issued capital of the Company by the issue of further shares, the provisions of Section 81 of

the Act will be complied with. The Directors with the sanction of the Company in General Meeting, shall

have full power to give to any person the right to call for the allotment of any shares either at par or at a

premium; and for such period, and for such consideration as the Directors think fit.

Power to issue

shares at a discount

5. Subject to the provisions of the Act it shall be lawful for the Company to issue at a discount shares of a

class already issued.

Company not

bound to recognise

any interest in

share other than

that of registered

holder of beneficial

owner

8. Except as ordered by a Court of competent jurisdiction or as required by law, the Company shall be

entitled to treat the person whose name appears on the Register of Members as the holder of any share or

where the name appears as the beneficial owner of shares in the records of the Depository, as the

absolute owner thereof and accordingly shall not be bound to recognise any benami trust or equitable,

contingent, future or partial interest in any share (except only as is by these Articles otherwise expressly

provided) or any right in respect of a share other than an absolute right thereto in accordance with these

Articles on the part of any other person whether or not it shall have express or implied notice thereof.

Power to

subdivide and

consolidate.

On what

conditions new

shares may

be issued.

47. The Company may by ordinary resolution from time to time after the conditions of the Memorandum of

Association as follows:

(a) Increase the Share Capital by such amount, to be divided into shares of such amount as may be

specified in the resolution;

(b) Consolidate and divide all or any of its share capital into shares of larger amount than its existing

shares;

(c) Subdivide its existing shares or any of them into shares of smaller amount than is fixed by the

Memorandum, so however, that in the subdivision the proportion between the amount paid and the

amount, if any, unpaid-on each reduced share shall be the same as it was in the case of the share

from which the reduced share is derived; and

(d) Cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed

to be taken by any person and diminish the amount of its share capital by the amount of the shares

so cancelled.

48. The resolution whereby any share is subdivided or consolidated may determine that, as between the

members registered in respect of the shares resulting from such subdivision or consolidation, one or

more of such shares shall have some preference or

special advantage as regards dividend, capital, voting or otherwise or as compared with the others or

other subject nevertheless to the provisions of Sections 85, 87, 88, 93 and 106 of the Act.


335


Surrender

49. Subject to the provisions of Sections 100 to 104 inclusive of the Act, the Board may accept from any

member the surrender of all or any of his shares on such terms and conditions as shall be agreed.

Reduction of

share capital.

47A. The Company may :

(1) by Special Resolution and subject to confirmation by the Court, reduce its share capital in any

way; and, in particular and without prejudice to the generality of the foregoing power

(a) extinguish or reduce the liability on any of its shares in respect of Share Capital not paid up;

(b) either with or without extinguishing or reducing the liability on any of its shares, cancel any

paid up share capital which is lost or is unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability on any of its shares, pay off any

paid up share capital which is in excess of the wants of the Company;

And may, if and so far as is necessary, alter its Memorandum by reducing the amount of its share

capital and of its shares accordingly.

(2) by Special Resolution reduce in any manner and with, and subject to, any incident authorised and

consent required by law;

(a) any Capital Redemption Reserve Fund; or

(b) any Share, Premium Account.

CONVERSION OF SHARES INTO STOCK


Conversion of

Shares into

Stock and

reconversion.

46. The Company may exercise the power of conversion of its shares into stock and in that case clauses 37

to 39 of Table “A” in Schedule I to the Act shall apply.

GENERAL MEETINGS


Convening of

Meeting.

55. The Board may, whenever it thinks fit, call a general meeting provided however if at any time there are

not in India Directors capable of acting who are sufficient in number to form a quorum any Director

may call a general meeting in the same manner as nearly as possible as that in which such a meeting

may be called by the Board.


336

PROCEEDINGS OF GENERAL MEETINGS


Quorum 56. The quorum for a General Meeting shall be five members present in person.

Chairman 57. At every General Meeting the Chair shall be taken by the Chairman of the Board of Directors. If at any

meeting the Chairman of the Board of Directors be not present within fifteen minutes after the time

appointed for holding the meeting or, though present, be unwilling to act as Chairman the members

present shall choose one of the Directors present to be Chairman, or if no Director shall be present and

willing to take the Chair, then the members present shall choose one of their number, being a member

entitled to vote, to be Chairman.

Sufficiency of

Ordinary

Resolution

58. Any act or resolution which, under the provisions of this article or of the Act, is permitted or required

to be done or passed by the Company in general meeting shall be sufficiently so done or passed if

effected by an ordinary resolution unless either the Act or the Articles specifically require such act to

be done or resolution passed by a Special Resolution.

When,

if quorum

not present,

meeting to be

dissoved and

when to be

adjourned.

59. If within half an hour from the time appointed for the meeting a quorum be not present, the meeting, if

convened upon a requisition of shareholders shall be dissolved but in any other case it shall stand

adjourned to the same day in the next week at the same time and place, unless the same shall be a

public holiday when the meeting shall stand adjourned to the next day not being a public holiday at

the same time and place and if at such adjourned meeting a quorum be not present within half an hour

from the time appointed for the meeting, those members who are present and not being less than two

persons shall be a quorum and may transact the business for which the meeting was called.

How questions

or resolutions

to be decided

at meetings.

60. In the case of an equality of votes the Chairman shall, both on a show of hands and at a poll, have a

casting vote in addition to the vote or votes, to which he may be entitled as a member.

Power to

adjourn

General Meeting.

Business may

proceed notwith

standing

demand of poll.

61. The Chairman of a General Meeting may adjourn the same from time to time and from place to place,

but no business shall be transacted at any adjourned meeting other than the business left unfinished at

the meeting from which the adjournment took place. It shall not be necessary to give notice to the

members of such adjournment or of the time, date and place appointed for the holding of the

adjourned meeting.

62. If a poll be demanded, the demand of a poll shall not prevent the continuance of a meeting for the

transaction of any business other than the question on which a poll has been demanded.

SHARE WARRANTS


Power to

issue share

warrants

45. Subject to the provisions of Section 114 and 115 of the Act and subject to any directions which may be

given by the Company in General Meeting, the Board may Issue share-warrants in such manner and on

such terms and conditions as the Board may deem fit. In case of such issue clauses 40 to 43 of Table “A”

in Schedule I to the Act, shall apply.


337

SHARES CERTIFICATE AND DEMATERIALISATION


Certificates.

9. Except where shares of the Company are held in depository, Depository the

certificates of title to shares shall be issued under the Seal of the

Company.

Member’s right to

certificate.

10. Except where shares of the company are held in Depository, every member shall be entitled free of charge

to one or more certificates for all the shares of each class registered in his name in marketable lots, or if

the Board so approves to several certificates each for one or more of such shares, but in respect of each

additional certificate, the Company, if the Board so determines, shall be entitled to charge a fee of not

exceeding Re.1.

As to issue of new

certificate in place

of one defaced.

Lost or destroyed

etc.

11. If any certificate be old, decrepit or worn out or defaced, then, upon production thereof to the Company,

the Board may order the same to be cancelled, and may issue a new certificate in lieu thereof, and if any

certificate be lost or destroyed, then, upon proof thereof to the satisfaction of the Board and on such

indemnity as the Board deems adequate being given, a new certificate in lieu thereof may be given.

However production of old certificate will not be required in case of rematerialisation. For every such

new certificate and for every new certificate issued on the consolidation or subdivision of certificates,

there shall be paid to the Company; if the Board so determines, a sum not exceeding Re. 1. In case of

destruction or loss the member to whom such new certificate is given shall also bear and pay to the

Company all legal costs and other expenses of the Company incidental to the investigation by the

Company of the evidence of such destruction or loss and to the preparation of such indemnity.

Joint holders

Maximum

number.

Liability several

as well as joint.

Survivors of

joint-holders

only recognised.

Delivery of

certificate.

12. Where two or more persons are registered as the holders of any share they shall be deemed to hold the

same as joint-tenants with benefit of survivorship subject to the provisions following and to the other

provisions if these Articles relating to joint-holders :-

a) The Company shall not be bound to register more than four persons as the joint-holders of any

share.

b) The joint-holders of a share shall be liable severally as well as jointly in respect of all payments

which ought to be made in respect of such share.

c) On the death of any one of such joint-holders the survivor or survivors of shall be the only person

or persons recognised by the Company as having any title to or interest in such share but the Board

may require such evidence only recognised of death as it may deem fit.

d) Only the person whose name stands first in the Register as one of the joint holders of any share

shall be entitled to delivery of the certificate relating to such share.

Company’s

right to

Dematerialise

or

Rematerialise

its securities.

44A. (a) Notwithstanding anything to the contrary or inconsistency contained in these Articles, the

Company shall be entitled to dematerialise its shares, debentures and other securities (hereinafter

referred to as “securities”) pursuant to the Depositories Act and to offer its securities for

subscription in a dematerialised form and to rematerialise its securities.

(b) Either the Company may exercise the option to issue or the investor may exercise an option to deal

in or hold the securities with a Depository in electronic form and the certificates in respect thereof


338


Company

to recognise

interest in

dematerialised

securities under

Depositiories Act.

Option for

Investors.

Securities in

Depositories to be

in fungible form.

Rights of

Depositories

and Beneficial

Owners.

Service of

Documents

Transfer of

Securities.

shall be dematerialised, in which event the rights and obligations of the parties concerned and

matters connected therewith or incidental thereto, shall be governed by the provisions of the

Depositories Act, as amended from time to time or any statutory modification thereto or

re-enactment thereof.

(c) Every person subscribing to or holding securities of the Company shall have the option to

receive security certificates or to hold the securities with a Depository. Such a person who is the

beneficial owner of the securities can at any time opt out of a Depository, if permitted by law, in

respect of any security, in the manner provided by the Depositories Act, and the Company shall, in

the manner and within the time prescribed, arrange to issue to the Beneficial Owner the required

certificates of securities. If a person opts to hold his security with a Depository, the Company shall

intimate such Depository the details of allotment of the security, and on receipt of the information,

the Depository shall enter in its records the name of the allottee as the Beneficial Owner of the

security.

(d) All securities of the Company held by a Depository shall be dematerialised and shall be in fungible

form. Nothing contained in Sections 153, 153A, 153B, 187B, 187C and 372A of the Act shall

apply to a Depository in respect of the securities held by it on behalf of the beneficial owners.

(e) (i) Notwithstanding anything to the contrary contained in the Act or these Articles, a

Depository shall be deemed to be the registered owner for the purposes of effecting transfer

of ownership of securities on behalf of the beneficial owner.

(ii) Save as otherwise provided in (i) above, the Depository as the registered owner of the

securities shall not have any voting rights or any other rights in respect of the securities held

by it.

(iii) Every person holding securities of the Company and whose name is entered as the beneficial

owner in the records of the Depository shall be deemed to be a member of the Company.

The beneficial owner of the securities shall be entitled to all the rights and benefits and be

subject to all the liabilities in respect of his securities which are held by the Depository.

(f) Notwithstanding anything contained to the contrary in the Act or these Articles, where securities

are held in a Depository, the records of the beneficial ownership may be served by such

Depository on the Company by means of electronic mode or by delivery of flopies or discs.

(g) Nothing contained in Section 108 of the Act shall apply to transfer of securities affected by the

transferor and the transferee both of whom are entered as beneficial owners in the records of a

Depository.

In the case of such transfer of securities where the Company has not issued any certificate or

certificates, or certificate or certificates issued have been dematerialised subsequently and where

such securities are being held in an electronic and fungible form, the provisions of the Depositories

Act, shall apply.

(h) Every Depository shall furnish to the Company information about the transfer of securities in the

name of the beneficial owner at such intervals and in such manner as may be specified by the

bye-laws and the Company in that behalf.

(i) Upon receipt of certificate of securities on surrender by a person who has entered into an

agreement with the Depository through a Participant, the Company shall cancel such certificate

and substitute in its records the name of Depository as the registered owner in respect of the said

securities and shall also inform the Depository accordingly.

(j) If a Beneficial Owner seeks to opt out of a Depository in respect of any security the beneficial

owner shall inform the Depository accordingly. The Depository shall, on receipt of information as


339


Depository to

furnish

information.

Cancellation of

certificates

upon surrender

by a person.

Option to opt

out in respect

of any security.

Allotment of

Securities dealt

with in a

Depository.

Distinctive

numbers of

securities held

in a Depository.

Register and

Index of

Beneficial

Owners.

Register of

Transfers.

Overriding

effect of this

Article.

Nomination

for Shares &

Debentures.

above, make appropriate entries in its records and shall inform the Company.

The Company shall, within thirty (30) days of the receipt of intimation from the Depository and on

fulfillment of such conditions and on payment of such fees as may be specified by the regulations,

issue the certificate of securities to the Beneficial Owner or the transferee as the case may be.

(k) Notwithstanding anything contained in the Act or these Articles, where securities are dealt with by

a Depository, the Company shall intimate the details thereof to the Depository immediately on

allotment of such securities.

(I) Nothing contained in the Act or these Articles regarding the necessity of having distinctive

numbers for securities issued by the Company, shall apply to securities held with a Depository.

(m) The Register and Index of beneficial owners maintained by a Depository under the Depositories

Act, shall be deemed to be the Register and Index of members and Register and Index of

Debenture-holders, as the case may be, for the purpose of the Act.

(n) The Company shall keep a Register of Transfers and shall have recorded therein, fairly and

distinctly, particulars of every transfer or transmission of any securities held in material form.

(o) Provisions of this Article will have full effect and force notwithstanding anything to the contrary

or inconsistent contained in any other Article of these presents.

44B. Notwithstanding anything to the contrary contained in any other Article every holder of shares in or

holder of debentures of the Company, holding either singly or jointly, may, at any time, nominate a

person in the prescribed manner to whom the shares and/or the interest of the members in the capital of

the Company or debentures of the Company shall vest in the event of his/her death and the death of the

joint bolder(s), if any, of shares/ debentures. Such holder may revoke or vary his/her nomination, at any

time, by notifying the same to the Company to that effect. Such nomination shall be governed by the

provisions of Section 109A and 109B of the Companies Act, 1956 or such other regulations governing

the matter from time to time.


340


Calls 13. The Directors may, from time to time, subject terms on which any shares may have been issued, make

such calls as they think fit upon the members in respect of all moneys unpaid on the shares held by them

respectively, and not by the conditions of allotment thereof made payable at fixed times, and each

member shall pay the amount of every call so made on him to the persons and at the times and places

appointed by the Directors. A call may be made payable by installments.

When call

deemed to have

been made.

14. A call shall be deemed to have been made at the time when the resolution of the Directors authorising

such call was passed.

Notice for calls 15. Not less than 14 day’s notice of any call shall be given specifying the time and place of payment and to

whom such call shall be paid.

Amount payable

at fixed times or by

instalments

payable as calls.

16. If by the terms of issue of any share or otherwise, the whole or part of the amount or issue price thereof

is made payable at any fixed time or by installments at fixed times, every such amount or issue price or

installment thereof shall be payable as If it were a call duly made by the Directors and of which due

notice had been given, and all the provisions herein contained in respect of calls shall apply to such

amount, or issue price or installment accordingly.

When interest

on call or

instalment

payable.

17. If the sum payable in respect of any call or installment be not paid on or before the day appointed for the

payment thereof, the holder for the time being of the share in respect of which the call shall have been

made or the installment shall be due, shall pay interest for the same at the rate of 12 per cent per annum,

from the day appointed for the payment thereof to the time of the actual payment or at such other rate as

the Directors may determine but they shall have power to waive the payment thereof wholly or in part.

Evidence in

actions by

Company

against

shareholders.

18. On the trial or hearing of any action or suit brought by the Company against any member or his

representative to recover any debt or money claimed to be due to the Company in respect of his shares, it

shall be sufficient to prove that the name of the defendant is, or was, when the claim arose, on the

Register of the Company as a holder, or one of the holders of the number of shares in respect of which

such claim is made, that the resolution making the call is duly recorded in the minute book and that the

amount claimed is not entered as paid in the books of the Company, and it shall not be necessary to

prove the appointment of the Directors who made any call, nor that a quorum of Directors was present at

the meeting at which any call was made nor that such meeting was duly convened or constituted, nor any

other matter whatsoever; but the proof of the matters aforesaid shall be conclusive evidence of the debt.

Payment of

calls in

advance.

19. The Directors may, if they think fit, receive from any member willing to advance the same, all or any

part of the money due upon the shares held by him beyond the sums actually called for and upon the

money so paid in advance or so much thereof as from time to time exceeds the amount of the calls then

made upon the shares in respect of which such advance has been made, the Company may at the option

of the Directors pay interest at such rate as may be agreed, but the member shall not be entitled to

participate in profits or dividend or to any voting rights in respect of money so paid by him until the

same would but for such payment become presently payable.


341

TRANSFER AND TRANSMISSION OF SHARES


Execution of

transfer, etc.

33. Subject to the provisions of the Act, no transfer of shares shall be registered unless a proper instrument

of transfer duly stamped and executed by the transferor and transferee has been delivered to the

Company together with the certificate, or certificates of the shares, or if no such certificate is in

existence, alongwith the letter of allotment of shares. The instrument of transfer of any shares shall be in

writing in the usual common form and be signed both by the transferor and the transferee and shall

contain the name, and other particulars of the transferee and the transferor shall be deemed to remain the

holder of such share until the name of transferee is entered in the Register in respect thereof.

Application

for transfer.

34. Application for the registration of the transfer of a share may be made either by the transferor or the

transferee provided that, where such application is made by the transferor, no registration shall in the

case of partly paid shares be effected unless the Company gives notice of the application to the

transferee in the manner prescribed by the Act, and subject to the provisions of Articles 8 and 37 hereof,

the Company shall, unless objection is made by the transferee within two weeks from the date of receipt

of the notice, enter in the Register the name of the transferee in the same manner and subject to the same

conditions as if the application for registration was made by the transferee.

Notice of

transfer to

registered

holder.

35. Before registering any transfer tendered for registration the Company may, if it so thinks fit, give notice

by letter posted in the ordinary course to the registered holder that such transfer deed has been lodged

and that, unless objection is taken, the transfer will be registered and if such registered holder fails to

lodge an objection in writing at the Office of the Company within seven days from the posting of such

notice to him he shall be deemed to have admitted the validity of the said transfer. Where no notice is

received by the registered holder, the Company shall be deemed to have decided not to give notice and

In any event the non-receipt by the registered holder of any notice shall not entitle him to make any

claim of any kind against the Company in respect of such non-receipt.

Indemnity

against

wrongful

transfer.

36. Neither the Company nor its Directors shall incur any liabilities for registering or acting upon a transfer

of shares apparently made by sufficient parties, although the same may, by reason of any fraud or other

cause not known to the Company or its Directors be legally inoperative or insufficient to pass the

property in the shares proposed or professed to be transferred, to pass the property in the shares proposed

or professed to be transferred, and although the transfer may, as between the transferor and the

transferee, be liable to be set aside, and notwithstanding that the Company may have notice that such

instrument of transfer was signed or executed and delivered by the transferor in blank as to the name of

the transferee or the particulars of the shares transferred, or otherwise in defective manner. And in every

such case the person registered as transferee, his executors, administrators and assigns alone shall be

entitled to be recognised as the holder of such share and the previous holder shall so far as the Company

is concerned be deemed to have transferred his whole title thereto.

In what case to

decline to

register transfer

of shares.

37. Subject to the provisions of Section 111 of the Act, the Board, without assigning any reason for such

refusal, may, within two months from the date on which the instrument of transfer was delivered to the

Company, refuse to register any transfer of a share upon which the Company has a lien and, in the case

of a share not fully paid up, may refuse to register a transfer to a transferee of whom the Board does not

approve. Provided that registration of a transfer shall not be refused on the ground of the transferor being

either alone or jointly with any other person or persons indebted to the Company on any account

whatsoever except a lien on the shares.

No transfer to

minor or person

of unsound mind.

38. No transfer shall be made to a minor or person of unsound mind or firm without the consent of the

Board.


342


When instrument

of transfer to be

retained.

39. All instruments of transfer which shall be registered shall be retained by the Company.

Notice of refusal

to register

transfer.

40. If the Directors refuse to register the transfer of any shares, the Company shall, within two months from

the date on which the instrument of transfervas lodged with the Company, send to the transferee and the

transferor notice of the refusal.

Power to close

transfer books

and register.

41. On giving seven days’ notice by advertisement in a news paper circulating in the District in Which the

Office of the Company is situated, the Register of Members may be closed during such time as the

Directors think fit not exceeding in the whole forty five days in each year but not exceeding thirty days

at a time.

Transmission of

registered shares.

42. The executors or administrators or the holder of a succession certificate in respect of shares of a

deceased member (not being one of several joint holders) shall be the only person whom the Company

shall recognise as having any title to the shares registered in the name of such member and, in case of

the death of any one or more of the joint-holder of any registered shares, the survivors shall be the only

persons recognised by the Company as having any title to or interest in such shares but nothing herein

contained shall be taken to release the estate of a deceased joint-holder from any liability on shares held

by him jointly with any other person. Before recognising any legal representative or heir or a person

otherwise claiming title to the shares the Company may require him to obtain a grant of probate or

letters of administration or succession certificate or other legal representation, as the case may be, from

a competent Court: Provided nevertheless that in any case where the Board in its absolute discretion

thinks fit it shall be lawful for the Board to dispense with the production of probate or letters of

administration or a succession certificate or such other legal representation upon such terms as to

indemnity or otherwise as the Board may consider desirable.

As to transfer

of shares of

deceased or

insolvent

members.

Transmission

Article.

Notice of election

to be registered as

shareholders.

Provisions of

Articles relating to

transfer applicable.

43. Any person becoming entitled to or to transfer shares in consequence of the death or insolvency of any

member, upon producing such evidence that he sustains the character in respect of which he proposes to

act under this Article or of his title as the Directors think sufficient, may, with the consent of the

Directors (which they shall not be under any obligation to give), be registered as a member in respect of

such shares or may subject to the regulations as to transfer hereinbefore contained, transfer such shares.

This Article is hereinafter referred to as “The Transmission Article”. Subject to any other provisions of

these Articles, if the person so becoming entitled to shares under this or the last preceding Article shall

elect to be registered himself, he shall deliver or send to the Company a notice in writing signed by him

stating that he so elects. If he shall elect to transfer the shares to some other person he shall execute an

instrument of transfer in accordance with the provisions of these Articles relating to transfer of shares.

All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the

registration of transfer of shares shall be applicable to any such notice or transfer as aforesaid.

Rights of

unregistered

executors and

trustees.

44. Subject to any other provisions of these Articles and if the Directors in their sole discretion are satisfied

in regard thereto, a person becoming entitled to a share in consequence of the death or insolvency of a

member may receive and give a discharge for any dividends or other moneys payable in respect of the

share.


343

LOANS AND DEBENTURES


Power to

borrow.

Conditions of

Borrowing

Issue of

Debenture.

51. The Board may from time to time at its discretion. subject to the provisions of the Act, raise or borrow

from the Directors or from elsewhere and secure payment of any sum or sums of money for the purposes

of the Company.

52. The Board may raise or secure the repayment of such sum or sums in such manner and upon such terms

and conditions in all respects as it thinks fit and in particular by the issue of bonds, notes, convertible

redeemable or otherwise perpetual or redeemable debentures or debenture-stock or any mortgage or

other security on the undertaking of the whole or any part of the property of the Company (both present

and future) including its uncalled capital for the time being.

53. Any debentures, debenture-stock bonds and other securities may be issued at a discount, premium or

otherwise and with any special privileges as to redemption, surrender, drawings, allotment of shares, or

conversion, appointment of Directors and otherwise. Provided that debentures with the right to allotment

of or conversion into shares shall not be issued except with the sanction of the Company in General

Meeting. Debentures, debenture-stock, bonds and other securities may be made assignable free from any

equities between the Company and the person to whom the same may be issued.

DIRECTORS


Number of

directors

Present

Directors.

72. Until otherwise determined by the Company in General Meeting, the number of Directors shall not be less

than 3 nor more than 15.

73. At the date of the adoption of these Articles, the Directors of the Company are :-

Shri K. K. Birla

Shri Maneklal Premchand

Shri S. G. Nevatia

Shri Kamalnayan Bajaj

Shri P. R. Jhunjhunwala

Shri Rasiklal Maneklal

Shri Gopikisan Piramal

Shri N. K. Karanjia

Qualification

of Directors.

74. A Director of the Company shall not be required to hold qualification shares.

Remuneration

of Directors.

75. Each Director will be entitled to be paid out of the funds of the Company by way of remuneration for

his services, such sum as may be fixed by the Directors but not exceeding such sum as may be

prescribed by the Act or the Central Government from time to time, for any meeting of the Board or

Committee attended by him. The Directors shall also be entitled to receive in each year a commission

@1% of the net profits of the Company such commission to be calculated on the net profit of the

Company to be computed in accordance with the provisions of the Companies Act, 1956, and such

commission shall be divided among the Directors in such proportions and manner as may be

determined by them. The Directors may allow and pay to any Director, who for the time being is


344


resident out of the place at which any Meeting of the Directors may be held and who shall come to

that place for the purpose of attending such meeting, such sum as the Directors may consider fair and

reasonable for his expenses in connection with his attending at the meeting in addition to his

remuneration as above specified. If any Director being willing shall be called upon to perform extra

service or to make any special exertions for any of the purposes of the Company the Directors shall

be entitled to remunerate such Director either by a fixed sum or percentage of profits or in any other

manner as may be determined by the Directors in addition to the remuneration above provided.

Continuing

Directors may

act.

76. The continuing Directors may act notwithstanding any vacancy in their body but so that if the number

falls below the minimum above fixed the Directors shall not except for the purpose of filling

vacancies or of summoning a General Meeting act so long as the number is below the minimum.

Directors may

contract with

Company.

77. Subject to the provisions of the Act, the Directors (including a Managing Director) shall not be

disqualified by reason of his or their office as such from holding office under the Company or from

contracting with the Company either as vendor, purchaser, lender, agent, broker, lessor or lessee or

otherwise, nor shall any such contract or any contract or agreement entered into by or on behalf of the

Company with any Director or with any company or partnership, of or in which any Director shall be

a member or otherwise interested be avoided nor shall any Director so contracting or being such

member or so interested be liable to account to the Company for any profit realised by such contract

or arrangement by reason only of such Director holding that office or of the fiduciary relation thereby

established.

Appointment

of Directors.

78. The Company in General Meeting, may, subject to the provisions of these Articles and the Act, at any

time elect any person to be a Director and may from time to time increase or reduce the number of

Directors and may also determine in what rotation such increased or reduced number is to go out of

office.

Appointment of

Additional

Director.

79. (a) The Directors shall have power at any time and from time to time to appoint any person other than

a person who has been removed from the office of a Director of the Company to be a Director of

the Company as an addition to the Board but so that the total number of Directors shall not at any

time exceed the maximum number fixed. Any Director so appointed shall hold office only until the

conclusion of the next following Annual General Meeting of the Company when he shall be

eligible for reappointment.

Casual vacancy

may be filled

by Board

(b) The Directors shall also have power to fill a vacancy in the Board. Any Director so appointed shall

hold office only so long as the vacating Director would have held the same it to no vacancy had

occurred.

Power to

nominate

Directors.

80. Subject to the provision of the Act, any State or Credit Institutions if so agreed between them and the

Company shall be at liberty to nominate Directors in terms of such agreement.

Alternate

Directors.

81. The Board may appoint any person to act as an alternate director for a director during the latter’s absence

for a period of not less than three months from the State in which meetings of the Board are ordinarily

held and such appointment shall have effect and such appointee, whilst he holds office as an alternate

director shall be entitled to notice of meetings of the Board and to attend and vote thereat accordingly; but

he shall ipso facto vacate office if and when the absent Director returns to the State in which meetings of


345


the Board are ordinarily held or the absent Director vacates office as a Director.

Rotation of

Directors.

82. At the Annual General Meeting of the Company in every year, one third of the Directors for the time

being liable to retire by rotation and if their number is not three or a multiple of three then the number

nearest thereto shall retire from office. The Directors to retire at such Annual General Meeting shall be the

Directors (other than ex-officio Director or Directors or a Managing Director or Directors who by virtue

of the provisions of any agreement with any Central or State Government or Credit Institution are not

liable to retire) who shall have been longest in office since their last election. As between Directors who

became Directors on the same day those to retire shall (in default of agreement between them) be

determined by lot. For the purpose of this Article a Director appointed to fill a vacancy under the

provisions of Article 79 (b) shall be deemed to have been in office since the date on which the Director, in

whose place he was appointed was last elected as a Director.

Retiring

Director eligible

For re-election.

83. A retiring Director shall be eligible for re-election and shall act as a Director throughout the meeting at

which he retires.

Adjournemnt

of meeting

for election

of Directors

84. Subject to any resolution for reducing the number of Directors, if at any meeting at which an election of

Directors ought to take place the places of the retiring Directors are not filled up, the meeting shall stand

adjourned till the same day in the next week or if that day is a public holiday till the next succeeding day

which is not a public holiday at the same time and place and if at the adjourned meeting the places of the

retiring Directors are not filled up the retiring Dirctors or such of them as have not had their places filled

up shall (if willing to continue in office) be deemed to have been re-elected at the adjourned meeting.

PROCEEDINGS OF THE BOARD OF DIRECTORS


Meetings of

Directors.

85. The Directors may meet together for the despatch of meounss of business, adjourn and otherwise regulate

their meetings and proceedings as they think fit.

Summoning

meeting of

Directors.

86. The Secretary may at any time, and upon request of any two Directors shall summon a Meeting of the

Directors.

Voting at

meeting.

87. Subject to the provisions of the Act, questions arising at any meeting shall be decided by a majority of

votes, each Director having one vote and in case of an equality of votes the Chairman shall have a second

or casting vote.

Chairman of

meeting.

88. The Chairman of the Board of Directors shall be the Chairman of the meetings of Directors: Provided that

if the Chairman of the Board of Directors is not present, the Directors present shall choose one of their

member to be Chairman of such meeting.

Acts of

meeting.

89. A meeting of Directors in which a quorum is present shall be competent to exercise all or any of the

authorities, powers and discretions by or under the Articles of the Company and the Act for the time

being vested in or exercisable by the Directors.


346


Delegation to

committees.

90. The Directors may subject to compliance of the provisions of the Act from time to time delegate any of

their powers to Committees consisting of such member or members of their body as they think fit, and

may from time to time revoke such delegation. Any Committee so formed shall in the exercise of the

powers so delegated conform to any regulations that may from time to time be imposed on it by the

Directors. The meeting and proceedings of any such Committee, if consisting of two or more members,

shall be governed by the provisions for regulating the meetings and proceedings of the Directors so far

as the same are applicable thereto and are not superseded by any regulation made by the Directors under

this Article.

Validity of

acts.

91. All acts done at any meeting of Directors or of a, Committee of the Directors or by any person acting as

a Director shall notwithstanding that it be afterwards discovered that there was some defect in the

appointment of any such Directors, Committee or person acting aforesaid or that they or any of them

were disqlialified, be as valid as if every such person bad been duly apointed and was duly qualified.

Provided always that nothing in this Article shall be deemed to give validity to acts done by such

Directors, Committee or person acting as aforesaid after it has been shown that there was some defect in

any appointment or that they or any of them were disqualified.

Resolution by

circulation.

92. A resolution may be passed by the Board by circulation in accordance with the provisions of Section

289 of the Act.

Minutes to

be made.

93. The Directors shall cause minutes to be duly entered in the books provided for the purpose :-

(a) of all appointments of officers and Committees made by the Directors;

(b) of the names of the Directors present at each meeting of the Directors and of any Committee

of Directors;

(c) of all orders made by the Directors and Committees of Directors;

(d) of all resolutions and proceedings of General Meetings and of meetings of Directors and

Committees,

And any such minutes of any meeting of Directors or of any Committee or of the Company, if

purporting to be signed by the Chairman of such meeting or by the Chairman of the next succeeding

meeting, shall be receivable as prima facie evidence of the matters stated in such minutes.

POWERS OF DIRECTORS


General powers

of Company

vested in

Directors.

94. The business of the Company shall be managed by the Directors who in addition to the powers and

authorities by these presents or otherwise expressly conferred upon them may exercise all such powers

and do all such acts and things as may be exercised or done by the Company and are not hereby or by

law expressly directed or required to be exercised or done by the Company in General Meeting but

subject nevertheless to the provisions of any law and of these presents and to any regulations not being

inconsistent with these presents from time to time made by the Company in General Meeting : Provided

that no regulation so made shall invalidate any prior act of the Directors which would have been valid if

such regulation had not been made.


347


Management

abroad

95. The Directors may make such arrangements as may be thought fit for the management of the Company’s

affairs abroad and may for this purpose (without prejudice to the generality of their powers) appoint

local boards, attorneys and agents and fix their remuneration, and delegate to them such powers as may

be deemed requisite or expedient. The Company may have for use abroad such official seal as is

provided for by Section 50 of the Act. Such seal shall be affixed by the authority and in the presence of,

and the instruments sealed theirewith shall be signed by such persons as the Directors shall from time to

time by writing under the Seal appoint. The Company may also exercise the powers of, keeping Foreign

Registers as provided by the Act.

MANAGEMENT


Management

96. The company may appoint Managing or wholetime Director/Directors or Manager to manage its affairs

for such period and on such remuneration and upon such terms and conditions as may be sanctioned by

the Company in the manner required by the Act and approved by the Central Government.

COMMON SEAL


Custody of

Seal etc.

97. The Directors shall provide a seal for the purpose of the Company and shall have power from time to

time to destroy the same and substitute a new seal in lieu thereof and shall provide for the safe custody

of the seal and the seal shall except as otherwise empowered under the Act or rules thereunder, never be

used except by the authority of Directors or of a Committee of the Directors and one Director shall sign

every instrument to which the seal is affixed. Provided nevertheless that any instrument bearing the Seal

of the Company and issued for valuable consideration shall be binding on the Company

notwithstanding any irregularity touching the authority of the Directors to issue the same.


348

ACCOUNTS

Title of Article Article number and contents

Books of

account to

be kept.

Inspection by

members

When accounts

to be deemed

finally settled.

98. The books of account shall be kept at the Office of the Company or at such other place as the Directors

think fit.

99. The Board shall from time to time determine whether and to what extent and at what times and places

and under what conditions or regulations the accounts and books of the Company or any of them shall

be open to the inspection of the members not being Directors, and no member (not being a Director)

shall have any right of inspecting any account or books or document of the Company except as

conferred by law or authorised by the Directors or by the Company in General Meeting.

100. Every Balance Sheet and Profit and Loss Account when audited and approved by a General Meeting

shall be conclusive except as regards any error discovered therein within three months next after the

approval thereof. Whenever any such error is discovered within that period the account shall forthwith

be corrected and thenceforth shall be conclusive.

RECONSTRUCTION


Reconstruction 116. On any sale of the undertaking of the Company, the Directors or the Liquidators on a winding up

may, if authorised by a Special Resolution, accept fully paid or partly paid-up shares, debentures or

securities of any other company, whether incorporated in India or not, either then existing or to be

formed for the purchase in whole or in part of the property of the Company. The Liquidators (in a

winding up), may distribute such shares, or securities, or any other property of the Company amongst

the contributories without realisation or vest the same in trustees for them and may if authorised by

Special Resolution provide for the distribution or appropriation of the cash, shares or other securities,

benefits or property otherwise than in accordance with the strict legal rights of the contributories of

the Company, and for the valuation of any such securities or property at such price and in such

manner as the meeting may approve, and the contributories shall be bound to accept and shall be

bound by any valuation or distribution so authorised and waive all rights in relation thereto, save such

statutory rights (if any) under the Act as are incapable of being varied or excluded by these presents.

WINDING UP


Distribution of

Assets

117. Upon the winding up of the Company, the holders of Preference shares, it any, shall be entitled to be

paid all arrears of Preferential dividend to the commencement of winding up and also to be repaid the

amount of capital paid up or credited as paid up on such preference shares held by them respectively, in

priority to the Ordinary shares, but shall not be entitled to any other further rights to participate in

profits or assets; subject as aforesaid and to the rights of any other holders of shares entitled to receive

preferential payment over the Ordinary shares, in the event of the windIng up of the Company, the

holders of the Ordinary shares shall be entitled to be repaid the amount of capital paid up or credited as

paid up on such shares and all surplus assets thereafter shall belong to the holders of the Ordinary

shares in proportion to the amount paid up or credited as paid up on such Ordinary shares respectively,

at the commencement of the winding up. If the assets shall be insufficient to repay the whole of the paid

up Ordinary capital, such assets shall be distributed so that as nearly as may be the losses shall be borne

by the members holding Ordinary shares in proportion to the capital paid up or which ought to have

been paid up on the Ordinary shares held by them respectively at the commencement of the winding up,


349


Distribution of

assets in specie.

other than the amounts paid by them in advance of calls.

118. If the Company shall be wound up, whether voluntarily or otherwise, the Liquidators may, with the

sanction of a special Resolution of the Company and any other sanction required by the Act, divide

among the contributories in specie or kind, any part of the assets of the Company and may, with the like

sanction, vest any part of the assets of the Company in trustees upon such trusts for the benefit of the

contributories, or any of them, as the Liquidators, with the like sanction, shall think fit.

INDEMNITY


Indemnity

Individual

responsibility of

Directors

119. Subject to the provisions of Section 201 of the Act, every Director, Manager, Secretary and other officer

or employee of the Company shall be indemnified against, and it shall be the duty of the Directors to pay

out of the funds of the Company all costs, losses and expenses (including travelling expenses) which any

such Directors, Manager or Secretary or other officer or employee may incur or become liable to by

reason of any contract entered into or any way in the discharge of his or their duties and in particular, so

as not to limit the generality of the foregoing provisions, against all liabilities incurred by him or them as

such Director, Manager, Secretary, Officer or employee in defending any proceedings whether civil or

criminal, in which judgement is given in his or their favour or he or they is or are acquitted or in

connection with any application under Section 633 of the Act in which relief is granted by the Court and

the amount for which such indemnity is provided shall immediately attach as a lien on the property of the

Company and have priority as between the Members over all other claims.

120. Subject to the provisions of the Act and so far as such provisions permit, no Director, Auditor or other

Officer of the Company shall be liable for acts, receipts, neglects or defaults of any other Director or

Officer, or for joining in any receipt or other act for conformity, or for any loss or expense happening to

the Company through the insufficiency or deficiency of title to any property required by order of the

Directors for or on behalf of the Company or for the insufficiency or deficiency of any security in or upon

which any of the moneys of the company shall be invested, or for any loss occasioned by any error of

judgment, omission, default, or oversight on his part, or for any loss, damage or misfortune whatever

which shall happen in the execution of the duties of his office or in relation thereto, unless the same

happens through his own dishonesty.

SECRECY CLAUSE


Secrecy 121. Subject to the provisions of these Articles and the Act no member or other person (not being a Director)

shall be entitled to enter the property of the Company or to inspect or examine the Company’s premises

or properties of the Company without the permission of the Directors or to require discovery of or any

information respecting any detail of the Company’s trading or any matter which is or may be in the

nature of a trade secret, mystery of trade, or secret process or of any matter whatsoever which may

relate to the conduct of the business of the Company and which in the opinion of the Directors it will be

inexpedient in the interest of the Company to communicate.


350

SECTION XI: OTHER INFORMATION

LIST OF MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

MATERIAL CONTRACTS

1. Letters of appointment, dated October 9, 2007, to the Enam Securities Private Limited, from our

Company appointing them as the Book Running Lead Managers.

2. Letter of Appointment dated ___________, 2007 to ___________ appointing them as the Registrar to

the Issue.

3. Memorandum of Understanding between our Company and the Lead Manager.

4. Memorandum of Understanding between our Company and the Registrar to the Issue.

MATERIAL DOCUMENTS 1. Board Resolutions dated August 20, 2007 for the Rights Issue.

2. Annual Reports of the Company for the years ended June 30, 2003; 2004; 2005; 2006; 2007.

3. Report dated December 11, 2007, of the Statutory Auditors, M/s. S. R. Batliboi & Co., prepared as per

Indian GAAP, SEBI (DIP) Guidelines, 2000 and SEBI Act, 1992.

4. Tax Benefits Certificate dated 11th

December, 2007 from the Statutory Auditors, M/s. S. R. Batliboi &

Co.

5. Consent of the Directors, Compliance Officer, Lead Manager, Registrar to the Issue, Banker to the

Issue, Legal Advisor to the Issue and Statutory Auditors to include their names in the Draft Letter of

Offer.

6. Undertaking given by the promoters to subscribe more than their entilement, in case required to ensure

minimum subscription in the Rights Issue.

7. Listing applications dated�, 2007 made to BSE and NSE respectively.

8. In-principle listing approvals dated�, 2007 and�, 2007 from BSE and NSE respectively.

9. Triprtite agreement between NSDL, our Company and Registrar to the Issue dated November 1, 1999.

10. Triprtite agreement between CDSL, our Company and Registrar to the Issue dated October 29, 1999.

11. Due diligence certificate dated�, 2007 to SEBI from the Lead Manager, Enam Financial Consultants

Private Limited.

12. SEBI observation letter no.� Dated�, 2008 and our reply dated �, 2008.

AVAILABILITY OF MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The above-mentioned ‘Material Contracts’ and ‘Material Documents’ may be inspected at the Registered Office

of our Company from 11.00 a.m. to 2.00 p.m. on all the working days, from the date of this Draft Letter of Offer

until the closure of the subscription list. Copies of these documents, for inspection as mentioned above, will be

delivered to the Designated Stock Exchange.


351

DECLARATION

All relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government or the

guidelines issued by the Securities and Exchange Board of India established under section 3 of the Securities

and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in

this Draft Letter of Offer is contrary to the provisions of the Companies Act, 1956 or the Securities and

Exchange Board of India Act, 1992 or Rules made there under or guidelines issued, as the case may be.

We, the Directors of the Company, hereby certify that, all statements in this Draft Letter of Offer are true correct

and fair.

Yours faithfully

On behalf of the Board of Directors of The Oudh Sugar Mills Limited

Mr. C.S.Nopany (Chairman cum Managing Director)

Mr. S.V.Muzumdar (Director)

Mr. Ashvin Dalal (Director)

Mr. Rohit Kumar Dhoot (Director)

Mrs. Madhu Vadera Jayakumar (Director)

Mr. C.B. Patodia (Director)

Mr Jayant Godbole (Director)

Mr Haigreve Khaitan (Director)

Managing Director

Mr. C.S.Nopany

Chief Financial Officer

Mr. Mahesh Jain

Company Secretary

Mr. Sanjay Mukherjee

Place: Mumbai

Date: December 24, 2007