ISSUER’S ABSOLUTE RESPONSIBILITY - · PDF fileISSUER’S ABSOLUTE RESPONSIBILITY Avadh Sugar & Energy Limited, having made all reasonable inquiries, accepts responsibility for and

Information Memorandum Avavdh Sugar & Energy Limited

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ISSUER’S ABSOLUTE RESPONSIBILITY

Avadh Sugar & Energy Limited, having made all reasonable inquiries, accepts responsibility for and confirms that this Information Memorandum contains all information with regard to the Company which is material in the context of this Issue of Shares pursuant to the Scheme, that the information contained in the Information Memorandum is true and correct in all material aspects 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 inclusion or omission of which makes this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions, misleading, in any material respect. LISTING The Equity Shares are proposed to be listed on the National Stock Exchange of India Limited (NSE), BSE Limited (BSE) and the Calcutta Stock Exchange Limited (CSE). The Company has submitted this Information Memorandum with NSE, BSE and CSE. This Information Memorandum will also be updated on the website of NSE (www.nseindia.com), BSE (www.bseindia.com) and CSE (www.cse-india.com) REGISTRAR AND TRANSFER AGENT

Link Intime India Pvt. Ltd, 59 C, Chowringhee Road,

3rd Floor, Kolkata – 700020

Tel: 033 - 2289 0540 Telefax: 033 - 2289 0539

Email: [email protected]


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TABLE OF CONTENTS

SECTION I – GENERAL

• DEFINITIONS AND ABBREVIATIONS

• PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA

• FORWARD-LOOKING STATEMENTS

SECTION II – RISK FACTORS

SECTION - III- INTRODUCTION

• SUMMARY OF INDUSTRY

• SUMMARY OF OUR BUSINESS

• GENERAL INFORMATION

• CAPITAL STRUCTURE

• OBJECT & RATIONALE OF THE SCHEME

• SALIENT FEATURES OF THE SCHEME

• STATEMENT OF TAX BENEFITS

SECTION IV – ABOUT OUR COMPANY

• INDUSTRY OVERVIEW

• OUR BUSINESS

• KEY REGULATIONS & POLICIES

• HISTORY OF OUR COMPANY

• OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANIES

• OUR MANAGEMENT

• DIVIDEND POLICY

SECTION V- FINANCIAL INFORMATION

• FINANCIAL INFORMATION

SECTION VI- LEGAL AND OTHER INFORMATION

• OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS

• GOVERNMENT APPROVALS AND LICENSES

• SECTION VII- OTHER INFORMATION

• MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION

• DECLARATION


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SECTION I – GENERAL

DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise indicates, requires or implies, the following terms shall have the following meanings in this Information Memorandum. References to statutes, rules, regulations, guidelines and policies will be deemed to include all amendments and modifications notified thereto, from time to time.

Company Related Terms

Term Description

Transferor Company-1/UGSIL/ Upper Ganges Sugar & Industries Limited (UGSIL), (Transferor Company-1) which pursuant to Part IX of the Composite Scheme of Arrangement is transferring and vesting its Residual Business to Avadh Sugar & Energy Ltd., Transferee Company.

Transferor Company-2/OSML The Oudh Sugar Mills Limited (OSML), (Transferor Company-2) which pursuant to Part IX of the Composite Scheme of Arrangements is transferring and vesting its Residual Business to Avadh Sugar & Energy Ltd., Transferee Company.

“Our Company” / “the Company” / ” Avadh Sugar and Energy Limited” / “ASEL” / “we” / “us” / “our” / “Transferee company”

Avadh Sugar & Energy Limited, a public limited company incorporated under the Companies Act, 2013, with its registered office at P.O. Hargaon, District Sitapur, Uttar Pradesh-261121

Residual Business -1 Residual Business- 1 shall mean the entire business and whole of Undertaking of Upper Ganges Sugar & Industries Ltd that is remaining after transferring and vesting of its other undertaking(s) in terms of Part IV and Part VII of the Composite Scheme of Arrangement.

Residual Business -2 Residual Business- 2 shall mean the entire business and whole of Undertaking of The Oudh Sugar Mills Ltd. that is remaining after transferring and vesting of its other undertaking(s) in terms of Part II and Part VI of the Composite Scheme of Arrangement.


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Conventional and General Terms

Term Description

AGM Annual General Meeting

Articles / Articles of Association / AOA

Articles of Association of ASEL

Applicable Laws Any statute, notification, bye-laws, rules, regulations, guidelines, Common law, policy code, directives, ordinate, schemes notices, orders or instructions, laws enacted or issued or sanctioned by any appropriate authority in India including any modifications or re-enactment thereof for the time being in force.

Appointed Date April 1, 2015 as approved by Hon’ble NCLT

AS Accounting Standards, as issued by the Institute of Chartered Accountants of India.

Auditors The Statutory Auditors of ASEL

Board/Board of Directors Board of Directors of ASEL

BSE BSE Limited

Capital or Share Capital Share Capital of ASEL

CDSL Central Depository Services (India) Limited

CFO Chief Financial Officer

CIT Commissioner of Income Tax

Corporate Office The corporate office of our Company, presently located at 9/1, R.N. Mukherjee Road Birla Building, 5th Floor, Kolkata - 700 001

Non-Convertible Cumulative Redeemable Preference Shares / “CRPS”

8.5 % Non-Convertible Cumulative Redeemable Preference Shares of ASEL Company of face value of Rs. 10/- each.

12% Non-Convertible Cumulative Redeemable Preference Shares of ASEL Company of Face value of Rs. 100/- Each

Act/Companies Act The Companies Act, 1956 and/or the Companies Act, 2013, as applicable

Companies Act, 1956 Companies Act, 1956, as amended

Companies Act, 2013 The Companies Act, 2013 and any Rules issued thereunder

Court / High Court Hon’ble High Court of Allahabad, as applicable, and shall include the National Company Law Tribunal, Allahabad Bench

CSE Calcutta Stock Exchange Limited

CSR Corporate Social Responsibility

DDT Divided Distribution Tax Designated Stock Exchange (‘DSE’)

National Stock Exchange of India Limited


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Depositories Act The Depositories Act, 1996 and amendments thereto

Director(s) The director(s) of the Company, unless otherwise specified.

DP Depository Participant

Effective Date March 23, 2017 on filling of order with ROC

EGM Extraordinary General Meeting

Eligible Shareholder(s) Eligible holder(s) of equity Shares of UGSIL / OSML (Transferor Company-1 and Transferor Company-2) as on the Record Date

Equity Share(s) or Share(s) Fully paid up equity shares of ASEL having a face value of Rs. 10 each unless otherwise specified in the context thereof

ESI Act Employee’s State Insurance Act, 1938

FDI Foreign Direct Investment

FEMA Foreign Exchange Management Act, 1999

FI Financial Institutions

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

Financial Year/Fiscal/FY Period of twelve months ended March 31 of that particular year, unless otherwise stated

GDP Gross Domestic Product

GoI Government of India

Government Authority Applicable Central, State or local Government, Statutory, regulatory, departmental or public body or authority of relevant jurisdiction, legislative body or administrative authority, agency or commission or any Court, tribunal, board, bureau or instrumentality thereof including Securities and Exchange Board of India, Stock Exchanges, Register of Companies, Regional Directors, Foreign Investment Promotion Board, Reserve Bank of India, or arbitration or arbitral body having jurisdiction, Court and other government and India in each case.

Group Companies The details of Group Companies are provided at page no. 99

HR Human Resource

HUF Hindu Undivided Family

Indian GAAP Generally accepted accounting principles in India

IT Act The Income Tax Act, 1961 and amendments thereto

ITAT Income tax Appellate Tribunal

JV Joint Venture

KMP Key Managerial Personnel

Listing Regulations SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015


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Memorandum/Memorandum of Association / MOA

Memorandum of Association of ASEL

MAT Minimum Alternate Tax

MoEF Ministry of Environment and forest

Mn Million

N.A Non Applicable

NOCs No Objection Certificates

NR Non Resident

NRI(s) Non Resident Indian(s)

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

PAN Permanent Account Number

RBI The Reserve Bank of India

Record Date Saturday, March 25, 2017

Registrar and share Transfer Agent

M/s. Link Intime India Pvt Ltd, Add: C 101, 247, Park, L B S Marg, Vikhroli West, Mumbai – 400 083

Registered Office The registered office of our Company, presently located at Avadh Sugars & Energy Limited, P.O. Hargaon, District Sitapur, Uttar Pradesh-261121

RoC The Registrar of Companies

Scheme or Scheme of Arrangement or Composite Scheme of Arrangement

Composite Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 or Section 230 to 234 of Companies Act 2013 as applicable, amongst Upper Ganges Sugar & Industries Limited, The Oudh Sugar Mills Limited, Palash Securities Limited, Allahabad Canning Limited, Ganges Securities Limited, Cinnatolliah Tea Limited, Vaishali Sugar & Energy Limited, Magadh Sugar & Energy Limited and Avadh Sugar & Energy Limited and their respective Shareholders and Creditors (‘the Scheme’), and their respective shareholders and creditors, sanctioned by the Hon’ble NCLT, Allahabad Bench

SCRA Securities Contracts (Regulation) Act, 1956 and amendment thereto

SCRR Securities Contracts Regulation (Rules), 1957

SEBI Securities and Exchange Board of India

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

SEBI (ICDR) Regulations SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and amendments thereto

SEBI Takeover Regulations

The SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 and amendments thereto


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TAN Tax Deduction Account Number

TIN Tax Information Network

USD United State Dollar

VAT Value Added Tax

Wealth Tax Act The Wealth Tax Act, 1957 and amendments thereto

w.e.f With effect from

The words and expressions used but not defined herein shall have the same meaning as is assigned to such terms under the Companies Act, the SCRA, the Depositories Act and the rules and regulations made thereunder or such other applicable laws as amended from time to time.

Notwithstanding the foregoing, terms in sections titled “Main Provisions of the Articles of Association”, “Statement of Tax Benefits” and “Financial Information”, have the meanings given to such terms in these respective sections.

PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA

Financial Data

Unless indicated otherwise, the financial data and other financial information in this Information Memorandum is derived from our financial statements. The fiscal year of the Company commences on April 1 and ends on March 31 of each year. Accordingly, unless the context otherwise implies or requires, all references to a particular fiscal year are to the twelve-month period ended March 31 of that year.

In this Information Memorandum, any discrepancies in any table between the total and the sums of amounts listed are due to rounding off. All references to “India” contained in this Information Memorandum are to the republic of India. All references to “Rupees” or “Rs.” or “`” are to Indian Rupees, the official currency of the Republic of India.

For additional definitions, please refer to the section titled “Definitions and Abbreviations” of this Information Memorandum.

For more information on the results of operations and financial condition of the Company, see the section titled “Financial Information”.

Industry and Market Data

Unless stated otherwise, industry and market data used throughout this Information Memorandum has been obtained from industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable, but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Further, they also state that the information contained in the industry reports are of a general nature and do not address the circumstances of any particular individual or entity. Although the Company believes that the industry and market data used in this Information Memorandum is reliable, it has not been independently verified by us or any independent sources.

The information included in this information memorandum about various other companies is based on their respective annual reports and information made available by the respective companies.

Currency of Presentation

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


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FORWARD-LOOKING STATEMENTS

This Information Memorandum 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”, “future”, “goal”, “plan”, “contemplate”, “propose” “seek to” “project”, “should”, “will”, “will continue”, “will pursue”, “will likely result” or other words or phrases of similar import. Similarly, statements that describe our objectives, strategies, plans or goals are also forward-looking statements. All forward looking statements are based on our current plans and expectations and are subject to a number of uncertainties and risks and assumptions that could significantly and materially affect our current plans and expectations and our future financial condition and results of operations. Important factors that could cause actual results, including our financial conditions and results of operations to differ from our expectations include, but are not limited to, the following:

1. our ability to successfully implement our strategy, our growth and expansion 2. competition from our existing as well as new competitors; 3. our ability to compete with and adapt to technological advances; 4. changes in domestic laws, regulations and taxes; 5. the performance of the financial markets in India and globally; 6. general economic, political and business conditions in the markets in which we operate and in the local,

regional and national economies; 7. failure to maintain high level of customer satisfaction 8. the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates,

foreign exchange rates, equity prices or other rates or prices; and 9. terrorist attacks, civil disturbances, regional conflicts, accidents and natural disasters.

For further discussion of factors that could cause our actual results to differ, see sections titled “Risk Factors” this Information Memorandum. 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.

We do not have any obligation to, and do not intend 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 materialize.

SECTION II – RISK FACTORS

This is only a summary with Risk factors related to investment in shares of the company. The investors should read the following summary with the Risk Factors mentioned and the more detailed information about us and our financial statements included elsewhere in this Information Memorandum. Unless specified or quantified in the relevant risk factors below, we were not in a position to quantify the financial or other implication of any of the risks described in this section. The numbering of the risk factors has been done to facilitate ease of reading and reference and does not in any manner indicate the importance of one risk over another.

RISKS RELATING TO THE COMPANY

Internal Risk Factors

1. Our Company, Subsidiaries, Promoter and certain Group Companies are involved in certain legal proceedings, which if determined against the above entities could have an adverse impact on the business and financial results of our Company.


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Our Company, promoters and some of our group companies are involved in certain legal proceedings which are pending at different levels of adjudication before various courts and tribunals. If any of the cases pending are decided or determined against us, our promoter or any of our group companies, such decision may have an adverse effect on our business, results of operations and financial condition. For further details, please refer to the chapter titled “Outstanding Litigation, Defaults and Material Developments' this Information Memorandum.

2. Availability of sugarcane for our sugar mills is predominantly dependent upon the cultivation of sugarcane within our reserved cane area. Any shortfall in cultivation of sugarcane in the cane areas by the farmers may adversely impact the raw material supply to our mills thereby adversely impacting our production and results of operation.

Under the State laws, we are bound by law to purchase sugarcane from farmers’ cooperative societies in areas reserved and assigned to us by the Cane Commissioner, together referred to as “Cane Area”. However, the farmers within our Cane Area have no obligation to cultivate sugarcane and may instead grow other more profitable crops. If the farmers within our Cane Area cultivate other crops, or otherwise limit their cultivation of sugarcane, we may have a shortage of raw material. Sugarcane grown within our Reserved Cane Area may be sold to manufacture of Gur & Khandsari and others instead of us. Any reduction in the supply of sugarcane may adversely affect our operations and financial condition.

3. Our business is dependent on the Sugar cane production during the sugar season

Sugar industry is an agro based industry and its main raw material is sugarcane. In any year, if there is a shortfall in sugarcane production on account of adverse climatic conditions, the amount of sugar produced by the sugar mills is affected adversely. Apart from climatic conditions, the sugar cane crop may also be impacted by the occurrence of crop disease. Proper water management through irrigation during the formative stage of the cane is critical to the sucrose content and overall quality of the cane. In case the quality /quantity of cane is affected by any of the aforementioned conditions, we may not be able to optimally utilize our crushing capacity. This will directly affect our profitability.

4. 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 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.

5. 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 existing norms, we have to purchase sugarcane at State Advised Price (SAP). The regulated release mechanism—under which sugar quantity for open market sale is fixed by the government—has been abolished and control of mandatory supply of sugar in public distribution system (PDS) as levy sugar has also been rescinded from May, 2013.Sugar is subject to price fluctuations resulting from adverse weather conditions, natural disasters, domestic and foreign trade policies, shifts in supply and demand and other factors beyond our control. Sugar is sold in the open market at market determined prices. Thus, we have little control over the price at which we can sell the sugar produced.


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As a result, any prolonged decrease in sugar prices could have a material adverse effect on our Company and our results of operations.

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

In the past few years, there has been an aggressive increase in capacities made by the existing sugar companies and the new entrants in the state of Uttar Pradesh. The supply of sugar in the market will further 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.

Petition in the sugar, alcohol and power industries is based upon a number of considerations, including location, product quality, brands, product innovation, distribution capabilities and price. In the sugar industry in the past few years, there has been an aggressive increase in capacities made by the existing sugar companies and the new entrants in the state of Uttar Pradesh. The supply of sugar in the market will further 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. On the other hand, some of the competitors may be well established, substantially larger, more diversified and have greater financial, personnel and marketing resources and therefore have certain competitive advantages.

In addition to above, there are alternate sweeteners, especially artificial sweeteners such as saccharine and high

fructose corn syrup, which reduced the demand for sugar in India. A substantial decrease in sugar consumption, or the increased use of alternative or artificial sweeteners in India could have a material adverse effect on the operations.

7. We are subject to restrictive covenants in certain long term debt facilities provided to us by our lenders

We have taken long term and short term loans from 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.

Certain Significant Restrictive/Negative Covenants are:

The borrowings are subject us to certain restrictive covenants which require us to obtain the prior permission of such banks before undertaking certain activities such as alteration of our capital structure, payment of any dividend etc. Some of these restrictive covenants that which affect our shareholders’ interest include: 1. Effect any change in the Company's capital structure; With regard to the term loans raised by the Company,

there is a prohibition on disinvestments by promoters of their quota in the equity of the borrower Company, without seeking prior approval from the Banks.

2. Formulate any Scheme of Amalgamation or Reconstruction. 3. Undertake any new project, implement any scheme of expansion or acquire fixed assets except those indicted

in the funds flow statement submitted to the Bank from time to time and approved by the Bank. 4. Invest by way of share capital in or lend or advance funds to or place deposits with any other concern

(including group companies); normal trade credit or security deposits in the normal course of business or advances to employees can, however, be extended.

5. Enter into borrowing arrangement either secured or unsecured with any other bank, financial institution, Company or otherwise or accept deposits apart from the arrangement indicated in the funds flow statements submitted to the Bank from time to time and approved by the Bank.

6. Undertake any guarantee obligation on behalf of any other Company (including group companies).


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7. Declare dividends for any year out of the profits relating to that year or of the previous years. It is however necessary for the borrower to ensure first that provisions are made and that no repayment obligations remain unmet at the time of making the request for Bank’s approval for the declaration of dividend.

8. Create any charge, lien or encumbrance over its undertaking or any part thereof in favour of any financial institution, bank, Company, firm or persons. Sell, assign, mortgage or otherwise dispose off any of the fixed assets charged to the Bank. Enter into any contractual obligation of a long-term nature or affecting the Company financially to a significant extent.

9. Change the practice with regard to remuneration of directors by means of ordinary remuneration or commission, scale of sitting fees, etc.

10. Undertake any trading activity other than the sale of products arising out of its own manufacturing operations,

11. Permit any transfer of the controlling interest or make any drastic change in the management set-up. Repay monies brought in by the promoters/ directors/ principal shareholders and their friends and relatives by way of deposits/ loans / advances. Further, the rate of interest, if any, payable on such deposits/ loans/ advances should be lower than the rate of interest charged by the Bank on its term loan and payment of such interest will be subject to regular repayment of installments under term loans granted/ deferred payment guarantees executed by the Bank or other repayment obligations, if any, due from the Company to the Bank.

12. All unsecured loans/ deposits raised by the Company for financing a project are always subordinate to the loans of the banks/ financial institutions and should be permitted to be repaid only with the prior approval of the all the banks and the financial institutions concerned.

8. Our established brand name may be adversely affected by events beyond our control.

We believe that our brand is recognizable among the populace in India due to its long presence in the Indian market. However, there can be no assurance that this establish brand name will not be adversely affected in the future by events such as actions that are beyond our control, including customer complaints, developments in other businesses that use this brand or adverse publicity from any other source. Any damage to this brand name, if not immediately and sufficiently remedied, could have an adverse effect on our business, financial condition and results of operations.

9. Our success depends largely on our senior management and our ability to attract and retain our key

personnel. Any significant changes in the key managerial personnel, may affect the performance of our company.

Our success is substantially dependent on the availability of skilled manpower for operations. Any loss or interruption of the services of the key senior personnel, or the inability to recruit sufficient qualified personnel, could adversely affect the business. In addition, sugar, alcohol and power production and marketing thereof processes depend upon highly skilled employees. The business requires considerable resources for recruiting and developing such individuals and encouraging such individuals to remain employed by it. There is an inherent risk related to skilled and specialized manpower. They gain experience working with the Company and need continuous motivation and supervision. There is a risk of specialized manpower leaving the jobs, joining competitors, sharing confidential information etc. There is also the risk of being under-utilized or put in areas where they are unfit.

10. Sugar and alcohol industry is a highly regulated industry

The sugar and alcohol industry is operated in regulated environment under the policies and regulations of central and state governments comprising of the fixation of raw material prices affecting the agricultural sector and


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related industries could adversely affect its operations and its profitability. Several aspects of the operations including the sourcing and pricing of raw material and sale of the products are regulated by the governments.

The Central Government fixes the Fair and Remuneration Price (FRP) annually based upon last year sugar yield and increase thereafter for every ten basis points increase in yield. The central government policies affecting the agricultural industry, such as environmental regulations, taxes, tariffs, duties, subsidies and import and export restrictions on agricultural commodities and commodity products, can influence industry profitability, the planting of certain crops as opposed to desired crops, the location and size of crop production, and the volume and types of imports and exports. In certain states, government fixes FRP under their respective cane legislations.

Changes in government policies in relation to sugar cane prices, sugar prices, alcohol, ethanol, imports and exports may affect its operations and profitability. The mill will also adhere to applicable regulations governing ‘good manufacturing practices’ including testing, quality control, manufacturing and documentation requirements. The government policies have changed in the past and are subject to changes in the future.

The ethanol and power business are highly dependent on policies framed by the central and state governments. The various incentives and subsidies have been announced in this regard. The ethanol demand and price depend on government policy towards cleaner fuels. The power policy announced by the government from time to time is critical to the success or failure of the power business.

11. Interest rate exposure

The fluctuations in the exchange rate between the rupee and the US dollar have a material adverse effect on the valuations. Depreciation of rupee against foreign currencies may have an adverse impact on the Company’s financial viability. The exchange rate between rupee and the US dollar has changed substantially in the last two decades and could fluctuate in the future. In recent years, the rupee has depreciated against the US dollar. Financial derivatives are used by the Company for hedging purpose to limit the Company’s net exposure after internal netting of income against expense, and asset against liability in terms of timing, amount and currency type.

12. Our insurance coverage may not adequately protect us against certain operating hazards and this may have a material effect on our business.

We maintain insurance policies in respect of our principal places of business, including our sugar mills, distilleries, co-generation and vehicles. While we believe that the insurance coverage we maintain would reasonably be adequate to cover all normal risks associated with the operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will be honored fully or in part or on time. To the extent that we suffer loss or damage that is not covered by insurance or exceeds our insurance coverage, our results of operations and cash flow may be adversely affected.

13. Working Capital requirement is comparatively high in liquor companies

Indian liquor companies have weak financial profile with low margins, large working capital requirements, high gearing and low interest coverage indicators. Low margins are a manifestation of limited pricing flexibility and high overheads and advertising and promotion expenses. Working capital requirements are large because of high level of work in progress due to long processing period for fermentation and distillation.

14. Any loss or break down of operations at any of our manufacturing facilities may have a material effect on our business, financial conditions and results of operations


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Our manufacturing facilities are subject to operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, obsolescence, labour disputes, natural disasters, industrial accidents and the need to comply with the directives of relevant government authorities. The occurrence of any of these risks could significantly affect our operating results. We are required to carry out planned shutdowns of our plants for maintenance, statutory inspections and testing. Although precautions are taken to minimize the risk of any significant operational issues at our manufacturing facilities, our business, financial condition and results of operations may be adversely affected by any disruption of operations at our facilities, including due to any of the factors mentioned above.

15. If we fail to comply with environmental laws and regulations or face environmental litigation, our results of operation may be adversely affected

Environmental laws and regulations in India have been increasing in stringency and it is possible that they will become significantly more stringent in the future. If, as a result of compliance or non-compliance with any environmental regulations, our unit or the operations of such unit is suspended, we may need to incur costs in complying with regulations, appealing any decision closing our facilities, maintaining production at our existing facilities and continuing to pay labour and other costs which continue even if the facility is closed. As a result, our overall operating expenses may increase and our profits may decrease.

External Risk Factors

16. The sugar prices in India are impacted by the world sugar production and consumption. The global demand and production may affect the prices for Sugar.

The increase in production of Sugar in major sugar producing countries like Brazil, China, Thailand, Australia etc. may create surplus in the global sugar market and may resulted in lowering of the sugar prices. If such surplus phase characterized by a significant excess of global production over consumption continues, we cannot assure of higher realization prices of sugar being produced by us.

17. Changes in Government Policies and political situation in India may have an adverse impact on the business and operations of our Company

Since 1991, the Government of India has pursued policies of economic liberalization, including relaxing restrictions on the private sector. We cannot provide any assurance that the process of liberalization will be sustained in future. There could be a slowdown in the pace of economic development. The rate of economic liberalization could change specific laws and policies, foreign investment, currency exchange rates and other matters affecting investing in our securities could change as well. Any adverse change in Government policies relating to the Sugar Industry in general may have an impact on our profitability.

Certain events that are beyond our control such as earthquake, fire, floods and similar natural calamities may cause interruption in the services provided by us. All our facilities are located in India and our officers and directors are residents in India. Our operations and financial results and the market price and liquidity of our equity shares may be affected by changes in Indian Government policy or taxation or social, ethnic, political, economic or other adverse developments in or affecting India.

18. Impact of Regional or International hostilities, terrorist attack or other acts of violence of war

Regional or International hostilities, terrorist attack or other acts of violence of war could have a significant adverse impact on international or Indian financial markets or economic conditions or on Government Policy. Such incidents could also create a greater perception that investment in Indian Companies involves a higher degree of risk and could have an adverse impact on our business and on the market price of our company’s equity shares.


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19. Our Company is subject to risk arising from changes in interest rates and banking policy.

We are dependent on various banks for arranging our working capital requirements, etc. Accordingly, any change in the existing banking policy or increase in interest rates may have an adverse impact on our Company’s profitability.

20. Statutory taxes and other levies may affect our margin in the event of our inability to factor such expense in our selling prices.

Any increase in taxes and / or levies, or the imposition of new taxes and / or levies in the future, could increase the cost of production / operating expenses. To the extent, our Company is not able to factor such increase in the selling price; it may have a material adverse impact on our business operations and financial conditions.

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

Substantially all of our assets are located in India and substantial portion of our total income originated from India. Consequently, our performance and growth are dependent on the health of the Indian economy. Various factors, such as political or regulatory action, including adverse changes in liberalization policies, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices, could adversely affect the Indian economy. Any slowdown in the Indian economy may adversely affect our business and financial performance and the price of our Equity Shares.

22. If the rate of price inflation in India increases, our business and results of operations may be adversely affected.

Due to the global economic downturn, India has experienced fluctuating wholesale price inflation, as compared to historical levels. An increase in inflation in India could cause a rise in the price of raw materials and wages, or any other expenses that we incur. If this trend continues, we may be unable to accurately estimate or control our costs of production and this could have an adverse effect on our business and results of operations.

23. Our ability to pay dividends in the future will depend upon our future earnings, financial condition, cash flows, working capital requirements, capital expenditures and restrictive covenants in our financing arrangements.

Our future ability to pay dividends will depend on the earnings, financial condition and capital requirements of our Company. Dividends distributed by us will attract dividend distribution tax at rates applicable from time to time. We cannot assure you that we will generate sufficient income to cover our operating expenses and pay dividends to our shareholders, or at all. Our ability to pay dividends could also be restricted under certain financing arrangements that we may enter into. In addition, dividends that we have paid in the past may not be reflective of the dividends that we may pay in a future period. We may be unable to pay dividends in the near or medium term, and our future dividend policy will depend on our capital requirements, financing arrangements, results of operations and financial condition.

24. Impact of any disruption in supply of power, water or other basic infrastructure facilities

Any disruption in supply of power, water or other basic infrastructure facilities could adversely affect the business and production process of our Company or subject it to excess cost, which in turn will have an adverse impact on our profitability.

25. Global economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.

External factors such as potential terrorist attacks, acts of war or geopolitical and social turmoil in many parts of the world could constrain our ability to do business, increase our costs and negatively affect our stock price. These geopolitical, social and economic conditions could result in increased volatility in India and worldwide


16

financial markets and economy, and such volatility could constrain our ability to do business, increase our costs and negatively affect our stock price.

26. Natural calamities could have a negative impact on the Indian economy and cause the business to suffer.

India has experienced natural calamities such as earthquakes, tsunami, floods and drought in the past few years. The extent and severity of these natural disasters has an impact on the Indian economy. Any negative impact of natural disasters on the Indian economy could adversely affect the business and the market price of the Equity Shares.

27. The market value of the Equity Shares may fluctuate due to the volatility of the securities markets. As such shareholders will bear the risk of fluctuation in the price of Equity Shares

The securities markets are volatile and stock exchanges have in the past, experienced substantial fluctuations in the prices of listed securities. The stock exchanges have experienced problems, which, if these were to continue or recur, could affect the market price and liquidity of the securities of Indian Companies, including the Equity Shares. The governing bodies of the various Indian stock exchanges have from time to tome imposed restrictions on trading in certain securities, limitations on price movements and margin requirements.

28. The Company is operating in a highly regulated market. Policy decision by the Government may not be favorable and that may have an adverse effect over the revenues and profitability.

Sugar, being an essential commodity, is subject to various restrictions and regulations imposed by the State/Central Government such as the controls over fixation of cane price, distribution and sale of sugar both levy and free due to the release mechanism. As such the performance of the Company is at par with the industry, which depends upon policies and regulations issued by the Government, Semi-government and local authorities.


17

Section-III SUMMARY OF INDUSTRY

Indian Sugar Industry Outlook

The Indian sugar industry is a key driver of rural development, supporting India's economic growth. The industry is inherently inclusive supporting over 50 million farmers and their families, along with workers and entrepreneurs of almost 500 mills, apart from a host of wholesalers and distributors spread across the country.

On the consumption side, The Indian sugar consumption has steadily increased at 3.5 percent since 1996. Typically, sugar consumption is driven by the GDP growth and this has been the case for India as well. The per capita consumption has seen a steady growth of 2.1 percent CAGR over this period, while the population has grown at a CAGR of 1.4 percent. Further strong domestic demand for soft drink manufacturers, confectioneries, hotels, bakeries and ice cream manufacturers will support higher level of consumption. India’s relatively strong economic growth, stable political situation, rising incomes, a young population and changing consumer consumption patterns are envisaged to be the key drivers encouraging higher sugar consumption.

However, Indian sugar prices are expected to remain weak due to surplus sugar stock in both domestic and global markets. The government’s intervention is necessary in order to revive the Indian sugar industry which has been reeling under the twin impacts of high sugarcane prices and low sales realization on sugar leading to recurring losses being incurred by sugar mills and mounting cane arrears. Concrete measures are required including emphasis on increasing its ethanol blending programme along with providing flexibility for use of sugarcane as feed stocks for ethanol production, building compulsory buffer stocks, incentive exports through higher exports subsidy, restructuring debt of sugar manufactures and implementation of recommendation of Rangarajan committee for linking prices of cane to actual realization of sugar and its allied products. Indian Industrial Alcohol Outlook

Ethanol is produced in India from sugarcane molasses and partly from grains. Beginning in January 2003, the GOI mandated the use of five-percent ethanol blend in gasoline through its ambitious EBP. Ethanol and alcohol production in India depends largely on availability of sugar molasses (a byproduct of sugar production). Since sugarcane production in India is cyclical, ethanol production also varies accordingly and therefore does not assure optimum supply levels needed to meet the demand at any given time.

At times, lower availability of sugar molasses and resultant higher molasses prices affect the cost of production of ethanol, thereby disrupting supply of ethanol for the blending program at pre-negotiated fixed ethanol prices. However, recently announced price fixing scheme for fuel ethanol procurement for OMCs and with sugarcane cycle expected to enter its sixth year of surplus production, the EBP is likely to accelerate but with slower pace. India has around 330 distilleries which can produce over 4 billion liters of rectified spirit (alcohol) per year. Of this total, about 162 distilleries have the capacity to distill over 2 billion liters of conventional ethanol. India produces conventional bioethanol mostly from sugar molasses and partly from grains. Production of advanced bioethanol is in its research and development stage. Production Domestic ethanol production in last decade has remained stable except for steep decline in 2009 and historic high registered last year. Ethanol production in 2017 will decline eight percent to 1.9 billion liters due to decline in cane planting for second consecutive year. Acute water scarcity and abnormal weather conditions in major cane planting regions will discourage farmers to bring new areas under cane production.


18

Fuel Ethanol Market Penetration

Fuel ethanol market penetration in 2017 will be slightly higher at two percent compared to 1.9 percent expected in current year. Industry sources indicated that the OMCs may procure upwards of 700 million liters in 2017. Technically, given the current growth in gasoline consumption, the installed capacity will meet five to six percent of blend target. The fixed price for ethanol delivered at OMC depot is attractive for sugar mill given that average retail price of gasoline is on slightly higher side. On contrary, any procedural delay in EBP could encourage them to divert ethanol to chemical and potable industries. Additionally, mills could divert molasses as cattle feed or for exports if their prices are competitive.

Indian Ethanol Production, Supply and Consumption

Co-generation

Biomass has always been an important energy source for the country considering the benefits it offers. It is renewable, widely available, carbon-neutral and has the potential to provide significant employment in the rural areas. Biomass is also capable of providing firm energy. About 32% of the total primary energy use in the country is still derived from biomass and more than 70% of the country’s population depends upon it for its energy needs. Ministry of New and Renewable Energy has realised the potential and role of biomass energy in the Indian context and hence has initiated a number of programmes for promotion of efficient technologies for its use in various sectors of the economy to ensure derivation of maximum benefits Biomass power generation in India is an industry that attracts investments of over Rs.600 crores every year, generating more than 5000 million units of electricity and yearly employment of more than 10 million man-days in the rural areas. For efficient utilization of biomass, bagasse


19

based cogeneration in sugar mills and biomass power generation have been taken up under biomass power and cogeneration programme.

Biomass power & cogeneration programme is implemented with the main objective of promoting technologies for optimum use of country’s biomass resources for grid power generation. Biomass materials used for power generation include bagasse, rice husk, straw, cotton stalk, coconut shells, soya husk, de-oiled cakes, coffee waste, jute wastes, groundnut shells, saw dust etc.

Besides the Central Financial Assistance, fiscal incentives, concessional import duty, excise duty, tax holiday for 10 years, bank loans of up to Rs. 15 crore for biomass-based power generators will be considered part of PSL etc., are available for Biomass power projects.

The benefit of concessional custom duty and excise duty exemption are available on equipment’s required for initial setting up of biomass projects based on certification by Ministry. In addition, State Electricity Regulatory Commissions have determined preferential tariffs and Renewable Purchase Standards (RPS). Indian Renewable Energy Development Agency (IREDA) provides loan for setting up biomass power and bagasse cogeneration projects.

(http://mnre.gov.in)

BUSINESS OVERVIEW

1. Upper Ganges Sugar & Industries Limited1 (UGSIL/Transferor Company-1) UGSIL belongs to the renowned renowned K K Birla Group of Sugar Companies (Birla Sugar Group). Birla Sugar Group is a major player in key industries like fertilizers, chemicals, textiles, shipping, etc. apart from sugar. From a modest beginning in 1932, UGSIL has grown to become the pioneer in the Sugar Industry. (UGSIL) is one of the oldest sugar companies of the K.K. Birla Group. Established in 1932, UGSIL has three sugar manufacturing units situated in the cane rich region one - as an integrated sugar unit in the Bijnor district of U.P. - and the other two in Gopalganj and Samastipur districts of Bihar. All these regions are enjoying a sugarcane cultivation culture. Through organic and inorganic growth, the 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 18,000 tonnes of sugarcane per day (TCD), one Distillery producing 100 kilo litre per day (KLPD) of industrial alcohol/ethanol, two Co-generation Power Plants with a total power generation capacity of 42 MW, one Bio-Compost plant producing organic fertilizer and one Tea Garden.

Sugar Mills § Seohara Sugar Mills, Seohara, Dist. Bijnor (U.P.) with a crushing capacity of about 10,000 tonnes of

sugarcane per day. § Bharat Sugar Mills, Sidhwalia, Dist. Gopalganj (Bihar) with a crushing capacity of about 5,000 tonnes of

sugarcane per day. § Hasanpur Sugar Mills, Hasanpur, Dist. Samastipur (Bihar) with a crushing capacity of about 3,000 tonnes

of sugarcane per day.


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Distillery § Seohara Distillery, Seohara, Dist. Bijnor (U.P.) with a capacity of producing 100 KLPD of Industrial

Alcohol/Ethanol. Co-Generation Power Plants § Seohara Co-generation Power Plant, Seohara, Dist. Bijnor (U.P.) with a capacity of 24 MW Power. § Sidhwalia Co-generation Power Plant, Sidhwalia, Dist. Gopalganj (Bihar) with a capacity 18 MW Power. § Hasanpur Sugar Mills, Hasanpur, Dist. Samastipur (Bihar) with a capacity 10 MW Power.

Organic Fertilizer Plant § One Bio-Compost Plant, at Shyamabad near Seohara Mill producing organic fertilizer marketed under the

brand name “UttamJaivikKhad”. Tea Garden § Cinnatolliah Tea Garden, North Lakhimpur (Assam)

2. The Oudh Sugar Mills Limited1 (OSML/ Transferor Company 2) OSML belongs to the renowned K K Birla Group of Sugar Companies (Birla Sugar Group). Birla Sugar Group is a major player in key industries like fertilizers, chemicals, textiles, shipping etc. apart from sugar. From a modest beginning in 1932, OSML has grown to become the pioneer in Sugar Industry. It is one of the rapidly growing company in the Sugar Industry.

Through organic and inorganic growth, the Company has cautiously but consistently grown from a single unit sugar manufacturing company to a company having four sugar manufacturing units with an aggregate crushing capacity of about 28,700 tonnes of sugarcane per day, two distilleries having capacity to produce 160 kilo litre per day (KLPD) of industrial alcohol/ethanol, three Co-generation Power Plants with a total capacity of 60 MW Power, one Bio-Compost plant producing organic fertilizer and one food and fruit processing unit. After meeting its captive energy needs, OSML has a surplus of around 30 MW which it supplies to the UP and Bihar State grids -- and adds -- 35 MW to the total power generated by OSML. It is the flagship company of the group and employs large no of people directly and persons indirectly.

Sugar Mills

• Hargaon Sugar Mills, Hargaon, Dist. Sitapur (U.P.) with a crushing capacity of about 10,000 tonnes of sugarcane per day.

• New Swadeshi Sugar Mills, Narkatiaganj, Dist. West Champaran (Bihar) with a crushing capacity of about 7,500 tonnes of sugarcane per day.

• Rosa Sugar Works, Rosa, Dist. Shahjahanpur, (U.P.) with a crushing capacity of about 4,200 tonnes of sugarcane per day.

• New India Sugar Mills, Hata, Dist. Kushinagar, (U.P.) with a crushing capacity of about 7,000 tonnes of sugarcane per day.

Distilleries

• Hargaon Distillery, Hargaon, Dist. Sitapur (U.P.) with a capacity of producing 100 KLPD of Industrial Alcohol/Ethanol.

• New Swadeshi Distillery, Narkatiaganj, Dist. West Champaran (Bihar) with a capacity of producing 60 KLPD of Industrial Alcohol/Ethanol.

Co-Generation Power Plants

• Hargaon Co-generation Power Plant, Hargaon, Dist. Sitapur (U.P.) with a capacity of 15 MW Power. • Hata Power Plant, Dist. Kushinagar, (U.P.) with a capacity of 35 MW Power.


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Bio-Compost Plant

• Bio-Compost Plant producing organic fertilizer marketed under the brand name “Oudh Shakti JaivikKhad”. Food Processing Factory • Allahabad Canning Company, P. O. Bamrauli, Dist. Allahabad. (U.P.)

3. Avadh Sugar & Energy Limited (Avadh/Transferee company)

Avadh was incorporated on March 19, 2015, under the Companies Act, 2013 vide certificate of incorporation issued by the Registrar of Companies, Kanpur & Nainital, as a public limited company as per the Companies Act, 2013. The registered office of Avadh is situated at P.O. Hargaon, District Sitapur, Uttar Pradesh-261121. The main object of Avadh is to carry on the business of manufacture and sale of sugar, ethyl alcohol including ethanol, cogeneration of power and by-products.

In terms of Part IX of the Composite Scheme of Arrangement Residual Business-1 and Residual Business-2 of Transferor Company-1 and Transferor Company-2 respectively are transferred and vested to Avadh Sugar & Energy Limited, the Transferee Company.

Our Company was incorporated with the main object to deal in sugar and sugar products, spirits and alcohol of denatured of any strength and all other products arising out of the manufacturing process of sugar or resultant of any activity related to sugar business, generation of power through various means. Pursuant to business realignment, whereby sugar business undertakings of The Oudh Sugar Mills Ltd and Upper Ganges Sugar & Industries Ltd will be housed geographically in the State of Uttar Pradesh shall get transferred to and vested to Avadh Sugar & Energy Ltd.

Post restructuring, the Company is having four sugar mills at Hargaon (District Sitapur, Uttar Pradesh), Seohara (District Bijnor, Uttar Pradesh), New India Sugar Mills, Hata (District Kushinagar, Uttar Pradesh), Rosa Sugar Works at Rosa (District Shahajahanpur, Uttar Pradesh) with a combined crushing capacity of 31,200 TCD. Our Company is also having two distilleries at Hargaon and at Seohara with a total capacity of 200 KLPD. Our Company is also having Cogen facility and can produce 74 MW power.

Sugar Mills

• Hargaon Sugar Mills, Hargaon, Dist. Sitapur (UP), with a crushing capacity of about 10,000 tonnes of sugarcane per day.

• Seohara Sugar Mills, Seohara, Dist. Bijnor (UP), with a crushing capacity of about 10,000 tonnes of sugarcane per day.

• Rosa Sugar Works, Rora, Dist. Shahjahanpur (UP) with a crushing capacity of about 4,200 tonnes of sugarcane per day.

• New India Sugar Mills, Hata, Dist. Kushinagar (UP) with a crushing capacity of about 7,000 tonnes of sugarcane per day

Distilleries:

• Hargaon Distillery, Hargaon, Dist. Sitapur (UP) with a capacity of producing 100 KLPD of Industrial Alcohol/ Ethanol.

• Seohara Distillery, Seohara Dist. Bijnor (UP) with a capacity of producing 100 KLPD of Industrial Alcohol/ Ethanol.

Co-Generation Power Plants

• Hargaon Co-generation Power Plant, Hargaon, Dist. Sitapur (UP) with a capacity of 15 MW Power.


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• Seohara Co-generation Power Plant, Seohara, Dist. Bijnor (UP) with a capacity of 24 MW Power. • Hata Power Plant, Dist. Kushinagar (UP) with a capacity of 35 MW Power.

We manufacture the following three main categories of products:

• Sugar • Industrial Alcohol / Ethanol/ Rectified spirits • Power

GENERAL INFORMATION

Name of the Company Avadh Sugar & Energy Limited CIN U15122UP2015PLC069635

Website www.birla-sugar.com / www.avadhsugar.com

Registered Office Address P.O. Hargaon, District Sitapur, Uttar Pradesh-

261121 Phone No. (05862) 256220, FAX. (05862) 256225 E-mail [email protected]

Plant Locations

Hargaon Sugar Mills Address PO. Hargaon, District : Sitapur (UP), PIN : 261 121 Phone No. (05862) 256220, FAX. (05862) 256225

Seohara Sugar Mills Address PO. Seohara, District. Bijnor (UP), PIN : 246 746 Phone No. (01344) 252401 FAX. (031344) 252321

Rosa Sugar Works Address PO. Rosa, District - Shahjahanpur, (UP) , PIN – 242 406 Phone No. (05842) 235407, FAX – 235406

New India Sugar Mills Address Vill. Dhadha Buzurg, District. Kushinagar, U.P, Pin : 274 207 Phone No. (05567) 261023, FAX – 261017

Corporate Office Address 9/1, R.N. Mukherjee Road Birla Building, 5th

Floor, Kolkata - 700 001 Phone No. + 91 033 2243 0497/98

Bankers to the Company State Bank of India IDBI Bank Ltd. State Bank of Hyderabad Union Bank of India DCB Bank Ltd ICICI Bank Ltd Punjab National Bank


23

Statutory Auditors to the company Name M/s. S.R. Batliboi & Co. LLP;

Chartered Accountants Address 22- Camac Street, 3rd Floor,

Block-C, Kolkata-700016.

Phone No./ Fax No. 011-2303234/ 0512-2303235 E-mail: [email protected]

Registrar & Share Transfer Agent Name Link Intime India Pvt. Ltd.

(Unit : Avadh Sugar & Energy Limited) Address 59 C, Chowringhee Road, 3rd Floor, Kolkata - 700020 Phone No./ Fax No. +91 033 - 2289 0540 FAX - + 033 - 2289 0539 E-mail : [email protected]

Whole Time Director Name Mr. Devendra Kumar Sharma Phone No. 91. 70816 11111 E-mail : [email protected]

Chief Financial Officer Name Mr. Dilip Patodia Phone No. 91. 97487 71855 E-mail : [email protected]

Company Secretary and Compliance officer Name Mr. Anand Sharma Phone No. 91. 99038 44446 E-mail : [email protected]

Board of Directors of the Company:

The Board of Directors as on the date of filing the Information Memorandum:

S.No. Name of the Director Designation

1. Mrs. Nandin iNopany Chairperson

2. Mr. Chandra ShekharNopany Co-Chairperson

3. Mr. Anand Ashvin Dalal Independent Director

4. Mr. Sunil Kanoria Independent Director

5. Mr Gaurav Swarup Independent Director

6. Mr. Kalpatru Tripathy Independent Director

7. Mr. P K Bishnoi Independent Director

8. Mr. Devendra Kumar Sharma Wholetime Director


24

Eligibility Criterion for listing of securities The Company/ Avadh Sugar will seek listing of its securities under sub-rule (7) of rule 19 of the SCRR on NSE, BSE and CSE. Thus, there being no requirement of initial public offering or rights issue as per Chapter III & IV of the SEBI (ICDR) Regulations, 2009. Further, the Company is in compliance with SEBI Circular No.CIR/CFD/DIL/5/2013 dated February 4, 2013 read with SEBI Circular No. CIR/CFD/DIL/8/2013 dated May 21, 2013 and has submitted its Information Memorandum, containing information about itself, making disclosure in line with the disclosure requirement for public issues, as applicable to BSE and NSE and CSE for making the said Information Memorandum available to public through their websites viz. www.bseindia.com, www.nseindia.com and www.cse-india.com .The Company has made the said Information Memorandum available on its website viz: www.birla-sugar.com. . The Company will duly make the requisite publications, in the manner as provided above mentioned circular.

CAPITAL STRUCTURE OF THE COMPANY

The Capital Structure of the Company-Pre-scheme of Arrangement:

Particulars Aggregate Nominal Value (Rs.) Authorized Capital 50,000 Equity Shares of Rs10 each 5,00,000 Total 5,00,000 Issued, Subscribed and Paid-up 50,000 Equity Shares of Rs10 each 5,00,000 Total 5,00,000

The entire pre-scheme equity share capital consisting of 50,000 Equity Shares of Rs. 10/- each were held by the Transferor Companies (i.e. The Oudh Sugar Mills Limited, Upper Ganges Sugar and Industries Limited and their nominees), which was consequently cancelled pursuant to the Scheme become effective.

The Capital Structure of the Company-Post scheme of Arrangement: Particulars Aggregate Nominal Value (Rs.) Authorized Capital 5,60,00,000 Equity Shares of Rs. 10 each 56,05,00,000 5,00,00,000 Preference Shares of Rs. 10 each 50,00,00,000 3,40,00,000 Preference Shares of Rs. 100 each 34,00,00,000 3,00,00,000 Unclassified Share of Rs.10 each 30,00,00,000 Total 170,05,00,000 Issued, Subscribed and Paid-up 1,00,09,210 Equity Shares of Rs. 10 each fully paid-up 10,00,92,100 8.5% 4,87,00,000Preference Shares of Rs. 10 each 48,70,00,000 12% 17,00,000 Preference Shares of Rs. 100 each 17,00,00,000 Total 75,70,92,100


25

Pursuant to the Scheme, Avadh Sugar shall issue and allot 17,00,000 (Seventeen Lakhs) fully paid up 12% Non-Convertible Cumulative Redeemable Preference Shares of the face value of Rs. 100/- (Rupees hundred) each credited as fully paid up in its share capital to the preference shareholders of Upper Ganges Sugar and Industries Limited (Transferor Company-1). Such Non- Convertible Redeemable preference shares of Rs.100/-each were allotted vide Board Resolution dated 30th March 2017, as approved by shareholder’s resolution dated 31st March, 2017. Further these Preference shares shall not be listed on any stock exchange. Again, in accordance with the Scheme, Avadh Sugar shall issue and allot 4,87,00,000 (Four Crores Eighty seven Lakhs) fully paid up 8.5% Non-Convertible Cumulative Redeemable Preference Shares of the face value of Rs.10/- (Rupees ten) each credited as fully paid up in its share capital to the preference shareholders of The Oudh Sugar Mills Limited (Transferor Company-2). Such Non- Convertible Redeemable preference shares of Rs.10/-each were allotted vide Board Resolution dated 30th March 2017. Further these Preference shares shall not be listed on any stock exchange.

Details of changes in Authorized Equity Share capital of the Company:

Date of change

Number of shares

Cumulative number of Equity Shares

Authorized

share capital

(in Rs.)

Face Value (in Rs.)

Details of Changes

Since Incorporation

50,000 50,000 5,00,000 10 Authorized Share Capital since incorporation

23.03.2017 5,60,00,000 5,60,50,000 56,05,00,000 10 Pursuant to the Para 76 of Part IX of the Composite Scheme of Arrangement

Details of changes in Authorized Preference Share capital of the Company:

Date of change

Number of shares

Authorized share capital (in Rs.)

Face Value (in Rs.)

Details of Changes

23.03.2017 5,00,00,000 50,00,00,000 10 Pursuant to Para 76 of Part IX of the Composite Scheme of Arrangement

23.03.2017 34,00,000 34,00,00,000 100 Pursuant to Para 76 of Part IX of the Composite Scheme of Arrangement

Details of changes in Authorized Unclassified Share capital of the Company:

Date of change

Number of shares

Authorized share capital (in Rs.)

Face Value (in Rs.)

Details of Changes

23.03.2017 3,00,00,000 30,00,00,000 10 Pursuant to Para 76 of Part IX of the Composite Scheme of Arrangement


26

Equity Share Capital build up since the inception of the Company:

Date of allotment

No. of shares allotted

Cumulative number of shares

Face Value (in Rs)

Cumulative paid-up capital

Nature of allotment/remarks

Consideration

19.03.2015 50,000 50,000 10 5,00,000 Issued to the subscribers of MOA

Cash

Equity Share Capital build up Post Arrangement 30.03.2017 1,00,09,210 1,00,09,210 10 10,00,92,100 Further allotment Pursuant to the

Part IX of Composite Scheme of Arrangement

Capital Buildup of promoters as on the date of filing this Information Memorandum:

As on the date of this information memorandum, the Promoters of the Company, collectively hold 59,40,836 Equity Shares, equivalent to 59.35% of the issued, subscribed and paid up share capital of the Company.

Name of the Promoter

Nature of issue

Date of allotment

Number of shares

Face value

Issue Price/ Consideration

Date when the shares were made fully paid up

% of the total pre and post issue capital

The Lock in period, if any

Number and percentage of pledged shares, if any

NandiniNopany *

Allotment pursuant to Scheme of Arrangement

30.03.2017

299,802

10 Other than cash

N.A. 3.00

N.A. -

Chandra ShekharNopany #


30.03.2017

30,922

10 Other than cash

N.A. 0.31

N.A. -


27

New India Retailing &Invesment Ltd


30.03.2017

972,652

10 Other than cash

N.A. 9.72

N.A. 617,344

SCM Investment & Trading Co. Ltd.


30.03.2017

749,945

10 Other than cash

N.A. 7.49

N.A. -

Uttar Pradesh Trading Company Limited


30.03.2017

739,312

10 Other than cash

N.A. 7.39

N.A. -

RTM Investment & Trading


30.03.2017

672,596

10 Other than cash

N.A. 6.72

N.A. 521,371

Sil Investments Ltd


30.03.2017

567,240

10

Other than cash

N.A. 5.67

N.A. -

Yashovardhan Investment & Trading


30.03.2017

356,692

10 Other than cash

N.A. 3.56

N.A. -

Hargaon Investment & Trading Co Ltd


30.03.2017

241,255

10 Other than cash

N.A. 2.41

N.A. -

GMB Investment Private Limited


30.03.2017

219,705

10 Other than cash

N.A. 2.20

N.A. -

Ronson Traders Ltd

Allotment pursuant to Scheme of

30.03.2017

219,346

10 Other than cash

N.A. 2.19

N.A. 65,564


28

Arrangement

Sidh Enterprises Ltd


30.03.2017

214,998

10 Other than cash

N.A. 2.15

N.A. -

Sonali Commercial Ltd


30.03.2017

149,050

10 Other than cash

N.A. 1.49

N.A. 133,334

Deepshikha Trading Company Pvt Ltd


30.03.2017

102,450

10 Other than cash

N.A. 1.02

N.A. 102,443

Champaran Marketing Co Ltd


30.03.2017

95,642

10 Other than cash

N.A. 0.96

N.A. -

OSM Investments & Trading Co


30.03.2017

86,127

10 Other than cash

N.A. 0.86

N.A. -

Uttam Commercial Ltd


30.03.2017

68,595

10 Other than cash

N.A. 0.69

N.A. -

Nilgiri Plantations Ltd


30.03.2017

50,600

10 Other than cash

N.A. 0.51

N.A. -

Narkatiaganj Farms Ltd


30.03.2017

37305 10 Other than cash

N.A. 0.37

N.A. -


29

Rajpur Farms Ltd


30.03.2017

33,309

10 Other than cash

N.A. 0.33

N.A. -

Shree Vihar Properties Ltd


30.03.2017

11,563

10 Other than cash

N.A. 0.12

N.A. -

La Monde Trading & Investments Pvt Ltd


30.03.2017

9,233

10 Other than cash

N.A. 0.09

N.A. -

The Oudh Trading Company (Private) Limited


30.03.2017

275

10 Other than cash

N.A. 0.00

N.A. -

Pavapuri Trading & Investment Co Ltd


30.03.2017

424

10 Other than cash

N.A. 0.00

N.A. -

Urvi Nopany Allotment pursuant to Scheme of Arrangement

30.03.2017

4,991

10 Other than cash

N.A. 0.05

N.A. -

Palash Securities Limited


30.03.2017

6,807

10 Other than cash

N.A. 0.07

N.A. -

* includes 15923 share as Trustee of Chandra Shekhar Charity Trusts

# includes 1834 shares as Joint holding with Shalini Nopany


30

Top Ten Shareholder of the Company post Scheme

Sl.No. Names No of Shares Percentage to the Paid-Up Capital

1 New India Retailing &Invesment Ltd 972,652 9.72 2 SCM Investment & Trading Co. Ltd. 749,945 7.49 3 Uttar Pradesh Trading Company Limited 739,312 7.39 4 RTM Investment & Trading Co. Ltd 672,596 6.72 5 Sil Investments Ltd 567,240 5.67 6 Yashovardhan Investment & Trading 356,692 3.56 7 Nandini Nopany * 299,802 3.00 8 Hargaon Investment & Trading Co Ltd 241,255 2.41 9 GMB Investment Private Limited 219,705 2.20

10 Ronson Traders Ltd 219,346 2.19 * includes 15923 shares as Trustee of Chandra Shekhar Charity Trust

Lock-in of shares: Not Applicable

In terms of the SEBI circular CIR/CFD/DIL/5/2013 dated February 4, 2013, in case of merger where the paid-up share capital of the unlisted issuer seeking listing (say, “entity B”) is more than the requirement for incorporation, the promoters' shares shall be locked-in to the extent twenty percent of the post-merger paid-up capital of the unlisted issuer, for a period of three years from the date of listing of the shares of the unlisted issuer. The balance of the entire premerger capital of the unlisted issuer shall also be locked-in for a period of three years from the date of listing of the shares of the unlisted issuer.

In the present case the paid-up share capital of the unlisted issuer (ASEL) seeking listing, is equal to minimum capital required for incorporation, hence the lock-in requirement pursuant to SEBI Circular is not applicable.

1. Shareholding Pattern of the Company pre-scheme: The entire pre-scheme equity share capital consisting of 50,000 Equity Shares of Rs. 10/- each were held by the Transferor Companies (i.e. The Oudh Sugar Mills Limited, Upper Ganges Sugar and Industries Limited and their nominees), which was consequently cancelled pursuant to the Scheme become effective. Annexure-1.

2. Shareholding pattern of Avadh Sugar & Energy Limited post the allotment of the shares Pursuant to Composite Scheme of Arrangement: Annexure: 2

There shall be only one denomination for the equity shares of the company, subject to applicable regulations and company shall comply with such disclosure and accounting norms specified by SEBI, from time to time.


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OBJECT AND RATIONALE OF THE SCHEME

Oudh Sugar is engaged in the business of manufacture and sale of sugar, ethyl alcohol including ethanol, co-generation of power and by-products. Further, Oudh Sugar is also engaged in the business of Food Processing and has investment in listed and unlisted securities.

Upper Gangesis engaged in the business of manufacture and sale of sugar, ethyl alcohol including ethanol, co-generation of power and by-products. Further, Upper Ganges is also engaged in the business of manufacture and sale of Tea and has investment in listed and unlisted securities. The management of Oudh Sugar and Upper Ganges with a view to achieve the following objectives proposes to restructure and de-link its multiple businesses in separate entities:

a) Establish independent companies for Bihar Sugar Undertakings of Oudh Sugar and Upper Ganges, UP Sugar Undertakings of Oudh Sugar and Upper Ganges, Investments of Oudh Sugar, Investments of Upper Ganges, Food Processing Undertaking of Oudh Sugar and Tea Undertaking of Upper Ganges.

b) Each of the above-mentioned business undertakings have variant capital needs and require a distinct skill set. The Sugar Business is a highly capital intensive business with high risk and rewards. On the other hand the capital requirements are low in Food Processing Business and Tea Business along with low risk to rewards ratio. Accordingly, each of the Businesses have their respective set of assets, liabilities and employees. Hence with a view to have concentrated effort and focus by the senior management on each business, the company intends to house each business in separate legal entity.

c) The dynamics of the sugar industry in Bihar and UP are vastly different, therefore the consolidation of the Sugar Business of Oudh Sugar and Upper Ganges in Bihar and UP in separate legal entities is intended to achieve better efficiencies and commercial synergies.

d) The Food Processing Business and Tea Business has good growth potential. With a view to explore the potential of these businesses to the fullest, provide focused leadership and management attention and explore the possibility of monetization of these businesses, it is intended to house the Food Processing Business and Tea Business in separate legal entities

e) Proposed business re-alignment will create enhanced value for all stakeholders of the two companies as it would facilitate focused strategy, direction and business planning to optimize operational, managerial, financial, technical and marketing capabilities of each business. It will help in optimization of the resources and reduction of the operational costs.

f) The Board of Directors of Oudh Sugar and Upper Ganges believe that the proposed business restructuring will lead to enhanced operational, managerial, financial and technological synergy and thereby enable each entity to address challenges of rising competitiveness.

SALIENT FEATURES OF THE SCHEME

The Hon’ble NCLT pursuant to its order dated March 02, 2017 (“Order”) (certified true copy received on March 9, 2017) sanctioned the Composite Scheme of Arrangement between Upper Ganges Sugar & Industries Limited, The Oudh Sugar Mills Limited, Palash Securities Limited, Allahabad Canning Limited, Ganges Securities Limited, Cinnatolliah Tea Limited, Vaishali Sugar & Energy Limited, Magadh Sugar & Energy Limited and Avadh Sugar & Energy Limited and their respective Shareholders and Creditors (‘the Scheme’). The Order was filed with the Registrar of Companies, Kanpur on 23rd March, 2017 and then the Scheme became effective with effect from April 1, 2015 being appointed date.


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Relevant Operation of the scheme: a) Pursuant to Part IX of the Composite Scheme of Arrangement “The Residual Business-1” and Residual Business-

2” of Transferor Company-1 and Transferor Company-2 respectively has been transferred to and vested in the Transferee Company, as a going concern without any further act, instrument, deed, matter or thing to be made, done or executed;

b) the Transferee Company shall, without any further application or deed, issue and allot equity shares to the

members of Transferor Companies whose name appear in the Register of Members as on the Record Date in proportion to their shareholding so as to result in the mirror image of the existing shareholding pattern, in the following manner: a. 2 equity share (s) of the face value of Rs. 10/- (Rupees Ten) each credited as fully paid up in the share capital

of Avadh Sugar for every 9 fully paid up equity share(s) of the face value of Rs. 10/-(Rupees Ten) each held in Oudh Sugar.

b. 11 equity share (s) of the face value of Rs. 10/- (Rupees Ten) each credited as fully paid up in the share capital of Avadh Sugar for every 30 fully paid up equity share(s) of the face value of Rs. 10/- (Rupees Ten) each held in Upper Ganges.

Further to the above Avadh Sugar shall issue and allot 4,87,00,000 (Four Crore and Eighty Seven Lakh) fully paid up 8.5% Non-Convertible Cumulative Redeemable Preference Shares of the face value of Rs. 10/- each credited as fully paid up in its share capital to the preference shareholders of Oudh Sugar. The terms and conditions of 8.5% Non-Convertible Cumulative Redeemable Preference Shares, so allotted by Avadh Sugar, shall be subject to the same terms and conditions which are applicable to the existing 8.5% Non-Convertible Cumulative Redeemable Preference Shares of Oudh Sugar. Further, Avadh Sugar shall also issue and allot 17,00,000 (Seventeen Lakh) fully paid up 12% Non-Convertible Cumulative Redeemable Preference Shares of the face value of Rs. 100/- (Rupees Hundred) each credited as fully paid up in its share capital to the preference shareholders of Upper Ganges. The terms and conditions of 12% Non-Convertible Cumulative Redeemable Preference Shares, so allotted by Avadh Sugar, shall be subject to the same terms and conditions which are applicable to the existing 12% Non-Convertible Cumulative Redeemable Preference Shares of Upper Ganges.

SCHEME OF ARRANGEMENT

(A) PARTS OF THE SCHEME:

The Scheme of Arrangement is divided in the following parts: (i) Part I deals with Definitions, Interpretation and Share Capital (ii) Part II: Demerger of Food Processing & Investments Business Undertaking of Oudh Sugar to Palash

Securities (iii) Part III: Transfer of Food Processing Business Undertaking of Palash Securities to Allahabad Canning (iv) Part IV: Demerger of Tea Business and Investments Business Undertaking of Upper Ganges to Ganges

Securities (v) Part V: Transfer of Tea Business Undertaking of Ganges Securities to Cinnatolliah Tea (vi) Part VI: Transfer of Bihar Sugar Business Undertaking of Oudh Sugar to Vaishali Sugar (vii) Part VII: Demerger of Bihar Sugar Business Undertaking of Upper Ganges to Magadh Sugar (viii) Part VIII: Merger of Vaishali Sugar with Magadh Sugar (ix) Part IX: Merger of Residual Oudh Sugar and Residual Upper Ganges with Avadh Sugar (x) PART X: General Terms and Conditions.


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(B) BACKGROUND AND DESCRIPTION OF COMPANIES INVOVLVED IN THE COMPOSITE SCHEME OF ARRANGEMENT

(i) The Oudh Sugar Mills Limited (Oudh Sugar) was incorporated on 26th day of July, 1932 under the provisions of the Indian Companies Act, 1913 under the name and style of The Oudh Sugar Mills Limited, having its Registered Office at P.O. Hargaon, District Sitapur, Uttar Pradesh-261121. The Company is engaged in the business of manufacturing and sale of sugar, ethyl alcohol including ethanol, cogeneration of power and by-products. Further it is also engaged in business of Food Processing and Investments in listed and unlisted securities. The Transferor Company’s equity shares are listed with BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).

(ii) Upper Ganges Sugar and Industries Limited (Upper Ganges) having its Registered Office at P.O. Seohara, District Bijnor, Uttar Pradesh- 246746, was incorporated on 10th day of August, 1932, under the provisions of the Indian Companies Act, 1913 under the name and style of ‘Upper Ganges Sugar Mills Limited’. In the year 1984, the name of the company was changed to Upper Ganges Sugar & Industries Limited, where after a fresh certificate of incorporation under the Companies Act, 1956 was issued. The Company is engaged in the business of manufacture and sale of sugar, ethyl alcohol including ethanol, cogeneration of power and byproducts. Further, it is also engaged in the tea business and carrying out investments in listed and unlisted securities. The Transferor Company’s equity shares are listed with BSE Limited (BSE), National Stock Exchange of India Limited (NSE) and Calcutta Stock Exchange (CSE).

(iii) Avadh Sugar & Energy Limited (Avadh Sugar) was incorporated on March 19, 2015, under the Companies Act, 2013 vide certificate of incorporation issued by the Registrar of Companies, Uttar Pradesh, as a public limited company as per the Companies Act, 2013. The registered office of Avadh is situated at P.O. Hargaon, District Sitapur, Uttar Pradesh-261121. The main object of Avadh is to carry on the business of manufacture and sale of sugar, ethyl alcohol including ethanol, cogeneration of power and by-products.

The Authorized Share Capital of the Company at the time of incorporation was Rs. 5 lacs divided into 50,000 Equity Shares of Rs.10/- each. Pursuant to the Composite Scheme of Arrangement the Authorised Share Capital of the Company shall be increased to Rs.170,05,00,000.00 divided into Rs.56,05,00,000.00 Equity shares divided into 5,60,50,000 (Five crore sixty lac and fifty thousand) Equity Shares of Rs. 10/- (Rupees ten) each and Rs. 50,00,00,000.00 Preference Shares divided into 5,00,00,000 (Fifty crore) Preference Shares of Rs. 10/- and Rs.34,00,00,000.00 Preference Shares divided into 34,00,000 (Thirty-four lacs) Preference Shares of Rs. 100/- each and Rs.30,00,00,000.00 Unclassified Shares divided into 3,00,00,000 (Three crore) Unclassified Shares of Rs.10/- each.

(iv) Magadh Sugar & Energy Limited (Magadh Sugar) was incorporated on March 19, 2015, under the Companies Act, 2013 vide certificate of incorporation issued by the Registrar of Companies, Uttar Pradesh, as a public limited company as per the Companies Act, 2013. The registered office of Magadh is situated at P.O. Hargaon, District Sitapur, Uttar Pradesh-261121. The main object of Magadh is to carry on the business of manufacture and sale of sugar, ethyl alcohol including ethanol, cogeneration of power and by-products.

The Authorized Share Capital of the Company at the time of incorporation was Rs. 5 lacs divided into 50,000 Equity Shares of Rs.10/- each. Subsequently the Authorized Share Capital was increased from Rs. 5 lacs to Rs.30 Crores divided into 1,50,00,000 (One Crore Fifty Lacs) Equity Shares of Rs.10/ - and Rs.15 crores Preference Shares divided into 1,50,000 (One lac fifty thousand) Preference Share of Rs.100 each each vide a Special Resolution passed at its Annual General Meeting held on 12th September, 2016. Again, pursuant to Composite Scheme of Arrangement the Authorized Share Capital was increased from Rs.30 crore to 30.10


34

crores divided into 1,51,00,000 (One Crore Fifty one Lac) Equity Shares of Rs.10/ - and Rs.15 crores Preference Shares divided into 1,50,000 (One lac fifty thousand) Preference Share of Rs.100 each.

(v) Palash Securities Limited (Palash Securities) was incorporated on March 23, 2015, under the Companies Act, 2013 vide certificate of incorporation issued by the Registrar of Companies, Uttar Pradesh, Uttar Pradesh, as a public limited company as per the Companies Act, 2013. The registered office of Palash is situated at P.O. Hargaon, District Sitapur, Uttar Pradesh-261 121. The main object of Palash is to carry on the business of Food Processing and Investments Business Undertaking.

The Authorized Share Capital of the Company at the time of incorporation was Rs. 5 lacs divided into 50,000 Equity Shares of Rs.10/- each. Subsequently the Authorized Share Capital was increased from Rs. 5 lacs to Rs 2 Crores divided into 20,00,000 Equity Shares of Rs.10/ - each vide a Special Resolution passed at its Extra Ordinary General Meeting held on 24thApril, 2015. The Authorized Share Capital was further increased to Rs. 15 crores divided into 1,35,00,000 (One Crore Thirty Five Lacs) Equity Shares of Rs 10/- (Rupees Ten) each and 1500000 (Fifteen lac) Preference Shares of Rs. 10/- (Rupees ten) each vide a Special Resolution passed at the Annual General Meeting of the Members held on 12thSeptember, 2016.

(vi) Ganges Securities Limited (Ganges Securities) was incorporated on March 30, 2015, under the Companies Act, 2013 vide certificate of incorporation issued by the Registrar of Companies, Uttar Pradesh, as a public limited company as per the Companies Act, 2013. The registered office of Ganges is situated at P.O. Hargaon, District Sitapur, Uttar Pradesh-261 121. The main object of Ganges is to carry on the business of Tea and Investments Business Undertaking.

The Authorized Share Capital of the Ganges at the time of incorporation was Rs. 5 lacs divided into 50,000 Equity Shares of Rs.10/- each. Subsequently the Authorized Share Capital was increased from Rs. 5 lacs to Rs 2 Crores divided into 20,00,000 Equity Shares of Rs.10/ - each vide a Special Resolution passed at its Extra Ordinary General Meeting held on 27th April, 2015. The Authorized Share Capital was further increased to Rs 13,50,00,000/- divided into 1,35,00,000 (One Crore Thirty Five Lacs) Equity Shares of Rs 10/- (Rupees Ten) each and 150000 (One lac fifty thousand) Preference Shares of Rs. 100/- (Rupees one hundred) each vide a Special Resolution passed at the Annual General Meeting of the Members held on 12thSeptember, 2016.

(vii) Vaishali Sugar & Energy Limited (‘Vaishali Sugar’) was incorporated on 19thday of March, 2015 under the provisions of the Companies Act, 2013 under the name and style of Vaishali Sugar & Energy Limited having its Registered Office at P.O. Hargaon, District Sitapur, Uttar Pradesh-261121.The main object to carry on the business of Sugar and Sugar product.

The Authorised Share Capital of the Vaishali Sugar at the time of incorporation was Rs. 5 lacs divided into 50,000 Equity Shares of Rs.10/- each. Subsequently the Authorised Share Capital was increased from Rs. 5 lacs to Rs. 10 lacs divided into 1,00,000 Equity Shares of Rs.10/ - each vide a Special Resolution passed at its Annual General Meeting held on 8th September, 2016.

(viii) Cinnatolliah Tea Limited (‘Cinnatolliah Tea’) was incorporated on 19thday of March, 2015 under the provisions of the Companies Act, 2013 under the name and style of Cinnatolliah Tea Limited having its Registered Office at P.O. Hargaon, District Sitapur, Uttar Pradesh-261121. The main object of Cinnatolliah Tea to carry on the business of Tea Business Undertaking.

The Authorised Share Capital of the Cinnatolliah Tea at the time of incorporation was Rs. 5 lacs divided into 50,000 Equity Shares of Rs.10/- each. Subsequently the Authorised Share Capital was increased from Rs. 5 lacs to Rs. 26.5_Crores divided into 2,65,00,000 (Two crores sixty five lacs) Equity Shares of Rs.10/ - each vide a Special Resolution passed at its Annual General Meeting held on 8th September, 2016.


35

(ix) Allahabad Canning Limited (‘Allahabad Canning’) was incorporated on 19th day of March, 2015 under the provisions of the Companies Act, 2013 under the name and style of Allahabad Canning Limited having its Registered Office at P.O. Hargaon, District Sitapur, Uttar Pradesh-261121. Allahabad Canning was incorporated with the main object to carry on the business of Food Processing Business Undertaking.

The Authorised Share Capital of the Allahabad Canning at the time of incorporation was Rs. 5 lacs divided into 50,000 Equity Shares of Rs.10/- each. Subsequently the Authorised Share Capital was increased from Rs. 5 lacs to Rs.11.5 Crores divided into 1,15,00,000 (One Crore fifteen lacs) Equity Shares of Rs.10/ - each vide a Special Resolution passed at its Annual General Meeting held on 8th September, 2016.

Further for the sake of clarity, the Flow Chart of Part IX of the Scheme on the basis relevant extract from the Composite Scheme of Arrangement is explained underneath:


36


37

STATEMENT OF POSSIBLE DIRECT TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS

To

The Board of Directors

Avadh Sugar & Energy Limited

9/1, R.N. Mukherjee Road

Kolkata-700001

Dear Sirs,

Sub: Statement of possible direct tax benefits available to Avadh Sugar & Energy Limited (“the Company”) and its shareholders

We hereby confirm that the enclosed annexure to the statement states the possible direct tax benefits available to the Company and the shareholders of the Company under the Income – tax Act, 1961 (‘Act’) as amended by Finance Act 2017, presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant provisions of the Act. 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 faces in the future, the Company or its shareholders may or may not choose to fulfil.

The benefits discussed in the enclosed annexure to the statement are not exhaustive and the preparation of the contents stated is the responsibility of the Company’s management. We are informed that this statement is only intended to provide general information to the investors and hence 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 to the specific tax implications arising out of the scheme of restructuring the Company particularly in view of the fact that certain recently enacted legislation may not have a direct legal precedent or may have a different interpretation on the benefits, which an investor can avail. Neither are we suggesting nor are we advising the investor to invest money based on this statement.

The contents of the enclosed annexure to the statement is based on the information, explanations and representations obtained from the Company and on the basis of their understanding of the business activities and operations of the Company.

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;


38

• the conditions prescribed for availing the benefits, where applicable have been/would be met with; and • the revenue authorities/courts will concur with the views expressed herein.

This statement is intended solely for information and for inclusion in the Information Memorandum in connection with the proposed listing of shares of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent. Our views are based on the existing provisions of law referred to earlier and its interpretation, which are subject to change from time to time.

We shall not be liable to any claims, liabilities or expenses relating to this assignment except to the extent of fees relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or intentional misconduct. We will not be liable to any other person in respect of this Statement.

For S. R. Batliboi & Co LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E/E300005

Per Kamal Agarwal

Partner

Membership No.: 58652

Place: Kolkata

Date: April 03, 2017


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ANNEXURE TO THE STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO AVADH SUGAR & ENERGY LIMITED AND ITS SHAREHOLDERS

Outlined below are the possible benefits available to the Company and its shareholders under the current direct tax laws i.e. the Income Tax Act, 1961 (Amended as per the Finance Act, 2017).

Special Tax benefits available to the Company

No special tax benefit is available to the Company.

General Tax benefits available to the Company

1. The Company is entitled to claim depreciation on specified tangible and intangible assets owned by it and used

for the purpose of its business as per provisions of Section 32 of the Income Tax Act, 1961. 2. Business losses, if any, for an assessment year can be carried forward and set off against business profits for 8

subsequent years. Unabsorbed depreciation, if any, for an assessment year can be carried forward and set off against any source of income in subsequent years as per provisions of Section 32 of the Act.

3. As per the provisions of section 32(1)(iia) of the Act, The company is entitled to claim additional depreciation

of 20% of the actual cost of any new machinery or plant which has been acquired and installed after 31st March, 2005 subject to fulfilment of conditions prescribed therein.

4. As per provisions of Section 35 (1) (ii) and (iii) of the Act, in respect of any sum paid to a scientific research

association which has as its object the undertaking of scientific research, or to any approved university, College or other institution to be used for scientific research or for research in social sciences or statistical scientific research to the extent of a sum equal to one and one fourth times the sum so paid. Under Section 35 (1) (iia) of the Act, any sum paid to a company, which is registered in India and which has as its main object the scientific research and development, and being approved by the prescribed authority and such other conditions as may be prescribed, shall also qualify for a deduction of one and three fourth times the amount so paid.

Further, in respect of deduction under section 35(1)(iia) and 35(1)(iii), the deduction shall be restricted to 100

per cent with effect from 01.04.2017 (i.e. from previous year 2017-18 and subsequent years). In regard to deduction under section 35(1)(ii) of the Act, weighted deduction shall be restricted to 150 per cent from 01.04.2017 to 31.03.2020 (i.e. from previous year 2017-18 to previous year 2019-20) and deduction shall be restricted to 100 per cent from 01.04.2020 (i.e. from previous year 2020-21 onwards).

5. As per provisions of Section 35(2AA) of the Act, any contribution made Notified Institutions i.e. National

Laboratory, University, Indian Institute of Technology, specified persons as approved by the prescribed authority, is available to the extent of two times of such payment made.

However, weighted deduction shall be restricted to 150 per cent with effect from 01.04.2017 to 31.03.2020 (i.e.

from previous year 2017-18 to previous year 2019-20). Deduction shall be restricted to 100 per cent from 01.04.2020 (i.e. from previous year 2020-21 onwards).


40

6. As per the provisions of Section 35D of the Act, any specified preliminary expenditure incurred, after 31 March

1998 by an Indian company before the commencement of its business or after commencement of its business, in connection with the extension of an undertaking or setting up a new unit, shall be allowed a deduction of an amount equivalent to one-fifth of such expenditure for each of the five successive financial years beginning with the financial year in which the extension of the undertaking is completed or the new unit commences production or operation. However, any expenditure in excess of 5% of the cost of the project or the capital employed in the business of the Company, shall be ignored for the purpose of computing the deduction allowable under section 35D of the Act.

7. As per the provisions of Section 35DD of the Act, any expenditure incurred by an Indian Company, on or after

1 April 1999, wholly and exclusively for the purpose of amalgamation or demerger of an undertaking, shall be allowed a deduction of an amount equal to one-fifth of such expenditure for each of five successive financial years beginning with the financial year in which the amalgamation or demerger takes place.

8. As per the provisions of Section 35DDA of the Act, if a Company incurs any expenditure in any financial year

by way of payment of any sum to an employee in connection with his voluntary retirement, in accordance with any scheme or schemes of voluntary retirement, the Company would be eligible to claim a deduction for one-fifth of the amount so paid in computing the profits and gains of the business for that financial year, and the balance shall be deducted in equal installments for each of the four immediately succeeding financial years.

9. As per the provisions of Section 35CCD of the Act, if a Company incurs any expenditure (not being in the

nature of cost of any land or building) on any skill development project notified by the Central Board of Direct Taxes in this behalf in accordance with the guidelines as may be prescribed, then, the Company shall be allowed a deduction of sum equal to one and one-half times of such expenditure. However, the deduction shall be restricted to 100 per cent from 01.04.2020 (i.e. from previous year 2020-21 onwards).

10. As per the newly inserted explanation to Section 37 of the Act, any expenditure incurred by the Company on

the activities relating to corporate social responsibility (‘CSR’) referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the Company for the purpose of the business or profession. However, CSR expenditure which is of the nature described in provisions of section 30 to section 36 of the Act shall be allowed as deduction under respective sections, subject to fulfilment of conditions, if any, specified therein.

11. As per the provisions of Section 72(1) of the Act, if the net result of the computation of income from business

is a loss to the Company, not being a loss sustained in a speculation business, such loss can be set off against any other income and the balance loss, if any, can be carried forward for eight consecutive assessment years immediately succeeding the assessment year for which the loss was first computed and shall be set off against business income.

12. As per the provisions of Section 72A of the Act, pursuant to business re-organizations, such as amalgamation,

demerger, etc., the successor company shall be allowed to carry forward any accumulated tax losses/ unabsorbed depreciation of the predecessor company subject to fulfilment of prescribed conditions.

13. The amount of tax paid under section 115JB of the Act by the Company for any assessment year beginning on

or after 1st April, 2006 will be available as credit to the extent specified in section 115JAA against normal income-tax payable in subsequent assessment years.


41

14. In accordance with the provisions of Section 115JAA, from Assessment Year 2010-11 the MAT credit is

available for fifteen years succeeding the Assessment Year in which MAT credit becomes allowable. 15. MAT credit shall be allowed for any Assessment Year to the extent of difference between the tax payable as

per the normal provisions of the Act and the tax paid under Section 115JB for that assessment year. 16. Capital assets are to be categorized into short - term capital assets and long – term capital assets based on the

period of holding. All capital assets, being shares held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under section 10(23D) of the Act or a zero coupon bond, held by an assessee for more than twelve months are considered to be long – term capital assets, capital gains arising from the transfer of which are termed as long – term capital gains (‘LTCG’). In respect of any other capital assets, the holding period should exceed thirty – six months to be considered as long – term capital assets and twenty four month in case of assets being shares of unlisted Company.

17. Short Term Capital Gains (‘STCG’) means capital gains arising from the transfer of capital asset being a share

held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under clause (23D) of Section 10 or a zero coupon bonds, held by an assessee for 12 months or less.

18. In respect of any other capital assets, STCG means capital gains arising from the transfer of an asset, held by

an assessee for 36 months or less and twenty four month in case of assets being shares of unlisted Company. 19. Capital assets, being security (other than a unit) listed in a recognized stock exchange in India or unit of the

Unit Trust of India or a unit of equity oriented fund or a zero coupon bond, held by an assessee for not more than twelve months are considered to be short–term capital asset. In respect of any other capital assets, the holding period should not exceed thirty – six months to be considered as short– term capital assets.

20. Therefore, capital asset being unlisted share or unit of mutual fund (other than an equity oriented mutual fund)

shall be short term capital asset if it is held for not more than twenty four months. 21. LTCG arising on transfer of equity shares of a company or units of an equity oriented fund (as defined which

has been set up under a scheme of a mutual fund specified under Section 10(23D) or a unit of business trust as defined in section 2(13A), is exempt from tax as per provisions of Section 10(38) of the Act, provided the transaction is chargeable to securities transaction tax (STT) and subject to conditions specified in that section.

Further, the benefit of above mentioned exemption will not be available if equity shares are acquired on or after

October 1, 2004 and securities transaction tax had not been levied on such acquisition. However, it is proposed to notify transfers for which the condition of chargeability to Securities Transactions Tax on acquisition shall not be applicable for claiming the benefit of Section 10(38).

22. Income by way of LTCG exempt under Section 10(38) of the Act is to be taken into account while determining

book profits in accordance with provisions of Section 115JB of the Act. 23. As per the provisions of Section 48 of the Act, Long term Capital Gain arising on transfer of capital assets,

other than bonds and debentures (excluding capital indexed bonds issued by the Government) and depreciable


42

assets, is computed by deducting the indexed cost of acquisition and indexed cost of improvement from the full value of consideration.

24. As per the provisions of section 111A, short term capital gains arising from the transfer of equity shares in any

company or units of an equity oriented mutual fund transacted through a recognized stock exchange shall be subject to tax @ 15% provided such a transaction is entered in after the 1st day of Oct, 2004 and transaction is subject to security transaction tax. Further, short term capital gains as computed above that are not liable to STT would be subject to tax at a rate of 30% (plus applicable surcharge plus education cess plus higher education cess) in case of a company. No deduction under Chapter VIA is allowed from such income.

25. As per the provisions of section 112 of the Act, long-term capital gains to the extent not exempt under Section

10(38) of the Act would be subject to tax at the rate of 20% (plus applicable surcharge plus education cess plus higher education cess with indexation benefits. However, as per the proviso to Section 112 of the Act, if the tax on long-term capital gains is resulting from transfer of listed securities or units or zero coupon bonds, then long term capital gain will be chargeable to tax at the rate lower of the following: - a. 20% (plus applicable surcharge plus education cess plus higher education cess of the capital gains as computed after indexation of the cost; or b. 10% (plus applicable surcharge plus education cess plus higher education cess) of the capital gains as computed without indexation. However, Finance Act, 2014 has amended the provisions of section 112 allowing the concessional rate of tax of ten per cent on long term capital gain to listed securities (other than unit) and zero coupon bonds.

26. The tax rates mentioned above stands increased by applicable surcharge, education cess and higher education

cess on the total income. 27. As per Section 50 of the Act, where a capital asset is forming part of a block of assets in respect of which

depreciation has been allowed under the Act, capital gains shall be computed in the following manner: - where full value of consideration on account of transfer of any asset forming part of block of asset, as reduced

by expenditure incurred wholly or exclusively in connection with transfer, exceeds the written down value of block of assets and actual cost of assets acquired during the year, such excess shall be deemed to be short term capital gains and taxed accordingly.

- where any block of assets ceases to exist, for the reason that all the assets in that block are transferred, the difference between the consideration arising on result of transfer and the written down value of block of assets and the actual cost of assets acquired during the year, shall be deemed to be short term capital gains/ (losses) and taxed accordingly.

28. As per provisions of Section 71 read with Section 74 of the Act, short - term capital loss arising during a year

is allowed to be set-off against short - term as well as long - term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent eight assessment years.

29. As per provisions of Section 71 read with Section 74 of the Act, long - term capital loss arising during a year is

allowed to be set-off only against long - term capital gains. Balance loss, if any, shall be carried forward and set-off against long – term capital gains arising during subsequent eight assessment years.

30. As per the provisions of section 54D of the Act and subject to the conditions to the extent specified therein,

capital gains arising on compulsory acquisition of land & building or any right therein used by an industrial undertaking, will be exempt from tax if the capital gains are invested in ―land, building, or any right therein


43

within 3 years from the date of compulsory acquisition for the purpose of shifting / re-establishing/ setting up another industrial undertakingǁ subject to lower of Capital Gain or the Cost of acquisition of new land and building.

31. In accordance with and subject to the conditions and to the extent specified in section 54EC of the Act, the

company would be entitled to exemption from tax on gains arising from transfer of the long term capital asset (not covered by section 10(36) and 10(38)) if such capital gain is invested within a period of six months from the date of transfer in bonds redeemable after three years and issued by:

- National Highway Authority of India (NHAI) constituted under Section 3 of National Highway Authority of

India Act, 1988; and - Rural Electrification Corporation Limited (REC), a company formed and registered under the Companies Act,

1956.

The maximum investment in the specified long term asset cannot exceed Rs 50,00,000 during any financial year as well as capital gain arising from transfer of one or more original assets. Where the long term specified assets is transferred or converted into money at any time with in a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long term specified assets is transferred or converted into money.

32. As per the provisions of Section 36 (1) (xv) of the Act, the amount of Securities Transaction Tax paid by an assessee in respect of taxable securities transactions offered to tax as "Profits and gains of Business or profession" shall be allowable as a deduction against such Business Income. Where such deduction is claimed, no further deduction in respect of the said amount is allowed while determining the income chargeable to tax as capital gains.

33. Under section 10(34) read with section 115-O of the Act, dividend income (whether interim or final) in the

hands of the company as distributed or paid by any other domestic on or after April 1, 2004 is completely exempt from tax in the hands of the company.

34. The domestic company distributing dividends will be liable to pay dividend distribution tax at the applicable

rate on net basis on the amount of dividend payable applicable surcharge and education cess and secondary and higher education cess on the amount of dividend distribution tax and surcharge thereon)

35. Further w.e.f 1st October 2014, Finance Act 2014, has amended section 115-O in order to provide that for the

purpose of determining the tax on distributed profits payable in accordance with the section 115-O, any amount which is declared, distributed or paid by any domestic Company out of current or accumulated profit on or after 1 April 2003 is to be reduced by any amount of dividend as received by the company from its subsidiary or from foreign companies during the financial year, shall be increased to such amount as would, after reduction of the tax on such increased amount at the rate of 15%, be equal to the net distributed profits.

36. Therefore, the amount of distributable income and the dividends which are actually received by the unit holder

of mutual fund or shareholders of the domestic company need to be grossed up for the purpose of computing the additional tax.

37. Further, if the company being a holding company, has received any dividend from its subsidiary on which

dividend distribution tax has been paid by such subsidiary, then company will not be required to pay dividend distribution tax to the extent the same has been paid by such subsidiary company.


44

38. As per section 10(35) of the Act, the following income will be exempt from tax in the hands of the Company: (i) Income received in respect of the units of a Mutual Fund specified under section 10(23D) (other than income

arising from transfer of such units); (ii) Income received in respect of units from the Administrator of the specified undertaking; (iii) Income received in respect of units from the specified company

However, this exemption does not apply to any income arising from transfer of units of the Administrator of the specified undertaking or of the specified company or of a mutual fund, as the case may be.

39. As per the provisions of section 115BBD of the Act, dividend Received by an Indian company from a Specified Foreign Company (in which it has shareholding of 26% or more) would be taxable at the Concessional rate of 15% on gross basis (excluding surcharge and Education cess).

40. For removing the cascading effect of dividend distribution tax, while computing the amount of dividend

distribution tax payable. By a domestic company, the dividend received from a foreign Subsidiary on which income-tax has been paid by the Domestic Company under section 115BBD of the Act shall be reduced.

41. As per Section 80JJAA, where the gross total income of an assessee includes any profit and gain derived from

manufacture of goods in a factory, there shall, subject to the condition specified in subsection (2), be allowed a deduction of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment in provided.

However, the Finance Act, 2016 has amended the said provisions and has stated that where the gross total

income of an assessee, to whom section 44AB applies, includes any profit and gain derived from manufacture of goods in a factory, there shall, subject to the condition specified in subsection (2), be allowed a deduction of an amount equal to thirty per cent of additional employee cost incurred in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment in provided. The said amendment is applicable from AY 2017-18

42. As per the provisions of section 90, for taxes on income paid in Foreign Countries with which India has entered

into Double Taxation Avoidance Agreements (Tax Treaties from projects/activities undertaken thereat), the Company will be entitled to the deduction from the India Income-tax of a sum calculated on such doubly taxed income to the extent of taxes paid in Foreign Countries. Further, the company as a tax resident of India would be entitled to the benefits of such Tax Treaties in respect of income derived by it in foreign countries. In such cases the provisions of the Income tax Act shall apply to the extent they are more beneficial to the company. Section 91 provides for unilateral relief in respect of taxes paid in foreign countries

43. As per section 115QA of the Act, an Indian unlisted company will have to pay 20% tax on distributed income

on buyback of shares. Distributed income has been defined to mean consideration paid by the Indian unlisted company for purchase of its own shares as reduced by the amount which was received by the Indian unlisted company at the time of issue of such shares. The said provision has come into effect from 1 June 2013.

44. As per provisions of Section 80G of the Act, the Company is entitled to claim deduction of a specified amount

in respect of eligible donations, subject to the fulfilment of the conditions specified in that section. 45. As per provisions of Section 14A of the Act, expenditure incurred to earn an exempt income is not allowed as

deduction while determining taxable income.


45

Special Tax benefits available to the Shareholders

No special tax benefit is available to the Company.

General Tax benefits available to the Shareholders

Resident shareholders 1. Under Section 10(32) of the Act, any income of minor children who is a shareholder of the Company

clubbed in the total income of the parent under Section 64(1A) of the Act, will be exempt from tax to the extent of Rs. 1,500 per minor child whose income is so included in the income of the parent.

2. Under Section 10(34) of the Act, income by way of dividend referred to in Section 115-O of the Act,

received from the Company is exempted from income tax in the hands of shareholders. However, it is pertinent to note that Section 14A of the Act restricts claims for deduction of expenses incurred in relation to exempt income. Thus, any expenses incurred to earn the dividend income are not an allowable expenditure.

However, if the total dividend received by a shareholder (other than a domestic company), from one or more domestic companies exceeds Rs. 10 lakhs in an assessment year, the dividends received above Rs 10 lakhs shall be chargeable to tax @ 10% (plus applicable surcharge and education cess) under Section 115BBDA.

3. The characterization of the gains/losses, arising from transfer of shares, as capital gains or business

income would depend on the nature of holding (whether for investment or carrying on trading in shares) in the hands of the shareholder and various other factors.

4. Long-term capital gains (as defined under section 2(29B) of the Act) accruing to the shareholders of the

Company on sale of the Company‘s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to securities transaction tax (“STT”), is exempted from tax as per provisions of Section 10(38) of the Act.

Further, the benefit of above mentioned exemption will not be available if equity shares are acquired on or after October 1, 2004 and securities transaction tax had not been levied on such acquisition. However, it is proposed to notify transfers for which the condition of chargeability to Securities Transactions Tax on acquisition shall not be applicable for claiming the benefit of Section 10(38).

5. Short-term capital gains (under section 2(42A) of the Act) accruing to the shareholders of the Company

on transfer of the Company‘s equity shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, tax will be chargeable at 15% (plus applicable surcharge and education cess) as per provisions of Section 111A of the ITA. No deduction under Chapter VI-A of the ACT, would be allowed in computing such short term capital gains. In other cases, where the transaction is not subjected to STT, the short term capital gains would be chargeable as a part of the total income and the tax rates would depend on the income slab.


46

6. As per the provisions of Section 112 of the Act, long term capital gains accruing/ arising to the shareholders of the Company from the transfer of shares/ securities of the Company being listed in recognized stock exchanges, where no security transaction tax is paid then it is chargeable to tax at 10% (plus applicable surcharge and education cess) after deducting from the sale proceeds the cost of acquisition without indexation or chargeable to tax at the rate of 20% (plus applicable surcharge and education cess) after cla iming the benefit of indexation, whichever is lower. Under Section 48 of the ITA, the long term capital gains arising out of sale of capital assets excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed after indexing the cost of acquisition / improvement.

7. As per the provisions of Section 36(1)(xv) of the Act, the Securities transaction tax (STT) paid by the

shareholder in respect of taxable securities transaction entered in the course of business (if treated as business income) will be eligible for deduction from the income chargeable under the head Profit and Gains of business and profession.

8. Shareholders are entitled to claim exemption in respect of tax on long term capital gains (other than those

exempt under Section 10(38) of the Act) under Section 54EC of the ITA, if the amount of capital gains is invested in certain specified bonds / securities within six months from the date of transfer, subject to the fulfillment of the conditions specified therein. The maximum investment permissible on and after April 1, 2007 for the purposes of claiming the exemption in the notified bonds, by any person in a financial year, is 50 lakhs. However, according to Section 54EC(2) of the ITA, if the shareholder transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such bonds are transferred or otherwise converted into money.

9. Shareholders that are individuals or Hindu undivided families can avail of an exemption under Section 54F

of the Act, by utilization of the net consideration arising from the transfer of the Company‘s share held for a period of more than 12 months (which is not exempt under Section 10(38)), for purchase / construction of a residential house within the specified time period and subject to the fulfillment of the conditions specified therein.

10. Short-term capital loss suffered during the year can be set off against Income under the head Capital gains

(both short term and long term) under section 74 of the Act; balance loss if any, could be carried forward for eight assessment years immediately succeeding the year in which the loss in incurred. Long-term capital loss suffered during the year is allowed to be set-off only against L ong-term capital gains; balance loss, if any, could be carried forward for eight assessment years immediately succeeding the year in which the loss in incurred to be set off only from Long- term capital gains.

11. Where an individual or a Hindu undivided family receives from any person or persons on or after the 1st

day of October, 2009, any moveable property, (which includes inter alia, shares & securities being capital asset of the assessee), without consideration or for a consideration which is less than the aggregate fair market value by an amount exceeding fifty thousand rupees, the aggregate fair market value of such shares/ securities or the difference between aggregate fair market value and such consideration shall be chargeable to income-tax under the head Income from other sources as per the provisions of section 56(2)(vii) of Act subject to exemptions as provided in the section.

12. Wealth Tax has been abolished from 1st April, 2015 hence the same is not applicable for the individual

share holders


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13. 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.

14. No income-tax is deductible at source from income by way of capital gains under the present provisions

of the Act in case of residents. Non-resident shareholders – other than Foreign Institutional Investors

1. Under Section 10(32) of the Act, any income of minor children, who is a shareholder of the Company, which is clubbed with the total income of the parent under Section 64(1A) of the Act, will be exempt from tax to the extent of Rs. 1500 per minor child whose income is so included.

2. Under Section 10(34) of the Act, income by way of dividend referred to in Section 115-O of the ITA, received from the Company is exempted from income tax in the hands of shareholders. However, it is pertinent to note that Section 14A of the Act restricts claims for deduction of expenses incurred in relation to exempt income. Thus, any expenses incurred to earn the dividend income are not an allowable expenditure.

3. As per the provisions of Section 36(1)xv) of the Act, the Securities transaction tax (STT) paid by the shareholder in respect of taxable securities transaction entered in the course of business (if treated as business income) will be eligible for deduction from the income chargeable under the head Profit and Gains of business and profession.

4. The characterization of the gains/losses, arising from transfer of shares, as capital gains or business income would depend on the nature of holding (whether for investment or carrying on trading in shares) in the hands of the shareholder and various other factors.

5. Long-term capital gains (as defined under section 2(29B) of the Act) accruing to the shareholders of the Company on sale of the Company‘s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to securities transaction tax (“STT”), is exempted from tax as per provisions of Section 10(38) of the Act.

Further, the benefit of above mentioned exemption will not be available if equity shares are acquired on or after October 1, 2004 and securities transaction tax had not been levied on such acquisition. However, it is proposed to notify transfers for which the condition of chargeability to Securities Transactions Tax on acquisition shall not be applicable for claiming the benefit of Section 10(38).

6. Short-term capital gains (under section 2(42A) of the Act) accruing to the shareholders of the Company on transfer of the Company‘s equity shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, tax will be chargeable at 15% (plus applicable surcharge and education cess) as per provisions of Section 111A of the ITA. No deduction under Chapter VI-A of the ACT, would be allowed in computing such short term capital gains. In other cases, where the transaction is not subjected to STT, the short term capital gains would be chargeable as a part of the total income and the tax rates would depend on the income slab.

7. As per the provisions of Section 112 of the Act, long term capital gains accruing/ arising to the shareholders of the Company from the transfer of shares/ securities of the Company being listed in recognized stock exchanges, where no security transaction tax is paid then it is chargeable to tax at 10% (plus applicable surcharge and education cess) after deducting from the sale proceeds the cost of


48

acquisition without indexation or chargeable to tax at the rate of 20% (plus applicable surcharge and education cess) after cla iming the benefit of indexation, whichever is lower. Under Section 48 of the ITA, the long term capital gains arising out of sale of capital assets excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed after indexing the cost of acquisition / improvement.

8. As per the first proviso to section 48 of Act, capital gains arising from the transfer of shares of the company, shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilized in the purchase of the shares. Cost Indexation benefit will not be available in such a case. The capital gains so computed in such foreign currency shall be reconverted into Indian currency and such manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every reinvestment thereafter in, and sale of, shares of the Company.

9. Non-resident shareholders can take the advantage of provisions of Section 90(2) of the ITA, wherein it is provided that if the provisions of the Double Taxation Avoidance Agreement (“DTAA”) between India and the country of residence of the non-resident are more beneficial, then the provisions of the DTAA shall be applicable.

10. Shareholders are entitled to claim exemption in respect of tax on long term capital gains (other than those exempt under Section 10(38) of the Act) under Section 54EC of the Act, if the amount of capital gains is invested in certain specified bonds / securities within six months from the date of transfer, subject to the fulfillment of the conditions specified therein. The maximum investment permissible on and after April 1, 2007 for the purposes of claiming the exemption in the notified bonds, by any person in a financial year, is 50 lakhs. However, according to Section 54EC(2) of the Act, if the shareholder transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such bonds are transferred or otherwise converted into money.

11. Shareholders that are individuals or Hindu undivided families can avail of an exemption under Section 54F of the Act, by utilization of the net consideration arising from the transfer of the Company‘s share held for a period of more than 12 months (which is not exempt under Section 10(38)), for purchase / construction of a residential house within the specified time period and subject to the fulfillment of the conditions specified therein.

12. Short-term capital loss suffered during the year can be set off against Income under the head Capital gains (both short term and long term) under section 74 of the Act; balance loss if any, could be carried forward for eight assessment years immediately succeeding the year in which the loss in incurred. Long-term capital loss suffered during the year is allowed to be set-off only against L ong-term capital gains; balance loss, if any, could be carried forward for eight assessment years immediately succeeding the year in which the loss in incurred to be set off only from Long- term capital gains.

13. Where an individual or a Hindu undivided family receives from any person or persons on or after the 1st day of October, 2009, any moveable property, (which includes inter alia, shares & securities being capital asset of the assessee), without consideration or for a consideration which is less than the aggregate fair market value by an amount exceeding fifty thousand rupees, the aggregate fair market value of such shares/ securities or the difference between aggregate fair market value and such consideration shall be chargeable to income-tax under the head Income from other sources as per the provisions of section 56(2)(vii) of Act subject to exemptions as provided in the section.


49

14. As per Section 115E of the Act, in the case of a shareholder being a Non-Resident Indian, and subscribing to the shares of the Company in convertible foreign exchange, in accordance with and subject to the prescribed conditions, long term capital gains arising on transfer of the shares of the Company (in cases not covered under Section 10(38) of the ITA) will be subject to tax at the rate of 10% (plus applicable surcharge and education cess), without any indexation benefit.

15. As per Section 115F of the Act and subject to the conditions specified therein, in the case of a shareholder being a Non-Resident Indian, gains arising on transfer of a long term capital asset being shares of the Company will not be chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period of six months in any specified asset or savings certificates referred to in Section 10(4B) of the ITA. If part of such net consideration is invested within the prescribed period of six months in any specified asset or savings certificates referred to in Section 10(4B) of the ITA then such gains would not be chargeable to tax on a proportionate basis. Further, if the specified asset or savings certificate in which the investment has been made is transferred within a period of three years from the date of investment, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified asset or savings certificates are transferred.

16. As per Section 115G of the Act, Non-Resident Indians are not obliged to file a return of income under Section 139(1) of the Act , if their only source of income is income from specified investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act.

17. As per Section 115I of the Act, a Non-Resident Indian may elect not to be governed by the provisions of Chapter XII-A (which contains aforesaid sections 115E, 115F and 115G) for any assessment year by furnishing a declaration along with his return of income for that assessment year under Section 139 of the Act, 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. For the purpose of aforesaid clauses “Non-Resident Indian” means an Individual, being a citizen of India or a person of Indian origin who is not a “resident”. A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided

18. As per Section 115H of the Act, where Non-Resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under Section 139 of the Act to the effect that the provisions of Chapter XII-A (which contains aforesaid sections 115E, 115F and 115G) shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.

Non-resident shareholders – Foreign Institutional Investors 1. Under Section 10(34) of the Act, income by way of dividend referred to in Section 115-O of the Act,

received from the Company is exempted from income tax in the hands of shareholders. However, it is pertinent to note that Section 14A of the Act restricts claims for deduction of expenses incurred in relation to exempt income. Thus, any expenses incurred to earn the dividend income are not an allowable expenditure.

2. The characterization of the gains/losses, arising from transfer of shares, as capital gains or business income would depend on the nature of holding (whether for investment or carrying on trading in shares) in the hands of the shareholder and various other factors.


50

3. Long-term capital gains (as defined under section 2(29B) of the Act) accruing to the shareholders of the

Company on sale of the Company‘s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to securities transaction tax (“STT”), is exempted from tax as per provisions of Section 10(38) of the Act.

Further, the benefit of above mentioned exemption will not be available if equity shares are acquired on or

after October 1, 2004 and securities transaction tax had not been levied on such acquisition. However, it is proposed to notify transfers for which the condition of chargeability to Securities Transactions Tax on acquisition shall not be applicable for claiming the benefit of Section 10(38)]

4. Short-term capital gains (under section 2(42A) of the Act) accruing to the shareholders of the Company

on transfer of the Company‘s equity shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, tax will be chargeable at 15% (plus applicable surcharge and education cess) as per provisions of Section 111A of the Act. No deduction under Chapter VI-A of the ACT, would be allowed in computing such short term capital gains. In other cases, where the transaction is not subjected to STT, the short term capital gains would be chargeable at full rate of 30% plus applicable surcharge and education cess under section 115AD of the Act.

5. Long term capital gains (under section 2(29B) of the Act) accruing to the shareholders of the Company

being the FII from the transfer of shares of the Company being listed in recognized stock exchanges and purchased in foreign currency but not subjected to STT are chargeable to tax at 10% (plus applicable surcharge and education cess). The benefit of indexation and the adjustment with respect to fluctuation in foreign exchange rate would not be allowed to such shareholders. The filing of return under section 139(1) for income computed under Section 115AD is mandatory. Further, where the Gross Total Income (GTI) of the members includes any income on which tax has been paid as per special rates provided under Section 115AD, then the GTI shall be reduced by the amount of such income and deduction under chapter VIA shall be allowed in respect of reduced GTI.

6. Shareholders are entitled to claim exemption in respect of tax on long term capital gains (other than those

exempt under Section 10(38) of the Act) under Section 54EC of the Act, if the amount of capital gains is invested in certain specified bonds / securities within six months from the date of transfer, subject to the fulfillment of the conditions specified therein. The maximum investment permissible on and after April 1, 2007 for the purposes of claiming the exemption in the notified bonds, by any person in a financial year, is 50 lakhs. However, according to Section 54EC(2) of the Act, if the shareholder transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such bonds are transferred or otherwise converted into money.

7. FII (Non-resident shareholders) can take the advantage of provisions of Section 90(2) of the Act, wherein

it is provided that if the provisions of the Double Taxation Avoidance Agreement (“DTAA”) between India and the country of residence of the non-resident are more beneficial, then the provisions of the DTAA shall be applicable.

8. Short-term capital loss suffered during the year can be set off against Income under the head Capital gains

(both short term and long term) under section 74 of the Act; balance loss if any, could be carried forward


51

for eight assessment years immediately succeeding the year in which the loss in incurred. Long-term capital loss suffered during the year is allowed to be set-off only against L ong-term capital gains; balance loss, if any, could be carried forward for eight assessment years immediately succeeding the year in which the loss in incurred to be set off only from Long- term capital gains.

9. As per section 196D, no tax is to be deducted from any income, by way of capital gains arising from the

transfer of shares payable to Foreign Institutional Investor. Benefits available to Mutual Funds

As per the provisions of Section 10(23D) of the Act, any income of Mutual Funds registered under the SEBI Act, 1992 or regulations made thereunder, Mutual Funds set up by public sector banks or public financial institutions or Mutual Funds authorized by RBI would be exempt from income tax, subject to the conditions as the Central Government may by notification in the Official Gazette specify in this behalf.

Note: • 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; • 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 to 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;

SECTION IV – ABOUT THE COMPANY

INDUSTRY OVERVIEW Indian Sugar Industry

With an annual production capacity of almost 30 million metric tonne (MMT), the Indian sugar Industry (ISI) is the second largest producer of sugar in the world. It is also the second largest agro-based industry in the country after cotton.

• 5 crore farmers and their families directly dependent • Rs.65,000 crore of cane price annually • Direct & indirect employment to 2 mln. People. • Enough sugar production for domestic requirement • Foreign exchange earnings of USD 5000 mn in last 5 years • Green power, surplus of 5000 MW exported to grid


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• 12 mn tons molasses giving 300 cr. litres of alcohol • Incl. 120 cr. litres ethanol to replace 5% petrol consumption • Direct positive impact on rural economy • Annual direct & indirect contribution of Rs.75,000 cr. to the Exchequer

India’s centrifugal sugar (henceforth sugar) production in MY 2016/17 (out-year) will decline for a second consecutive year to 25.5 MMT. The out-year production estimate includes 560,000 metric tons (MT) of khandsari, a local type of low-recovery sugar prepared by open-pan evaporation. Production gains in Uttar Pradesh, Tamil Nadu, and other states will compensate for about one-third of the combined losses from Maharashtra and Karnataka.

Although the average sugar recovery rate will remain modest at 10.9 percent (0.1 percent below last year), lower cane delivery to sugar mills, particularly in Maharashtra and Karnataka, will decrease total sugar production. Cane supplies to gur (jaggery or crude, non-centrifugal lump sugar) manufacturing units will return to more normal levels, with out-year gur production during reaching 5.7 MMT.

Sufficient beginning stocks will augment the total sugar supply to about 35 MMT (five-year average is 37.5 MMT) and will just meet annual out-year consumption and stock requirements. Following domestic distribution, an additional 1 MMT of sugar may be available for trade or for storage. For the second time in recent years (the last time being in MY 2008/09), Indian sugar production will fall below consumption (27.2 MMT). Likewise, sugar production in the current year (MY 2015/16) is revised down by three percent to 27.7 MMT, as per the latest production figures. Maharashtra and Uttar Pradesh (UP) will respectively contribute 33 percent and 28 percent of total production. Last year, India produced 30.5 MMT sugar of which Maharashtra and UP respectively contributed 37 percent and 25 percent.

. The two years of drought and climate-related challenges are creating a whiplash in sugar prices as largest producer Maharashtra struggles to supply the nation. And though as households, we spend only 3% of our monthly food budget on sugar, eventually we also pay for the more expensive sugar in ready-to-eat foods, ice creams, sweets, snacks, cold drinks, confectionery, and restaurant meals. The food and hospitality industry, which buys 65% of the country's sugar, passes on the price increases to us.


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Maharashtra, which contributes a third of India's total supply, is expected to produce 40% less sugar in 2016-17. In Karnataka, production is down 44% due to the drought. Together, that is loss of sugar enough for two months consumption. Due to the acute water scarcity, farmers in these two states did not plant new sugarcane crop in 2016-17. The ratoon crop also yielded less juice. At least 45 sugar factories in Maharashtra shut operations early because no cane is available. The rest will shut in the next one-and-a-half months. Since the slack in Maharashtra and Karnataka will not be compensated by the increased production in Uttar Pradesh, India may fall short of sugar to meet demand. By September end, when the 2016-17 sugar marketing closes, we are likely to be left with stocks enough for only 47 days. This will be the lowest in several years. In Uttar Pradesh, mills have produced 10% more sugar than last year and sales are brisk. As a result, farmers are being paid at least 75% of their bill within the 15-day deadline. The delayed payments are mainly by corporate groups with high debt and poor cash flows.

While farmers and mills are coping well, consumers are less fortunate. The tight supplies have pushed up retail prices to above Rs 45kg in the metros just four months into the new sugar marketing year. Industrial consumers are also paying more in the wholesale markets. Sugar was 28% more expensive in December compared to the same month in 2015, shows latest Wholesale Price Index data.

Luckily, ample sugar is available in Brazil, the world's largest producer and exporter. If customs duty is removed, raw sugar can reach India at Rs 40kg. That should provide much-needed relief to consumers. But the window of opportunity to import affordable sugar is small since global prices have risen 15% in the last one month and 41% in last 12 months.

Sugarcane

The fair and remunerative price (FRP) of sugarcane for sugar season 2014-15 was fixed at Rs. 220 per quintal, linked to basic recovery at the rate of 9.5%, subject to premium of Rs.2.32 per qtl for every 0.1 percentage point increase in recovery above that level.

Major producers such as Uttar Pradesh, Tamilnadu, Haryana, Punjab and Uttarakhand continued with their sugarcane pricing policies as per the past practices of announcing SAPs, whereas states like Maharashtra and Karnataka are considering rationalization of their sugarcane pricing by linking it to the sugar prices. In the current year, sugar mills are finding it difficult to pay even the FRP and this mismatch between sugar and sugarcane prices has led to mounting arrears to be paid to sugarcane farmers.


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Sugarcane is still more lucrative to farmers than other crops and despite the accumulating cane arrears, preliminary data are showing 0.2 percent increase in the cane acreage.

ISMA based on the satellite images proved in the later part of June 2015, has projected the total average of around 53.58 lac hectares in 2015-16 sugar season (SS) which is almost similar to that of last 2014-15 SS, when it was 53.23 lac hectares production of sugar can estimated at 341.43 mt, is lower by 1.36 mt than its production estimated as per Ist advance estimated for the previous year by Agriculture Ministry.

India’s Sugarcane production and area under cultivation registered a common compounded annual growth rate (CAGR) of 3.70% and 2.03% respectively during the last 10 years ending 2013-2014. (Sugar Season refers to the period from October 01 to September 30). Although sugar can be extracted from any crop having sugar content, Sugarcane is preferred by the farmers as it is a durable crop backed by strong price support by the government of India (GOI) in terms of favorable prices for cane through the fair & Remunerative Price (FRP)/State advisory price (SAP) mechanism which has helped it to generate competitive returns as compared with paddy and cotton.

Government Policies Policy related decisions taken recently under review are: (i) July 2014: With a view to increase production of Ethanol, Central Government is providing soft loans up to

40% of the project cost to the sugar mills from SDF for setting up ethanol projects. (ii) December 2014: The Cabinet Committee on Economic Affairs (CCEA), has given its approval to ratify the

methodology adopted to recalculate the export incentive rate. (i) January 2015: FRP of sugarcane for 2015-16 sugar season has been fixed at Rs. 230 per quintal, linked to

basic recovery rate of 9.5% subject to premium of Rs.2.42 per qtl for every 0.1% increase in recovery above that level.

(ii) (iv) February 2015: Continuation of the incentive scheme for marketing and promotion services of raw sugar production during current sugar season 2014-15 (Oct-Sept) for a ql upto 1.4 mmt at Rs.4000 per MT

(iii) April 2015: -Increase import duty from 25% to 40%.


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-Withdrawal of DFIA scheme for sugar. -Period of discharge of export obligation under Advance Authorization Scheme for sugar is reduced from 18 months to 6 months. -Removal of excise duty on ethanol produced from molasses (generated during sugar season 2015-16) for blending

(iv) September 2015: Minimum Indicative Export Quotas (MIEQ) - Export quotas of 4 million tons of all grades of sugar (raw/plantation white/refined) have been prorated amongst sugar factories by taking into account their average production of three years – 2012-13 (A), 2013-14 (A) , 2014-15 (P) for Sugar season 2015-16 commencing from 1st October, 2015.

(v) November 2015: Direct subsidy to sugar car growth. Govt. has decided to provide production subsidy of Rs. 4.5/ql of cane crushed to offset cane cost.

Operational aspects of Sugar Industry

India has been known as the original home of sugar and sugarcane. Indian mythology supports the above fact as it contains legends showing the origin of sugarcane. India is the second largest producer of sugarcane next to Brazil. Presently, about 4 million hectares of land is under sugarcane with an average yield of 70 tonnes per hectare.

Sugar Process Flow Chart

1India is the largest single producer of sugar including traditional cane sugar sweeteners, khandsari and Gur equivalent to 26 million tonnes raw value followed by Brazil in the second place at 18.5 million tons. Even in respect of white crystal sugar, India has ranked No.1 position in 7 out of last 10 years.

Traditional sweeteners Gur & Khandsari are consumed mostly by the rural population in India. In the early 1930’s nearly 2/3rd of sugarcane production was utilised for production of alternate sweeteners, Gur & Khandsari. With better standard of living and higher incomes, the sweetener demand has shifted to white sugar. Currently, about 1/3rd


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sugarcane production is utilised by the Gur & Khandsari sectors. Being in the small scale sector, these two sectors are completely free from controls and taxes which are applicable to the sugar sector. 2Sugar Industry in India is the second largest agro-based industry in the country next to cotton textiles. The Indian Sugar Industry is playing a pivotal role in rural development, supporting over about 50 million sugarcane farmers, their dependents and a large mass of agricultural laborers involved in sugarcane cultivation, harvesting, machine manufacturing etc. of almost 597sugar mills and ancillary activities, constituting some 7.5% of the rural population. In addition, about 0.5 million skilled and semiskilled workers, mostly from the rural areas are engaged in the sugar industry. Thus, the sugar industry has been a focal point for socio-economic development in the rural areas by mobilizing rural resources, generating employment & higher income, besides giving a fillip to transport and communication facilities. 1http://www.sugarindustry.com/sugarindustry.htm

2http://www.indiansugar.com/Public/sugar.aspx

Outlook

India will continue to be a major sugar producer in the world and is expected to be a sugar surplus country for the sixth consecutive SS. ISI is expected to be a net exporter in SS 2015-16 and Sugar imports, if any, will be negligible. The average sugar recovery rate for cane is also expected to improve during SS 2015-16. On the consumption side, strong domestic demand for soft drink manufacturers, confectioneries, hotels, bakeries and ice cream manufacturers will support higher level of consumption. India’s relatively strong economic growth, stable political situation, rising incomes, a young population and changing consumer consumption patterns are envisaged to be the key drivers encouraging higher sugar consumption.

However, Indian sugar prices are expected to remain weak due to surplus sugar stock in both domestic and global markets. The government’s intervention is necessary in order to revive the ISI which has been reeling under the twin impacts of high sugarcane prices and low sales realization on sugar leading to recurring losses being incurred by sugar mills and mounting cane arrears. Concrete measures are required including emphasis on increasing its ethanol blending programme along with providing flexibility for use of sugarcane as feed stocks for ethanol production, building compulsory buffer stocks, incentive exports through higher exports subsidy, restructuring debt of sugar manufactures and implementation of recommendation of Rangarajan committee for linking prices of cane to actual realization of sugar and its allied products.

Source: http://www.careratings.com/upload/NewsFiles/SplAnalysis/Indian%20Sugar%20Industry%20-%20An%20Update%20-%20June%202015.pdf

Industrial Alcohol Industry In India

In the year 2008, the Government of India announced its National Policy on biofuels, mandating a phase-wise implementation of the programme of ethanol blending with petrol in various states.

In India, ethanol production is mainly done using sugarcane as feedstock. For successful implementation of the EBP in the country, a steady supply of sugarcane (or sugarcane juice) as feedstock is required. However, sugarcane production in a bumper crop year just about meets the requirement of all the sectors. In other years, there is a shortfall due to which the EBP has not been successfully implemented till now. In the past few years, there was a large unmet demand for ethanol from the industrial sector that was met by imports.


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The existing vehicular fleet in the country is compatible with the 5 per cent ethanol blended petrol. Sufficient lead time would have to be given to the automobile industry to make appropriate engine and other modifications to make vehicles compatible with higher levels of blended fuel.

The National Policy on Biofuels

The Ministry of Petroleum and Natural Gas (MoPNG) issued a notification in September 2002 for mandatory blending of 5 per cent ethanol in nine major sugar- producing states and four union territories from 2003.4 In 2003, the Report of the Committee on Development of Biofuel, under the auspices of the Planning Commission, recommended a phase-wise implementation programme to blend biofuels with petrol and diesel. However, due to a supply shortage from 2004 to 2005, the ethanol-blending mandate was made optional in October 2004, but it resumed in twenty states in October 2006.5 In October 2007, the Government of India made it mandatory to blend 5 per cent ethanol in petrol across the country, with the exception of J&K, the Northeast and island territories. In 2008, the Government of India announced its National Biofuel Policy, mandating a phase-wise implementation of the programme of ethanol blending in petrol in various states. The blending level of bio-ethanol6 at 5 per cent with petrol was made mandatory from October 2008, leading to a target of 20 per cent blending of bio-ethanol by 2017.7 This was taken up by the oil marketing companies (OMCs) in twenty states and four union territories.

The new biofuel policy was approved by the Union Cabinet in December 2009. In view of the multiplicity of departments and agencies, it was felt imperative to provide a highlevel co-ordination and policy guidance/review of biofuel development, promotion and utilisation. For this purpose, the policy proposed to set up a National Biofuel Coordination Committee (NBCC), headed by the Prime Minister. Ministers from the concerned ministries were proposed to be members of this Committee. The role and active participation of the states was considered crucial in the planning and implementation of the biofuel programme. The policy also proposed that the minimum purchase price (MPP) for bio-ethanol should be based on the actual cost of production and import price of bio-ethanol. The price of ethanol would be determined by the Biofuel Steering Committee8 and decided by the NBCC and, in the event of diesel or petrol prices falling below the MPP for bio-diesel and bio-ethanol, OMCs would be duly compensated by the government. Biofuel imports would be permitted to the extent necessary and decided by the NBCC under the policy. Additionally, it was mentioned that bio-ethanol already enjoys a concessional excise duty of 16 per cent and bio-diesel is exempt from excise duty.9 Duties and taxes would be levied on imports to ensure that indigenously produced biofuels are not more expensive than imported biofuels.

Demand for and Supply of Ethanol in India

There are three main uses of ethanol in India. Of the total available ethanol, the maximum – about 45 per cent – is used to produce potable liquor, about 40 per cent is used in the alcohol-based chemical industry (as a solvent in synthesis of other organic chemicals) and the rest is used for blending with petrol and other purposes.10 The demand for ethanol has been continually increasing on account of the growth of user industries and use of ethanol as a fuel in the country. However, the production and availability of ethanol has largely lagged behind. India is the fourth largest producer of ethanol in the world after Brazil, the United States of America (USA) and China, producing approximately 2000 million litres of ethanol,11 mainly by fermentation of sugarcane molasses.12 Ethanol is made by fermentation of sugars: enzymes from yeast change simple sugars into ethanol and carbon dioxide.

Demand for Ethanol

Data on ethanol production and consumption in India is published by many sources. Among these are the Indian Sugar Mills Association (ISMA), the U.S. Department of Agriculture (USDA), and the Indian Chemical Council


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(ICC). The estimates from these various sources vary considerably. One reason is that the year in question varies, e.g. the sugar year used by ISMA is from October to September, and the alcohol year used by ICC is from December to November. Estimates provided by USDA are for calendar year and those provided by the Planning Commission are for financial year April to March. Monthly data is not available to make comparisons across different sources.

In the year 2003, the Report of the Committee on Development of Biofuels was published by the Planning Commission of India. It gave projections of demand and supply of ethanol for India for the end of each five-year plan This report shows the break-up of production and consumption of ethanol in terms of molasses and cane. Data from different sources shows that as of 2010, the actual production of ethanol in India has not kept pace with the demand.

Projected Demand and Supply of Ethanol (million litres)

Note: Figures for petrol demand in million litres are calculated on an assumption of ethanol density of 0.789g/ml. Planning Commission (2003) also gives ethanol demand estimates, assuming an ethanol density of 0.85g/ml.

Supply of ethanol

Ethanol is primarily produced using sugarcane molasses, a by-product of sugar manufacturing in India. Three factors primarily determine sugarcane production in India: area under sugarcane production, sugarcane yield per hectare, and the proportion of sugarcane output that is crushed by sugar factories. The area under sugarcane production in India has increased nearly 2.5 times since 1950–51 (Pohit et al., 2009) (reaching about 5.04 million hectares in 2007–08). However, it has tended to stagnate in the recent past. There has also been considerable variation in the area under sugarcane production over time. Cultivation of this crop tends to follow a cyclical pattern of output (with three–four years of bumper harvests followed by relatively poor crops over a similar period subsequently). Farmers shift to other crops partly because of this, and also because other crops can be grown more profitably or within a shorter time span compared to sugarcane.


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The growth in ethanol consumption is primarily driven by production requirements for alcohol-based chemicals such as acetic acid and ethyl acetate that are, in turn, used in other industrial products as well as feedstock.31 Although many of these chemicals can be produced using petrochemicals, Nguyen et al. (2010), who compare these two processes based on their production cost, environmental impact and safety, point out that the bio-ethanol-based process is less expensive and has lower carbon dioxide emissions than the fossil-based process, though it poses greater safety hazards. With rapid economic growth, the demand for these chemicals is set to rise further. Given the constraints of ensuring a rapid enough increase in ethanol production, it is apparent that the country will have to depend on imports either of ethanol or of alcohol based chemicals from international markets.

KEY REGULATIONS AND POLICIES

The sugar industry is one of the industries enumerated in entry 33 of the List in 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 our business.

I. Central Laws relating to the production, sale and purchase of sugar and sugarcane:

1. The Essential Commodities Act, 1955 The Essential Commodities Act, 1955 (the "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 Act defines 'sugar' as under:

a) any form of sugar containing more than ninety per cent of sucrose, including, sugar candy; b) khandsari sugar or bura sugar or crushed sugar or any sugar in crystalline or powdered form; or c) sugar in process in vacuum-pan sugar factory or raw sugar produced therein;

Section 3 of the Act empowers the Central Government to issue 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 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 Act provides for fixing different prices from time to time for different areas or factories or for different kinds of sugar. The regulated release mechanism—under which sugar quantity for open market sale is fixed by the government—has been abolished and control of mandatory supply of sugar in public distribution system (PDS) as levy sugar has also been rescinded from May, 2013.


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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. 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.

3. Sugar (Packing and Marking) Order, 1970 The objective of this Order is to regulate the packing of sugar manufactured by a producer and marking on bags. The Order prescribes that each producer shall, at the time of such packing, mark the quality of sugar in terms of the Indian Sugar Standards.

4. Sugarcane (Control) Order, 1966 Under the aforesaid Order, the Central Government is empowered to fix the fair & remunerative price of sugarcane to be paid by producers of the sugar or their agents for sugarcane purchased by them having regard to certain factors as mentioned in Clause 3 of the said Order. Further, a different price may be fixed for different areas or different qualities or varieties of sugarcane. Further, the Central Government or the State Government with the approval of the Central Government, may, subject to such conditions as specified in the Order, allow a suitable rebate in the price so fixed. The said Order also contains various provisions for regulating the distribution and movement of sugarcane and restriction on setting up of two sugar factories within the radius of 15 km. The Central Government is empowered to direct the producers of the sugarcane to pay additional price for sugarcane in addition to the fair & remunerative sugar prices fixed in accordance with the provisions of the second schedule to the said Order.


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The Central Government is empowered to delegate certain powers conferred upon it by this Order subject to such restrictions, exceptions and conditions, if any, as the Central Government may think fit.

5. Sugar Development Fund Act, 1982 and Rules, 1983 These 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 modernization of the sugar plant and machinery based on the scheme approved by the financial institutions as also for sugarcane development. Under Rule 19 of the Sugar Development Fund Rules, 1983 the Central Government has been empowered to decide about the maintenance of Buffer Stock and payment of subsidy thereon. The Central Government under this Act and Rules may also provide financial assistance, as it may consider fit and proper.

6. The Prevention of Food and Adulteration and the Packaging Commodities Acts are also applicable to us.

7. National Food Security Act, 2013 An act to provide for food and nutritional security in human life cycle approach, ensuring access to adequate quantity of quality food at affordable prices to people to live a life with dignity and for matters connected therewith or incidental thereto.

8. The Warehousing (Development And Regulation) Act, 2007 An Act to make provisions for the development and regulation of warehouses, negotiability of warehouse receipts, establishment of a Warehousing Development and Regulatory Authority and for matters connected therewith or incidental thereto.

9. Food Safety And Standards Act, 2006 An Act to consolidate the laws relating to food and to establish the Food Safety and Standards Authority of India for laying down science based standards for articles of food and to regulate their manufacture, storage, distribution, sale and import, to ensure availability of safe and wholesome food for human consumption and for matters connected therewith or incidental thereto.

II. State Laws applicable in the State of Uttar Pradesh to the Sugar Industry:

1. The Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 This 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 this Act defines the following terms as follows:

a) ‘Cane Commissioner' means the Officer appointed to be Cane Commissioner under section 9 and includes an Additional Cane Commissioner under section 10.


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b) '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.

This Act prescribes that the Cane Commissioner shall, on application by the occupier of the factory, reserve or assigns any area for the purposes of supply of sugarcane to the factory in accordance with the provisions of Section 16 of the said Act. Section 16 of the said 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 May 05, 2004 in its 3:2 bench upheld the rights of Uttar Pradesh State Government to fix the State Advice 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 These 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 Cooperative Society and Council to regulate the supply and purchase of sugarcane.

3. The Sugarcane Supply Act and the Sugarcane (Regulation of Supply and Purchase) Rules, 1954 also regulates the payment of cane price to suppliers of sugarcane. Further, they also provide for the payment of a cess to the government based on the quantity of sugarcane utilized by a factory.

4. The Uttar Pradesh Sugarcane Supply & Purchase Order, 1954 The Uttar Pradesh Sugarcane Supply and Purchase Order, 1954 has also been issued, which lays down further provisions regarding the estimation of sugarcane supply and assignment of areas to factories for supply of sugarcane. Its main object is regulations of sugarcane supply to factories. Under the provisions of this Order, the Cane Commissioner, on the basis of estimates received from producers, determines the quantity of cane that each factory is entitled to receive. Factories cannot purchase sugarcane in excess of such prescribed quantities. This Order has been passed in exercise of powers conferred by Section 16 of the Uttar Pradesh Sugarcane (Regulation of Supply & Purchase) Act, 1953. This 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' pursuant to which the Cooperative Society agrees to sell the specified quantity of sugarcane to the sugar factory through its members under the reservation order.


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5. The Uttar Pradesh Sheera Niyantran Adhiniyam, 1964 This Act was enacted to provide in public interest for the control of storage, gradation and price of molasses produced by Sugar Factories in Uttar Pradesh and the regulation of supply and distribution thereof. The term "molasses" has been defined under Section 2(d) of the Act as under- "The heavy dark colored 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".

6. Uttar Pradesh Prevention of Food Adulteration Act, 1976 Under the Uttar Pradesh Prevention of Food Adulteration Act, 1976, a license is required to be obtained from the Local Health Authority for the production and sale of sugar and molasses.

III. Licensing and De-licensing of Sugar Industries

The Industries (Development and Regulation) Act, 1951 was enacted to provide for the development and regulation of certain industries. Section 11 of the Industries (Development and Regulation) Act, 1951 (the “IDRA”) provides that “(1) No person or authority other than the Central Government, shall, after the commencement of this Act, establish any new industrial undertaking, except under and in accordance with a license issued in that behalf by the Central Government. Provided that a Government other than the Central Government may, with the previous permission of the Central Government, establish a new industrial undertaking. (2) A license or permission under sub-section may contain such conditions including, in particular, conditions as to the location of the undertaking and the minimum standards in respect of size to be provided therein as the Central Government may deem fit to impose in accordance with the rules, if any, made under section 30.” The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India (“DIPP”) has, by issue of Press Note Number 12/1998 dated August 31, 1998, delicensed the sugar industry. Sugar industries, therefore, no longer come within the purview of compulsory licensing under the provisions of the IDRA. Entrepreneurs desirous of setting up sugar factories are only required to file an Industrial Entrepreneurs Memorandum (“IEM”) in the prescribed form with the Secretariat of Industrial Assistance, Ministry of Commerce and Industry, Government of India (“SIA”) as provided in Press Note dated August 2, 1991 issued by the SIA. To avoid unhealthy competition among sugar factories to procure sugarcane, the DIPP has provided that a minimum distance of 15 kilometers must be maintained between an existing sugar mill and a new mill. Recently, the High Court of Allahabad has passed an order dated August 24, 2005 quashing the Government of India notifications that provided for the delicensing of the sugar industry by omitting the requirement to obtain a license under the IDRA for setting up new sugar mills or engaging in the substantial expansion of existing sugar mills. This order of the High Court of Allahabad has been challenged by Bajaj Hindustan Limited in the Supreme Court. The Supreme Court has stayed the operation of the said judgment of the High Court of Allahabad vide its order dated September 19, 2005 till further orders. Union of India and the U. P. Government have also been made parties to this Special Leave Petition.


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IV. Labour and Industrial Laws

Sugar factories must obtain a factories license under the Factories Act, 1948.

Further, a wide variety of labour laws have also to be complied with. Apart from the generally applicable labour laws, including the Industrial Disputes Act, 1947, the Contract Labour (Regulation and Abolition) Act, 1970, the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, the Payment of Gratuity Act, 1972 and the Payment of Wages Act, 1936, there are also standing orders specifically applicable to the sugar industry.

These standing orders lay down rules governing terms of employment in sugar factories and provide, inter alia, for: (a) Notification of periods and hours of work, including holidays;

(b) Notices relating to closure and re-opening of a factory or section of a factory;

(c) Leave conditions and procedure for availing leave;

(d) Situations where there may be temporary stoppage of work;

(e) Employment of seasonal workmen;

(f) Grounds for termination of employment;

(g) Retirement of workmen;

(h) Redressal mechanisms in case of grievances and disputes.

V. Land Laws

For setting up a sugar factory, permission for acquisition of land is required from local authorities in light of the provisions of local land ceiling laws. Further, it is necessary to apply for change of land use from agricultural to industrial, in the event the area identified for setting up of the factory is designated as an agricultural area.

VI. Environmental Laws

Prior to setting up a sugar factory, relevant environmental consents must be obtained under the Environment (Protection) Act, 1986, the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981.

VII. Supply and Purchase of Sugarcane

Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953

The Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 (“Sugarcane Supply Act”) regulates the supply and purchase of sugarcane required for use in sugar factories. Under the provisions of this Act, the occupier of a sugar factory must submit to the Cane Commissioner an estimate of the quantity of cane required by the factory. The same is examined by the Cane Commissioner and the estimated quantities published.

The decision of the Cane Commissioner regarding the estimate of the quantities of sugarcane required by the factories and allocation of reserved/assigned areas may be appealed against to the State Government, who may revise the same. Further, the Cane Commissioner may also cancel any order reserving or assigning an area, or alter the boundaries of the area so reserved or assigned.

The Sugarcane Supply Act also provides that the State Government may provide for the manner in which the cane grown in the reserved or assigned area may be purchased by the factory concerned, and the circumstances


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in which the sugarcane grown by a cane grower shall not be purchased, except through a cane growers’ co-operative society.

VIII. Production and Sale of Sugar

Sugar (Regulation of Production) Act, 1961 The Sugar (Regulation of Production) Act, 1961 (“Sugar Act”) empowers the Central Government to fix the quantity of sugar, which may be produced, in a factory during any year. The Act was meant to provide for the regulation of production of sugar in the interests of general public and for the levy and collection of a special excise duty on sugar produced by a factory in excess of the quota fixed for the purpose.

IX. Taxes and Levies on Sugarcane and Sugar

1. Uttar Pradesh Sugarcane Cess Act, 1956 The Act was enacted “to amend and consolidate the law relating to imposition of cess on sugarcane intended for use and consumption in or sale to a factory and a Gur, Rab or Khandsari Sugar Manufacturing Unit.” Under the provisions of the Uttar Pradesh Sugarcane Cess Act, 1956 (“Sugarcane Cess Act”), a cess is levied on the use, consumption and sale of sugarcane to a factory.

2. Uttar Pradesh Sugarcane (Purchase Tax) Act, 1961 The Act was enacted to “impose a tax on the purchase of sugarcane by factories and certain Gur, Rab or Khandsari Sugar Manufacturing Units and to regulate the manufacture of Gur or Rab by such Units.”

3. Sugar Cess Act, 1982 The Sugar Cess Act, 1982 (“Sugar Cess Act”) provides for the imposition of a cess on all sugar produced by any sugar factory in India.

X. Foreign Investment Regulations The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 provide that the investment cap for foreign direct investment in the sugar industry is 100%.

Spirits Industry:

I. Environment (Protection) Act, 1986

The Environment (Protection) Act, 1986 was enacted as a general legislation to safeguard the environment from all sources of pollution by enabling coordination of the activities of the various regulatory agencies concerned, to enable creation of an authority with powers over such areas as environmental protection and regulation of discharge of environmental pollutants. The purpose of the Environmental (Protection) Act, 1986 is to act as an “umbrella” legislation designed to provide a framework for Central Government co-ordination of the activities of various central and State authorities established under previous laws, such as the Water Act and the Air Act, defined below. It includes water, air and land and the interrelationships which exist among water, air and land, and human beings and other living creatures, plants, micro-organisms and property.

II. Consent for Operation of the Plant under the Air (Prevention and Control of Pollution) Act, 1981.

The Air (Prevention and Control of Pollution) Act, 1981 (the “Air Act”) has been enacted to provide for the prevention, control and abatement of air pollution. The statute was enacted with a view to protect the environment and surroundings from any adverse effects of the pollutants that may emanate from any factory or manufacturing operation or activity. It lays down the limits with regard to emissions and pollutants that


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are a direct result of any operation or activity. Periodic checks on the factories are mandated in the form of yearly approvals and consents from the corresponding Pollution Control Boards in the State.

III. Consent for Operation of the Plant under the Water (Prevention and Control of Pollution) Act, 1974

The Water (Prevention and Control of Pollution) Act, 1974 (the “Water Act”) was enacted in 1974 to provide for the prevention and control of water pollution by factories and manufacturing industries and for maintaining or restoring the wholesomeness of water. The Water Act regulates the, (i) occupier (the owner and 123 management of the undertaking); (ii) outlet; (iii) pollution; and (iv) trade effluents. The Water Act requires that approvals be obtained from the corresponding State’s Pollution Control Boards.

IV. Water (Prevention and Control of Pollution) Cess Act, 1977

The Water Cess (Prevention and Control of Pollution) Act, 1977 (the “Water Cess Act”) provides for the levy and collection of cess on local authorities and industries based on the consumption of water by such local authorities and industries to enable implementation of the Water Act by regulatory agencies.

V. Hazardous Waste (Management & Handling) Rules, 1989

These rules regulate the disposal of hazardous wastes. The occupier generating hazardous wastes must apply to the State Pollution Control Board to obtain authorization for storing, collecting, treating and disposing of hazardous wastes. It shall be the duty of the occupier and operator of a facility to take adequate steps while handling hazardous wastes to contain contaminants and prevent accidents and limit their consequences on humans and the environment. These rules do not apply to waste water and exhaust gases regulated under the Water Act and the Air Act. Accidents occurring at a facility must be reported to the State Pollution Control Board.

VI. Environmental Impact Assessment Regulations under Notification Dated January 27, 1994

These regulations have been framed under the provisions of the Environmental (Protection) Act and provide that expansion or modernization of certain activities, including distilleries, shall not be undertaken in any part of India unless environmental clearance has been obtained from the central Government.

VII. Industrial (Development and Regulation) Act, 1951

The Industrial (Development and Regulation) Act, 1951 has been liberalized under the New Industrial Policy dated July 24, 1991, and all industrial undertakings are exempt from licensing with the exception of certain industries such as distillation and brewing of alcoholic drinks, cigars and cigarettes of tobacco and manufactured tobacco substitutes, all types of electronic aerospace and defense equipment, industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches and hazardous chemicals, drugs and pharmaceuticals and those reserved for the small-scale sector.

VIII. Indian Boilers Act, 1923

The Indian Boilers Act, 1923 was enacted with the objective of ensuring the safety of public life and property by administering and enforcing the provisions of the Act with respect to steam boilers and steam pipes, which produce steam, which is used for re-distillation of alcohol and liquor. As per the provisions of the Act, the Chief Inspector of Boilers or an Inspector appointed under the Act periodically reviews the administration of the regulations by (a) approval of manufacturers, (b) inspection of designs relating to boilers and inspection of the manufacturing of boilers and boiler components, (c) approval of boiler repairers and boiler erectors, (d) authorization and inspection of boiler repairs and (e) certification of boiler operating engineers, boiler operators and welders.


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IX. Approvals from Local Authorities

Planning approvals must be obtained from the relevant Local Panchayat(s) (outside the city limits) and the appropriate Metropolitan Development Authority (within the city limits) to set up a factory or a manufacturing or housing unit. Consents from the State Pollution Control Board(s), the relevant State 124 Electricity Board(s) and the State Excise Authorities (Sales Tax) are required to be obtained before commencing construction of a factory or manufacturing operations.

X. Labour Legislations

1. The Factories Act, 1948

The Factories Act, 1948 (the “Factories Act”) was enacted primarily with the object of protecting workers from industrial and occupational hazards. The Factories Act defines a factory as any premises which employ ten or more workers in which a manufacturing process is carried on with the aid of power, and any premises employing at least 20 workers regardless of whether an electricity-aided manufacturing process is being carried on.

Under the Factories Act, an occupier of a factory is the person who has ultimate control over the affairs of the factory. In case of a company, any of the directors shall be the occupier and such director must ensure the health, safety, welfare, working hours, leave and other benefits of all workers. Under the statute, approval must be granted prior to establishment of a factory, an operating license must be granted thereafter and the factory must be registered by the Chief Inspector of Factories or the State Government. In case of contravention of any provision of the Factories Act or rules thereunder, the occupier and the manager of a factory may be subject to imprisonment or a fine or both.

2. The Contract Labour (Regulation and Abolition) Act, 1970 The Contract Labour (Regulation and Abolition) Act, 1970 applies to any establishment (not including an establishment where work performed is of intermittent or seasonal nature)where 20 or more workmen are employed or were employed on any day of the preceding one year as contract laborers; and to every contractor or sub-contractor who employs or had employed 20 or more workmen on any day of the preceding one year, provided they were not employed in certain “core” activities. This legislation regulates the working conditions of contract laborers and provides that any employer of contract laborers must register his establishment with the appropriate authority of the particular State. A principal employer and a contractor as defined under the Contract Labour (Regulation and Abolition) Act, 1970, must apply for a license and for registration of each establishment under the provisions of the Act.

3. The Employees’ State Insurance Act, 1948 The Employee’s State Insurance Act, 1948 is applicable to all factories including a factory belonging to the Government other than seasonal factories and any other establishment as the appropriate Government may determine. Employers of factories and establishments covered under the Employees’ State Insurance Act, 1948 are required to pay contributions to the Employees State Insurance Corporation, in respect of each employee at the rate prescribed by the Central Government. Companies which are controlled by the Government are exempt from this requirement if employees receive benefits similar or superior to the benefits prescribed under the Employees’ State Insurance Act, 1948.


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4. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 Under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, compulsory provident fund, family pension fund and deposit linked insurance are payable to employees in factories and other establishments. The legislation provides that an establishment employing more than 20 persons, either directly or indirectly, in any capacity whatsoever, is either required to constitute its own provident fund or subscribe to the statutory employee’s provident fund. The employer of such establishment is required to make a monthly contribution to the provident fund equivalent to the amount of the employee’s contribution to the provident fund.

5. Payment of Bonus Act, 1965 The Payment of Bonus Act, 1965 applies to every factory and to every other establishment in which 20 or more persons are employed. An employee in a factory who has worked for at least 30 days in a year is eligible to be paid a bonus in accordance with the provisions of such law. Contravention of provision of the Payment of Bonus Act, 1965 is punishable by imprisonment up to six months or a fine up to Rs.1000 or both.

6. Payment of Gratuity Act, 1972 Under the Payment of Gratuity Act, 1972, an employee, on his death, or who becomes disabled due to accident or disease, or who, after having completed at least five continuous years of service in an establishment resigns or retires, is eligible to receive gratuity in accordance with the provisions of the law. To meet this liability, employers of all establishments to which the legislation applies are required to contribute towards gratuity.

7. Payment of Wages Act, 1936 The Payment of Wages Act, 1936 (the “Wages Act”) applies to persons employed in factories, industrial or other establishments where monthly wages are less than Rs.10,000. The Wages Act obliges employers to maintain registers and records as required under this Act and display the abstracts of the Wages Act and the rules thereunder.

8. The Minimum Wages Act, 1948 The Minimum Wages Act, 1948 was enacted to establish minimum wages for certain categories of employees. Under this Act, the Central and the State Governments stipulate the scheduled industries and fix minimum wages. The Act lists Agricultural and Non Agricultural employment where a prescribed minimum rate of wages is to be paid to employees.

Various Regulations Governing Shops and Establishments

There are several State regulations governing the employment of workers in shops and commercial establishments. These regulations provide for the opening and closing hours of shops and establishment and the provision of weekly holiday with wages. The officials of the Labour Department who are notified as inspectors under such regulations are generally competent to initiate prosecution proceedings against the employers who violate the provisions of such laws. These acts provide for the compounding of offences committed thereunder.


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XI. Fiscal Legislations 1. Service Tax

Chapter V of the Finance Act, 1994 as amended, provides for the levy of a service tax in respect of certain categories of services. Every person who is liable to pay this service tax must register himself with the appropriate authorities.

2. Central Excise Excise duty imposes a liability on a manufacturer to pay excise duty on production or manufacture of goods in India. The Central Excise Act, 1944 provides for the levy and collection of excise and prescribes procedures for clearances from a factory once the goods have been manufactured.

3. Value Added Tax Value Added Tax (“VAT”) is a system of multi-point levies on each of the purchases in the supply chain with the facility of set-off input tax on sales whereby tax is paid at the stage of purchase of goods by a trader and on purchase of raw materials by a manufacturer. VAT is based on the value addition of goods, and the related VAT liability of the dealer is calculated by deducting input tax credit for tax collected on the sales during a particular period.

VAT is a consumption tax applicable to all commercial activities involving the production and distribution of goods and the provisions of services, and each State that has introduced VAT has its own VAT Act under which persons liable to pay VAT must register and obtain a registration number from the Excise Tax Officer of the respective State.

4. Sales Tax The tax on sale of moveable goods within India is governed by the provisions of the Central Sales Tax Act, 1956 or the relevant State law depending upon the movement of goods pursuant to the relevant sale. If the goods move between States pursuant to a sale arrangement, then the taxability of such sale is determined by the Central Sales Tax Act, 1956. On the other hand, the taxability of a sale of movable goods which does not contemplate movement of goods outside the State where the sale is taking place is determined as per the local sales tax/VAT legislation in place within such State.

XII. State Laws Governing Entry Tax

Entry Tax provides for the levy and collection of tax on the entry of goods into a State for consumption, use or sale therein. It is levied at such rate as may be specified by the State Government and different rates may be specified for different goods. The tax leviable under this Act shall be paid by every dealer in scheduled goods or any other person who brings or causes to be brought into a local area such scheduled goods whether on his own account or on account of his principal or customer or takes delivery or is entitled to take delivery of such goods on such entry.


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Relevant Details of the Scheme

PART – IX MERGER OF RESIDUAL OUDH SUGAR AND RESIDUAL UPPER GANGES WITH AVADH SUGAR

11 TRANSFER AND VESTING OF BUSINESS AND UNDERTAKINGS OF RESIDUAL OUDH SUGAR AND RESIDUAL UPPER GANGES

11.1 With effect from the Appointed Date or such other date as may be fixed or approved by the High Court and upon the Scheme becoming effective, the entire business and whole of Undertaking(s) of Residual Oudh Sugar and Residual Upper Ganges shall, pursuant to the provisions of Sections 391 to 394 and other applicable provisions, if any, of the Act, and pursuant to the order of the High Court sanctioning the Scheme, shall without any further act, deed, matter or thing, stand transferred to and vested in and / or deemed to be transferred to and vested in Avadh Sugar, as a going concern, so as to become the properties and liabilities of Avadh Sugar within the meaning of Section 2(1B) of the Income Tax Act, 1961.

11.2 Without prejudice to the generality of the above said Clause:

11.2.1 With effect from the Appointed Date, all the assets, rights and properties of Residual Oudh Sugar and Residual Upper Ganges (whether movable or immovable, tangible or intangible) of whatsoever nature including but not limited to computers and servers, computer software, investments, office premises, office equipment, electrical installations, telephones, telex, facsimile, other communication facilities, any registrations whether under Central, State or other laws, copyrights, permits, approvals, all rights or title or interest in property by virtue of any court order or decree, contractual arrangement, allotment, grant, lease, possession or otherwise, memorandum of understandings, tenancy rights, hire purchase contracts, lending contracts, permissions, incentives, tax registrations, subsidies, grants, tax credits (including CENVAT, Service Tax credit, MAT credit), deferred tax asset (if any), advance tax credit, contracts, engagements, arrangements of all kinds, rights, titles, interests, benefits and advantages of whatsoever nature and where so ever situate belonging to or in the ownership, power or possession and in the control of or vested in or granted in favour of or enjoyed by Residual Oudh Sugar and Residual Upper Ganges, industrial and other licenses, municipal and other statutory permissions, approvals including but not limited to right to use and avail electricity connections, water connections, telephone connections, facsimile connections, telexes, e-mail, internet, leased line connections and installations, all records, files, papers, computer programs, manuals, data, quotations, list of present and former vendors and suppliers, and all other rights, title, lease, interest, contracts, consent, approvals or powers of every kind, nature and descriptions whatsoever, shall under the provisions of Sections 391 to 394 of the Act and pursuant to the order of the High Court or any other appropriate authority sanctioning this Scheme and without further act, instrument or deed, but subject to the charges affecting the same as on the Effective Date be transferred and / or deemed to be transferred to and vested in Avadh Sugar, so as to become the properties and assets of Avadh Sugar.

11.2.2 With respect to such assets and properties of Residual Oudh Sugar and Residual Upper Ganges as on the Effective Date, as are movable in nature and are capable of transfer by physical delivery or endorsement and delivery or novation and delivery, including cash in hand, the same shall be so transferred to Avadh Sugar and deemed to have been handed over by physical delivery or by endorsement and delivery or novation and delivery, as the case may be, to Avadh Sugar to the end and intent that the property and benefit therein passes to Avadh Sugar with effect from the Appointed Date.


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11.2.3 In respect of the movable assets owned by Residual Oudh Sugar and Residual Upper Ganges as on the Effective Date, other than those mentioned in Clause 73.2.2 above, including actionable claims, sundry debtors, outstanding loans, advances, whether recoverable in cash or kind or for value to be received and deposits, if any, with the local and other authorities, body corporate(s), customers etc., Residual Oudh Sugar and Residual Upper Ganges shall, if so required by Avadh Sugar, and / or Avadh Sugar may, issue notices or intimations in such form as Avadh Sugar may deem fit and proper, stating that pursuant to the High Court or NCLT having sanctioned this Scheme, the debt, loan, advance or other asset, be paid or made good or held on account of Avadh Sugar, as the person entitled thereto, to the end and intent that the right of Residual Oudh Sugar and Residual Upper Ganges to recover or realize the same stands transferred to Avadh Sugar and that appropriate entries should be passed in their respective books to record the aforesaid changes.

11.2.4 With effect from the Appointed Date and upon the Scheme becoming effective, the immovable properties standing in the books of Residual Oudh Sugar and Residual Upper Ganges, if any, and any documents of title or rights and easements in relation thereto shall without any further act, deed, matter or thing be vested in and transferred to and / or be deemed to have been vested in and transferred to Avadh Sugar and shall belong to Avadh Sugar. The mutation of the title to the immovable properties shall be made and duly recorded by the appropriate authorities pursuant to the sanction of the Scheme and upon the Scheme becoming effective, in accordance with the terms hereof, in favour of Avadh Sugar. Any inchoate title or possessory title of Residual Oudh Sugar and Residual Upper Ganges shall be deemed to be the title of Avadh Sugar.

11.2.5 It is clarified that if any assets (estate, claims, rights, title, interest and authorities relating to such assets) or any contract, deeds, bonds, agreements, schemes, arrangements or other instruments of whatsoever nature in which Residual Oudh Sugar and Residual Upper Ganges owns or to Residual Oudh Sugar and Residual Upper Ganges is a party and which cannot be transferred to Avadh Sugar for any reason whatsoever, Residual Oudh Sugar and Residual Upper Ganges shall hold such assets or contract, deeds, bonds, agreements, schemes, arrangements or other instruments of whatsoever nature in trust for the benefit of Avadh Sugar, insofar as it is permissible so to do, till such time as the transfer is effected

11.2.6 All assets and liabilities of Residual Oudh Sugar and Residual Upper Ganges as on the Appointed Date and all assets and properties which are acquired by Residual Oudh Sugar and Residual Upper Ganges on or after the Appointed Date but prior to the Effective Date shall be deemed to be and shall become the assets and properties of Avadh Sugar and shall under the provisions of Sections 391 to 394 and all other applicable provisions, if any, of the Act, without any further act, instrument or deed, be and stand transferred to and vested in or be deemed to be transferred to and vested in Avadh Sugar upon the coming into effect of this Scheme pursuant to the provisions of Sections 391 to 394 of the Act, provided however that no onerous asset shall have been acquired by Residual Oudh Sugar and Residual Upper Ganges after the Appointed Date without the prior written consent of Avadh Sugar.

11.2.7 With effect from the Appointed Date, debts, liabilities (including contingent liabilities), deferred tax liability (if any), duties and obligations of every kind, nature and description of Residual Oudh Sugar and Residual Upper Ganges shall be transferred or be deemed to have been transferred to Avadh Sugar, to the extent they are outstanding on the Effective Date, without any further act, deed, matter or thing and the same shall be assumed by Avadh Sugar so as to become, on and from the Appointed Date, the liabilities and obligations of Avadh Sugar on same terms and conditions as were applicable to Residual Oudh Sugar and Residual Upper Ganges. Avadh Sugar shall undertake to meet, discharge and satisfy the same and further it shall not be necessary to obtain the consent of any third party or


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other person who is a party to any contract or arrangement by virtue of which such debts, liabilities and obligations have arisen in order to give effect to the provisions of this Clause.

11.3 Where any of the debt, liabilities (including contingent liabilities), duties and obligations of Residual Oudh Sugar and Residual Upper Ganges, as on the Appointed Date, deemed to be transferred to Avadh Sugar, have been discharged by Residual Oudh Sugar and Residual Upper Ganges after the Appointed Date and prior to the Effective Date, such discharge shall be deemed to have been for and on account of Avadh Sugar, and all loans raised and used and all liabilities and obligations incurred by Residual Oudh Sugar and Residual Upper Ganges after the Appointed Date and prior to the Effective Date shall be deemed to have been raised, used or incurred for and on behalf of Avadh Sugar, and to the extent they are outstanding on the Effective Date, shall also without any further act, deed, matter or thing shall stand transferred to Avadh Sugar and shall become the liabilities and obligations of Avadh Sugar on same terms and conditions as were applicable to Residual Oudh Sugar and Residual Upper Ganges. Avadh Sugar shall undertake to meet, discharge and satisfy the same and further it shall not be necessary to obtain the consent of any third party or other person who is a party to any contract or arrangement by virtue of which such loans and liabilities have arisen in order to give effect to the provisions of this Clause.

11.4 All approvals, consents, exemptions, registrations, no-objection certificates, permits, quotas, rights, entitlements, licenses (including the licenses granted by any Governmental, statutory or regulatory bodies for the purpose of carrying on its business or in connection therewith), and certificates of every kind and description of whatsoever nature of Residual Oudh Sugar and Residual Upper Ganges or to the benefit of which Residual Oudh Sugar and Residual Upper Ganges may be eligible/entitled, and which are subsisting or having effect on the Effective Date, shall by endorsement, delivery or recordal or by operation of law pursuant to the vesting orders of the Courts sanctioning the Scheme shall be deemed to be approvals, consents, exemptions, registrations, no-objection certificates, permits, quotas, rights, entitlements, licenses (including the licenses granted by any Governmental, statutory or regulatory bodies for the purpose of carrying on its business or in connection therewith), and certificates of every kind and description of whatsoever nature of Avadh Sugar and shall be in full force and effect in favour of Avadh Sugar, subject to Avadh Sugar maintaining all prior undertakings and commitments pursuant to any administrative or judicial proceedings and may be enforced as fully and effectually as if, instead of Residual Oudh Sugar and Residual Upper Ganges, Avadh Sugar had been a party or beneficiary or obligor thereto. Any third party or authority required to give effect to the provisions of this Clause shall take on record the orders of the Court sanctioning the Scheme on its file and make and duly record the necessary substitution or endorsement in the name of Avadh Sugar as successor in interest, pursuant to the sanction of this Scheme by the Courts in accordance with the terms provided hereof. For this purpose, Avadh Sugar shall file certified copies of such sanction orders and if required file appropriate applications or forms with relevant authorities concerned for statistical and information purposes only and there shall be no break in the validity and enforceability of approvals, consents, exemptions, registrations, no-objection certificates, permits, quotas, rights, entitlements, licenses (including the licenses granted by any Governmental, statutory or regulatory bodies for the purpose of carrying on its business or in connection therewith), and certificates of every kind and description of whatsoever nature.

11.5 Without prejudice to the generality of the foregoing, upon the coming into effect of this Scheme on the Appointed Date, all consents, permissions, licenses, approvals, certificates, clearances and authorities including the Licenses, given by, issued to or executed in favour of Residual Oudh Sugar and Residual Upper Ganges as on the Appointed Date, shall stand transferred to Avadh Sugar as if the same were originally given by, issued to or executed in favour of Avadh Sugar, and the rights and benefits under the same shall be available to Avadh Sugar. Any registration fees, charges etc paid by Residual Oudh Sugar and Residual


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Upper Ganges in relation to the aforementioned consents, permissions, licenses, approvals, certificates, clearances and authorities, shall deemed to have been paid by Avadh Sugar.

11.6 All patents, trademarks, copyrights, or any kind of intellectual property, if any, registered with the authorities concerned or applications submitted at any time on or before the Effective Date or being used by Residual Oudh Sugar and Residual Upper Ganges shall stand transferred and vested in the name of Avadh Sugar without any further act or deed. Avadh Sugar, however, shall after the Scheme becoming effective file the relevant intimation with the concerned statutory authority (ies).

11.7 All cheques and other negotiable instruments, payment orders received in the name of Residual Oudh Sugar and Residual Upper Ganges after the Effective Date shall be accepted by the bankers of Avadh Sugar and credited to the account of Avadh Sugar. Similarly, the banker of Avadh Sugar shall honour cheques issued by Residual Oudh Sugar and Residual Upper Ganges and presented for payment after the Effective Date.

11.8 Upon the coming into effect of this Scheme the resolutions, if any, of Residual Oudh Sugar and Residual Upper Ganges, which are valid and subsisting on the Effective Date shall continue to be valid and subsisting and be considered as resolutions of Avadh Sugar and if any such resolutions have upper monetary or other limits being imposed under the provisions of the Act, or any other applicable provisions, then the said limits shall be added and shall constitute the aggregate of the said limits in Avadh Sugar.

12 CONSIDERATION AND ISSUE OF SHARES

12.1 Upon this Scheme becoming effective and in consideration for the transfer and vesting of Residual Oudh Sugar and Residual Upper Ganges in Avadh Sugar, Avadh Sugar shall issue and allot equity shares in its share capital at par, credited as fully paid up to the extent indicated below, to the shareholders of Oudh Sugar and Upper Ganges or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of Oudh Sugar and Upper Ganges and approved by them whose names appear in the Register of Members on the Record Date in the following ratio: I. 2 equity share(s) of the face value of Rs. 10/- (Rupees Ten) each credited as fully paid up in the share

capital of Avadh Sugar for every 9 fully paid up equity share(s) of the face value of Rs. 10/- (Rupees Ten) each held in Oudh Sugar.

II. 11 equity share(s) of the face value of Rs. 10/- (Rupees Ten) each credited as fully paid up in the share capital of Avadh Sugar for every 30 fully paid up equity share(s) of the face value of Rs. 10/- (Rupees Ten) each held in Upper Ganges.

12.2 Further, upon this Scheme coming into effect, Avadh Sugar shall issue and allot 4,87,00,000 (Four Crore and Eighty Seven Lakh) fully paid up 8.5% Non-Convertible Cumulative Redeemable Preference Shares of the face value of Rs. 10/- (Rupees Ten) each credited as fully paid up in its share capital to the preference shareholders of Oudh Sugar. The terms and conditions of 8.5% Non-Convertible Cumulative Redeemable Preference Shares, so allotted by Avadh Sugar, shall be subject to the same terms and conditions which are applicable to the existing 8.5% Non-Convertible Cumulative Redeemable Preference Shares of Oudh Sugar.

12.3 Further, upon this Scheme coming into effect, Avadh Sugar shall issue and allot 17,00,000 (Seventeen Lakh) fully paid up 12% Non-Convertible Cumulative Redeemable Preference Shares of the face value of Rs. 100/- (Rupees Hundred) each credited as fully paid up in its share capital to the preference shareholders of Upper Ganges. The terms and conditions of 12% Non-Convertible Cumulative Redeemable Preference Shares, so allotted by Avadh Sugar, shall be subject to the same terms and conditions which are applicable to the existing 12% Non-Convertible Cumulative Redeemable Preference Shares of Upper Ganges.


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12.4 The fractional entitlement, if any, to which shareholders of Oudh Sugar and Upper Ganges may become entitled to upon issue of Equity Shares pursuant to Clause 74.1 above, would be rounded off by Avadh Sugar to the next integer.

12.5 The new shares in Avadh Sugar to be issued to the shareholders of Oudh Sugar and Upper Ganges pursuant to Clause 74.1, 74.2 and 74.3above shall be subject to the Memorandum and Articles of Association of Avadh Sugar and shall rank paripassu with the existing shares of Avadh Sugar.

12.6 The shares or the share certificates of the Oudh Sugar and Upper Ganges in relation to the shares held by its members shall, without any further application, act, instrument or deed, be deemed to have been automatically extinguished and cancelled and be of no effect on and from the Record Date.

12.7 All equity shares allotted by Avadh Sugar to shareholders of Oudh Sugar and Upper Ganges shall be listed for trading on the BSE, NSE and CSE and shall be subject to the applicable regulations. Avadh Sugar shall enter into such arrangement and issue such confirmations and/or undertakings as may be necessary in accordance with the applicable law or regulation for the above purpose. However, it is further clarified that the fees and amounts paid by Oudh Sugar and Upper Ganges to the stock exchanges in relation to its listing and other processes under applicable law till the Appointed Date would be deemed to be sufficient consideration and as paid by Avadh Sugar and no separate filing fees would be required to be paid by Avadh Sugar for any new applications or notifications made by it to the stock exchanges from the Appointed Date.

12.8 The shares allotted by Avadh Sugar pursuant to Clause 74.1 of the Scheme shall remain frozen in the depositories system till listing/trading permission is given by the designated stock exchange.

12.9 There will be no change in the shareholding pattern or control of Avadh Sugar between the Record Date and the listing which may affect the status of approval granted by the stock exchanges.

12.10 12% Non-Convertible Cumulative Redeemable Preference Shares of Upper Ganges and 8.5% Non-Convertible Cumulative Redeemable Preference Shares of Oudh Sugar are not listed on any stock exchange and therefore 12% Non-Convertible Cumulative Redeemable Preference Shares and 8.5% Non-Convertible Cumulative Redeemable Preference Shares issued by Avadh Sugar pursuant to Clause 74.2 and 74.3, respectively, above shall not be listed on any stock exchange.

12.11 The approval of this Scheme by the shareholders of Avadh Sugar shall be deemed to be due compliance of Section 62 of the Companies Act, 2013 and other relevant and applicable provisions of the Act for the issue and allotment of shares by Avadh Sugar to the shareholders of Oudh Sugar and Upper Ganges, as provided in this Scheme.

12.12 The shares issued to the members of Oudh Sugar and Upper Ganges by Avadh Sugar shall be issued in dematerialised form as far as possible except for person holding shares in physical form, and unless otherwise notified in writing by the members of Oudh Sugar and Upper Ganges to Avadh Sugar on or before such date as may be determined by the Board of Directors of Avadh Sugar or a committee thereof. In the event that such notice has not been received by Avadh Sugar in respect of any of the members of Oudh Sugar and Upper Ganges, the shares shall be issued to such members in dematerialised form provided that the members of Oudh Sugar and Upper Ganges shall be required to have an account with a depositary participant and shall be required to provide details thereof and such other confirmations as may be required. It is only thereupon that Avadh Sugar shall issue and directly credit the dematerialised shares to the account of such member with the shares of Avadh Sugar. In the event that Avadh Sugar has received notice from any member that shares are to be issued in physical form or if any member has not provided the requisite details relating to his/her /its account with a depositary participant or other confirmations as may be required, then Avadh Sugar shall issue shares in physical form to such member.


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12.13 In the event of there being any pending share transfers, whether lodged or outstanding, of any member of Oudh Sugar and Upper Ganges, the Board of Directors of Avadh Sugar shall be empowered in appropriate cases, prior to or even subsequent to the Record Date, to effectuate such a transfer as if such changes in registered holder were operative as on the Record Date, in order to remove any difficulties arising to the transferor of the share in Oudh Sugar and Upper Ganges and in relation to the shares issued by Avadh Sugar after the effectiveness of the Scheme. The Board of Directors of Avadh Sugar shall be empowered to remove such difficulties as may arise in the course of implementation of this Scheme and registration of shareholders in Avadh Sugar on account of difficulties faced in the transaction period.

12.14 Shares to be issued by Avadh Sugar pursuant to above clause in respect of such of the shares of Oudh Sugar and Upper Ganges which are held in abeyance under the provisions of Section 126of the Companies Act, 2013 or otherwise shall, if any, pending allotment or settlement of dispute by order of Court or otherwise, also be kept in abeyance by Avadh Sugar.

12.15 For the purpose of issue of shares to the shareholders of Oudh Sugar and Upper Ganges, Avadh Sugar shall, if and to the extent required, apply for and obtain the necessary statutory approvals.

12.16 The holders of the shares of Oudh Sugar and Upper Ganges shall, save as expressly provided otherwise in this Scheme continue to enjoy their existing rights including the right to receive dividends from Oudh Sugar and Upper Ganges till the Scheme coming into effect.

13 ACCOUNTING TREATMENT

Upon the Scheme becoming effective, Avadh Sugar shall account for the amalgamation of Residual Oudh Sugar and Residual Upper Ganges in its books of accounts with effect from the Appointed Date as per the ‘Purchase Method’, as described in Accounting Standard – 14 “Accounting for Amalgamations” issued by the Institute of Chartered Accountants of India, such that:

13.1 All the assets and liabilities (including intangible not recorded) excluding reserves (other than statutory reserves, if any) of Residual Oudh Sugar and Residual Upper Ganges are transferred to and vested in Avadh Sugar, pursuant to the Scheme and shall be recorded by Avadh Sugar, at their respective fair values as on the Appointed Date.

13.2 Avadh Sugar shall credit the aggregate face value of the shares issued by it to the shareholders of Residual Oudh Sugar and Residual Upper Ganges pursuant to Clause 74.1, 74.2 and 74.3 of this Scheme to the Share Capital Account in its books of accounts.

13.3 With effect from the Appointed Date and upon the Scheme becoming effective, the investments of Residual Oudh Sugar and Residual Upper Gangesin Avadh Sugar, if any, shall stand cancelled.

13.4 Loans, advances, amount receivable or payable inter-se between Avadh Sugar and Residual Oudh Sugar and Residual Upper Ganges appearing in the books of accounts Avadh Sugar and Residual Oudh Sugar and Residual Upper Ganges, if any, shall stand cancelled.

13.5 The difference in the fair value of the net assets of Residual Oudh Sugar and Residual Upper Ganges to be vested in Avadh Sugar as per Clause 75.1 and the amount credited by Avadh Sugar to the Share Capital Account as per Clause 75.2 above, after adjustment of the cancellation of investment inAvadh Sugar as per Clause 75.3 and loans, advances, amount receivable or payable as per Clause 75.4 above would be debited to Goodwill or credited to Capital Reserve as the case may be.

13.6 In case of any difference in the accounting policies between Residual Oudh Sugar and Residual Upper Ganges and Avadh Sugar, the impact of the same till the Appointed Date will be adjusted in accordance with Accounting Standard - 5 “Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies” to


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ensure that the financial statements of Avadh Sugar reflect the financial position on the basis of consistent accounting policy.

14 INCREASE IN AUTHORISED SHARE CAPITAL OF AVADH SUGAR

Upon the Scheme becoming effective, the authorized share capital of Avadh Sugar, in terms of its Memorandum of Association and Articles of Association, shall automatically stand enhanced without any further act, instrument or deed on the part of Avadh Sugar, by the authorized share capital of Residual Oudh Sugar and Residual Upper Ganges and the Memorandum of Association and Articles of Association of Avadh Sugar (relating to the authorized share capital) shall, without any further act, instrument or deed, be and stand altered, modified and amended, and consent of all the shareholders to the Scheme shall be deemed to be sufficient for the purposes of effecting this amendment and no further resolution(s) under Section 13, 14 and 61 of the Companies Act, 2013 and Section 394 of the Companies Act, 1956 and other applicable provisions of the Act would be required to be separately passed and for this purpose the stamp duty and fee paid on the authorized share capital of Residual Oudh Sugar and Residual Upper Ganges shall be utilized and applied to the increased authorized share capital of Avadh Sugar and no extra stamp duty and / or fee shall be payable by Avadh Sugar for increase in the authorized share capital to that extent.

15 STAFF, WORKMEN AND EMPLOYEES

15.1 On the Scheme becoming effective, all staff, workmen and employees of Residual Oudh Sugar and Residual Upper Ganges in service on the Effective Date shall be deemed to have become staff, workmen and employees of Avadh Sugar with effect from the Appointed Date without any break, discontinuance or interruption in their service and on the basis of continuity of service, and the terms and conditions of their employment with Avadh Sugar shall be the same as their existing terms of employment in the Residual Oudh Sugar and Residual Upper Ganges on the Effective Date.

15.2 It is expressly provided that, on the Scheme becoming effective, Provident Fund, Gratuity Account, Superannuation Fund or any other Special Fund or Trusts created or existing for the benefit of the staff, workmen and employees of Residual Oudh Sugar and Residual Upper Ganges shall be transferred to and shall get consolidated with the corresponding funds or account of Avadh Sugar. Avadh Sugar shall have the obligation to make contributions to the said Fund or account or Funds or accounts in accordance with the provisions thereof or as per the terms provided in the respective Trust Deeds, if any, to the end and intent that all rights, duties, powers and obligations of Residual Oudh Sugar and Residual Upper Ganges in relation to such Fund or account or Funds or accounts shall become those of Avadh Sugar. It is clarified that the services of the staff, workmen and employees of Residual Oudh Sugar and Residual Upper Ganges will be treated as having been continuous for the purpose of the said Fund or account or Funds or accounts. Until such time that Avadh Sugar creates or arranges for its own funds or accounts, Avadh Sugar may, subject to necessary approvals and permissions if any, continue to make contributions pertaining to the employees of Residual Oudh Sugar and Residual Upper Ganges to the relevant fund or accounts of Residual Oudh Sugar and Residual Upper Ganges. Such contributions and other balances pertaining to the employees of Residual Oudh Sugar and Residual Upper Ganges shall be transferred to the funds or accounts created by Avadh Sugar on creation of relevant funds or arrangements or accounts by Avadh Sugar.

16 LEGAL PROCEEDINGS

16.1 All legal proceedings of whatsoever nature, by or against Residual Oudh Sugar and Residual Upper Ganges, pending and / or arising on or after the Appointed Date, shall not abate or be discontinued or be in any way prejudicially affected by reason of the Scheme or by anything contained in this Scheme but shall be continued and enforced by or against Avadh Sugar as the case may be, in the manner and to the same extent as would or might have been continued and enforced by or against Residual Oudh Sugar and Residual Upper Ganges.


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16.2 Avadh Sugar undertakes to have all legal and / or other proceedings initiated by or against Residual Oudh Sugar and Residual Upper Ganges referred to in Clause 78.1 above transferred in its name and to have the same continued, prosecuted and enforced by or against Avadh Sugar, to the exclusion of Residual Oudh Sugar and Residual Upper Ganges.

17 CONTRACTS, DEEDS, APPROVALS, EXEMTIONS, ETC

17.1 With effect from the Appointed Date and upon the Scheme becoming effective, all contracts, deeds, bonds, agreements and other instruments, if any, of whatsoever nature, of Residual Oudh Sugar and Residual Upper Ganges, shall continue in full force and effect against or in favour of Avadh Sugar, and may be enforced effectively by or against Avadh Sugar as fully and effectually as if, instead of Residual Oudh Sugar and Residual Upper Ganges, Avadh Sugar had been a party thereto.

17.2 Avadh Sugar may, at any time after the coming into effect of this Scheme in accordance with the provisions hereof, if so required, under any law or otherwise, enter into, or issue or execute deeds, writings, confirmations, novation, declarations, or other documents with, or in favour of any party to any contract or arrangement to which Residual Oudh Sugar and Residual Upper Ganges is a party or any writings as may be necessary to be executed in order to give formal effect to the above provisions. Avadh Sugar shall be deemed to be authorized to execute any such writings on behalf of Residual Oudh Sugar and Residual Upper Ganges and to carry out or perform all such formalities or compliances required for the purposes referred to above on the part of Residual Oudh Sugar and Residual Upper Ganges.

17.3 It is hereby clarified that if any contract, deeds, bonds, agreements, schemes, arrangements or other instruments of whatsoever nature, to which Residual Oudh Sugar and Residual Upper Ganges is a party to, cannot be transferred to Avadh Sugar for any reason whatsoever, Residual Oudh Sugar and Residual Upper Ganges shall hold such contract, deeds, bonds, agreements, schemes, arrangements or other instruments of whatsoever nature in trust for the benefit of Avadh Sugar insofar as it is permissible so to do, till such time as the transfer is affected.

17.4 With effect from the Appointed Date and upon the Scheme becoming effective, the past track record of Residual Oudh Sugar and Residual Upper Ganges, including without limitation, the profitability, production volumes, experience, credentials and market share, shall be deemed to be the track record of Avadh Sugar for all commercial and regulatory purposes including for the purpose of eligibility, standing, evaluation and participation of Avadh Sugar in all existing and future bids, tenders and contracts of all authorities, agencies and clients

17.5 Avadh Sugar shall be entitled to the benefit of all insurance policies which have been issued in respect of Residual Oudh Sugar and Residual Upper Ganges and the name of Avadh Sugar shall be substituted as “Insured” in the policies as if Avadh Sugar was initially a party.

18 CONDUCT OF BUSINESS UNTIL THE EFFECTIVE DATE

With effect from the Appointed Date and up to and including the Effective Date:

18.1 Residual Oudh Sugar and Residual Upper Ganges undertake to preserve and carry on the business with reasonable diligence and business prudence and shall not undertake financial commitments or sell, transfer, alienate, charge, mortgage, or encumber or otherwise deal with or dispose of any Undertaking or any part thereof save and except in each case:

(a) if the same is in its ordinary course of business as carried on by it as on the date of filing this Scheme with the High Court; or

(b) if the same is expressly permitted by this Scheme; or

(c) if the prior written consent of the Board of Directors of Avadh Sugar has been obtained.


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18.2 Residual Oudh Sugar and Residual Upper Ganges shall carry on and be deemed to have carried on all business and activities and shall stand possessed of all the assets, rights, title and interest of Residual Oudh Sugar and Residual Upper Ganges for and on account of, and in trust for Avadh Sugar.

18.3 All profits and cash accruing to or losses arising or incurred (including the effect of taxes, if any, thereon), by Residual Oudh Sugar and Residual Upper Ganges, shall for all purposes, be treated as the profits or cash, taxes or losses, of Avadh Sugar.

18.4 All accretions and depletions to Residual Oudh Sugar and Residual Upper Ganges shall be for and on account of Avadh Sugar.

18.5 Any of the rights, powers, authorities, privileges, attached, related or pertaining to or exercised by Residual Oudh Sugar and Residual Upper Ganges shall be deemed to have been exercised by Residual Oudh Sugar and Residual Upper Ganges for and on behalf of, and in trust for and as an agent of Avadh Sugar. Similarly, any of the obligations, duties and commitments attached, related or pertaining to Residual Oudh Sugar and Residual Upper Ganges that have been undertaken or discharged by Residual Oudh Sugar and Residual Upper Ganges, shall be deemed to have been undertaken for and on behalf of and as an agent for Avadh Sugar.

18.6 As and from the Appointed Date and till the Effective Date:

18.6.1 All assets and properties of Residual Oudh Sugar and Residual Upper Ganges as on the date immediately preceding the Appointed Date and all assets and properties relating thereto, which are acquired by Residual Oudh Sugar and Residual Upper Ganges on or after the Appointed Date, in accordance with this Scheme, shall be without any further act or deed deemed to be the assets and properties of Avadh Sugar.

18.6.2 All reserves, debts, liabilities, loans raised and used, liabilities and obligations incurred, duties and obligations as on the Appointed Date and all reserves, debts, liabilities, loans raised and used, liabilities and obligations incurred, duties and obligations relating thereto which arise or accrue to Residual Oudh Sugar and Residual Upper Ganges, on or after the Appointed Date in accordance with this Scheme, shall be deemed to be the reserves, debts, liabilities, loans raised and used, liabilities and obligations incurred, duties and obligations of Avadh Sugar.

18.7 Residual Oudh Sugar and Residual Upper Ganges shall not vary the terms and conditions of service of its employees except in the ordinary course of its business.

19 SAVING OF CONCLUDED TRANSACTIONS

The transfer and vesting of the assets, liabilities and obligations of Residual Oudh Sugar and Residual Upper Ganges, pursuant to this Scheme, and the continuance of the legal proceedings by or against Avadh Sugar shall not affect any transactions or proceedings already completed by Residual Oudh Sugar and Residual Upper Ganges, on and after the Appointed Date, to the end and intent that Avadh Sugar accepts all acts, deeds and things done and executed by and / or on behalf of Residual Oudh Sugar and Residual Upper Ganges, as acts, deeds and things done and executed by and / or on behalf of Avadh Sugar.

20 COMPLIANCE WITH SECTION 2(1B) OF THE INCOME-TAX ACT, 1961

The provisions of this Scheme as they relate to the amalgamation of Residual Oudh Sugar and Residual Upper Ganges into and with Avadh Sugar have been drawn up to comply with the conditions relating to “amalgamation” as defined under Section 2(1B) of the Income-tax Act, 1961. If any terms or provisions of the Scheme are found or interpreted to be inconsistent with the provisions of the said Section of the Income-tax Act, 1961, at a later date including resulting from an amendment of law or for any other reason whatsoever, the provisions of the said Section of the Income-tax Act, 1961, shall prevail and the Scheme shall


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stand modified to the extent determined necessary to comply with Section 2(1B) of the Income-tax Act, 1961. Such modification will, however, not affect the other parts of the Scheme.

21 TREATMENT OF TAXES

21.1 It is expressly clarified that upon the Scheme becoming effective all taxes payable by Residual Oudh Sugar and Residual Upper Ganges from the Appointed Date onwards shall be treated as the tax liability of Avadh Sugar. Similarly all credits for tax deduction at source on income of Residual Oudh Sugar and Residual Upper Ganges shall be given to Avadh Sugar; or obligation for deduction of tax at source on any payment made by or to be made by Avadh Sugar shall be made or deemed to have been made and duly complied with if so made by Residual Oudh Sugar and Residual Upper Ganges. Similarly any advance tax payment required to be made by specified due dates in the tax laws shall also be deemed to have been made correctly if so made by Residual Oudh Sugar and Residual Upper Ganges.

21.2 All taxes of any nature, duties, cesses or any other like payment or deductions made by Residual Oudh Sugar and Residual Upper Ganges to any statutory authorities such as Income Tax, Sales Tax, Service Tax etc. or any tax deduction or collection at source, relating to the period after the Appointed Date up to the Effective Date shall be deemed to have been on account of or paid by Avadh Sugar and the relevant authorities shall be bound to transfer to the account of and give credit for the same to Avadh Sugar upon the passing of the orders on this Scheme by the High Court and upon relevant proof and documents being provided to the said authorities.

21.3 Upon the Scheme becoming effective, Avadh Sugar is also expressly permitted to revise its income tax, withholding tax, service tax, sales tax/ value added tax, and other statutory returns and filings under the tax laws notwithstanding that the period of filing/ revising such returns may have lapsed and to claim refunds, advance tax and withholding tax credits, etc, pursuant to the provisions of this Scheme. Avadh Sugar shall be entitled to refund and/or set off all amounts paid by either of Residual Oudh Sugar and Residual Upper Ganges or Avadh Sugar under Income Tax, value Added Tax or any other disputed amount under appeal, if any, upon this scheme being effective.

22 DISSOLUTION OF OUDH SUGAR AND UPPER GANGES

On the Scheme becoming effective, Oudh Sugar and Upper Ganges shall without any further act or deed stand dissolved without being wound up.


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Main Objects of our Company (AESL)

i. To purchase, manufacture, produce, refine, prepare, import, export, sell and generally to deal in sugar, sugar

beets, sugar-cane, molasses, syrups and melada and alcohol and all products or by-products thereof and food product generally and in connection therewith to acquire, construct and operate sugar or other refineries, buildings, mills, factories, distilleries and other works and to plant, cultivate, produce and raise or purchase sugar cane, 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 and for such purpose to carry on the business of 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.

ii. To carry on agri related businesses for the manufacture of sugar, refined sugar, artificial sweeteners, pharma sugar, sugar cubes, sugar sachets, branded sugar, fortified sugar and all value added sugar products and related products, manufacture, extractions and production of bio-diesel, seeds production, distribution, developing various hybrid strains and patenting them, commercial nurseries, for cultivation of sugar cane or any other crops used for production of sugar, entail agri research and development activities and to generally to carry out all activities and business as may be needed or incidental for the manufacture of sugar and related products and to carry on in India or elsewhere the business to manufacture, produce, process, crush, extract, reclaim, convert, commercialize, control, compound, develop, distribute, derive, treat, grade, release, manipulate, prepare, promote, supply, import, export, buy, sell turn to account, and to act as agent, broker, concessionaires, consultant, collaborator, job worker, export house or otherwise to deal in all varieties, colours, dimensions, descriptions, characteristics, applications and uses of sugar including cane sugar, beet sugar, maple sugar, khandsari sugar etc, in the form of powder, granules, cubes & lumps and its products, by-products, residues, derivatives, formulations, substances & materials including glucose, sucrose, fructose, lactose, maltose, molasses, confectioneries, chocolates, sugar candy, etc., and to do all incidental acts and things necessary for the attainment of above objects and to carry on business as manufacturers of and dealers in food products of all kinds including that of edible oils, dairy products of all kinds, corn products of all kinds, flour merchants, bakers, biscuit makers, and to sell all such products articles and things whatsoever.

iii. To manufacture, produce, import, export, stock or otherwise trade in rectified spirit and alcohol (all types and descriptions), ethanol, ethyl alcohol & other spirits of denatured of any strength and all other products arising out of the manufacturing process of sugar or which is germane to the said object for sale, distribution, export and import for industrial, human or commercial use or for any other purpose and also to manufacture bio-fertilizers, bio compost, bio pesticides, bio compost fertilizers, azotobacter, PSB and bio products of all types and descriptions which can be advantageously derived from the by-products derived from the manufacture of sugar and to buy, sell, import, export or otherwise deal or trade in the same. To manufacture, produce, refine, process, formulate, mix or prepare, enrich, mine, import or otherwise acquire, own, hold, use mortgage, pledge, buy, sell, exchange, distribute, assign, transfer or otherwise dispose of trade, deal in and deal with import and export any and all classes and kinds of agriculture chemicals, fertilizers, seeds, pesticides, manures, fungicides, insecticides, germicides, vermifuges, their by-products, mixtures, formulations, intermediates, derivatives and compounds, heavy chemicals, petro-chemicals, petroleum and any petroleum product, fine chemicals and any and all classes and kinds of inorganic and organic chemicals, source materials, intermediates, ingredients mixtures, derivatives and compounds thereof and any and all kinds of products of which any of the foregoing constitutes and ingredient or in the preparation, formulation, mixtures or production of which any of the foregoing is used or required.


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iv. To carry on the business of generation of power for captive consumption and /or supply, sale or export of

electric power, whether by way of bio-mass, bagasse, coal, water, gas and/or any other feed stock or from other substances or source and to maintain power plants, power generators, electricity generating works, factories and other work conveniences in connection therewith and to generate, use, sell, supply, and distribute electricity arising out of the carrying on the objects specified and to carry on, manage, supervise and control the business of transmitting, manufacturing, supplying, generating, distributing and dealing in electricity and all forms of energy and power generated by any source whether nuclear, steam, hydro or tidal, water, wind, solar, hydrocarbon fuel or any other form, kind or description connected with generation, transmission, distribution, supply and other ancillary activities relating to the electrical power and to undertake for and on behalf of others all these activities in any manner and to do all the ancillary , related or connected activities as may be considered necessary or beneficial or desirable for or along with any or all of the aforesaid purposes which can be conveniently carried on these systems, networks or platforms. To carry on the business of an electric light and power company in all its branches, units and in particular to lay down, construct and carry out all necessary cables, wires, lines, accumulators, lamps, and works and to generate, accumulate, distribute and supply electricity for the purposes of light, heat motive power or otherwise and to carry on the business of mechanical engineers, electricians, and manufacturers of and dealers in all apparatus and things required for or capable of being used in connection with such business.

v. To carry on business as traders, exporters, buyers, sellers, retailers merchants, indenters, contractors, brokers, agents, representatives, dealers, producers, stockists, importers, or distributers or trade or deal in any manner in all kinds of goods and merchandise, commodities and articles of consumption of all kinds and in all forms whether tangible or intangible and whether known or to become known in future, and to act as advertising agents, traveling agents and transport agents.

Other details of our company

Details regarding the description of our Company’s activities, products, market, growth, technology, capacity/facility creation, location of manufacturing facilities, marketing and competition, please refer to the chapters titled “Our Business”, “Our Management” and “Industry” of this Information Memorandum.

Injunction or restraining order

Our company is not operating under any injunction or restraining order.

Our Shareholders

As on the date of this Information Memorandum, there are 21643 shareholders in our company. For further details of our shareholding pattern, please refer to the chapter titled “capital structure” of this information memorandum. Raising of capital form of equity or debt

Other than as disclosed under the chapter titled “Capital Structure” of this information memorandum, our company has not raised any capital in the form of equity. For details of outstanding debt as on the date, please refer to the chapter titled “Financial information” of this Information Memorandum.

Changes in activities of our company during the previous years

There has been no change in the activities of the company since its inception. However, pursuant to the Scheme of Arrangement, the Residual Business-1 and Residual Business-2 of the Transferor Company-1 and Transferor Company-2respectively, has been included into the business portfolio of our Company.


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Defaults or rescheduling of borrowings with Financial Institutions/Banks

There has been no defaults till date. The Company “The Oudh Sugar Mills Limited” was under CDR for the period from 01.07.2010 (cut-off date) till 22 June 2016. There has been no re-scheduling from 01.04.2015 (Appointed Date).

The Company has not accepted any public deposits and no deposits are unpaid in any previous year.

Lock out or strikes

There have been no lock outs or strikes in our company since inception.

Holding Company As on the date of this Information Memorandum, the Company does not have any holding company.

Subsidiary Companies As on the date of submission of this Information Memorandum, the Company does not have any subsidiary company

Associate Company As on the date of submission of this Information Memorandum, the Company does not have any associate company.

Joint Ventures in the Subsidiary Company/Associate Company As on the date of submission of this Information Memorandum, the Company does not have any Joint Venture in the Subsidiary Company/Associate Company:

Insurance

We maintain insurance cover adequately for our assets to cover all normal risks associated with operations of our business and have obtained all risks policy.

We have taken money insurance policy for money in transit and money in safe which also extends to cover loss arising out of riot, strike and other perils for its corporate office. We have also taken and insurance policies for all the vehicles registered in the name of the Company. The Employee Employer Policy (EEP), workmen compensation policy has been among other insurance policy which is standard to our industry.

Human resources

The Company has a committed and motivated work force. It upholds the fundamental principles of human and workplace rights in all its businesses. A number of employees’ participation and welfare programs have been carried on during the financial year 2015-16. Keeping the philosophy of continuous training and job improvements, the Company has imparted sufficient man days of training other than on the job trainings to its employees during the year. The relation between the management and employees continued to remain cordial at all the locations. The manpower has also been rationalized with the transfer of employees to diversified businesses.

Our Promoters, Promoter Group and Group Companies:

Pursuant to the Scheme of Arrangement, the Residual Business-1 and Residual Business-2 of the Transferor Company-1 and Transferor Company-2, accordingly, the shareholders of the Transferor companies as on record date i.e. March 25, 2017 is the shareholders of the Transferee Company Our Present Promoters are Smt. Nandini Nopany and Shri C.S. Nopany, who controls the Company through their Direct and Indirect holdings and through Shares held through the following Companies:


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Brief Profiles:

Mrs. Nandini Nopany Mrs. Nandini Nopany is our Promoter and was appointed as Chairperson of the Company. Mrs Nopany has experience of over 35 years in managing industries and is associated with Birla Sugar since 1993. She is an eminent industrialist and philanthropist.

Mr. Chandra Shekhar Nopany Mr. Chandra Shekhar Nopany is our Promoter and was appointed as Co-Chairperson of the Company. He is a Member of the Institute of Chartered Accountants of India and Masters in Science of Industrial Administration from Carnegie Mellon University, Pittsburgh, USA. He has also worked as an independent consultant for USX Engineers and Consultants Inc. 1989. He is an eminent industrialist having vast experience in diverse fields like sugar, tea, shipping, textiles, fertilizers and chemicals, etc. He is the past President of Indian Chambers of Commerce and the present member of the Executive Committee of FICCI.

Body Corporates:

1. New India Retailing and Investment Limited (“NIRIL”) New India Retailing & Investment Limited was originally incorporated as “New India Sugar Mills Limited” on May 4th, 1933 under the Companies Act, VII of 1913 in the state of West Bengal. Subsequently the name of NIRIL was rechristened to its present name, i.e., “New India Retailing & Investment Limited” w.e.f. June 24th, 1985. The registered office of NIRIL is presently situated at 9/1 R.N. Mukherjee Road, Kolkata-700001. The CIN of NIRIL is L15421WB1933PLC023070. The equity shares of NIRIL are listed on The Calcutta Stock Exchange Limited. As per its Memorandum of Association, the main object of NIRIL is to carry on the business of sugar manufacture and refinery and buying, selling, leasing and hire purchase finance company to provide on lease or hire purchase basis all kinds of engineering products, plant machinery and equipments etc. The Company is also engaged in retailing operations having a designer store which has showcased Worldwide fashion exhibiting the products of international brands. It provides a perfect blend of leading Indian designers products as well. This iconic fashion store is one of the few haute couture stores in eastern India to showcase the spectrum of contemporary Indian fashion.

2. Hargaon Investment & Trading Company Limited (“HITCL”)

HITCL was incorporated on December 26, 1986 under the Companies Act, 1956 in the state of West Bengal. The registered office of HITCL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata – 700001. The CIN of the Company is U67120WB1986PLC041679. HITCL is registered with RBI as a NBFC vide certificate of registration number 05.00201 dated February 20, 1998 under section 45IA of RBI Act, 1934. The equity shares of HITCL are not listed on any Stock Exchange. HITCL is the wholly owned subsidiary of Palash Securities Limited.

As per its Memorandum of Association, The main object of HITCL is to carry on business of investment company and to invest in and acquire hold and deal in shares, stocks, debentures, debenture stocks, bonds, obligations and securities issued or guaranteed by anybody corporate carrying on business in India or elsewhere and debentures, debenture stocks, bonds, obligations and securities, issued or guaranteed by any Government State dominion, sovereign, ruler, commissioners, public body or authority, supreme, municipal


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local or otherwise whether in India or elsewhere. Currently, the company is engaged in the business of investment in shares and securities.

3. RTM Investment & Trading Company Limited (“RITCL”)

RITCL was incorporated on February 6, 1987 under the Companies Act, 1956 in the state of West Bengal. The registered office of RITCL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata – 700001. The CIN of the Company is U65993WB1987PLC041842. RITCL 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. The equity shares of RITCL are not listed on any Stock Exchange. RITCL is the wholly owned subsidiary of SIL Investments Limited

As per its Memorandum of Association, the main object of RITCL 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. RITCL is presently engaged in the business of investment in shares and securities.

4. Narkatiaganj Farms Limited (“NFL”)

NFL was incorporated on March 31, 1951 under the Indian Companies Act, 1913 in the state of Bihar. The Registered Office of the Company shifted from the Province of Bihar to the State of West Bengal vide Order of the Company Law Board, Eastern Region Bench, Kolkata dated 1st June, 2005. The Registered Office of NFL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of NFL is U14100WB1951PLC103575. The equity shares of NFL are not listed on any Stock Exchange. NFL is the subsidiary of Sidh Enterprises Limited

As per its Memorandum of Association, the main object of NFL is to plant, cultivate and raise, purchase or sell 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. NFL is also engaged in the business of investment in shares and securities.

5. Yashovardhan Investment & Trading Company Limited (“YITCL”)

YITCL was originally incorporated on October 30, 1987 as a Private Limited Company under the Companies Act, 1956 in the name “Yashovardhan Investment & Trading Company Private Limited”. The status of YITCL was subsequently changed from private limited company to a public limited company and a fresh Certificate of Incorporation consequent upon change of name on conversion to Public Limited Company was issued on April 28, 1993 by the Registrar of Companies, West Bengal. The registered office of YITCL is at 9/1, R.N. Mukherjee Road, Kolkata 700 001. The CIN of YITCL is U67120WB1987PLC 043223. YITCL 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 equity shares of YITCL are not listed on any Stock Exchange.

The main object of YITCL 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. YITCL is presently engaged in the business of dealing and investment in shares, securities and debentures.


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6. SCM Investment & Trading Company Limited (“SITCL”)

SITCL was incorporated on December 26, 1986 under the Companies Act, 1956 in the state of West Bengal. The registered office of SITCL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of SITCL is U67120WB1986PLC 041678. SITCL is registered with RBI as a NBFC vide certificate of registration number 05.02417 dated August 16, 1998 under section 45IA of RBI Act, 1934. The equity shares of SITCL are not listed on any Stock Exchange. SITCL is the subsidiary of SIL Investments Limited.

SITCL was incorporated to carry on the business of Investment Company and to invest in and acquire, hold, deal in shares, stocks, debentures, debentures stocks and other securities. YITCL is presently engaged in the business of investment in shares and securities.

7. Champaran Marketing Company Limited (“CMCL”)

CMCL was incorporated on 23rd February, 1951 under the Indian under the Companies Act, VII of 1913 in the state of West Bengal. The registered office of CMCL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of CMCL is U15424WB1951PLC 019451. CMCL is registered with RBI as a NBFC vide certificate of registration number 05.00192 dated February 20, 1998 under Section 45IA of RBI Act, 1934. The shares of CMCL are not listed on any Stock Exchange. CMCL is the subsidiary of Palash Securities Ltd.

CMCL was incorporated to carry on the 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 clause of Memorandum of Association of CMCL also entails to carry on the business as an investment company and to invest in and acquire hold and deal in shares, stocks, debentures and other securities. CMCL is presently engaged in investment in shares and securities.

8. OSM Investment & Trading Company Limited (“OITCL”)

OITCL was incorporated on 26th December, 1986 under the Companies Act, 1956 in the state of West Bengal. The registered office of OITCL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of OITCL is U67120WB1986PLC 041677. OITCL is registered with RBI as a NBFC vide certificate of registration number 05.00288 dated February 21, 1998 under Section 45IA of RBI Act, 1934. The equity shares of OITCL are not listed on any Stock Exchange. OITCL is the subsidiary of Palash Securities Limited

The main object of OITCL is to carry on business of Investment Company and to invest in and acquire hold and deal in shares, stocks, debentures and other securities and OITCL is presently engaged in the business of investment in shares and securities.

9. Nilgiri Plantations Limited (“NPL”)

NPL was incorporated on 29th July, 1954 under the Companies Act, VII of 1913 in the state of West Bengal. The registered office of NPL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN


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of NPL is U01132WB1954PLC 021767. The equity shares of NPL are not listed on any Stock Exchange. NPL is the subsidiary of Ronson Traders Limited.

As per its Memorandum of Association, the main object of NPL is to cultivate coffee, tea, cinchona, rubber and other produce and to carry on the business of coffee planters in all its branches, to carry on and work the business of cultivators, winnowers and buyers of every kind of vegetable, mineral or other produce of the soil, to prepare, manufacture and render marketable any such produce, and to sell, dispose of and deal in any such produce either in its prepared, manufactured or raw state and either by wholesale or retail. NPL also deals in the business of investment in shares and securities.

10. Sidh Enterprises Limited (“SEL”)

SEL was incorporated on 9th February, 1983 under the Companies Act, 1956 in the state of West Bengal. The registered office of SEL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of SEL is L51491WB1983PLC035825. The equity shares of SEL are listed on the Calcutta Stock Exchange Limited and was also listed UP Stock Exchange Limited before the said exchange was derecognized by SEBI. SEL is registered with RBI as a NBFC vide certificate of registration number 05.00298 dated February 21, 1998 under section 45IA of RBI Act, 1934.

As per its Memorandum of Association, the main object of SEL is to carry on all or any of the business of investment company and to invest in and acquire and hold otherwise deal in shares, stocks, debentures , bonds, securities financier of industrial, commercial & other enterprises and also the business of buyers, sellers, producers, suppliers, traders, importers, exporters, brokers, agents, stockists, distributors & dealers of and in cotton, wool, silk, handicrafts, readymade garments, jute & jute products, coal, cement & its allied products, ceramics & ceramic wares, chemicals, building materials, plastic products, electric parts & devices, iron & steel products, precious stones, curios, jewellery, paper & paper board, tea, coffee, fertilizers, agricultural implements, rubber & rubber products, leather products, metals & minerals, pharmaceutical products, proprietory articles of all kinds and generally to carry on business of merchants, export house for goods and merchandise of any other description for carrying on of all such business in India or abroad.

11. Rajpur Farms Limited (“RFL”)

RFL was incorporated on 19th December, 1949 under the Companies Act, VII of 1913 in the state of Bihar. The Registered Office of the Company shifted from the Province of Bihar to the State of West Bengal vide Order of the Company Law Board, Eastern Region Bench, Kolkata dated 1st June, 2005. The registered office of RFL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of RFL is U01400WB1949PLC 103574. The equity shares of RFL are not listed on any Stock Exchange. RFL is the subsidiary of Sidh Enterprises Limited

RFL was incorporated with the object to plant, cultivate and raise, purchase or sell 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. RFL is also engaged in the business of investment in shares and securities.


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12. Shree Vihar Properties Limited (“SVPL”) SVPL was incorporated on 28th January, 1986 under the Companies Act, 1956 in the state of West Bengal. The registered office of SVPL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of SVPL is U70109WB1986PLC 040086. The equity shares of SVPL are not listed on any Stock Exchange.

As per its Memorandum of Association, the main object of SVPL is to purchase or otherwise acquire and to sell, exchange, surrender, lease, mortgage, charge, convert, 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, debenture stocks, mortgages, debentures, produce, concessions, options, contracts, patents, annuities, licences, stocks, shares, securities, bonds, policies, book debts and claims, privileges and chose’s in action of all kinds, including any interest in real or personal property and any claims against such property or against any person or company to carry on any business, concern or undertakings so acquired. However, the other objects clause incidental to the main object clause permits the Company to carry on the business of lending money, to advance deposit, securities to such persons, firms, body corporate, as it may think fit.

13. La Monde Trading & Investments Private Limited (“LMTIPL”)

LMTIPL was incorporated on December 24, 1998 under the Companies Act, 1956 in the state of West Bengal. The Registered Office of LMTIPL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata – 700 001. The CIN of LMTIPL is U51909WB1998PTC 088533. The equity shares of LMTIPL are not listed on any Stock Exchange.

LMITPL is engaged in the business of traders, sellers, imports & exports, merchants, brokers, agents, commission agents, assemblers, refiners, cultivator, miners, mediators, packers, stockist, distributors, advisors, hire purchasers and dealers of and in all kinds of electric and electronics components and all types of consumer products in India or abroad and in any other related items in connection therewith. LMITPL is also engaged in the business of investment & financial company and act as investors by way of acquiring, holding selling, buying, transferring subscribing and otherwise deal in shares and securities whether issued by any company or guaranteed by any Govt., state or province etc.

14. Uttam Commercial Limited (“UCL”) UCL was incorporated on December 7, 1984 under the Companies Act, 1956 in the state of Uttar Pradesh. The Registered Office of the Company shifted from the Uttar Pradesh to the State of West Bengal on 5th Novenber, 1990. The Registered Office of UCL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of UCL is U51109WB1990PLC050213. UCL is registered with RBI as a NBFC vide certificate of registration number 05.00522 dated March 2, 1998 under section 45IA of RBI Act, 1934. The equity shares of UCL are not listed on any Stock Exchange.

UCL was incorporated with the objective to carry on and undertake the business of leasing and to finance lease operations of all kinds, purchasing, selling, hiring or letting on hire all kinds of plants and machinery, and to carry on business of financial industrial enterprise whether by way of making loans or advances or


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subscribing to capital or private industrial enterprise, to carry on business of buyers, sellers, producers, brokers, buying agents, selling agents, commission agents, factors, distributors, stockists, agents, traders, exporters, importers and suppliers of and dealers in all kinds of tea, coffee, paper, paper board, iron & steel, chemicals, jute, cloth, cement, food grains, fertilisers, electrical goods, sugar, automobile parts, rubber parts, including all work whatsoever, as are incidental or conductive to the carrying on of all such business in India or abroad. UCL is mainly engaged in the business of investment in shares and securities.

15. Sonali Commercial Limited (“SCL”) SCL was incorporated on 3rd June, 1985 under the Companies Act, 1956 in the state of West Bengal. The Registered Office of SCL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of SCL is L51226WB1985PLC039024. SCL is registered with RBI as a NBFC vide certificate of registration number 05.00305 dated 21.02.1998 under section 45IA of RBI Act, 1934. The equity shares of SCL are listed on The Calcutta Stock Exchange Limited and was also listed UP Stock Exchange Limited before the said exchange was derecognized by SEBI

As per its Memorandum of Association, the main object of SCL is to carry on business as traders, exporters, agents, representatives, dealers, producers, stockists, importers or distributors of tea, coffee, jute and jute goods, textiles, cotton, cellulosic or synthetic fibre, silk, yarn, wool and woolen goods,, handicrafts, marble and other stones, steel, plastic, rubber, chemicals, engineering goods, metals, minerals, electronic, cloth, dresses, garments, transport vehicles, good products, books, reading and educative materials, paper and paper products, tobacco and tobacco products. The various clauses as enlisted into the Other Objects of the Memorandum & Association of the Company other object of SCL entitles them to carry on business of loans and advances.

16. Pavapuri Trading & Investment Company Limited (“PTICL”) PTICL was incorporated on 16th October 1982 under the Companies Act, 1956 in the state of West Bengal. The Registered Office of PTICL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of PTICL is L65993WB1982PLC 035368. PTICL is registered with RBI as a NBFC vide certificate of registration number 05.01356 dated 31.03.1998 under section 45IA of RBI Act, 1934. The equity shares of PTICL are listed on The Calcutta Stock Exchange Limited and was also listed Delhi Stock Exchange Limited before the said exchange was derecognized by SEBI.

As per its Memorandum of Association, the main object of PTICL is to carry on business of investment company and to invest in acquire, sell, transfer, subscribe or hold and otherwise deal in and invest in any shares, stocks, debentures, debenture stocks, bonds, obligations and securities issued or guaranteed by anybody corporate carrying on business in India or elsewhere and 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 and presently its main source of income consists of income from investment in shares and securities.


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17. Ronson Traders Limited (“RTL”)

RTL was incorporated on 16th October, 1982 under the Companies Act, 1956 in the state of West Bengal. The Registered Office of RTL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of RTL is L51909WB1982PLC 035358. RTL is registered with RBI as a NBFC vide certificate of registration number 05.00295 dated 21.02.1998 under section 45IA of RBI Act, 1934. The equity shares of RTL are listed on The Calcutta Stock Exchange Limited and was also listed UP Stock Exchange Limited before the said exchange was derecognized by SEBI

As per its Memorandum of Association, the main object of RTL is to carry on business as traders, exporters, agents, representatives, dealers, producers, stockists, importers or distributors of scientific, household, domestic, automobile, farm and forest products, goods, plants, machineries, equipments, apparatus, gadgets, appliances, accessories, spare parts or other merchandise including tea, coffee, jute and jute goods, textiles, cotton, cellulosic or synthetic fibre, silk, yarn, wool and woolen goods, leather and leather goods, handicrafts, piece of arts, jewellery, ornaments, marble and other stones, steel, plastic, rubber, chemicals, engineering goods, metals, minerals, electronic, musical and sports goods, cloth, dresses, garments, transport vechicles, food products, books, reading and educative materials, paper and paper products, tobacco and tobacco products and safety matches and to purchase, acquire hold and dispose of otherwise deal and invest in any shares, debentures and other securities in or of any company and to act as investors, guarantors, underwriters, financiers to industrial enterprises either out of its own funds or out of funds that the company might borrow by issue of debentures or banks or otherwise.

18. Deepshikha Trading Company Private Limited (“DTCPL”)

DTCPL was incorporated on 24th December, 1983 under the Companies Act, 1956 in the state of West Bengal. The Registered Office of DTCPL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of DTCPL is U51909WB1983PTC037043. DTCPL is registered with RBI as a NBFC vide certificate of registration number 05.02860 dated 27.08.1998 under section 45IA of RBI Act, 1934. The equity shares of DTCPL are not listed on any Stock Exchange.

As per its Memorandum of Association, the main object of DTCPL is to carry on the business of traders, importers, exporters, buyers, sellers, dealers, stockists, hire purchasers, agents, distributors and concessionaires of all substance merchandise goods, chemicals machinery, tools, implements, hardware, and to undertake, transact and execute agency business in connection therewith. The other main object clauses of DTCPL is to carry on business of financiers of industrial, commercial and other entries and film financiers, producers and distributors and exhibitors and to lend money and also to invest in acquire, sell, transfer, subscribe or hold and otherwise deal in and invest in any shares, stocks, debentures, debenture stocks, bonds, obligations and securities issued or guaranteed by anybody corporate carrying on business in India or elsewhere and 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.


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19. SIL Investments Limited (“SIL”)

SIL was incorporated on 22nd November, 1934 under the Companies Act, VII of 1913 in the state of Rajasthan. The Registered Office of SIL is presently situated at Pachpahar Road, Bhawani Nadi, Jhalwar, Rajasthan - 326502. The CIN of SIL is L17301RJ1934PLC 002761. SIL is registered with RBI as a NBFC vide certificate of registration number NBFC-ND-SI dated 22.05.1999 under section 45IA of RBI Act, 1934. The equity shares of SIL are listed on BSE Limited, the National Stock Exchange Limited and the Calcutta Stock Exchange Limited.

20. UTTAR PRADESH TRADING COMPANY LIMITED (“UPTCL”) UPTCL was incorporated on 23rd February, 1951 under the Indian Companies Act, 1913 in the state of West Bengal. The Registered Office of UPTCL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of UPTCL is U51109WB1951PLC019450. UPTCL is registered with RBI as a NBFC vide certificate of registration number 5.0022 dated 20.02.1998 under section 45IA of RBI Act, 1934. The equity shares of UPTCL are not listed on any Stock Exchange. As per its Memorandum of Association, the main object of UPTCL is to carry on the business to subscribe for, underwrite, purchase or otherwise acquire, dispose of, and deal with the shares, stocks, securities, and evidences of indebtness. The UPTCL is presently engaged in the business of investment in shares and securities. The UPTCL is wholly owned subsidiary of Ganges Securities Ltd.

21. G M B Investment Private Limited (GMBIPL) GMPIPL was incorporated on 30th April, 1985 under the Companies Act, 1956 in the state of West Bengal. The Registered Office of UPTCL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of GMBIPL is U67120WB1985PTC038868. GMBIPL is registered with RBI as a NBFC vide certificate of registration number 5.0022 dated 20.02.1998 under section 45IA of RBI Act, 1934. The equity shares of GMBIPL are not listed on any Stock Exchange. As per its Memorandum of Association, the main object of GMBIPL is to carry on all or any of the investment company, and to invest in and acquire and hold otherwise deal in shares, stocks, debentures, bonds, securities, financier of industrial, commercial and other enterprises and general financiers, producers, distributors and exhibitors, estate owners, landlords, estate agents, builders, hire – purchaser dealers, promoters, and dealers of property and right of all kinds and such other business and acts required in connection therewith and receive an deposit or borrow and raise money provided that the Company shall not carry on business of banking as defined under the Banking Regulations Act, 1949. The GMBIPL is presently engaged in the business of investment in shares and securities

22. The Oudh Trading Company Pvt Ltd (“TOTCL”) TOTCL was incorporated on 4th February, 1943 under the Indian Companies Act, 1913 in the state of Uttar Pradesh. The Registered Office of TOTCL is presently situated at 9/1, R.N. Mukherjee Road, Kolkata - 700 001. The CIN of TOTCL is U17111UP1943PTC001154.

As per its Memorandum of Association, the main object of TOTCL is to carry on in India or elsewhere business as merchants on its own account and/or as agents or brokers in Jute, Gunnies, Hessain, bullion,


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yarn, piece-goods, hosiery, cotton, silk, sugar, seeds, grains, minerals, metals, and generally in manufactured or otherwise.

23. Palash Securities Ltd PALASH SECURITIES LIMITED was incorporated on March 23, 2015, under the Companies Act, 2013 vide certificate of incorporation issued by the Registrar of Companies, Uttar Pradesh, as a public limited company as per the Companies Act, 2013. The registered office of Palash Securities is situated at P.O. Hargaon, District Sitapur, Uttar Pradesh-261 121. The main object of Palash Securities is to carry on the business of Food Processing and Investments.

24. Ms. Urvi Nopany, aged 25 years is the daughter of Mr Chandra Shekhar Nopany. She has undergone her degree course in Bachelor of Arts from the Yale University, USA.

Our Group Companies

1 ARVENTEA LIMITED

2 BILLBERGEA LIMITED

3 COLUMNEA LIMITED

4 CONDIDES LIMITED

5 CRASSULA LIMITED

6 CENTRE STAGE CREATIONS PRIVATE LIMITED

7 EAST COAST VANIJYA PRIVATE LIMITED

8 GLADIOLUS TRADERS PRIVATE LIMITED

9 HARGAON PROPERTIES LIMITED

10 INDIA EDUCATIONAL & RESEARCH INSTITUTIONS PVT. LTD.

11 MOON CORPORATION LIMITED

12 PONDEROSA HOLDINGS LIMITED

13 RTM PROPERTIES LIMITED

14 SHITAL COMMERCIAL LIMITED

15 SHOBHANA TRADERS LIMITED

16 SIL PROPERTIES LIMITED

17 SUTLEJ TEXTILES & INDUSTRIES LIMITED

18 VITTATUM LIMITED

19 MAGADH SUGAR & ENERGY LIMITED

20 GANGES SECURITIES LIMITED

21 ALLAHABAD CANNING LIMITED

22 CINNATOLLIAH TEA LIMITED

23 MANAVTA HOLDINGS LTD

24 MANBHAWANI INVESTMENT LTD

25 CHAMBAL FERTILIZERS & CHEMICALS LTD


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OUR MANAGEMENT

The Company’s Board of Directors has firm belief in fairness, transparency and accountability and provides appropriate directions with regard to leadership, vision, strategy, policies, monitoring, and supervision, accountability to shareholders and to achieve greater levels of performance on a sustained basis as well as adherence to the best practices of Corporate Governance. The Board also provides directions and exercises appropriate control to ensure that the Company fulfils stakeholders’ aspirations and societal expectations.

Our Board consists of 8 (Eight) Directors of which 3 (three) being directors at the executive grade and 5 (Five) being non-executive directors out of which 5(five) are independent directors. Our Chairman belongs to the promoters’ category. The composition of the Board of Directors is governed under the provisions of the Companies Act, 2013 and Listing Regulations (Regulation 17 to Regulation 27 of the proposed Listing Regulations).

Board of Directors as on date of this Information Memorandum:

Name along with DIN

Date of Appointment

Designation Address Age, Father’s Name, Nationality, Occupation

Other Directorship

Mrs Nandini Nopany

DIN : 00051362

29.07.2016 Chairperson

Nopany Niwas, 14, Rowland Road, Kolkata – 700 020 WB

AGE : 70

Father’s Name : Late K K Birla

Nationality : Indian

Occupation : Industrialist

• Modern Diagen Services Limited

• Nilgiri Plantations Ltd • Shital Commercial

Ltd • Ronson Traders Ltd • Uttam Commercial

Ltd. • Uttar Pradesh Trading

Co Ltd • Centre Stage

Creations Private Limited

• Cinnatolliah Tea Limited

• Ganges Securities Limited


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Mr Chandra Shekhar Nopany

DIN : 00014587

29.07.2016 Co-Chairperson

17E, Alipore Road, Kolkata – 700 027, WB

AGE : 51

Father’s Name : Mr B K Nopany



• Magadh Sugar & Energy Limited

• Sil Investments Limited

• Yashovardhan Investment & Trading Company Limited

• Ronson Traders Ltd • New India Retailing &

Investment Limited • Sutlej Textiles And

Industries Limited • Chambal Fertilisers

And Chemicals Limited

• Palash Securities Limited

• Ganges Securities Limited

Mr Anand Ashvin Dalal

DIN : 00353555

14.03.2017 Independent Director

Ashvin Chinubhai Broking Pvt. Ltd.

44/45, Bhupen Chamber, 2nd Floor

Room Nos. 44/45, 9, Dalal Street, Fort

Mumbai 400 023

AGE : 51

Father’s Name : Mr Ashvin Chinubhai Dalal


Occupation : Business

• Ashvin Chinubhai Broking Private Limited

• Champaran Marketing Co Ltd

• Osm Investment & Trading Co Ltd

• Hargaon Investment & Trading Co Ltd

• Andromeda Derivative Strategies Limited

Mr Sunil Kanoria

DIN : 00421564


‘Kanoria Hous’, 3 Middle Road, Hastings, Kolkata – 700 022

AGE : 52

Father’s Name : Mr Hari Prasad Kanoria



• SREI Equipment Finance Limited

• The Associated Chambers Of Commerce And Industry Of India

• SREI Infrastructure Finance Limited

• India Power Corporation Limited


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Mr Gaurav Swarup

DIN : 00374298


White House Garden, 17A, Alipore Road, Kolkata – 700 027

AGE : 60

Father’s Name : Late Mahendra Swarup



• Garima Pvt Ltd • Graphite India

Limited • TIL Limited • Paharpur Cooling

Towers Ltd • Swadeshi Polytex Ltd • K S B Pumps Limited • The Plastics Export

Promotion Council • Industrial And

Prudential Investment Company Limited

• Medica Synergie Private Limited

Mr Kalpataru Tripathy

DIN : 00865794


3101 ATS Greens – II, A-58, Sector-50, Noida – 201 307

AGE : 45

Father’s Name : Late Bankanidhi Tripathy


Occupation : Professional

J K Tyre and Industries Ltd

Mr Pradip Kumar Bishnoi

DIN : 00732640


01031, ATS Advantage, Indrapruram, Ghaziabad – 201 014, Delhi NCR

AGE : 66

Father’s Name : Late Om Prakash Bishnoi



Rane (Madras) Limited

Mr Devendra Kumar Sharma

DIN : 06498196

29.07.2016 Wholetime Director

P.O. Hargaon, District Sitapur, Uttar Pradesh-261121

AGE : 49

Father’s Name : Mr Ramesh Chandra Sharma


NIL


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Shareholding of Directors in the company as on the date of this Information Memorandum:

S No. Name of the Director No. of Shares held

1. Mrs Nandini Nopany* 299802 2. Mr Chandra Shekhar Nopany# 30922 3. Mr Anand Ashvin Dalal NIL 4. Mr Sunil Kanoria NIL 5. Mr Gaurav Swarup NIL 6. Mr Kalpatru Tripathy NIL 7. Mr P K Bishnoi NIL 8. Mr Devendra Kumar Sharma NIL

* includes 15923 shares as Trustee of Chandra Shekhar Charity Trust

# includes 1834 shares as Joint holding with Shalini Nopany

BRIEF PROFILE OF THE DIRECTORS

Mrs. Nandini Nopany Mrs. Nandini Nopany is our Promoter and was appointed as Chairperson of the Company. Mrs Nopany has experience of over 35 years in managing industries and is associated with Birla Sugar since 1993. She is an eminent industrialist and philanthropist.

Mr. Chandra ShekharNopany Mr. Chandra Shekhar Nopany is our Promoter and was appointed as Co-Chairperson of the Company. He is a Member of the Institute of Chartered Accountants of India and Masters in Science of Industrial Administration from Carnegie Mellon University, Pittsburgh, USA. He has also worked as an independent consultant for USX Engineers and Consultants Inc. 1989. He is an eminent industrialist having vast experience in diverse fields like sugar, tea, shipping, textiles, fertilizers and chemicals, etc. He is the past President of Indian Chambers of Commerce and the present member of the Executive Committee of FICCI.

Mr Anand Ashvin Dalal Mr Anand Dalal is appointed as Non Executive and Independent Director of the Company. He is an eminent corporate personality, a stock broker and an ex-merchant banker. He is the Managing Director of Ashvin Chinubhai Stock Broking Private Limited. He has over 30 years of rich experience in stock broking and merchant banking activities.

Mr Sunil Kanoria Mr Sunil Kanoria is appointed as Non Executive and Independent Director of the Company. He is a Member of the Institute of Chartered Accountants of India. He is the President of the Federation of Indian Hire Purchase Association and Member of several important organizations viz. Finance Industry Development Council,


96

Construction Industry Development Council, etc. He is also the past President of Merchants Chamber of Commerce as well as ASSOCHAM.

Mr Gaurav Swarup

Mr Gaurav Swarup is appointed as Non Executive and Independent Director of the Company. He is holder of Masters Degree in Business Administration (MBA) from Harvard University, U.S.A. and has done his Mechanical Engineering from Jadavpur University. He is the Managing Director of Paharpur Cooling Towers Ltd. He is the past President of Indian Chamber of Commerce, Kolkata.

Mr Kalpatru Tripathy

Mr Kalpatrau Tripathy is appointed as Non Executive and Independent Director of the Company. Mr Tripthay has done B.Sc. (Chemistry Hons) and LLB from Delhi University besides PG Diploma in International Business Laws from Indian Society of International Law, New Delhi. Mr Tripathy was Partner with leading law firm M/s Shardul Amarchand Mangaldas since 2007 before starting on its own very recent. He has experience of about 20 years in the Corporate Law area and specializes in Mergers and Acquisitions, Joint Ventures, Private Equity and General Corporate practice. He was also the Regional Vice Chairperson (Asia Pacific Region) of Cross Border practice Group of Lex Mundi.

Mr P K Bishnoi Mr P K Bishnoi is appointed as Non Executive and Independent Director of the Company. He is MBA from IIM, Ahemdabad, besides having done Management Programme at Oxford, UK and Programme on Utility Regulators at World Bank, Florida University. USA. He was awarded Gold medal by Prime Minister for development work in the year 2008. He is an avid regulator being member of Petroleum & Natural Gas Regulatory Board since 2012 and was also on the Board of Standing Council of Public Enterprises as well as World Steel Association.

Mr Devendra Kumar Sharma Mr Devendra Kumar Sharma, is an Associate Member of the Institute of Cost & Works Accountant of India and a Master of Commerce, having 26 years of experience in the Sugar, Power & Alcohol industry with 10 years working as Head / Top position in the Industry. He is appointed as appointed as Whole Time Director of the Company w.e.f. 1st March 2017. Borrowing powers of board of Directors The borrowing powers the Board are regulated by the Articles of Association of our Company, subject to provisions of the Companies Act, 2013.The Board of Directors of our Company has power to borrow up to Rs. 3000 Crores (Rupees Three thousand Crore only) as per the members resolution passed in the EGM of our Company held on March 1, 2017.

Arrangements with major shareholders, customers, suppliers and others There is no arrangement or understanding between our Company and major shareholders, customers, suppliers or others, pursuant to which of any of the Directors of our Company was selected as a Director or member of senior management of our Company.


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Details of service contracts Our Company has not entered into any service contracts with any of our Directors for providing benefits upon termination of employment except the retirement benefits, being payable in the normal course of the running the affairs of the Company.

Non-Executive Director’s Compensation

No remuneration is being paid to the non-executive and independent directors. However, the Company pays sitting fees of Rs.40000/- (Rupees Forty thousand only) for attending the meetings of the Board and Rs.20000/- (Rupees Twenty thousand only) for Committees thereof plus reimburses the travelling expenses incurred by the non-executive and independent directors.

Corporate Governance

The provisions of the SEBI Regulations in respect of corporate governance will be applicable to our Company immediately upon the listing of the Equity Shares on the Stock Exchanges. Our Company has complied with the corporate governance code in accordance with Regulation 17 to Regulation 27 of the proposed Listing Regulations), particularly, in relation to appointment of independent Directors on our Board and constitution of the Audit Committee, the Stakeholders’ Relationship Committee and the Nomination and Remuneration Committee. The Board functions either as a full board or through various committees constituted to oversee specific operational areas. Our Company undertakes to take all necessary steps to continue to comply with all the requirements of Regulation 17 to Regulation 27 of the Listing Regulations.

In terms of Regulation 17 to Regulation 27 of the Listing Regulations, our Company has constituted the following committees • Audit Committee • Nomination and Remuneration Committee • Stakeholders Relationship Committee • Corporate Social Responsibility Committee; • Finance & Corporate Affairs Committee

Audit Committee

The Composition of the Audit Committee is as under:

Name of Director Designation in the Committee Nature of Directorship

Mr Anand Ashvin Dalal Chairman Independent (Non-Executive)

Mr Kalpatru Tripathy Member Independent (Non-Executive)

Mr P K Bishnoi Member Independent (Non-Executive)

Mr Devendra Kumar Sharma Member Whole Time Director (Executive)

All the members of the Committee have sound knowledge in the fields of finance and accounts. The role and terms of reference of audit committee covers all the areas mentioned under Regulation 17 to Regulation 27 of the Listing Regulations and Section 177 of the Companies Act, 2013 (hereinafter referred as the ‘Act’). Further, the Committee oversees and monitors the financial reporting system within the Company, considers its quarterly, half-yearly and


98

annual financial results, related party transactions, utilization of proceeds from the capital issues, status of indebtness, financial restructuring plans, reviews of the internal audit plans, the report of internal auditors, legal compliance, internal control system, audit methodology, accounting policies and practices, compliance with applicable accounting standards, risk management, risk disclosure and submit its observations to the Board. The audit committee also advises the management on areas where greater internal control and internal audit focus are required to be strengthen, and review areas for audit and control purposes, cost control measures and statutory compliances in various functional areas.

Nomination and Remuneration Committee

The composition of the Nomination and Remuneration Committee is as under:


Mr Sunil Kanoria Chairman Independent (Non-Executive)

Mr Gaurav Swarup Member Independent (Non-Executive)

Mr Anand Ashvin Dalal Member Independent (Non-Executive)

Mr Kalpatru Tripathy Member Independent (Non-Executive)

The Nomination and Remuneration Committee is in compliance with the Section 178 of the Companies Act, 2013 and rules and made thereunder read with relevant Listing Regulations. The objective of this committee is to lay down a framework in relation to remuneration to the directors, KMP, senior management personnel and other employees. The Committee shall guide the Board in relation to appointment and removal of Directors, Key Managerial Personnel and Senior Management; formulate the criteria for determining qualifications, positive attributes and independence of director/KMP/senior employees and recommend to the Board policies relating to the remuneration, role responsibilities and other terms of Directors, key managerial personnel and other employees; recommend to the Board continuing evaluation process and suitable mechanism to ensure that; consider the grievance, if any, raised by such persons and take steps as considered necessary; suggest ways to harmonies working amongst the working directors; seek such reports and compliances as considered necessary and submit report to Board.

Stakeholders Relationship Committee

The composition of the Stakeholders Relationship Committee is as under:


Mr Gaurav Swarup Chairman Independent (Non-Executive)

Mr Anand Ashvin Dalal Member Independent (Non-Executive)



The Stakeholders Relationship Committee is in compliance with the Section 178 of the Companies Act, 2013 and rules made thereunder read with relevant Listing Regulations. The objective of this Committee is to perform all functions relating to the interests of security holders of the Company and related work as assigned by the Board, as may be required from time to time.


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Other Committees

Corporate Social Responsibility Committee

The Corporate Social Responsibility (CSR) Committee comprises of:


Mrs Nandini Nopany Chairperson Chairperson (Non-Executive)



The Corporate Social Responsibility Committee was constituted in accordance with the requirements laid down in Section 135 of the Companies Act, 2013 and the Rules framed there under, comprising of three directors. Mrs. Nandini Nopany acts as the Chairperson of the Committee. The Committee deals with the formulation and recommendation to the Board, the plans for CSR activities, amount of expenditure to be incurred; and monitor the implementation of the CSR Policy and to take such necessary steps to strengthen the social awareness and improve the hygienic environment in the vicinity of the plants and provide help to the poor in mills command area.

Key Managerial Personnel

Following are the Key Managerial Personnel of the Company:

Mr. Devendra Kumar Sharma Whole Time Director

Mr. Dilip Patodia, Chief Financial Officer

Mr. Anand Sharma, Company Secretary


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OUR ORGANIZATIONAL STRUCTURE

BoardofDirectors

KeyManagerialPersonnel

WTD CFO CS

SeniorManangement/

UnitHeads

V.PTechnicalV.P.

Manufacturing

V.PCane

MiddleManagement

Workmen

V.P.Finance&accounts

V.P.Distillery V.P.Cogen


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DIVIDEND DISTRIBUTION POLICY

It is the objective of the Company to optimize shareholder returns. The declaration and payment of dividends will be recommended by the Board of Directors and approved by the shareholders of the Company at their discretion, and will depend on a number of factors, including but not limited to the results of operations, cash flows, business requirements, capital expenditures and overall financial condition. The Company will also be subject to any covenants in the Credit facilities agreements.

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) and may include the following parameters:

(a) the circumstances under which the shareholders of the company may or may not expect dividend;

(b) the financial parameters that shall be considered while declaring dividend;

(c) internal and external factors that shall be considered for declaration of dividend;

(d) policy as to how the retained earnings shall be utilized; and

(e) parameters that shall be adopted with regard to various classes of shares.

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 subject to the provisions of the Act and fix the time for payment.


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The Oudh Sugar Mills Limited

Transferor Company

REPORT OF THE INDEPENDENT AUDITORS ON THE SUMMARY FINANCIAL INFORMATION

To the Members of The Oudh Sugar Mills Limited

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of The Oudh Sugar Mills Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit


103

evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the financial statements.

BASIS FOR QUALIFIED OPINION

As indicated in Note 14 to the financial statements, the Company continues to carry Deferred Tax Asset (DTA) (net) of Rs. 12,810.10 lacs (after reversal of Rs. 94.81 lacs during the year) up to March 31, 2016, based on the future profitability projections made by the management. In our opinion, in the absence of virtual certainty about the above projections, as required in terms of Accounting Standard - 22, had the above impact been considered, there would have been a loss of Rs. 12,186.99 lacs during the year as against the reported profit of Rs. 623.11 lacs and reserves & surplus as at the balance sheet date would have been (-) Rs. 27,288.94 lacs as against the reported figure of (-) Rs. 14,478.84 lacs. Our audit opinion on the financial statements for the previous year was also qualified in respect of the above matter. QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter stated in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2016, of its profit, and its cash flows for the year ended on that date.

EMPHASIS OF MATTER

a) We draw attention to Note 38 to the financial statements regarding erosion of net worth of the Company. The Company has earned profits during the current year consequent to improved realization and sugar yields. Further, the Company is also undergoing Business Restructuring as described in Note to the financial statements. Based on above factors, these financial statements have been drawn as per the going concern assumption.

b) We draw attention to Notes to the financial statements in respect of composite scheme of arrangement to re-structure and de-link the Company’s multiple businesses into separate entities w.e.f 1st April, 2015 subject to necessary approvals more fully described therein. Pending such approvals, no adjustment has been made in these accounts. Our opinion is not qualified in respect of above matters. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor’s report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act, we report that: a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief

were necessary for the purpose of our audit; b) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion

proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;


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e) The matter described in the Basis for Qualified Opinion and point (a) of Emphasis of matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;

f) On the basis of written representations received from the directors as on March 31, 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of section 164 (2) of the Companies Act, 2013;

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure 2” to this report;

i) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements Refer Note 7 & 35 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For S.R. Batliboi & Co. LLP Chartered Accountants

Firm registration number: 301003E/E300005 Kamal Agarwal Membership no.: 58652 Place: Kolkata Partner

Date: May 13, 2016


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Annexure 1 referred to in paragraph 1 under the heading “Report on Other Legal and Regulatory Requirements” of our report of even date to the members of The Oudh Sugar Mills Limited as at and for the year ended March 31, 2016

1. a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) Fixed assets were physically verified by the management during the year in accordance with a planned programme of verifying all of them once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

c) According to information and explanations given by the management, the title deeds of immovable properties, included in Fixed Assets are held in the name of the Company except in respect of land aggregating Rs 433.26 lacs where the title deeds are yet to be executed in favour of the Company. Further, in respect of land aggregating Rs. 1,731.82 lacs as at March 31, 2016, original title deeds were not available with the Company since as explained, the title deeds thereof are lying with the banks as security towards various credit facilities and hence we are unable to comment on the same.

2. The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.

3. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii) (a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

4. In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees and securities granted in respect of which provisions of section 185 and 186 of the Companies Act 2013 are applicable and hence not commented upon.

5. The Company has not accepted any deposits from the public. 6. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the

Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013 in respect of its products and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

7. (a) Undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, service tax, excise duty, value added tax & cess on account of any dispute, are as follows:-

Name of the statute

Nature of dues

Amount Period to which the( Rs. in lacs) amount relates

Forum where dispute is pending

Bihar Finance Tax on sale of Alcohol for non- 4.19, 1995-96 Appellate Tribunal, Patna


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Act, 1981 submission of declaration forms

U.P. Tax on Entry of Goods Act, 2007

Interest demand on Entry Tax on Sugar

0.74, 2008-09 Joint Commissioner Appeal

Central Sales Tax Act, 1956

Central Sales Tax demand on Stock transfer

5.71, 1999-00, 1993-94, 1996-97 to 1997-1998, 2000-2001, 2011-2012 to 2012-2013

Joint Commissioner (Appeals) / High Court, Allahabad

Taxability on alcohol sale Demand for Sales Tax due to non- submission of Declaration Forms

10.47, 1977-78 to 1981-82,

9.31 2002-03 to 2003-04, 2006-2007

Appellate Tribunal, Lucknow, Appellate Tribunal, Patna/ Lucknow

Demand for VAT on sale of denatured spirit and various other matter

319.36 2000-01, 2006-2007, 2009-10, 2010-11, 2011-12, 2012-13, 2014-15

Commissioner Appeal / CESTAT / High Court, Allahabad

Excise Duty on burnt / waste and loss on storage of molasses etc

28.87 1977-78, 1990-1991 2002-03 to 2004-05 & 2010-11

Commissioner (Appeals) / High Court, Allahabad

Demand towards differential amount of sugar cess on duty paid stock

43.47 2007-08 CESTAT

State Act Administration Charges on Molasses, Demand of Electricity Duty on Sale of Electricity

116.29 1995-96 to 1999-00, 162.02 2010-11 to 2012-13

Supreme court of India

High Court, Patna

8. According to information and explanations given by the management, we are of the opinion that the

Company has not defaulted in repayment of dues to bank or government. The Company did not have any outstanding dues in respect of a financial institutions or debenture holders during the year.

9. According to the information and explanations given by the management, term loans were applied for the

purpose for which the loans were obtained. The Company has not raised any money way of initial public offer / further public offer / debt instruments during the year.


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10. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.

11. According to the information and explanations given by the management, the provisions of section 197

read with Schedule V of the Act is not applicable to the company and hence reporting under clause 3(xi) are not applicable and hence not commented upon.

12. In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order

are not applicable to the Company and hence not commented upon. 13. According to the information and explanations given by the management, transactions with the related parties

are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

14. According to the information and explanations given to us and on an overall examination of the balance sheet, the

Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence not commented upon.

15. According to the information and explanations given by the management, the Company has not entered

into any non-cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.

16. According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of

India Act, 1934 are not applicable to the Company.

For S.R. Batliboi & Co. LLP Chartered Accountants

Firm registration number: 301003E/ E300005

Kamal Agarwal Membership no.: 58652 Place: Kolkata Partner

Date: May 13, 2016


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Annexure 2 to the Independent Auditors’ Report (referred to in our report of even date to the members of The Oudh Sugar Mills Limited as at and for the year ended 31st March, 2016)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”) We have audited the internal financial controls over financial reporting of The Oudh Sugar Mills Limited (“the Company”) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

MANAGEMENT’S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial


109

control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

QUALIFIED OPINION According to the information and explanation given to us and based on our audit, the following material weakness

has been identified as at March 31, 2016

The Company’s internal financial controls over recognition of deferred tax asset and controls over assessing virtual certainty in recognition of deferred tax asset, were not operating effectively which has resulted in material misstatement whereby the Company has recognized deferred tax assets without establishing virtual certainty under Accounting Standard 22 - Accounting for Taxes on Income notified under the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

A ‘material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control over financial

reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

In our opinion, the Company has, in all material respects, maintained adequate internal financial controls over financial reporting as of March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India, and except for the effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company’s internal financial controls over financial reporting were operating effectively as of March 31, 2016

EXPLANATORY PARAGRAPH

We also have audited, in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act, the standalone financial statements of The Oudh Sugar Mills Limited, which comprise the Balance Sheet as at March 31, 2016, and the related


110

Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2016 standalone financial statements of The Oudh Sugar Mills Limited and has affected our opinion on the standalone financial statements of the company and we have issued a modified opinion on the standalone financial statements dated May 13, 2016

For S.R. Batliboi & Co. LLP Chartered Accountants Firm registration number: 301003E/ E300005

Kamal Agarwal Membership no.: 58652 Place: Kolkata Partner

Date: May 13, 2016


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Annexure I

Balance Sheet

Rs. in lacs

As at 31st March 2016



EQUITY AND LIABILITIES

Shareholders’ Funds

Share Capital 7,604.43 7,604.43 7604.43

Reserves and Surplus -14,478.84 -15,107.97 (7482.82)

Bearer Equity Share Coupons 0 0.06 0.06

-6,874.41 -7,503.48 121.67

Non-current Liabilities

Long-term borrowings 35,326.01 31,204.95 33663.83

Other long-term liabilities 297.84 489.22 721.46

Long-term provisions 298.15 272.8 134.34

35,922.00 31,966.97 34519.63

Current Liabilities

Short-term borrowings 66,754.45 65,163.43 70303.54

Trade payables

Total outstanding dues of micro enterprises and small enterprises

134.22 154.69 -

Total outstanding dues of creditors other than micro enterprises and small enterprises

30,551.44 51,834.02 49687.08

Other current liabilities 26,737.76 13,516.98 16001.34

Short-term provisions 329.33 348.05 312.43

124,507.20 131,017.17 136304.39

Total 153,554.79 155,480.66 170945.69

ASSETS

Non-Current Assets

Fixed Assets

Tangible Assets 51,164.54 53,182.69 54730.40

Intangible Assets 49.04 86.63 124.88

Capital Work-in-Progress 1,170.85 257.26 277.25

Non-current Investments 1,080.25 1,080.23 1080.23

Deferred tax assets (net) 12,810.10 12,904.91 9001.60


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Loans and advances 122.85 17.81 28.45

Other Non-current assets 122.51 59.03 52.02

66,520.14 67,588.56 65294.83

Current assets

Current Investments 17.5 17.5 -

Inventories 73,778.22 69,359.30 95118.70

Trade Receivables 6,523.09 4,990.54 3991.72

Cash and bank balances 264 426.88 376.45

Loans and advances 1,431.08 2,025.11 3053.82

Other current assets 5,020.76 11,072.77 3110.17

87,034.65 87,892.10 105650.86

Total 153,554.79 155,480.66 170945.69

Annexure II

Statement of Profit and Loss

Rs. In Lacs




INCOME

Revenue from Operations (gross) 121,501.26 142,965.29 119298.28

Less : Excise duty 3,693.11 3,833.36 3374.65

Cess 1,221.49 918.44 702.38

Revenue from Operations (net) 116,586.66 138,213.49 115221.25

Other Income 212.98 173.11 436.84

Total Revenue (I) 116,799.64 138,386.60 115658.09

EXPENSES

Cost of Raw Materials consumed 89,088.23 91,674.18 96381.09

Purchase of Traded Goods 759.54 772.04 665.22

Decrease / (Increase) in Inventories of Finished Goods, Traded Goods and Goods under Process

-2,425.71 24,795.54 (6359.86)

Employee benefits expenses 5,462.31 5,487.67 5006.60


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Other expenses 9,773.23 11,087.58 10915.38

Total (II) 102,657.60 133,817.01 106,608.43

Profit before finance costs, tax, depreciation and amortization [(I) - (II)]

14,142.04 4,569.59 9049.66

Depreciation and Amortization expenses 2,649.66 2,847.29 4173.81

Finance Costs 10,774.46 12,887.11 13198.47

Profit / (Loss) before tax 717.92 -11,164.81 (8,322.62)

Tax expenses

Deferred tax charge / (credit) 94.81 -3,777.71 (2862.64)

94.81 -3,777.71 (2862.64)

Profit / (Loss) for the year 623.11 -7,387.10 (5459.98)

Earnings per equity share [Nominal value of share Rs 10 (Rs. 10)]

Basic & Diluted (Rs.) 0.28 -30.47 -22.90

Cash Flows

Rs. In Lakhs

31st March 2016 31st March 2015 31st March, 2014

(A) CASH FLOW FROM OPERATING ACTIVITIES:

Profit / (Loss) before tax 717.92 -11,164.81 -8322.62

Adjustment to reconcile profit / (loss) before tax to net cash flows

Depreciation and Amortization expenses 2,649.66 2,847.29 4173.81

Finance Costs 10,774.46 12,887.11 13198.47

Loss on fixed assets sold / discarded (net) 29.97 44.66 7.81

Bad debts, irrecoverable claims and advances written off

4.99 72.13 1.78

Provision for bad and doubtful debts / advances

- 17.7 10.44

Provision for Warranties & Claims 5.28 6.65 9.89

Molasses Storage & Maintenance Reserve 6.02 5.85 8.07


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Cane Purchase Tax Remission - - -513.36

Cane Commission Remission -892.33 - -191.83

Unspent Liabilities, Provisions no longer required and Unclaimed Balances adjusted

-121.25 -79.64 -203.85

Interest Income -6.4 -10.84 -11.74

Dividend Income -0.1 -0.08 -0.08

Operating Profit before Working Capital Changes :

13,168.22 4,626.02 8166.79

(Decrease) / Increase in Trade Payables -20,306.64 2,388.04 13581.9

Increase in Long Term Provisions 25.35 138.46 -18.28

(Decrease) / Increase in Short Term Provisions

-24 19.58 -10.01

Increase / (Decrease) in Other Current Liabilities

10,359.36 -1,400.33 -6609.55

(Decrease) in Other Long Term Liabilities -1.14 -4.89 4.31

(Increase) in Trade Receivables -1,532.21 -1,004.03 -920.31

(Increase) in Non-current Loans & Advances

-6.92 -1.81 356.75

Decrease in Current Loans & Advances 298.25 769.07 -422.18

Decrease / (Increase) in Other Current Assets

6,069.14 -7,957.90 -2981.97

(Increase) in Inventories -4,418.92 25,759.40 -6844.44

Cash Generated from Operations: 3,630.49 23,331.61 42583.01

Direct Taxes Refund / (Paid) 1.78 -0.03 -1.05

Net Cash from Operating Activities 3,632.27 23,331.58 4281.96

(B) CASH FLOW FROM INVESTING ACTIVITIES :

Proceeds from sale of Tangible Assets 33.78 7.47 8.27

Purchase of Fixed Assets, including CWIP and Capital Advances

-1,672.18 -1,615.24 -883.09

Purchase of Non-current Investments -0.02 - -4.9

Purchase of Current Investments - -17.5 -

Loan Recovered (net) 8.9 17.67 0.65


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Interest Received 4.87 10.8 16.72

Dividend Received 0.1 0.08 0.08

(Investment) / Redemption / Maturity in / of Bank Deposits having original

-2.88 2.75 19.18

maturity of more than 3 months (net) 40

Net Cash Used in Investing Activities -1,627.43 -1,593.97 803.09

(C) CASH FLOW FROM FINANCING ACTIVITIES :

Reduction in Bearer Equity Share Coupons -0.06 - -

Repayment of Long Term Borrowings -5,124.88 -6,281.64 -5089.26

Proceeds from Long Term Borrowings 11,759.00 2,666.00 6250

Repayment / Proceeds of / from Short Term Borrowings (net)

1,475.52 -5,133.21 7411.27

Repayment of loans to Subsidiary Companies

-8 -3,098.00 -22

Loans from Subsidiary Companies 416.35 3,251.10 1151

Interest Paid -10,444.85 -13,041.54 -13185.8

Other Borrowing Cost -243.68 -47.91 -96.98

Net Cash Used in Financing Activities -2,170.54 -21,685.20 -3581.79

Net Changes in Cash & Cash Equivalents (A+B+C)

-165.76 52.41 -102.92

Cash & Cash Equivalents at the beginning of the year

419.73 367.32 470.24

Cash & Cash Equivalents at the end of the year *

253.97 419.73 367.32

A Summary of Significant Accounting Policies (a) Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period and he results from operations during the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.


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(b) Tangible Fixed Assets Fixed Assets are stated at cost less accumulated depreciation and impairment losses determined, if any. The cost comprises the purchase price inclusive of duties (net of CENVAT Credit), taxes, incidental expenses, erection / commissioning expenses and borrowing costs if capitalization criteria are met and directly attributable cost of bringing the assets to its working condition for the intended use. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. This applies mainly to components for machinery. When significant parts of fixed assets are required to be replaced at intervals, the company recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on an existing fixed asset, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred. Gains or losses arising from derecognition of tangible fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. Machinery spares which can be used only in connection with an item of fixed asset and whose use as per technical assessment is expected to be irregular, are capitalised and depreciated over the residual life of the respective assets.

(d) Depreciation on Tangible Fixed Assets

The classification of plant and machinery into continuous and non-continuous process is done as per technical certification and depreciation thereon is provided accordingly. Depreciation on fixed assets is provided under Straight Line basis using the rates arrived at based on the useful lives estimated by the management. The company has used the following rates to provide depreciation on its fixed assets.

Class of Assets Useful Lives estimated by the management (Years)

Factory Buildings 5 to 30 Non-factory Buildings 5 to 60 Plant and Equipments 5 to 40 Computer and Data Processing Equipments 3 to 6 Furniture and Fixtures 10 Vehicles 8 to 10 Office Equipments 5

Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis with reference to the date of addition / disposal.


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The management has estimated, supported by independent assessment by professionals, the useful lives of certain plant and equipment as 5 to 18 years. These lives are lower than those indicated in schedule II. Leasehold properties are depreciated over the primary period of lease or their respective useful lives, whichever is shorter.

(d) Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets being Specialized Software are amortized on a straight line basis over a period of 5 years.

(e) Leases Operating Lease Leases where the lessor effectively retains substantially all the risks and benefits of the ownership of the leased assets are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on straight line basis over the lease term.

Finance Lease Assets acquired under lease agreements which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased items, are capitalized at the lower of the fair value of the leased property and present value of minimum lease payment at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and the reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of their liability. Finance charges are charged directly to the expenses account.

(f) Borrowing Costs

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

(g) Impairment of Fixed Assets The carrying amounts of assets are reviewed at each balance sheet date to determine, if there is any indication of impairment based on internal/ external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount which is the greater of the asset’s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market


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assessments of the time value of money and risks specific to the asset. Depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

(h) Government Grants and Subsidies Grants and subsidies from the government are recognized when there is reasonable certainty that the grant/subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset. Government grants of the nature of promoters’ contribution are credited to capital reserve and treated as a part of shareholders’ funds.

(i) Investments Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

(j) Inventories Raw Materials, stores and spares are valued at lower of cost and net realizable value. However, these items are considered to be realizable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. Cost of raw materials and stores and spares is determined on annual weighted average method / moving average method. Goods under process, finished goods (including Power Banked), traded goods and standing crops, are valued at lower of cost and net realizable value. Finished goods, Goods under process and Standing Crops include cost of conversion and other costs incurred in bringing the inventories to their present location and condition based on normal operating capacity. Cost is determined on weighted average basis. By products, Country crop and Saleable scraps, whose cost is not identifiable, are valued at estimated net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs


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of completion and estimated costs necessary to make the sale.

(k) Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, which usually coincides with delivery of the goods. The Company collects Sales Tax(s) and Value Added Taxes (VAT) on behalf of the government and, therefore, these not being economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty and Cess deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the period. Income from Renewable Energy Certificates (RECs) is recognized at estimated realizable value on confirmation of RECs by the concerned Authorities. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head “other income” in the statement of profit and loss. Dividend income is recognized when the shareholders’ right to receive the payment is established by the reporting date. Insurance and other claims, Interest on doubtful loans and advances to cane growers and Compensation receivable in respect of land surrendered to / acquired by the Government due to uncertainty in realizations, are accounted for on acceptance basis.

(i) Foreign Currency Transactions

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.

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.

Exchange differences Exchange differences arising on the settlement/ conversion of monetary items are recognized as income or expenses in the period in which they arise.

(m) Retirement and other Employee Benefits

Retirement benefits in the form of Provident and Pension Funds are defined contribution schemes and are charged to the statement of profit and loss of the period when the contributions to the respective funds are


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due. The Company has no obligation other than contributions to the respective funds. The Company recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the selected service. Gratuity liability being a defined benefit obligation is provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. Short term compensated absences are provided for based on estimates. The Company treats accumulated leaves expected to be carried forward beyond twelve months, as long term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the end of each financial year. The company does not have an unconditional right to defer its settlement for the period beyond 12 months and accordingly entire leave liability is shown as current liability. Actuarial gains / losses are immediately taken to the statement of profit and loss and are not deferred.

(n) Income taxes Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to tax authorities in accordance with Income Tax Act, 1961 enacted in India. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the period and reversal of timing differences of earlier years.

The deferred tax for timing differences between the book and tax profit for the period is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the reporting date. Deferred tax asset is 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 is recognized only to the extent that there is virtual certainty supported by convincing evidence that sufficient taxable income will be available in future against which such deferred tax asset can be realized. The carrying amount of deferred tax assets is reviewed at each reporting date. The company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient taxable income will be available in future. At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized. Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent that there is convincing evidence that the company will pay normal income tax during the specified period. In the period in which the MAT credit becomes eligibleto be recognized as an asset in accordance with the recommendations contained in the guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the same at each reporting date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.


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(o) Segment Reporting

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.

Inter Segment Transfers The Company accounts for inter segment transfers at mutually agreed transfer prices. 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”

Unallocated items Unallocated items include general corporate income and expense items which are not allocated to any business segment.

(p) Earnings Per Share Basic Earnings per Share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, 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.

(q) Cash and Cash Equivalents Cash and cash equivalents in the cash flow statement comprise of cash at bank and on hand and short- term investments with an original maturity of three months or less.

(r) 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 reporting date.

(s) Provisions A provision is recognized when the company 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 the best estimate required to settle the obligation, at the reporting date. These are reviewed at each reporting date and adjusted to reflect the current management estimates.

(t) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be


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confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely are cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. Material Notes to financials of Oudh Sugar and Mills Limited for the year ended 2015-16

Terms of redemption of Preference Shares The Non-Convertible Cumulative Redeemable Preference Shares (NCCRPS) carries dividend @ 8.5% per annum. NCCRPS shall be redeemable at par on 2 August 2023 being twelve years and one day from the date of allotment i.e. 01 August 2011 with a right vested to the Board of Directors to redeem it earlier, subject to the consent of the lenders and dividend is payable at the time of redemption of the NCCRPS. However, the Board reserves the right to pay the dividend earlier with the consent of the Lenders and subject to the availability of profit.

Long Term Borrowings In Rs. Lacs

Non-current portion Current portion As at As at As at As at

31st March 2016 31st March 2015 31st March 2016 31st March 2015 Term Loans (secured) : From Banks - Term Loan 17,152.34 20,549.21 3,396.87 2,956.04 Funded Interest Term Loan (FITL)

- - - 1,298.97

Under Financial Assistance Scheme (SEFASU 2014)

6,119.60 8,916.00 2,796.40 -

Under Financial Assistance Scheme (SOFT 2015 - Central)

8,885.00 - - -

Under Financial Assistance Scheme (SOFT 2015 - Bihar)

2,299.20 - 574.8 -

From Sugar Development Fund

869.87 1,739.74 869.87 869.87

35,326.01 31,204.95 7,637.94 5,124.88 Less : Amount disclosed under the head

7,637.94 5,124.88

“other current liabilities” Net amount 35,326.01 31,204.95 - -


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a) Term Loan from Banks carry interest rate in the range of 13.77% to 14.99% and are repayable in 32 quarterly instalments by 30th June 2020. These loans are secured by first mortgage / charge on all the immovable and movable assets (save and except book debts), present and future, of the Company’s Sugar Units at Hargaon, Narkatiaganj and Dhadha Bujurg (Hata) and Distillery Unit at Hargaon, ranking pari-passu amongst the various lenders, subject to prior charges created on movables for working capital borrowings from the Company’s bankers. The above Term Loan is further secured as follows.

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

(ii) Third charge on current assets of Sugar & Distillery Units at Hargaon and Sugar Unit at Narkatiaganj. (iii) Pledge of 64,79,294 equity shares of the Company held by the promoter group companies, ranking pari-passu amongst the various lenders.

b) Term loans from banks under Financial Assistance Scheme (SEFASU 2014), carry interest rate in therange

of 11.4% to 12.3% p.a. and is repayable in12 quarterly instalments by 30 June 2019. The Company is entitled to interest subvention from the Government of India upto 12% as per terms of scheme and the same will be directly reimbursed to bank by Department of Food & Public Distribution and hence, no liability towards interest under subvention has been provided in these accounts. The above loan is secured by the first pari passu charge on all the fixed assets of both present and future of Sugar and Co-generation units of the Company at Hargaon & Dhadha Bujurg (Hata) and Sugar units of the Company at Narkatiaganj & Rosa.

c) Term loans from banks under Financial Assistance Scheme of the Government of India (SOFT LOAN

2015), carry interest rate in the range of 11.60% to11.75% p.a. and are repayable in 20 equal quarterly instalments by 30 September 2022. The Company is entitled to interest subvention from the Government of India upto 10% for first year as per terms of the Scheme and the same will be reimbursed directly to banks by the Department of Food & Public Distribution and hence, no liability towards interest under subvention has been provided in these accounts. The above loans are secured / to be secured by the first pari-passu charge on all the fixed assets, both present and future, of Sugar and Co-generation units of the Company at Hargaon and Dhadha Bujurg (Hata) and Sugar units of the Company at Narkatiaganj and Rosa.

d) Term loans from a bank under Financial Assistance Scheme of the State Government of Bihar (SOFT

LOAN 2015), carry interest rate of 13% p.a. and are repayable in 20 equal quarterly instalments by 31 March 2021. The Company is entitled to interest subvention from the State Government of Bihar upto 12% for first year and 10% thereafter as per terms of the Scheme and the same will be reimbursed directly to banks by the State Government of Bihar and hence, no liability towards interest under subvention has been provided in these accounts. The above loans are secured / to be secured by the first pari-passu charge on all the fixed assets, both present and future, of Sugar and Co-generation units of the Company at Hargaon and Dhadha Bujurg (Hata) and Sugar units of the Company at Narkatiaganj and Rosa.

e) Term loans from the Sugar Development Fund, which carry interest of 4% p.a., are 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 Hargaon and Narkatiaganj.


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The above loans are repayable as under: Rs in Lacs Balance as at Balance as at Disbursed to 31st March 2016 31st March 2015 Repayment Schedule

(i) Hargaon Sugar unit 1,249.34 1,874.01 5 yearly instalments ending on 30 September 2017.

(ii) Narkatiaganj Sugar unit

490.4 735.6 5 yearly instalments ending on 31 March 2018.

1,739.74 2,609.61

OTHER LONG-TERM LIABILITIES Rs. In Lacs

As at As at 31st March 2016 31st March 2015 Interest accrued but not due on borrowings 190.24 380.48 Trade and other deposits 107.6 108.74 297.84 489.22

PROVISIONS Rs. In Lacs Long-term Short-term As at As at As at As at

31st March 2016

31st March 2015 31st March 2016 31st March 2015

Provision for employee benefits Gratuity 298.15 272.8 100 100 Leave 168.09 183.77 298.15 272.8 268.09 283.77 Other provisions For warranties - - 6.29 5.33 For wealth tax - - - 4 For litigation, claims and contingencies

- - 54.95 54.95

- - 61.24 64.28 298.15 272.8 329.33 348.05

Provision for warranties A provision is recognized for expected warranty claims on products based on the management’s estimate computed


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on the basis of past experience. It is expected that the entire provision will be utilized within one year of the reporting date, since the warranty is generally for one year.

Provision for litigation, claims and contingencies

The Company has estimated the provision for pending litigation, claims and demands based on the assessment of probability for these demands being crystallizing against the Company in due course. The table below gives information about movement in litigation, claims and contingencies provisions.

Rs. In Lacs As at As at

31st March 2016

31st March 2015

Outstanding at the beginning and at the end of the year 54.95 54.95 SHORT-TERM BORROWINGS

Rs. In Lacs As at As at 31st March 2016 31st March 2015 Cash credit from Banks (secured) (repayable on demand) 51,998.95 50,248.43 Other Loans & Advances (unsecured) From Subsidiary Companies (Note 34f) 4,015.50 3,900.00 Inter-Corporate Deposits From related parties (Note 34f) 6,825.00 6,825.00 From others 3,915.00 4,190.00 66,754.45 65,163.43

Cash Credit from bank other than from District Co-operative Bank Ltd. is secured by hypothecation of the entire current assets of the Company and also by a charge on the immovable assets as follows:

I. Canning factory at Allahabad - First Charge; II. Sugar Unit at Rosa - First Charge;

III. Sugar Unit at Dhadha Bujurg (Hata) - Second Charge; IV. Sugar Units at Hargaon and Narkatiaganj - Third Charge.

In addition, Cash Credit from banks are also secured by pledge of 64,79,294 equity shares of the Company held by the promoter group companies, ranking pari-passu amongst the various lenders. Cash credit of Rs. 11,440.14 lacs (Rs. 12,156.16 lacs) from District Co-operative Bank Ltd. is secured by pledge of the Stock of Sugar pertaining to Sugar Units at Hargaon and Rosa.

Cash Credit borrowings carry interest rates ranging between 11.25% to 12.30% p.a.


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OTHER CURRENT LIABILITIES

Rs. In Lakhs As at As at

31st March

2016 31st March

2015 Trade payables Total outstanding dues of micro enterprises and small enterprises 134.22 154.69 Total outstanding dues of creditors other than micro enterprises and small enterprises

30,551.44 51,834.02

Other liabilities : Current maturities of long-term borrowings (Note 5) 7,637.94 5,124.88 Payable towards deduction against crop loan by a bank 8,046.50 - Payable towards purchase of capital goods 64.08 70.97 Payable to employees 702.44 575.78 Advance against Sales 111.06 315.52 Interest accrued but not due on borrowings, deposits etc. 1,160.52 805.27 Investor Education and Protection Fund will be credited by following amounts (as and when due) - Unclaimed dividend 3.97 4 Others - Statutory dues 238.53 345.1 Excise Duty on Closing Stocks 4,299.82 2,483.43 Crop Loan from a Bank pending disbursement to cane growers 4,390.45 3,742.46 Miscellaneous 82.45 49.57

26,737.76 13,516.98 57,423.42 65,505.69


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Notes to financial statements as at and for the year ended 31 March 2016

Tangible assets

Rs. in lacs

Freehold Land

(a) & (b)

Leasehold Land

Buildings Plant and equipments

Computer and Data

Processing equipment

Furniture and fixtures

Vehicles Office equipments

Total (c)

Cost

At 1 April 2014 2,256.43 23.50 6,287.62 81,923.42 204.46 236.78 455.17

105.27

91,492.65

Additions - - 822.80 769.39 27.59 11.77

40.00

11.41

1,682.96

Disposals - - 48.31 536.52 13.26 10.08 24.09

3.25

635.51

At 31 March 2015

2,256.43 23.50 7,062.11 82,156.29 218.79 238.47 471.08

113.43

92,540.10

Additions - - 85.46 519.67 13.50 16.22 18.61

4.21

657.67

Disposals - - - 281.75 1.47 1.18 53.74

- 338.14

At 31 March 2016

2,256.43 23.50 7,147.57 82,394.21 230.82 253.51 435.95

117.64

92,859.63


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Depreciation

At 1 April 2014 - 4.63 1,243.49 34,969.10 127.07 126.97 243.83

47.16

36,762.25

Added to opening balance of

- - 108.64 232.07 7.45 2.67 14.57

4.10

369.50

Statement of Profit & Loss

Charge for the year

- 0.79 416.73 2,280.23 33.29 21.60 36.18

20.29

2,809.11

Disposals - - 45.59 489.61 12.62 9.84 22.68

3.11

583.45

At 31 March 2015

- 5.42 1,723.27 36,991.79 155.19 141.40 271.90

68.44

39,357.41

Charge for the year

- 0.78 260.53 2,257.74 24.82 18.79 32.21

17.20

2,612.07

Disposals - - - 221.48 1.19 0.68 51.04

- 274.39

At 31 March 2016

- 6.20 1,983.80 39,028.05 178.82 159.51 253.07

85.64

41,695.09

Net Block

At 31 March 2015

2,256.43 18.08 5,338.84 45,164.50 63.60 97.07 199.18

44.99

53,182.69

At 31 March 2016

2,256.43

17.30 5,163.77 43,366.16 52.00 94.00 182.88

32.00

51,164.54


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(a) Title deeds for ` 433.26 lacs (` 433.26 lacs) are yet to be executed in favour of the Company.

(b) Includes assets held in joint ownership with others - Gross Block ` 156.98 lacs (` 156.98 lacs) and Net Block Rs.81.70 lacs (` 86.34 lacs), head-wise details of which is as under :

Freehold Land

Leasehold Land

Buildings Plant and equipments

Computer and Data

Processing equipment

Furniture and fixtures

Vehicles Office equipments

Total

At 31 March 2015

Gross Block

0.80

- 88.19 22.67 1.61 37.71 0.20

5.80

156.98

Net Block

0.80

- 63.07 7.07 0.15 14.74 0.06

0.45

86.34

At 31 March 2016

Gross Block

0.80

- 88.19 22.67 1.61 37.71 0.20

5.80

156.98

Net Block

0.80

- 61.52 5.82 0.08 13.08 0.04

0.36

81.70


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CURRENT INVESTMENTS

Rs.in Lakhs

Number of Units / shares

Face Value Per Unit /

share

As at As at

31st March 2016

31st March 2015

Non-Trade (valued at cost and fair value unless stated otherwise)

Unquoted (fully paid)Investment in Equity Instruments In Subsidiary Companies

Allahabad Canning Ltd. 50,000 10 5 5 Palash Securities Ltd. 50,000 10 5 5 Vaishali Sugar & Energy Ltd. 50,000 10 5 5 15 15 In Joint Venture Company Avadh Sugar & Energy Ltd. 25,000 10 2.5 2.5 17.5 17.5

TRADE RECEIVABLES AND OTHER ASSETS Rs.in Lakhs

As at As at

Outstanding for a period exceeding six months from the date they are due for payment

31st March 2016

31st March 2016

Unsecured, considered good 15.52 40.06 Considered doubtful 41.54 41.89 57.06 81.95

Less :Provision for doubtful trade receivables 41.54 41.89

15.52 40.06 Other receivables Secured, considered good 24.25 9.52 Unsecured, considered good 6,483.32 4,940.96 6,507.57 4,950.48 6,523.09 4,990.54

Other assets

Rs.in Lakhs

Non-current Current


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(Unsecured, considered good) As at

31st March 2016

As at 31st March

2015

As at 31st March

2016

As at 31st March

2015

Non-current Bank balance (Note 19) 15.8 15.8 - -

Interest accrued on Loans, Advances, Deposits, Investments etc.

- 6.84 5.31

Unamortised ancillary cost of arranging the borrowing

106.71 43.23 29.16 13.56

Claims and Refunds Receivable towards Subsidy & Incentives

- - 2,597.42 8,978.60

Renewable Energy Certificates entitlement - - 2,387.34 2,075.30

122.51 59.03 5,020.76 11,072.77

OTHER INCOME

Rs.in Lakhs

Year ended 31st March

2016

Year ended 31st March 2015

Interest income on Loans, deposits, advances etc. 6.2 10.51 Refund from Income Tax Department

0.17 0.27

Long-term investments 0.03 0.06 Dividend income on Long-term investments

0.1 0.08

Insurance and Other Claims 43.37 13.05 Rent and Hire Charges 26.89 21.7 Unspent Liabilities, Provisions no longer required and Unclaimed Balances adjusted 121.25 79.64

Gain on Foreign Exchange fluctuations (net) 3.32 4.36

Miscellaneous Receipts 11.65 43.44 212.98 173.11

SEGMENT INFORMATION

The primary segment reporting format is determined to be business segments as the company’s risks and rates of return are affected predominantly by differences in the products produced. Secondary information is reported


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geographically. The operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Accordingly, the Company has identified "Sugar", "Spirits", "Co-generation" and "Food processing" as the operating segments:

Sugar - Consists of manufacture, trading and sale of Sugar, Molasses and Bagasse

Spirits - Consists of manufacture and sale of Industrial Spirits (including Ethanol), Fusel Oil and Bio-Compost Co-generation - Consists of generation and transmission of Power

Food Processing Products - Consists of Canned Fruits and Vegetables, Jams, Jellies, Squashes and Juices

The Company primarily operates in India and therefore the analysis of geographical segments is demarcated into its Indian and Overseas Operations

Business segments Year ended 31st March 2016

Rs.in Lakhs

Particulars Sugar Spirits Co-

generation Food

processing Total

Revenue * Segment revenue 1,03,192.53 16,832.87 10,370.88 3,875.00 1,34,271.28 Less : Inter segment 12,117.17 - 5,567.45 - 17,684.62 Total revenue from operations (net)

91,075.36 16,832.87 4,803.43 3,875.00 1,16,586.66 Results Segment results 3,897.34 4,839.54 3,135.04 206.37 12,078.29 Unallocated Income / (Expenses) (net of unallocable expenses / income)

-585.91

Operating profit 11,492.38 Finance costs 10,774.46 Profit / (Loss) before tax 717.92 Deferred tax charge / (credit) 94.81 Net profit / (loss) 623.11 As at 31st March 2016 Rs. in lacs

Particulars Sugar Spirits Co-generation Food

processing Total

Segment assets 1,08,257.10 14,265.81 14,854.81 1,976.02 1,39,353.74 Unallocated assets 14,201.05 Total assets 1,53,554.79 Segment liabilities 48,115.86 494.33 154.77 591.11 49,356.07 Unallocated liabilities 1,11,073.13 Total liabilities 1,60,429.20 Other segment information Capital expenditure

Tangible assets 726.68 835.39 1.86 7.33 1,571.26 Depreciation 1,723.20 566.3 310.59 11.98 2,612.07 Amortization 37.59 - - - 37.59 Non-cash expenses 6.02 - - - 6.02


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Business segments Year ended 31st March 2015

Rs.in Lakhs


generation Food

processing Total

Revenue *

Segment revenue 1,28,514.44 12,957.71 11,003.13 3,778.30 1,56,253.58

Less : Inter segment 12,756.73 50.81 5,232.55 - 18,040.09 Total revenue from operations (net)

1,15,757.71 12,906.90 5,770.58 3,778.30 1,38,213.49

Results Segment results -4,595.33 3,285.27 3,621.46 87.86 2,399.26

Unallocated Income / (Expenses) (net of unallocable expenses / income)

-676.96

Operating profit 1,722.30 Finance costs 12,887.11 Profit / (Loss) before tax -11,164.81 Deferred tax charge / (credit) -3,777.71 Net profit / (Loss) -7,387.10 As at 31st March 2015 Rs.in lacs

Particulars Sugar Spirits Co-generation Food

processing Total

Segment assets 1,10,547.93 13,737.63 14,789.91 1,882.43 1,40,957.90

Unallocated assets 14,522.76

Total assets 1,55,480.66

Segment liabilities 58,914.90 575.31 133.67 673.25 60,297.13

Unallocated liabilities 1,02,687.01

Total liabilities 1,62,984.14

Other segment information Capital expenditure

Tangible assets 1,489.06 113.4 24.69 35.82 1,662.97 Depreciation 1,898.95 579.86 312.89 17.41 2,809.11 Amortization 38.18 - - - 38.18 Non-cash expenses 5.85 - - - 5.85


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GEOGRAPHICAL SEGMENTS The Company primarily operates in India and therefore the analysis of geographical segments is demarcated into its Indian and overseas operations.

Rs. in Lakhs

Year ended 31st March 2016 India Overseas Total

Revenue* Revenue from operations 1,15,763.59 823.07 1,16,586.66 Other segment information Segment assets 1,39,353.74 - 1,39,353.74

Rs. in lacs

Year ended 31st March 2015 India Overseas Total

Revenue* Revenue from operations 1,37,987.34 226.15 1,38,213.49 Other segment information Segment assets 1,40,957.90 - 1,40,957.90

Related Party Disclosures Names of Related Parties

Related parties where control exists

Subsidiary Companies

Champaran Marketing Company Limited

OSM Investment & Trading Company Limited

Hargaon Investment & Trading Company Limited

Hargaon Properties Limited Allahabad Canning Limited Palash Securities Limited Vaishali Sugar & Energy Limited

Joint Venture Company Avadh Sugar & Energy Limited Related parties with whom transactions have taken place during the year

Key Management Personnel

Shri Chandra Shekhar Nopany - Chairman-cum-Managing Director [upto 30.06.2015] and Chairman [w.e.f. 01.07.2015]

Shri Chand Bihari Patodia -Whole-Time Director [w.e.f. 01.07.2015]

Shri Dilip Patodia - President (Finance) and Chief Financial Officer

Shri Anand Sharma - Company Secretary Relatives of key management personnel

Smt. Nandini Nopany - Mother of Shri Chandra Shekhar Nopany


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Smt. Shalini Nopany - Wife of Shri Chandra Shekhar Nopany

Enterprises owned or significantly influenced by key management personnel or their relatives

Upper Ganges Sugar & Industries Limited

Sutlej Textiles & Industries Limited

SIL Investments Limited SCM Investment & Trading Company Limited

RTM Investment & Trading Company Limited


Nilgiri Plantations Limited Ronson Traders Limited

The following table provides the total amount of transactions that have been entered into with related parties for the reporting year

a. Sale of goods Rs. in lacs

Year ended Sale of fixed assets

Amount owed by related parties

Amount owed torelated parties



31-Mar-16 52.16 - - 31-Mar-15 197.65 - - b. Purchase of goods Rs. in lacs




Enterprises owned or significantly influenced by key management personnel or their relatives Upper Ganges Sugar & Industries Limited

31-Mar-16 583.12 - - 31-Mar-15 393.22 - - c. Sale of fixed assets Rs. in lacs




Enterprises owned or significantly influenced by key management personnel or their relatives Upper Ganges Sugar & Industries Limited

31-Mar-16 0.24 - - 31-Mar-15 - - - g. Investments made Rs in lacs


136

Year ended Investment

made during the year

Investment sold during

the year Closing Balance

In Subsidiary Companies Allahabad Canning Limited 31-Mar-16 - - 5 31-Mar-15 5 - 5 Palash Securities Limited 31-Mar-16 - - 5 31-Mar-15 5 - 5 Vaishali Sugar & Energy Limited 31-Mar-16 - - 5 31-Mar-15 5 - 5 In Joint Venture Company Avadh Sugar & Energy Limited 31-Mar-16 - - 2.5 31-Mar-15 2.5 - 2.5 h. Preference Share Capital Rs. in lacs

Year ended Issued

during the year

Redeemed during the

year

Closing

Balance

Enterprises owned or significantly influenced by key managerial personnel or their relatives

Sutlej Textiles & Industries Limited 31-Mar-16 - - 5000

31-Mar-15 - - 5000 i. Director's sitting fees Rs. in lacs

Key Management Personnel Year ended Transaction

during the year

Amount owed by

related parties

Amount owed to related parties

Shri Chandra Shekhar Nopany 31-Mar-16 0.4 - - 31-Mar-15 - - - Shri Chand Bihari Patodia 31-Mar-16 0.1 - - 31-Mar-15 0.08 - - j. Remuneration to Key Managerial Personnel

Rs. in lacs

Year ended

Transaction Amount owed by

Amount owed to

during the

year related parties

related parties

Shri Chandra Shekhar Nopany 31-Mar-16 - - - 31-Mar-15 43.68 * - - Shri Dilip Patodia 31-Mar-16 87.26 - - 31-Mar-15 88.19 - - Shri Anand Sharma 31-Mar-16 52.49 - - 31-Mar-15 37.72 - -

* Excludes Nil (Rs 36.00 lacs) and Nil (Rs 39.43 lacs) paid towards rent and maintenance respectively for the accommodation provided to the Managing Director which has been included under "Rent” and "Miscellaneous Expenses” in note 25.


137

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

Rs.in Lakhs



(a) Demands / Claims by various Government Authorities and others not acknowledged as debt and contested by the Company :

(i) Excise Duty & Service Tax 11,600.27 10,329.87

(ii) Sales & Entry Tax 433.41 174.22

(iii) Duty under State Acts 360.94 361.04

(iv) Others 203.88 68.28 Total * 12,598.50 10,933.41

(b) Outstanding towards Crop Loan disbursed to growers for which corporate guarantee is given to a bank

1,452.20 588.52

(c) Bank Guarantees outstanding 825.52 1,157.97

(d) Arrear Dividend (including tax) on Non-convertible Cumulative Redeemable Preference Shares (NCCRPS)

2,387.09 1,835.57

* Based on discussions with the solicitors / favourable decisions in similar cases / legal opinions taken by the Company, the management believes that it is possible but not probable the action will succeed and accordingly no provision there against is considered necessary.

Contingent Liabilities

Rs.in Lakhs

Year ended 31st

March 2016 Year ended 31st

March 2015


(i) Excise Duty & Service Tax 11,600.27 10,329.87

(ii) Sales & Entry Tax 433.41 174.22

(iii) Duty under State Acts 360.94 361.04

(iv) Others 203.88 68.28 Total * 12,598.50 10,933.41


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(b) Outstanding towards Crop Loan disbursed to growers for which corporate guarantee is given to a bank

1,452.20 588.52

(c) Bank Guarantees outstanding 825.52 1,157.97

(d) Arrear Dividend (including tax) on Non-convertible Cumulative Redeemable Preference Shares (NCCRPS)

2,387.09 1,835.57

* Based on discussions with the solicitors / favorable decisions in similar cases / legal opinions taken by the Company, the management believes that it is possible but not probable the action will succeed and accordingly no provision there against is considered necessary.

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

• The Company's Board of Directors has approved a Composite Scheme of arrangement amongst the Company, Upper Ganges Sugar & Industries Limited, Palash Securities Limited, Allahabad Canning Limited, Ganges Securities Limited, Cinnatolliah Tea Limited, Vaishali Sugar & Energy Limited, Magadh Sugar & Energy Limited, Avadh Sugar & Energy Limited in terms of the provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956 & Companies Act, 2013, to the extent applicable to restructure and de-link its multiple business in separate new entities w.e.f. 1 April 2015 subject to necessary approvals. The Company is in the process of obtaining necessary approvals from various concerned authorities and pending such approvals, no accounting adjustment has been made in these financial statements.

• The net worth of the Company is completely eroded due to losses in earlier years. However, the Company earned profits during the current year consequent to improved realisation and sugar yields. Further, the Company is also in the process of business restructuring as mentioned in note 37 above. In view of the above, the management is certain that the Company would be in a position to generate positive cash flows and profits in future and accordingly, these financial statements have been drawn as per the going concern assumption.

Rs. in lacs

31st March 2016 31st March 2015

(i) The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of the accounting year

Principal amount due to micro and small enterprises 97.76 130.03

Interest due on above 1.59 0.78 Total 99.35 130.81


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(ii)

The amount of interest paid by the buyer in terms of section 16 of the MSMED Act 2006 along with the amounts of the payment made to the supplier beyond the appointed day during the accounting year

249.84 144.03

(iii)

The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the MSMED Act 2006.

24.82 10.27

(iv) The amount of interest accrued and remaining unpaid at the end of the accounting year.

36.46 24.66

(v)

The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the MSMED Act 2006

10.05 13.61

UNADITED FINANCIAL RESULTS FOR NINE MONTHS ENDED 31.12.2016, FOR THE OUDH SUGAR MILLS LIMITED

The Oudh Sugar Mills Limited Balance sheet as at 31 December 2016

As at As at 31/Dec/2016 31/Dec/2015 Rs in lacs Rs. in lacs

Equity and Liabilities Shareholders’ Funds Share Capital 7,604.43 7,604.43 Reserves and Surplus (7,219.19) (21,946.30) Bearer Equity Share Coupons - 0.06 385.24 (14,341.81) Non-current Liabilities Long-term borrowings 28,062.14 37,306.58 Other long-term liabilities 169.19 430.26 Long-term provisions 342.85 331.87

28,574.18 38,068.71 Current Liabilities Short-term borrowings 43,151.69 33,170.13 Trade payables Total outstanding dues of micro enterprises and small enterprises 99.01 40.73 Total outstanding dues of creditors other than micro enterprises and small enterprises

20,687.39 30,123.79


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Other current liabilities 26,488.66 20,606.46 Short-term provisions 1,858.44 349.06

92,285.19 84,290.17 TOTAL 121,244.61 108,017.07 Assets Non-Current Assets Fixed Assets Tangible Assets 51,293.87 51,468.97 Intangible Assets 27.32 58.19 Capital Work-in-Progress 863.24 724.99 Non-current Investments 1,080.25 1,080.25 Deferred tax assets (net) 8,219.46 12,904.91 Loans and advances 122.05 227.27 Other Non-current assets 110.78 127.05

61,716.97 66,591.63 Current assets Current Investments 17.50 17.50 Inventories 47,611.08 33,991.61 Trade Receivables 7,447.58 3,178.85 Cash and bank balances 290.64 465.79 Loans and advances 1,432.25 1,200.38 Other current assets 2,728.59 2,571.31

59,527.64 41,425.44 TOTAL 121,244.61 108,017.07

The Oudh Sugar Mills Limited Statement of profit and loss for the nine months Ended 31 December 2016 9 months ended 9 months ended 31-Dec-16 31-Dec-15 Rs. in lacs Rs. in lacs Income Revenue from Operations (gross)

108,388.22

84,755.87 Less : Excise duty

2,554.78

2,984.03 Cess

2,984.48

589.11 Revenue from Operations (net)

102,848.96

81,182.73 Other Income

121.43

114.67 Total Revenue (I)

102,970.39

81,297.40


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Expenses Cost of Raw Materials consumed

43,675.81

34,144.70 Purchase of Traded Goods

455.59

412.64 Decrease / (Increase) in Inventories of Finished Goods, Traded Goods and Goods under Process

23,738.13

33,550.20

Employee benefits expenses 4,618.32

3,750.93

Other expenses 7,129.17

6,301.13

Total (II) 79,617.02

78,159.60

Profit before finance costs, tax, depreciation and amortization [(I) - (II)]

23,353.37

3,137.80

Depreciation and Amortization expenses 1,971.82

2,002.36

Finance Costs 8,068.75

7,977.83

Profit / (Loss) before tax 13,312.80

(6,842.39)

Less / Add : Exceptional item -

-


(6,842.39)

Tax expenses Current tax (MAT)

1,465.74

- Deferred tax charge / (credit)

4,590.64

-

6,056.38

- Profit / (Loss) for the year

7,256.42

(6,842.39) Earnings per equity share [Nominal value of share Rs. 10 (Rs. 10)]

Basic & Diluted 26.51

(28.04)


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Transferor Company

Independent Auditor's Report

To the Members of

Upper Ganges Sugar & Industries Limited Report on the Financial Statements

We have audited the accompanying financial statements of Upper Ganges Sugar & Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have


143

obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the financial statements.

BASIS FOR QUALIFIED OPINION

As indicated in Note 14 to the financial statements, the Company continues to carry Deferred Tax Asset (DTA) (net) of 'Rs. 7,017.61 lacs (after reversal of 'Rs.199.75 lacs during the year) up to March 31, 2016, based on the future profitability projections made by the management. In our opinion, in the absence of virtual certainty about the above projections, as required in terms of Accounting Standard - 22, had the above impact been considered, loss for the year would have been ' 5,898.35 lacs as against the reported profit of Rs. 1,119.26 lacs and reserves & surplus as at the balance sheet date would have been (-) 'Rs. Rs.7,239.11 lacs as against the reported figure of (-) 'Rs. 221.50 lacs. Our audit opinion on the financial statements for the previous year was also qualified in respect of the above matter.

QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter stated in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31, 2016, of its profit, and its cash flows for the year ended on that date.

EMPHASIS OF MATTER We draw attention to Note 36 to the financial statements in respect of composite scheme of arrangement to restructure and de-link the Company's multiple businesses into separate entities w.e.f 1st April, 2015 subject to necessary approvals, more fully described therein. Pending such approvals, no adjustment has been made in these accounts. Our opinion is not qualified in respect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's report) Order, 2016 ("the Order") issued by the Central

Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143 (3) of the Act, we report that: (a) We have sought and obtained all the information and explanations which to the best of our knowledge

and belief were necessary for the purpose of our audit; (b) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our

opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) Except for the effects of the matter stated in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) The matter described in the Basis for Qualified Opinion paragraph above in our opinion may have an


144

adverse effect on functioning of the Company. (f) On the basis of written representations received from the directors as on March 31, 2016, and taken on

record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of section 164 (2) of the Act;

(g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above;

(h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

(i) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 7 and 35 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For S.R.Batliboi & Co. LLP



Kamal Agarwal

Partner

Membership no.: 58652

Place : Kolkata

Date : May 13, 2016


145

Annexure 1 referred to in paragraph 1 under the heading “Report on Other Legal and Regulatory Requirements” of our report of even date to the members of Upper Ganges Sugar & Industries Limited as at and for the year ended March 31, 2016

(i) (a) The Company has maintained proper recordsshowing full particulars, including quantitative details and

situation of fixed assets. (b) Fixed assets were physically verified by the management during the year in accordance with a planned

programme of verifying all of them once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to information and explanations given by the management, the title deeds of immovable properties, included in Fixed Assets are held in the name of the Company except in respect of land aggregating 'Rs. 25.42 lacs where the title deeds are yet to be executed in favour of the Company. Further, in respect of freehold land and leasehold land aggregating to 'Rs. 105.21 lacs of Gross Bock (Net Block Rs. 10.66 lacs) as at March 31, 2016, original title deeds were not available with the Company since as explained, the title deeds thereof are lying with the banks as security towards various credit facilities and hence we are unable to comment on the same

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noted on such physical verification except for in one of the units fully detailed in the note 23 to the financial statements which have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees and securities granted in respect of which provisions of section 185 and 186 of the Companies Act 2013 are applicable and hence not commented upon.

(v) In respect of deposits accepted in earlier years and repaid during the year, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Companies Act, 2013, and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, in respect of its products and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases. (b) According to the information and explanations given to us, no undisputed dues in respect of provident fund, employees' state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.


146

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, service tax, duty on custom, duty of excise and value added tax on account of any dispute, are as follows:

Name of the statute Nature of dues Amount (Rs. in lacs)

Period to which the amount relates

Forum where dispute is pending

Central Excise and Customs Act, 1944

Disallowance of Cenvat credit on Certain inputs and capital goods

212.42

1993-1994 to 2015-16

Commissioner (Appeals)/ CESTAT/High Court

Disallowance of Service Tax on discount to whole sellers and other items

2.92 1997-1998 to 1998-1999, 2005-2006

CESTAT

Prevention of (Water) Pollution Act

Water Cess 1.41 1989-1990 High Court, Allahabad

Bihar Sugarcane (Supply & Regulation) Act,1981

Interest on Cane cess 3.37 1984-85 to 1986-87, 1991- 92, 1994-95 to 1998-99, 2003-04 & 2004-05

Certificate Officer, Samastipur

Bihar VAT Act, 2005 VAT/ CST on exempted sale, C Form etc.

16.64 2008-09 & 2009-2010

Joint Commissioner Commercial Tax (Appeal)

(viii) According to information and explanations given by the management, we are of the opinion that the

Company has not defaulted in repayment of dues to banks or government. The Company did not have any outstanding dues in respect of a financial institutions or debenture holders during the year.

(ix) According to the information and explanations given by the management, term loans were applied for the purpose for which the loans were obtained. The Company has not raised any money way of initial public offer / further public offer / debt instruments during the year.

(x) We report that the Company has noticed/ reported during the year for shortages amounting to ' 2,206.08 lacs in the inventory of Finished Goods and Work-in- Progress at one of the units of the Company, resulting out of overstatement of yield recorded in earlier years as more fully described in Note 23 of the financial statements. The Company has made necessary accounting adjustments in the financial statements.

(xi) According to the information and explanations given by the management, the provisions of section 197 read with Schedule V of the Act is not applicable to the company and hence reporting under clause 3(xi) are not applicable and hence not commented upon.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or


147

partly convertible debentures during the year under review and hence not commented upon. (xv) According to the information and explanations given by the management, the Company has not entered

into any non-cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company

Annexure 2 to the Independent Auditors' Report (referred to in our report of even date to the members of Upper Ganges Sugar & Industries Limited as at and for the year ended 31st March, 2016) Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act") We have audited the internal financial controls over financial reporting of Upper Ganges Sugar & Industries Limited ("the Company") as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS The Company's Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

AUDITOR'S RESPONSIBILITY Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.


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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

QUALIFIED OPINION According to the information and explanation given to us and based on our audit, the following material weakness has been identified as at March 31, 2016: The Company's internal financial controls over recognition of deferred tax asset and controls over assessing virtual certainty in recognition of deferred tax asset, were not operating effectively which has resulted in material misstatement whereby the Company has recognized deferred tax assets without establishing virtual certainty under Accounting Standard 22 - Accounting for Taxes on Income notified under the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. A 'material weakness' is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. In our opinion, the Company has, in all material respects, maintained adequate internal financial controls over financial reporting as of March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India, and except for the effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company's internal financial controls over financial reporting were operating effectively as of March 31, 2016.


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EXPLANATORY PARAGRAPH We also have audited, in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act, the standalone financial statements of Upper Ganges Sugar & Industries Limited, which comprise the Balance Sheet as at March 31, 2016, and the related Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2016 standalone financial statements of Upper Ganges Sugar & Industries Limited and has affected our opinion on the standalone financial statements of the company and we have issued a modified opinion on the standalone financial statements dated May 13, 2016.

AnnexureI

Balance Sheet

Rs. In Lacs

EQUITY AND LIABILITIES

Shareholders' Funds As at 31st March 2016



Share Capital 4,155.73 4,155.73 1155.73 Reserves and Surplus -221.5 -1,344.70 4440.40

3,934.23 2,811.03 5596.13 Non-current Liabilities Long-term borrowings 18,617.03 17,225.32 21018.46 Other long-term liabilities 540.23 650.86 716.42 Long-term provisions 459.45 784.04 589.83 19,616.71 18,660.22 22324.71 Current Liabilities Short-term borrowings 38,910.17 38,390.65 41639.60 Trade payables Total outstanding dues of micro enterprises and small enterprises

86.17 113.52

Total outstanding dues of creditors other than micro enterprises and small enterprises

25,937.16 35,172.21 30518.71

Other current liabilities 16,862.55 9,747.01 7758.65 Short-term provisions 269.26 275.97 264.20 82,065.31 83,699.36 80181.16

Total 1,05,616.25 1,05,170.61 108102.00

ASSETS

Non-Current Assets

Fixed Assets


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Tangible Assets 33,044.31 34,448.74 36233.96

Intangible Assets 33.85 59.27 84.54

Capital Work-in-Progress 67.63 7.56 7.31

Non-current Investments 2,114.14 2,114.14 2114.14

Deferred tax assets (net) 7,017.61 7,217.36 4036.85

Loans and advances 564.78 597.1 500.61

Other Non-current assets 93.65 76.7 95.77

42,935.97 44,520.87 43073.18

Current assets

Current Investments 17.5 17.5 -

Inventories 52,921.77 48,079.14 59156.73

Trade Receivables 4,209.96 3,660.49 1826.18

Cash and bank balances 1,692.43 1,236.74 855.66

Loans and advances 1,112.18 1,134.64 1650.30

Other current assets 2,726.44 6,521.23 1539.95

62,680.28 60,649.74 65028.82

Total 1,05,616.25 1,05,170.61 108102.00

STATEMENT OF PROFIT AND LOSS


2016


2015

Year Ended 31st March

2014 INCOME Revenue from Operations (Gross) 87,697.16 88,618.97 81849.73 Less : Excise duty 3,042.87 2,774.61 3003.79 Cess 924.74 560.16 471.38 Revenue from Operations (net) 83,729.55 85,284.20 78374.56 Other Income 379.94 282.16 521.96 Total Revenue (I) 84,109.49 85,566.36 78896.52 EXPENSES Cost of Raw Materials consumed 66,388.95 61,645.99 61487.30 Purchase of Traded Goods 852.87 808.57 950.44 Decrease / (Increase) in Inventories of Finished Goods, Traded Goods and Goods under Process

-3,604.48 11,164.13 -1357.17


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Employee benefits expenses 5,736.53 5,402.38 4951.26 Other expenses 6,759.32 6,878.78 6486.80 Total (II) 76,133.19 85,899.85 72522.63 Profit / (Loss) before finance costs, tax, depreciation and amortization [(I) - (II)]

7,976.30 -333.49 6373.89

Depreciation and Amortization expenses 1,397.93 1,702.23 2741.37 Finance Costs 5,579.66 6,467.27 6733.18 Profit / (Loss) before tax 998.71 -8,502.99 -3100.66 Tax expenses Current tax [after adjusting ' 13.38 lacs (' Nil) for earlier years]

55.52 85.76 98.80

Deferred tax charge / (credit) 199.75 -3,051.62 -1260.80 Provision for Income Tax no longer required writen back

-375.82 - -

Total tax expense / (credit) -120.55 -2,965.86 -1161.28 Profit / (Loss) for the year 1,119.26 -5,537.13 -1939.38 Earnings per equity share [nominal value of share Rs. 10 each] Basic & Diluted (') 5.93 -49.84 -16.78

Cash Flow Statement

A) CASH FLOW FROM OPERATING ACTIVITIES:


2016


2015


2014 Profit / (Loss) before tax 998.71 -8,502.99 -3100.66 Adjustment to reconcile profit / (loss) before tax to net cash flows

Depreciation and Amortization expenses 1,397.93 1,702.23 2741.37 Finance Costs 5,579.66 6,467.27 0.40

Loss/(Profit) on fixed assets sold / discarded (net) 17.78 -38.99 0.21

Bad Debts, irrecoverable claims and advances written off

0.36 - 9.52

Provision for bad and doubtful debts / advances 21.28 19.85 4.32

Molasses Storage & Maintenance Reserve 3.94 2.34 Cane Purchase Tax remission -333.57 Cane Commission Remission -479.98 - -183.35

Unspent Liabilities and unclaimed balances adjusted -67.73 -72.31 -68.85

Interest Income -136.84 -99.04 -100.72 Dividend Income -101.69 -50.96 -80.96 Operating Profit before Working Capital Changes :

7,233.42 -572.6 5620.89


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(Decrease)/Increase in Trade Payables -8,714.69 4,837.83 4485.27 Increase in Long Term Provisions 51.23 194.21 19.89

(Decrease) / Increase in Short Term Provisions -6.71 11.77 -14.84

Increase in Other Current Liabilities 5,299.16 2,552.03 -6557.19

Increase / (Decrease) in Other Long Term Liabilities 5 -6.05 -0.04

(Increase) in Trade Receivables -549.83 -1,851.65 934.22 Decrease / (Increase) in Non-Current Loans & Advances

2.63 -1.75 0.09

(Increase) / Decrease in Current Loans & Advances -7.53 517.59 -531.83

(Increase) / Decrease in Other Non Current Assets -16.95 19.07 -80.77

Decrease/ (Increase) in Other Current Assets 3,800.20 -4,981.36 -1444.57 (Increase) / Decrease in Inventories -4,842.63 11,077.59 -1022.83 Cash Generated from Operations: 2,253.30 11,796.68 1408.29 Direct Taxes Refund / (Paid) -29.12 -77.49 -93.10 Net Cash from Operating Activities 2,224.18 11,719.19 1315.19 (B) CASH FLOW FROM INVESTING ACTIVITIES:

Proceeds from sale of Tangible Assets 8.19 60.18 18.92 Purchase of Fixed Assets including CWIP and Capital Advances

-687.12 -466.64 -4100.13

Purchase of Current Investments - -17.5 - Loans Received Back -1.45 0.42 1.67 Interest Received 131.43 99.12 107.99 Dividend Received 101.69 50.96 80.96 (Deposits) / Withdrawal under Tea Development Account Scheme (net)

13.37 -137.84 130.57

(Investments) in / Redemption of bank deposits (having original maturity of more than three months) (net)

362.34 -379.59 7.75

Receipt of Capital Subsidy 585.34 - 50.87 Net Cash Used in Investing Activities 513.79 -790.89 3701.40 (C) CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds from issuance of Preference Share Capital - 3000 Repayment of Long Term Borrowings -3754.74 -4281.26 -4051.74 Proceeds from Long Term Borrowings 7085 - 11921.00 Repayment / Proceeds from Short Term Borrowings (net)

199.52 -3530.45 1453.19

Repayment of Loan to Subsidiary Company -52.5 -22.5 Loan from Subsidiary Company 372.5 304 Interest Paid -5646.49 -6295.88 -6848.09 Other Borrowing Cost -123.23 -100.72 99.87


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Net Cash from Financing Activities -1919.94 -10926.81 2374.49 Net Changes in Cash & Cash Equivalents (A+B+C) 818.03 1.49 -11.72 Cash & Cash Equivalents at the beginning of the year

418.28 416.79 428.51

Cash & Cash Equivalents at the end of the year * 1236.31 418.28 416.79


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Material Notes to financials of Upper Ganges Sugar & Industries Limited for the year ended 2015-16

Summary of Significant Accounting Policies (a) Use of Estimates The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period and the results from operations during the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. (b) Tangible Fixed Assets Fixed Assets are stated at cost less accumulated depreciation and impairment losses determined, if any. The cost comprises the purchase price inclusive of duties (net of CENVAT Credit), taxes, incidental expenses, erection / commissioning expenses and borrowing costs if capitalisation criteria are met and directly attributable cost of bringing the assets to its working condition for the intended use. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. This applies mainly to components for machinery. When significant parts of fixed assets are required to be replaced at intervals, the company recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed asset, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred. Gains or losses arising from derecognition of tangible fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. Machinery spares which can be used only in connection with an item of tangible fixed asset and whose use as per technical assessment is expected to be irregular, are capitalised and depreciated over the residual life of the respective assets. (c) Depreciation on Tangible Fixed Assets The classification of plant and machinery into continuous and non-continuous process is done as per technical certification and depreciation thereon is provided accordingly. Depreciation on fixed assets is provided under Straight Line basis using the rates arrived at based on the useful lives estimated by the management. The company has used the following rates to provide depreciation on its fixed assets.

Class of Assets Useful Lives estimated by the management (Years)

Factory Buildings 5 to 30


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Non-factory Buildings 5 to 60 Plant and Equipments 5 to 40 Computer and Data Processing Equipments 3 to 6 Furnitures and Fixtures 10 Vehicles 8 to 10 Office Equipments 5

Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis with reference to the date of addition / disposal. The management has estimated, supported by independent assessment by professionals, the useful lives of certain plant and equipment as 5 to 18 years. These lives are lower than those indicated in schedule II. Leasehold properties are depreciated over the primary period of lease or their respective useful lives, whichever is shorter. (d) Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets being Specialized Software are amortised on a straight line basis over a period of 5 years. (e) Leases Operating Lease Leases where the lessor effectively retains substantially all the risks and benefits of the ownership of the leased assets are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on straight line basis over the lease term. Finance Lease

Assets acquired under lease agreements which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased items, are capitalized at the lower of the fair value of the leased property and present value of minimum lease payment at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and the reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of their liability. Finance charges are charged directly to the expenses account. (f) Borrowing Costs Borrowing cost includes interest, amortisation of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.


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(g) Impairment of Fixed Assets

The carrying amounts of assets are reviewed at each balance sheet date to determine, if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount which is the greater of the asset's net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. Depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

(h) Government Grants and Subsidies Grants and subsidies from the government are recognized when there is reasonable certainty that the grant/subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset. Government grants of the nature of promoters' contribution are credited to capital reserve and treated as a part of shareholders' funds. (i) Investments Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. (j) Inventories Raw Materials, components, stores and spares are valued at lower of cost and net realizable value. However, these items are considered to be realizable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. Cost of raw materials and stores and spares is determined on annual weighted average method / moving average method. Goods under process, finished goods (including Power Banked), traded goods and standing crops, are valued at lower of cost and net realizable value. Finished goods, Goods under process and Standing Crops include cost of conversion and other costs incurred in bringing the inventories to their present location and condition based on normal operating capacity. Cost is determined on weighted average basis. By products, Country crop and Saleable scraps, whose cost is not identifiable, are valued at estimated net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.


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(k) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, which usually coincides with delivery of the goods. The Company collects Sales Tax(s) and Value Added Taxes (VAT) on behalf of the government and, therefore, these not being economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty and Cess deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the period.

Income from Renewable Energy Certificates (RECs) is recognised at estimated realisable value on confirmation of RECs by the concerned Authorities. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss. Dividend income is recognized when the shareholders' right to receive the payment is established by the reporting date. Insurance and other claims, Interest on doubtful loans and advances to cane growers and Compensation receivable in respect of land surrendered to / acquired by the Government due to uncertainty in realisation, are accounted for on acceptance basis. (l) Foreign Currency Translation 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. 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. Exchange differences Exchange differences arising on the settlement/ conversion of monetary items are recognized as income or expenses in the period in which they arise. (m) Retirement and other Employee Benefits Retirement benefits in the form of Provident and Pension Funds are defined contribution schemes and are charged to the statement of profit and loss of the period when the contributions to the respective funds are due. The Company has no obligation other than contributions to the respective funds. The Company recognises contribution payable to the provident fund scheme as an expenditure, when an employee renders the selected service. Gratuity liability being a defined benefit obligation is provided for on the basis of actuarial valuation on


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projected unit credit method made at the end of each financial year. Short term compensated absences are provided for based on estimates. The Company treats accumulated leaves expected to be carried forward beyond twelve months, as long term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the end of each financial year. The company does not have an unconditional right to defer its settlement for the period beyond 12 months and accordingly entire leave liability is shown as current liability. Actuarial gains / losses are immediately taken to the statement of profit and loss and are not deferred. (n) Income taxes

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to tax authorities in accordance with Income Tax Act, 1961 enacted in India. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the period and reversal of timing differences of earlier years.

The deferred tax for timing differences between the book and tax profit for the period is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the reporting date. Deferred tax asset is 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 is recognized only to the extent that there is virtual certainty supported by convincing evidence that sufficient taxable income will be available in future against which such deferred tax asset can be realized. The carrying amount of deferred tax assets is reviewed at each reporting date. The company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such writedown is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient taxable income will be available in future. At each reporting date, the Company reassesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized. (o) Segment Reporting 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. Inter Segment Transfers The Company accounts for inter segment transfers at mutually agreed transfer prices.


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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".


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Unallocated items Unallocated items include general corporate income and expense items which are not allocated to any business segment. Segment accounting policies The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole. (p) Earnings Per Share Basic Earning per Share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted number of equity shares outstanding during the period. 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. (q) Cash and Cash Equivalents Cash and cash equivalents in the cash flow statement comprise of cash at bank and on hand and short-term investments with an original maturity of three months or less.

(r) 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 reporting date.

(s) Provisions A provision is recognized when the company 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 the best estimate required to settle the obligation, at the reporting date. These are reviewed at each reporting date and adjusted to reflect the current management estimates

(t) Contingent Liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. Material Notes to financials of Upper Ganges Sugar & Industries Limited for the year ended 2015-16

Terms of redemption of Preference Shares The Non-Convertible Cumulative Redeemable Preference Shares (NCCRPS) carries dividend @12% per annum. NCCRPS shall be redeemable at par on 24th September, 2019 being 5 years from the date of allotment i.e. 25th September, 2014 with a right vested to the Board of Directors to redeem it earlier, but not before 12


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months from the date of issue.The Dividend is payable annually, subject to the availability of the profit. However, the unpaid cumulative dividend, if any, is payable along with the redemption of NCCRPS.

LONG-TERM BORROWINGS Non-current portion Current portion As at As at As at As at

31st March 2016

31st March 2015

31st March 2016 31st March 2015

Term Loans (secured) : From Banks - Under Project Finance / Corporate Loan Scheme

6,080.00 8,380.00 2,300.00 2,100.00

Under Financial Assistance Scheme (SEFASU 2014)

3,827.47 5,741.00 1,913.53 -

Under Financial Assistance Scheme (SOFT 2015 Central)

4,070.00 - - -

Under Financial Assistance Scheme (SOFT 2015 Bihar)

2,412.00 - 603 -

From Sugar Development Fund 2,227.56 3,104.32 876.76 1,211.68 Other Loans and Advances (unsecured) : Fixed Deposits from related parties (Note 33e)

- - - 9.8

Fixed Deposits from others - - - 433.2 18,617.03 17,225.32 5,693.29 3,754.68 Less : Amount disclosed under the head

5,693.29 3,754.68

“other current liabilities” (Note 9) Net amount 18,617.03 17,225.32 - -

(a) Term Loans from Banks under project finance / corporate loan scheme, carry interest in the range of 11.85% to 12.75%

and are secured by first mortgage / charge on all the immovable and movable assets (save and except book debts), present and future, of the Company’s Sugar Units at Seohara (including Co-generation plant), Sidhwalia & Hasanpur and Distillery unit at Seohara, ranking pari passu amongst the various lenders, subject to prior charges created on movables for working capital borrowings from the Company’s bankers. Further, the term loan of ` 3,300 lacs (` 4,400 lacs) is also secured by pledge of certain shares held as investments by the Company and its subsidiary Company (Refer note 13a).

The above loans are repayable as under.

Disbursed to Balance as at 31st March 2016 Balance as at 31st March 2015/ Repayment Schedule


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(i) Seohara Sugar Unit

3,300.00 4,400.00 20 Quarterly installments ending on January 2019.

(ii) Sidhwalia Sugar Unit

3,400.00 4,000.00 20 Quarterly installments ending on June 2020.

(iii) Hasanpur Sugar and Co-Generation Unit

1,680.00 2,080.00 19 Quarterly installments ending on September 2019.

8,380.00 10,480.00

(b) Term Loans from Punjab National Bank (PNB) & State Bank of India (SBI) under Financial Assistance

Scheme (SEFASU 2014) carry interest of 12% and 12.50% p.a. respectively and is repayable in monthly / quarterly installments ending on March 2019. The Company is entitled to Interest subvention from Government of India upto 12% as per the terms of schedule and the same will be directly reimbursed to Banks by Department of Food & Public Distribution and hence no liability towards interest of 12% p.a. has been provided in these accounts. The above loan is secured by the first pari-passu charge on all the fixed assets, both present and future of the Company's Sugar unit at Seohara, Sidhwalia and Hasanpur. The term loan from PNB is further secured by 3rd pari-passu charge on all current assets of the above sugar units.

(c) Term loan from a bank under Financial Assistance Scheme of the Government of India (SOFT Loan 2015), carry interest rate in the range of 10.60% to 11% p.a. and repayable in 20 equal quaterly instalments by 30th september, 2022. The Company is entitled to interest subvention from the Government of India upto 10% for first year as per terms of the Scheme and the same will be reimbursed directly to banks by the Department of Food & Public Distribution and hence, no liability towards interest under subvention has been provided in these accounts. The above loans are secured/ to be secured by the first parri-passu charge on all the fixed asets,both present and future, of all sugar units of the Company at Seohara,Sidhwalia and Hasanpur

(d) Term loan from a bank under Financial Assistance Scheme of the State Government of Bihar (SOFT Loan 2015), carry interest rate of 13% p.a. and repayable in 20 equal instalments by 31st March, 2021. The Company is entitled to interest subvention from the Government of Bihar upto 12% for first year and 10% there after as per terms of the Scheme and the same will be reimbursed directly to banks by the State Government of Bihar and hence, no liability towards interest under subvention has been provided in these accounts. The above loans are secured/ to be secured by the first parri-passu charge on all the fixed asets,both present and future, of all sugar units of the Company at Seohara,Sidhwalia and Hasanpur

(e) Term loans from the Sugar Development Fund, carry interest @ 4% p.a. and are secured by a second charge on all the immovable and movable assets (save and except book debts), present and future of the Company's Sugar unit at Sidhwalia (including Co-generation Plant).

The above loans are repayable as under.

Disbursed to Balance as at

31st March 2016 Balance as at 31st March 2015 , Repayment Schedule

(i) Seohara Co-generation unit

- 334.92 10 half yearly installments ending on September

2015.


163

(ii) Sidhwalia Sugar unit

2,701.59 3,376.99 5 yearly installments ending on September 2019.

(iii) Sidhwalia Co-generation unit

402.73 604.09 10 half yearly installments ending on February

2018.

3,104.32 4,316.00

OTHER LONG-TERM LIABILITIES

As at As at 31st March 2016 31st March 2015 Interest accrued but not due on borrowings 508.93 624.56 Trade and other deposits 31.3 26.3 540.23 650.86

PROVISIONS Long-term Short-term As at As at As at As at

31st March 2016 31st March 2015 31st March 2016

31st March 2015

Provision for employee benefits Gratuity (Note 30) 459.45 417.27 100 100 Leave - - 134.8 135.89 459.45 417.27 234.8 235.89 Other provisions For income tax - 366.77 - - For wealth tax - - - 5.62 For litigation, claims and contingencies

34.46 34.46

- 366.77 34.46 40.08 459.45 784.04 269.26 275.97

PROVISION FOR LITIGATION, CLAIMS AND CONTINGENCIES The Company has estimated the provision for pending litigation, claims and demands based on the assessment of probability for these demands being crystallising against the Company in due course. The table below gives information about movement in litigation, claims and contingencies provisions. As at As at

31st March 2016

31st March 2015

Outstanding at the beginning and at the end of the year 34.46 34.46


164

SHORT-TERM BORROWINGS As at As at

31st March 2016

31st March

2015 Cash credit from Banks (secured) (repayable on demand) 34,585.67 33,236.15 Other Loans & Advances (unsecured) From a Subsidiary Company (Note 33e) 1,254.50 934.5 Inter-Corporate Deposits From related parties (Note 33e) 1,585.00 1,585.00 From others 1,485.00 2,635.00 38,910.17 38,390.65

(a) Cash credit borrowings from Banks, other than from District Co-operative Bank Ltd. and DCB Bank Ltd. (Commodity Finance) are secured by hypothecation of the current assets of the Company ranking pari passu amongst the various lenders. In addition, cash credit borrowings from State Bank of India, Punjab National Bank and DCB Bank Ltd. is further secured by a charge on the immovable assets as follows :

i. Cinnatolliah Tea Unit - First Charge; ii. Hasanpur Sugar Mills - Second Charge; iii. Seohara Sugar Unit - Third Charge (ranking pari-passu between the lenders); iv. Bharat Sugar Mills - Third Charge.

(b) Cash credit of ` 15,126.28 lacs (` 11,549.24 lacs) from District Co-operative Bank Ltd. and DCB Bank Ltd. (Commodity Finance) are secured by pledge of the stock of sugar pertaining to Sugar units at Seohara and Sidhwalia.

(c) Cash Credit borrowings carry interest ranging between 11.25% to 12.90% p.a.

OTHER CURRENT LIABILITIES As at As at

31st March

2016 31st March

2015 Trade payables -total outstanding dues of micro enterprises and small enterprises (refer Note 37)

86.17 113.52

-total outstanding dues of creditors other than micro enterprises and small enterprises

25,937.16 35,172.21

Other liabilities : Current maturities of long-term borrowings (Note 5) 5,693.29 3,754.68 Payable towards deduction against crop loan 4,996.88 2,149.18 Payable towards purchase of capital goods 69.19 116.93 Payable to employees 696.7 571.54 Advance against Sale of goods/fixed assets 131.31 608.89 Interest accrued but not due on borrowings, deposits etc. 275.19 349.62 Investor Education and Protection Fund will be credited by following amounts (as and when due) -


165

Unclaimed Matured Fixed Deposits - 0.06 Unclaimed dividend 1.21 1.21 Others - Statutory dues 161.12 239.05 Excise Duty on Closing Stocks 3,411.18 1,908.95 Crop Loan from a Bank pending disbursement to cane growers 1,340.75 - Miscellaneous 85.73 46.9 16,862.55 9,747.01 42,885.88 45,032.74


166

TANGIBLE ASSETS

Cost Freehold Land (a)

Leasehold Land

Buildings equipments

Plant and and Data Processing equipment

Computer and fixtures

Furniture

Vehicles

Office equipments

Total ©

At 1 April 2014

889.35 94.55 4,759.91 57,027.31 186.63 188.02 355.28 62.15 63,563.20

Additions 34.84 - 34.97 163 20.53 9.86 24.97 3.43 291.6 Disposals - - 9 153 12.98 36.76 22.74 2.5 236.98 At 31 March 2015

924.19 94.55 4,785.88 57,037.31 194.18 161.12 357.51 63.08 63,617.82

Additions - - 7 487.91 6.07 11.89 61.45 5.07 579.39 Disposals - - 11.5 819.13 (b) 5.12 10.4 37.42 1.09 884.66 At 31 March 2016

924.19 94.55 4,781.38 56,706.09 195.13 162.61 381.54 67.06 63,312.55

Depreciation At 1 April 2014

- 94.55 1,162.46 25,604.74 114.05 134.19 197.54 21.71 27,329.24

Adjusted with opening balance of General Reserve

126.14 216.81 7 3.91 14.57 10.77 379.2

Charge for the year

- - 111.97 1,484.42 28.36 9.27 29.59 12.82 1,676.43

Disposals - - 8.16 140.37 12.34 35.62 17.17 2.13 215.79


167

At 31 March 2015

- 94.55 1,392.41 27,165.60 137.07 111.75 224.53 43.17 29,169.08

Charge for the year

- - 104.47 1,203.66 (b) 18.15 8.38 27.32 10.53 1,372.51

Disposals - - 3.02 221.25 4.88 9.87 33.28 1.05 273.35 At 31 March 2016

- 94.55 1,493.86 28,148.01 150.34 110.26 218.57 52.65 30,268.24

Net Block At 31 March 2015

924.19 - 3,393.47 29,871.71 57.11 49.37 132.98 19.91 34,448.74

At 31 March 2016

924.19 - 3,287.52 28,558.08 44.79 52.35 162.97 14.41 33,044.31

(a) Title deeds for Rs. 25.42 lacs (Rs. 25.42 lacs) are yet to be executed in favour of the Company. (b) Includes Rs 585.34 lacs which has been decapitalised on account of Capital Subsidy received during the year and depreciation of ` 174.40 lacs thereon provided in earlier

years has been reversed during the year.

(c) Includes assets held in joint ownership with others, Gross Block ` 264.74 lacs (` 264.81 lacs) and Net Block ` 151.16 lacs (` 157.33 lacs), details of which is as under :

Freehold Land (a)

Leasehold Land

Buildings equipments

Plant and Data Processing equipment

Computer and fixtures

Furniture

Vehicles

Office equipments

Total ©

At 31 March 2015 Gross Block 2.47 - 199.5 33.67 1.54 23.19 0.08 4.36 264.81 Net Block 2.47 - 138.14 10 0.08 6.34 0.01 0.29 157.33 At 31 March 2016 Gross Block 2.47 - 199.43 33.67 1.54 23.19 0.08 4.36 264.74 Net Block 2.47 - 134.8 8.28 0.08 5.24 - 0.29 151.16


168

NON-CURRENT INVESTMENTS Number of Face Value As at As at Units /

shares Per Unit /

share 31st March

2016 31st March

2015 Non Trade (valued at cost unless stated otherwise)

Quoted (fully paid) Investment in Equity Instruments

New India Retailing & Investment Ltd. 2,02,500 10 277.5 277.5

Chambal Fertilizer & Chemicals Ltd. 704,160 (a) 10 98.85 98.85

376.35 376.35 Unquoted (fully paid) Investment in Equity Instruments

In Subsidiary Company Uttar Pradesh Trading Co. Ltd. 16,36,24,995 1 1,736.55 1,736.55 1,736.55 1,736.55 In Other Companies Bihar State Financial Corporation Ltd. 60 100 0.06 0.06

Birla Buildings Ltd. 8,400 10 0.84 0.84 0.9 0.9 In Co-operative Farming Societies

Krishna Sahakari Kheti Samiti Limited 5 100 0.01 0.01

Kuri Sanyukta Sahakari Kheti Samiti Limited 1 (b) 100 - -

Keshopur Sanyukta Sahakari Kheti Samiti Limited

1 (b) 100 - -

Pandia Sanyukta Sahakari Kheti Samiti Limited 1 (b) 100 - -

Seohara Co-operative Cane Development Union Limited

1 (b) 100 - -

Najibabad Co-operative Cane Development Union Limited

1 (b) 10 - -

Nagina Co-operative Cane Development Union Limited

1 (b) 10 - -

Moradabad Co-operative Cane Development Union Limited

1 (b) 10 - -

0.01 0.01 In Preference Shares


169

Raj Kamal Prakashan Pvt. Ltd. 50 100 0.05 0.05 In Government Securities 12 Years National Savings Certificates (c) 0.01 0.01

12 Years National Plan Savings Certificates (c) 0.08 0.08

7 Years National Savings Certificates (c) 0.07 0.07

6 Years National Savings Certificates (c) 0.12 0.12

0.28 0.28 2,114.14 2,114.14

Aggregate amount of quoted investments [Market value : ` 447.33 lacs (` 536.41 lacs)]

376.35 376.35

Aggregate amount of unquoted investments 1737.79 1737.79

a) Includes 6,37,365 shares pledged against term loan of Rs. 3,300 lacs (Rs. 4,400 lacs) taken from a bank b) The figures, being less than ` 500, have been shown above as blank. c) Deposited / pledged with various Government authorities. d) The cost of following unquoted investments in equity shares (fully paid up) has been written off in the

past, though quantity thereof appears in the books.

Name of the Company No. of shares Face Value per share

Chandausi Rice Mills Ltd. (in liquidation) 1000 10

Jai Hind Publishing Co. Ltd. (in liquidation) 65 25

Akhil Bharat Printers Ltd. (in liquidation) 270 100

e) There is a diminution of ` 216.75 lacs (` 216.75 lacs) in the value of certain long term quoted investments based on the last quoted price. The above diminution in the opinion of the management is temporary in nature since the breakup value of the said shares supplemented by the market value as on 31st March 2016, of the quoted investments held by the investee Company, is much higher than the corresponding Book Value and hence no provision is considered necessary. LOANS AND ADVANCES Non-current Current As at As at As at As at

31st March 2016

31st March 2015

31st March 2016

31st March 2015

(Unsecured, considered good except stated otherwise)


170

Capital advances 29.25 29.33 - - Sundry Deposits 7.85 13.06 10.13 11.01 Advances recoverable in cash or in kind or for value to be received or pending adjustments Considered good* - - 442.69 529.31 Considered doubtful - - 63.11 53.67 - - 505.8 582.98 Less : Provision for doubtful advances

- - 63.11 53.67

- - 442.69 529.31 Other loans and advances Considered good Loan to employees - - 1.45 - Deposits against demand under appeal and / or under dispute

- - 134.65 142.75

Claims/Refunds Receivable - - 81.54 89.41 Prepaid Expenses 9.2 6.62 46.03 41.12 Advance payment of Income Tax and Tax deducted at

29.5 55.9 - -

source after adjusting provisions Balances with Excise and Other Government Authorities

- - 335.99 251.18

Balance with Tea Development Account Scheme, 1990

488.98 492.19 59.7 69.86

Considered doubtful Loan to others - - 7.5 7.5 527.68 554.71 666.86 601.82 Less : Provision for doubtful Loans - - 7.5 7.5 527.68 554.71 659.36 594.32 564.78 597.1 1,112.18 1,134.64 CURRENT INVESTMENTS

Number of Units / shares

Face Value Per Unit / share



Non-Trade (valued at cost unless stated otherwise) Unquoted (fully paid)

Investment in Equity Instruments In Subsidiary Companies


171

Ganges Securities Limited 50000 10 5 5

Cinnatolliah Tea Limited 50000 10 5 5

Magadh Sugar & Energy Limited

50000 10 5 5

15 15

In Joint Venture Company

Avadh Sugar & Energy Limited 25000 10 2.5 2.5

17.5 17.5

TRADE RECEIVABLES AND OTHER ASSETS

As at As at 31st March 2016 31st March 2015

Outstanding for a period exceeding six months from the date they are due for payment Unsecured, considered good 27.85 36.89 Considered doubtful 32.12 60.39 59.97 97.28 Less : Provision for doubtful trade receivables 32.12 60.39 27.85 36.89 Other receivables Unsecured, considered good * 4,182.11 3,623.60 4,182.11 3,623.60 4,209.96 3,660.49

OTHER ASSETS

Non-current Current As at As at As at As at

31st March 2016

31st March 2015

31st March 2016

31st March 2015

(Unsecured, considered good, Unless stated otherwise) Non-current Bank balance (Note 19) 15 15.5 - - Considered good Interest accrued on Loans, Advances, Deposits,

- - 48.38 42.97

Investments etc.


172

Claims Receivable towards Subsidies & Incentives

- - 1,719.90 5,772.46

Renewable energy certificate entitlement - - 933.55 688.79 Unamortized ancillary cost of arranging the borrowings

78.65 61.2 24.61 17.01

Considered doubtful Interest accrued on Loans, Advances, Deposits,

- - 3.83 3.83

Investments etc. 93.65 76.7 2,730.27 6,525.06 Less : Provision for doubtful items - - 3.83 3.83 93.65 76.7 2,726.44 6,521.23

OTHER INCOME Year ended Year ended 31st March 2016 31st March 2015 Interest income on Loans, deposits, advances etc. 136.84 91.83 Refund from Income Tax Department - 7.21 Dividend income on Long-term investments 14.81 13.72 Insurance and Other Claims 42.43 5.83 Rent and Hire Charges 8.81 6.86 Unspent Liabilities and unclaimed Balances adjusted 67.73 72.31 Land Dividend 86.88 37.24 Profit on tangible assets sold / discarded (net) - 38.99 Miscellaneous Receipts 22.44 8.17 379.94 282.16

SEGMENT INFORMATION The primary segment reporting format is determined to be business segments as the company’s risks and rates of return are affected predominantly by differences in the products produced. Secondary information is reported geographically. The operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Accordingly, the Company has identified “Sugar”, “Spirits”, “Co-generation” and “Tea” as the operating segments :

Sugar - Consists of manufacture, trading and sale of Sugar, Molasses and Bagasse Spirits - Consists of manufacture and sale of Industrial Spirits (including Ethanol), Fusel Oil and Bio-Compost Co-generation - Consists of generation and transmission of Power

Tea - Consist of cultivation, manufacture and sale of tea

Others - Consist of Miscellaneous business comprising of less than 10% revenues.


173

The Company primarily operates in India and therefore the analysis of geographical segments is demarcated into its Indian and Overseas Operations.

BUSINESS SEGMENTS YEAR ENDED 31ST MARCH 2016


generation Tea Others Total Revenue * Segment revenue 73,756.75 10,496.02 9,925.45 2,246.64 878.38 97,303.24 Less : Inter segment 8,598.32 42 4,933.37 - - 13,573.69 Total revenue from operations (net) 65,158.43 10,454.02 4,992.08 2,246.64 878.38 83,729.55 Results Segment results -573.43 3,239.42 3,657.50 429.66 19.33 6,772.48 Unallocated Income / (Expenses) -194.11 (net of unallocable expenses / income) Operating Profit 6,578.37 Finance costs 5,579.66 Profit / (Loss) before tax 998.71 Current Tax 55.52 Deferred tax charge / (credit) 199.75 Provision for Income Tax no longer -375.82 required written back Net Profit / (Loss) for the year 1,119.26

ASSETS Particulars Sugar Spirits Co-generation Tea Others Total Segment assets 70,335.40 6,673.42 15,815.74 1,209.29 11.39 94,045.24 Unallocated assets 11,571.01 Total assets 1,05,616.25 Segment liabilities 36,643.51 449.96 42.53 348.1 0.19 37,484.29 Unallocated liabilities 64,197.73 Total liabilities 1,01,682.02

Other segment information Capital expenditure

Tangible & Intangible assets 488.3 63.1 19.8 68.26 - 639.46

Depreciation & Amortization expense

687.79 247.46 401.79 56.87 4.02 1,397.93

Non-cash expenses 3.94 - - - - 3.94


174

REVENUE

Particulars Sugar Spirits Co-generation

Tea Others Total

Revenue * Segment revenue 77,617.40 5,890.93 10,069.72 2,272.64 827.85 96,678.54 Less : Inter segment 6,873.09 51.13 4,470.12 - - 11,394.34 Total revenue from operations (net)

70,744.31 5,839.80 5,599.60 2,272.64 827.85 85,284.20

Results Segment results -7,217.60 994.96 3,914.38 532.79 13.52 -1,761.95 Unallocated Income / (Expenses)

-273.77

(net of unallocable expenses / income) Operating Profit/(Loss) -2,035.72 Finance costs 6,467.27 Profit / (Loss) before tax -8,502.99 Current Tax 85.76 Deferred tax charge / (credit)

-3,051.62

Net Profit / (Loss) for the year

-5,537.13


generation Tea Others Total

Segment assets 69,913.11 6,892.97 15,877.99 1,132.62 20.5 93,837.19 Unallocated assets 11,333.42 Total assets 1,05,170.61 Segment liabilities 40,814.91 379.26 49.64 277.67 0.19 41,521.67 Unallocated liabilities 60,837.91 Total liabilities 1,02,359.58 Other segment information Capital expenditure Tangible & Intangible assets

205.23 24.38 21.44 41.33 - 292.38

Depreciation & Amortization expense

964.73 246.22 424.43 65.88 0.97 1,702.23

Non-cash expenses 2.34 - - - - 2.34


175

RELATED PARTY DISCLOSURES

Names of related parties and related party relationship

RELATED PARTIES WHERE CONTROL EXISTS

Subsidiary Companies


Cinnatolliah Tea Limited

Magadh Sugar & Energy Limited

Ganges Securities Limited

Joint Venture Company Avadh Sugar & Energy Limited

Related parties with whom transactions have taken place during the year

Key management personnel

Mrs. Nandini Nopany - Chairperson

Mr. Bal Kishore Malpani - Wholetime Director

Mr. Shiv Kumar Maheshwari - Chief Financial Officer

Mr. Santosh Kumar Poddar - Company Secretary

Relatives of Key Management Personnel

Mr. Chandra Shekhar Nopany - Son of Mrs. Nandini Nopany

Mrs. Prem Lata Malpani - Wife of Mr. Bal Kishore Malpani

Mrs. Jai Shree Maheshwari - Wife of Mr. Shiv Kumar Maheshwari

Ms. Kanika Maheshwari - Daughter of Mr. Shiv Kumar Maheshwari

Mr. Kartik Maheshwari - Son of Mr. Shiv Kumar Maheshwari

Mr. Satya Narayan Maheshwari - Brother of Mr. Shiv Kumar Maheshwari

Mr. Anil Kumar Maheshwari - Brother of Mr. Shiv Kumar Maheshwari

Enterprises owned or significantly influenced by Key management personnel or their relatives


Sutlej Textiles & Industries Limited

SIL Investments Limited

Ronson Traders Limited

Uttam Commercial Limited


176

RELATED PARTY TRANSACTIONS

The following table provides the total amount of transactions that have been entered into with related parties for the reporting year

a. Sale of goods

Year ended Sale of goods

Amount owed by

related parties

Amount owed to

related parties


The Oudh Sugar Mills Limited 31-Mar-16 583.12 - - 31-Mar-15 393.22 - b. Purchase of goods


Amount owed by

related parties

Amount owed to

related parties

The Oudh Sugar Mills Limited 31-Mar-16 52.16 - - 31-Mar-15 197.65 - c. Purchase of fixed assets


Amount owed by

related parties

Amount owed to

related parties


31-Mar-16 0.24 - -

31-Mar-15 - - - d. Receivable / Payable outstanding (net)


Amount owed by

related parties

Amount owed to

related parties

In Subsidiary Companies Cinnatolliah Tea Limited 31-Mar-16 - - 31-Mar-15 0.23 - Magadh Sugar & Energy Limited 31-Mar-16 - - 31-Mar-15 0.23 - Ganges Securities Limited 31-Mar-16 - - 31-Mar-15 0.23 In Joint Venture Company Avadh Sugar & Energy Limited 31-Mar-16 - -


177

31-Mar-15 0.12 Enterprises owned or significantly influenced by Key Management

Personnel or their relatives The Oudh Sugar Mills Limited 31-Mar-16 182.21 - 31-Mar-15 173.46

e. Loans / Inter corporate deposits and Fixed deposits taken and repayment thereof

Year ended

Loan/Inter- Corporate Deposite

Given

Repayments Interest accrued or paid

Amount owned

to replated

parties

Subsidiary Company

Uttar Pradesh Trading Company Limited 31-Mar-16 372.5 52.5 37.95 1,254.50

31-Mar-15 304 22.5 - 934.5

Relatives of Key Management Personnel

Others 31-Mar-16 - 9.8 0.72 -

31-Mar-15 - 122.34 12.18 9.8

Enterprises owned or significantly influenced by Key

Management Personnel or their relatives

Sutlej Textiles & Industries Limited 31-Mar-16 4,000.00 4,000.00 471.02 -

31-Mar-15 4,000.00 4,000.00 500.22 -

SIL Investments Limited 31-Mar-16 500 500 195.63 1,500.00

31-Mar-15 - - 215.01 1,500.00

Ronson Traders Limited 31-Mar-16 - - 3.31 25

31-Mar-15 - 50 4.15 25

Uttam Commercial Limited 31-Mar-16 - - 7.95 60

31-Mar-15 - - 8.4 60


178

f. Investments made

Year ended Investement

During the Year

Investment sold during the year

Closing Balance

In Subsidiary Companies Cinnatolliah Tea Limited 31-Mar-16 - - - 31-Mar-15 5 - 5 Magadh Sugar & Energy Limited 31-Mar-16 - - - 31-Mar-15 5 - 5 Ganges Securities Limited 31-Mar-16 - - - 31-Mar-15 5 - 5 In Joint Venture Company Avadh Sugar & Energy Limited 31-Mar-16 - - - 31-Mar-15 2.5 - 2.5 g. Director’s sitting fees

Year ended Transaction During the

Year

Amount owed by

related parties


Key Management Personnel Mrs. Nandini Nopany 31-Mar-16 0.4 - - 31-Mar-15 0.25 - Relatives of Key Management Personnel Mr. Chandra Shekhar Nopany 31-Mar-16 0.53 - - 31-Mar-15 0.45 -

h. Remuneration to Key Managerial Personnel

Year ended Transaction

During the Year

Amount owed by

related parties


Mr. Shiv Kumar Maheswari 31-Mar-16 30.16 - 1.37 31-Mar-15 26.14 - 0.29 Mr. Santosh Kumar Poddar 31-Mar-16 35.55 - - 31-Mar-15 33.42 - -

CONTINGENT LIABILITIES Year ended Year ended 31st March 2016 31st March 2015



179

(i) Excise Duty & Service Tax 5,514.79 5,292.11 (ii) Others 347.36 224.98 Total 5,862.15 * 5,517.09 (b) Bank Guarantees outstanding 604.37 550.72

(c) Corporate Guarantees given to a bank 774.46 3,600.00

(d) Arrear Dividend (including tax) on Non-Convertible Cumulative Redeemable Preference Shares (NCCRPS)

222.5 222.5

Details of dues to micro and small enterprises as defined under the MSMED Act, 2006 included in Trade Payables

31st March 2016

31st March 2015

(i) The principal amount and the interest due thereon remaining unpaid to the supplier as at end of the accounting year

Principal amount due to micro and small enterprises 77.7 101.09 Interest due on above 4.65 4.75 Total 82.35 105.84

(ii)

The amount of interest paid by the buyer in terms of section 16 of MSMEDAct 2006 along with the amounts of the payment made to the supplier beyond the appointed day during the accounting year

97.42 86.9

(iii)

The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under MSMED Act 2006.

2.9 4.12

(iv) The amount of interest accrued and remaining unpaid at the end of the accounting year.

8.47 12.43

(v)

The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprises for the purpose of disallowance as a deductible under section 23 of the MSMED Act 2006.

0.92 3.56

The land ceiling matter under the U.P. Imposition of Ceiling on Land Holdings Act, 1960 / Bihar Land Reforms (Fixation of Ceiling, Area and Acquisition of Surplus Land) Act, 1961 for acquisition of agricultural land by the Government is pending before the appropriate adjudicating authorities.


180

UNAUDITED FINANCIAL RESULTS FOR NINE MONTHS ENDED 31.12.2016, FOR UPPER GANGES SUGAR & INDUSTRIES LIMITED


Balance sheet as at 31st December 2016 As at As at As at 31 December 2016 31 December

2015 31 March 2016

` in lacs ` in lacs ` in lacs Equity and Liabilities Shareholders’ Funds

Share Capital 4,155.73

4,155.73 4,155.73

Reserves and Surplus 5,319.85

(6,217.06) (221.50)

9,475.58

(2,061.33) 3,934.23

Non-current Liabilities

Long-term borrowings 14,220.85

20,091.31 18,617.03 Other long-term

liabilities 380.59

588.89 540.23

Long-term provisions 570.11

894.35 459.45

15,171.55

21,574.55 19,616.71 Current Liabilities

Short-term borrowings 18,956.73

17,283.28 38,910.17 Trade payables

-Total outstanding dues of micro enterprises and small enterprises 25.02

15.90 86.17

-Total outstanding dues of creditors other than micro enterprises and small enterprises 12,855.80

21,765.42 25,937.16

Other current liabilities 18,891.41

15,439.13 16,862.55

Short-term provisions 2,094.23

280.92 269.26

52,823.19

54,784.65 82,065.31

TOTAL 77,470.32

74,297.87 105,616.25


181

Assets Non-Current Assets

Fixed Assets Tangible Assets 32,301.15

33,153.57 33,044.31

Intangible Assets 30.70 40.17

33.85

Capital Work-in-Progress

510.97 190.87

67.63

Non-current Investments 2,114.14 2,114.14

2,114.14

Deferred tax assets (net) 3,222.61 7,217.36

7,017.61

Loans and advances 612.68 640.70

564.78

Other Non Current Assets

75.11 102.19

93.65

38,867.36 43,459.00

42,935.97

Current assets Current Investments

17.50 17.50 17.50

Inventories 30,180.88 23,316.70

52,921.77

Trade Receivables 4,169.53 2,992.99

4,209.96

Cash and bank balances 2,021.51

1,876.60 1,692.43

Loans and advances 1,171.98 1,122.80

1,112.18

Other current assets 1,041.56 1,512.28

2,726.44

38,602.96

30,838.87 62,680.28

TOTAL 77,470.32

74,297.87 105,616.25

Statement of profit and loss for the period ended 31st December 2016

Period ended Period ended Year ended

31 December 2016

31 December 2015

31 March 2016

` in lacs ` in lacs ` in lacs Income

Revenue from Operations (Gross) 83,435.04

61,001.20

87,697.16


182

Less : Excise duty 2,008.15

2,350.41 3,042.87

Cess 2,351.14

427.85 924.74

Revenue from Operations (net) 79,075.75

58,222.94

83,729.55

Other Income 208.36 210.94 379.94

Total Revenue (I) 79,284.11

58,433.88

84,109.49

Expenses Cost of Raw Materials consumed

31,560.44

25,882.03

66,388.95 Purchase of Traded Goods 531.77 490.33

852.87 Decrease / (Increase) in Inventories of Finished

Goods, Traded Goods and Goods under Process

20,762.02

23,297.73

(3,604.48) Employee benefits expenses

5,048.62 4,030.69

5,736.53 Other expenses

4,975.39 4,331.95

6,759.32 Total (II)

62,878.24

58,032.73

76,133.19 Profit / (Loss) before finance costs, tax, depreciation and amortization [(I) - (II)]

16,405.87

401.15 7,976.30

Depreciation and Amortization expenses 1,212.52

1,004.23 1,397.93

Finance Costs 3,989.43

4,183.55 5,579.66


(4,786.63)

998.71

Tax expenses Current tax

1,870.55 88.21

55.52 Deferred tax credit

3,795.00 -

199.75 Provision for Income Tax no longer required writen back

(375.82)

Total tax expense / (credit) 5,665.55

88.21 (120.55)

Profit / (Loss) for the year 5,538.37

(4,874.84)

1,119.26

Earnings per equity share [nominal value of share ` 10 each ]

Basic & Diluted (`) 45.10 (45.00)

5.93


183

Financial Statements of Avadh Sugar and Energy Limited for the FY 2015-16 along with the Audited Results for 9 months Ended on 31st December, 2016

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of Avadh Sugar & Energy Limited

Report on the Special Purpose Interim Financial Statements

We have audited the accompanying special purpose interim financial statements of Avadh Sugar & Energy Limited (“the Company”), which comprise the interim Balance Sheet as at December 31, 2016, the interim Statement of Profit and Loss and the interim Cash Flow Statement for the nine months period then ended, and a summary of significant accounting policies and other explanatory information (“special purpose interim financial statements”).

Management’s Responsibility for the Special Purpose Interim Financial Statements

The Company’s Board of Directors is responsible for the preparation of these special purpose interim financial statements in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and Companies (Accounting Standards) Amendment Rules, 2016. The Company’s Board of Directors is also responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the special purpose interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these special purpose interim financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the special purpose interim financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the special purpose interim financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the special purpose interim financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances


184

but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control systems over financial reporting and the effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the special purpose interim financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the special purpose interim financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the accompanying special purpose interim financial statements have been prepared in all material respects, read with para 7 in accordance with the recognition and measurement principles of Accounting Standard 25 specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rule, 2014 and Companies (Accounting Standards) Amendment Rules, 2016.

Emphasis of Matter

We draw attention to Note 9 to the special purpose interim financial statements in respect of composite scheme of arrangement to re-structure and transfer of business undertakings located in the state of Uttar Pradesh of The Oudh Sugar Mills Limited and Upper Ganges Sugar and Industries Limited to the Company with effect from 1st April, 2015 as approved by National Company Law Tribunal, but not yet filed with Registrar of Companies, more fully described therein. Pending such filing, no adjustment has been made in these accounts.

Other Matters- Restriction of use

The accompanying special purpose interim financial statements have been prepared by the management for submission as part of the Information Memorandum to Stock Exchanges and Securities and Exchange Board of India (SEBI) for the purpose of listing of shares of the Company on the Bombay Stock Exchange, the National Stock Exchange and the Calcutta Stock Exchange, as mentioned in Note 2 of the accompanying special purpose interim financial statements.

For S.R. Batliboi & Co. LLP



per Kamal Agarwal

Partner

Membership Number: 58652

Place of Signature: Kolkata

Date: March 13, 2017


185


Interim Balance sheet as at 31st December, 2016 31-Dec-16 31-Mar-16

(Amount in

Rs) (Amount in Rs) Equity and liabilities Shareholders’ funds

Share capital 3

500,000 500,000

Reserves and surplus 4

(333,113) (157,405)

166,887 342,595 Current liabilities Trade payables 5

-Total outstanding dues of micro enterprises and small enterprises - -

-Total outstanding dues of creditors other than micro enterprises and small enterprises 36,650 28,625 Other Current liabilities 5 2,700 -

39,350 28,625

TOTAL

206,237 371,220

Assets Non-Current Assets Loans and advances 6 12,938 -

12,938 - Current Assets Loans and advances 6 44,850 - Cash and bank balances

7

148,449 371,220

193,299 371,220 TOTAL

206,237 371,220 Summary of significant accounting policies 2.1

The accompanying notes are an integral part of the interim financial statements. As per our report of even date For and on behalf of the board of directors For S.R. Batliboi & Co LLP Firm Registration Number: 301003E/E300005 Chartered Accountants per Kamal Agarwal Partner Membership No. 58652 Place: Kolkata Dated : March 13, 2017


186

Avadh Sugar & Energy Limited Interim Statement of profit and loss for the nine months ended 31st December, 2016

For the

nine months ended

For the year ended

Notes 31-Dec-16 31-Mar-16

(Amount

in Rs) (Amount in

Rs) Expenses Printing & Stationary Expenses

3,938

13,000 Professional Fees

100,326

30,578 Rates & Taxes

4,575

2,500 Other Expenses

157

24,692 Payment to Auditors- Audit Fees

28,750

28,625 Depository Related Charges

30,762

- Filing Fees

7,200

9,800

Total Expenses 175,708

109,195

Loss for the period/year

(175,708)

(109,195) Earnings per equity share [nominal value of share Rs 10/-]

Basic & Diluted (Rs.) 8 (3.51) * (2.19) * not annualised Summary of significant accounting policies 2.1

The accompanying notes are an integral part of the interim financial statements. As per our report of even date For and on behalf of the board of directors For S.R. Batliboi & Co LLP Firm Registration Number: 301003E/E300005 Chartered Accountants Director Director per Kamal Agarwal

Partner Membership No. 58652 Director Place: Kolkata Dated : March 13, 2017


187

Interim Cash Flow Statement for the nine months period ended 31st December, 2016

Particulars

For nine months period

ended on 31st Dec,

2016 (Rs)

For the year ended on 31st March, 2016

(Rs)

Rs. Rs.

(A)

CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit/(loss) before Tax (1034952) (328939)

Operating Profit before Working Capital Changes :

Decrease in Other Current Liabilities 1006975 (44957)

Increase in Other Current Assets (57788) (16,000.00)

NET CASH GENERATED FROM OPERATIONS: (85765)

(389,896.00)

(B )

CASH FLOW FROM FINANCING ACTIVITIES :

Issue of Equity Shares 0 0

NET CASH FROM FINANCING ACTIVITIES 0 0

NET CHANGES IN CASH & CASH EQUIVALENTS (A+B) (85765) (389896)

* Cash & Cash Equivalents - Opening Balance 110104 500000

* Cash & Cash Equivalents - Closing Balance 24339 110104

For AGRAWAL SUBODH & CO. For and on behalf of the Board of Directors of Palash Securities

Limited Chartered Accountants

Firm Reg. No. 319260E Director Director

Rathindra Nath Nandi Partner Membership No. 051052 Place : Kolkata Date:13-03-2017

Director


188


Notes to the interim financial statements as at and for the nine months ended 31st December, 2016 1. Corporate Information Avadh Sugar & energy Ltd. is a joint venture company of Upper Ganges Sugar & Industries Limited and The Oudh Sugar Mills Limited. The Company has been incorporated on 19th March, 2015. The Company has not started any business activity. a scheme of arrangement has been approved by the National Company Law Tribunal as stated in note 9 below. 2. Basis of preparation These special purpose interim financial statements comprise of interim Balance Sheet as at December 31, 2016, interim statement of profit and loss and interim cash flow statement for the nine months ended December 31, 2016 and a summary of significant accounting policies and other explanatory information. These special purpose interim financial statements have been prepared on an accrual basis under the historical cost convention in accordance with generally accepted accounting principles in India (Indian GAAP), and to comply in all material respects with the Accounting Standards notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and Companies (Accounting Standards) Amendment Rules, 2016. These special purpose interim financial statements should be read in conjuction with the annual financial statemnets of the Company for the year ended March 31, 2016. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year. These financial statements for the nine months period ended 31st December, 2016 have been prepared by the management for submission as part of the Information Memorandum to Stock Exchanges and Securities and Exchange Board of India (SEBI) for the purpose of listing of shares of the Company on the Bombay Stock Exchange, the National Stock Exchange and the Calcutta Stock Exchange.

These interim financial statements are prepared for the first time in accordance with Accounting Standard- 25 'Interim Financial Reporting' issued by the Institute of Chartered Accountants of India and the Company has opted not to disclose comparative figures for the corresponding nine months period of previous year for the Statement of Profit and Loss and Cash Flow Statement.

The Company has voluntarily disclosed comparative numbers for Statement of Profit and Loss and Cash Flow Statement for the corresponding full year ended 31st March, 2016. 2.1 Summary of significant accounting policies

(a) Use of estimates The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.


189

(b) Income taxes Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. At each reporting date, the company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. (c) Earnings Per Share Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes if any), by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.

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

(d) Contingent liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.


190

(e) Cash and cash equivalents Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

Notes to the interim financial statements as at and for the nine months ended 31st December, 2016

3. Share capital 31-Dec-16 31-Mar-

16 (Amount in Rs) (Amount

in Rs) Authorized shares 50,000 (50,000) Equity Shares of Rs 10/- each fully paid

500,000 500,000

500,000 500,000

Issued, subscribed and fully paid-up shares

50,000 (50,000) Equity Shares of Rs 10/- each fully paid

500,000 500,000

500,000

500,000 (a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period Equity shares 31-Dec-16 31-

Mar-16 No. of shares (Amount

in Rs) No. of shares (Amount

in Rs) Equity shares of Rs 10/- each, fully paid up

Outstanding at the beginning and end of the period

50,000 50,000

50,000 500,000

(b) Terms/ rights attached to equity shares The company has only one class of equity shares having par value of Rs 10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company. The distribution to equity shareholders will be in proportion to the amount paid on the shares held by them.


191

(c) Details of shareholders holding more than 5% shares in the company

Name of the shareholder 31-Dec-16 31-Mar-16

No. of shares % holding in the class

No. of shares % holding in the class


25,000 50.00% 25,000 50.00%

The Oudh Sugar Mills Limited 25,000 50.00% 25,000 50.00% As per records of the Company, including its register of Share Holders / Members, the above share holdings represents legal ownership of shares. 4. Reserves and surplus 31-Dec-16 31-Mar-

16 (Amount in Rs) (Amount

in Rs) Deficit in the statement of profit and loss

Opening Balance

(157,405) (48,210)

Loss for the period/year

(175,708) (109,195)

Net Deficit in the statement of profit and loss

(333,113) (157,405)

Total reserves and surplus

(333,113)

(157,405) 5. Current liabilities

31-Dec-16 31-Mar-

16

(Amount in Rs) (Amount

in Rs) Trade payables

-Total outstanding dues of micro enterprises and small enterprises

-

-

-Total outstanding dues of creditors other than micro enterprises and small enterprises

36,650

28,625

Other liabilities Statutory Dues

2,700 -

2,700 -


192

39,350 28,625

6. Loans and Advances Non-current Current

31-Dec-16 31-Mar-

16 31-Dec-16 31-Mar-

16


in Rs) (Amount in Rs) (Amount

in Rs) Advances recoverable in cash or in kind or for value to be received or pending adjustments -

- 34,500

-

Other loans and advances

Prepaid Expenses 12,938 - 10,350

-

12,938 - 44,850

-

7. Cash and bank balances 31-Dec-16 31-Mar-

16


in Rs)

Cash and cash equivalents Cash on Hand

943

2,793 Balance in Current Account 147,506

368,427 148,449

371,220

8. Earnings per share (EPS) The following reflects the loss and share data used in the basic and diluted EPS computations:

For the nine

months ended For the

year ended

31-Dec-16 31-Mar-16

(Amount in Rs) (Amount in Rs)

Net Loss after tax for calculation of basic and diluted EPS

(175,708) (109,195)


193

Number of shares Number of shares

Weighted average number of equity shares in calculating diluted EPS

50,000 50,000

Earnings per equity share [nominal value of share Rs 10]

Basic & Diluted (Rs.) (3.51) (2.19) 9. The Company’s Board of Directors at its meeting held on 27th March 2015 has approved a Composite Scheme of arrangement amongst the Company, The Oudh Sugar Mills Limited (OSML), Upper Ganges Sugar & Industries Limited (USGIL), Palash Securities Limited, Allahabad Canning Limited, Ganges Securities Limited, Cinnatolliah Tea Limited, Vaishali Sugar & Energy Limited, Magadh Sugar & Energy Limited in terms of the provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956 & Companies Act, 2013 to the extent applicable, for transfer of Business undertaking located at Hargaon District Sitapur, Dhadha Bujurg District Kushinagar and Rosa District Shahjahanpur in the state of Uttar Pradesh and the business undertaking located at Seohara, District Bijnor in the state of Uttar Pradesh of OSML and UGSIL respectively to the Company with effect from 1st April, 2015. The National Company Law Tribunal has given its approval to the scheme of arrangement being petition No. 33 of 2016 on 9th March, 2017. The Scheme gets effective upon filing with the Registrar of Companies which is still to be done, pending which no effect of the scheme has been given in these interim financial statements. 10. As the Company has not yet commenced any business activity, there is no segment information to be disclosed as per Accounting Standard - 17.


194

SECTION VI- LEGAL AND OTHER INFORMATION

Outstanding Litigation and Material Developments

(POSITION OF LITIGATION AGAINST AND BY THE COMPANY)

I. LITIGATION AGAINST THE COMPANY

A. LABOUR LAW CASES

(SEOHARA SUGAR UNIT) 1. There are 6 cases of reinstatement of employees filed against the Company in the Labour Court,

Rampur, UP and 2 cases in High Court, Allahabad (amount is not ascertainable in these cases).

2. Another case was filed by Mr. Sukh Lal Singh & others, contract laborers, who have claimed dues under the Payment of Wages Act, 1936. The Assistant Labour Commissioner, Bijnor passed an award for Rs. 1.27 Lakhs, which has been confirmed by the Commissioner. The Company though deposited the amount, has filed an Appeal No.14743/07 pending before High Court Allahabad.

B. CRIMINAL CASES

(SEOHARA SUGAR UNIT)

Sr. No.

Nature of Dispute Particulars of Case No./WP

Name of the Court

Present Status

Remarks (Amount involved)

1. The Assistant Cane Commissioner, Bijnor filed a criminal complaint alleging that the UGSIL has tagged the cash credit limits at lower percentage in Sugar season 1996-97.

317/1997

Chief Judicial Magistrate Bijnor

Case is pending for hearing

Nil

2 The Food Inspector, Lucknow on 10.12.1991 collected samples of sugar from PCF store, Barha Birbah, Lucknow, alleged to have been manufactured by Sugar Mill, Seohara. As per the inspection report, the sample were found having moisture and foreign substance in excess of the limit.

1005/96 Additional Chief Judicial Magistrate, Lucknow

Notice was issued by A.C.J.M. Court on 28-09-2007.

Nil


195

3 One Mrs. Kamini Singh filed a Contempt Petition alleging non-compliance of the Orders dated 4-10-13 of Allahabad High Court, Bench Lucknow, in the writ Petition No. 6590/2013 by Shri Sukhvir Singh, Executive President. In the Writ petition it was prayed to pass orders to Board of Revenue Lucknow for early disposal of her application related to some land. Instead of taking any action for disposal of the case, frivolous contempt petition was filed. Shri Sukhvir Singh also filed a Contempt Petition against Mrs. Kamini Singh.

342/2014

808/2014

Allahabad High Court, Bench Lucknow

Date for hearing is yet to be fixed

Nil

(SEOHARA DISTILLERY UNIT)

Sr. No.


Name of the Court

Present Status


1. The District Excise Officer, Bijnor filed a case u/s 64/88 of the UP Excise Act, 1910 alleging non delivery of Rectified Spirit against allotment order dated 26.6.89. Allahabad High Court vide its order dated 7.2.91 in C.M.A. No. 1895/1991 stayed the complaint.

1616 of 1990

1st Additional Chief Judicial Magistrate, Bijnor


Nil

C. CIVIL CASES


Sr. No.


Name of the Court

Present Status



196

1. The U.P. State Excise Authorities filed a SLP before Supreme Court of India against an order dated 11.04.05 passed by the Allahabad High Court in Writ Petition No. 906 of 1995 (M/B), vide which order the high court quashed the demand by the State Excise Authority on loss of Rectified Spirit in transit due to accident. The matter has been referred to the Larger Bench

SLP No. 16780/2005

Supreme Court of India

Pending for hearing

Rs.311355.00

(Rs.311355.00 deposited

under protest)

2. SS Techno Ltd., Pune instead of completing work granted vide PO No.CBP/UGSIL/SSTSPL/2012-13/ dated 20-02-13 filed a Civil Suit against the Company in Pune Court claiming balance contract price and C Forms. The party did not complete the work satisfactory for a long time inspite of regular reminder and meetings and therefore part of the contract price was withheld.

UGSIL challenged territorial jurisdiction of Pune court, however remaining C Forms were issued.

248/2016

Civil Judge, Sr. Division, Pune

Pending Rs. 4883734.00

3. Bharkam Polypacks Pvt. Ltd., Panipat issued PDCs (Post Dated Cheques) towards lifting of CO2, out of which 20 Cheques worth Rs.1373415.00 got dishonored, against which 20 complaints were filed against the party at Panipat (Haryana) Court u/s 138 of the Negotiable Instruments Act, 1881. Arrest Warrants issued against Bharkam.

Bharkam filed a Civil Suit in Panipat Court claiming balance payment against the order

15/2016

Judicial Magistrate, 1st Class, Panipat

Civil Judge, Sr. Division, Panipat

Pending Rs. 1373415.00

Rs. 1049157.00


197

placed by UGSIL. UGSIL has challenged territorial jurisdiction of Panipat Court.

D.SALES TAX CASES


Sr. No.


Name of the Court

Present Status


1. Central Sales Tax was imposed on Export Sale of Rectified Spirit (RS). Taxability of Export of RS was already decided by the Hon’ble High Court, Allahabad in favour of UGSIL, but remanded the matter to Tribunal Moradabad, vide Order dated 25.05.14 for passing appropriate orders.

Commercial Tax Tribunal , Moradabad

Pending Full amount of Tax Rs. 49383.22 has already been deposited by the Company.

E. 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 Lac.

II. LITIGATION BY THE COMPNY

B. CIVIL CASES


Sr. No.


Name of the Court

Present Status


1. Northern Railway (NR) vide letter dated 20-04-10 demanded rent of railway siding (situated at Sugar Mill, Seohara) for years 1986-87 to 2007-08 amounting to Rs.8417392.00. The demand was further increased to Rs.21664731.00 for the year 1986-87 to 2015-16. Matter is pending before arbitrator.

Sole Arbitrator Mr. Justice

(Rtd.) Girdhar Malviya,

Allahabad

Pending. Rs. 21664731.00


198

SEOHARA DISTILLERY UNIT

Sr. No.


Name of the Court

Present Status


1. Demand raised by UP State Excise Authorities for loss of Rectified Spirit on its way to Siliguri due to accident, was quashed by Allahabad High Court, vide order dated 18.5.06. The State Govt. has filed SLP no. (c) 657/2007 before the Hon’ble Supreme Court.

SLP No. (c ) 657/2007

Supreme Court

of India


Rs.294432.00


under protest)

2. U.P. Pollution Control Board demanded Rs.4.37 lac (including interest of Rs.1.56 lac) towards Water Cess for the period April, 1978 to December, 1988. Appellate Authority set aside the interest demand but confirmed the demand of Cess. Allahabad High Court stayed half of the demand subject to furnishing bank guarantee as a security and directed UGSIL to pay the balance amount, which has been paid.

Writ Petition No. 9278 of 1989

Allahabad High Court, Bench at Lucknow


Rs.256950.22


under protest)

C. SALES TAX CASES


Sr. No.


Name of the Court

Present Status


1. The Trade Tax Authorities demanded CST on sale of bagasse to the parties situated in the state of Uttaranchal during the Year 2003-2004. The demand was ultimately confirmed by Trade Tax Tribunal, Moradabad and the same was deposited by the

1668/2006 Allahabad High Court

Date for hearing is yet to be fixed

Rs. 837641.00

deposited under Protest and charged to Expenses)


199

Company under protest and charged to expenses.

UGSIL challenged the same before High court but the Advocate has advised to withdraw as the issue stands settled against UGSIL.


Sr. No.


Name of the Court

Present Status


1. UGSIL filed a Writ Petition No. 1291/2011 before the Lucknow High court challenging levy of VAT on Molasses. Writ was disposed off, holding that the judgment by Supreme court in Civil appeal No.2574/2010 of M/S SAF Yeast Co. P. Ltd. shall apply. UGSIL filed a SLP with Supreme court and the same has been tagged with appeal No.5537/2012 of the Oudh Sugar Mills Ltd. which was already tagged with the appeal No.2574/2010 of M/S SAF Yeast Co. P. Ltd.

Civil Appeal No.7498/ 2012



Nil

D. EXCISE LAW CASES


Sr. No.


Name of the Court

Present

Status


1. CESTAT New Delhi has remanded the matter to the adjudicating authority for fresh adjudication for Rs. 1,28,751.00 related to CENVAT credit availed on certain input and capital goods. The department has alleged that the same is in-

Appeal No.124/2008

Allahabad High Court

Dy. Commissioner, Moradabad


Duty demanded

Rs.71,508.00

Duty demanded

Rs.1,28,751.00


200

admissible; as such goods do not fall within the definition of admissible input/capital goods. However, CESTAT has rejected part appeal for Rs. 71,508.00 against which order, appeal has been preferred before Allahabad High court.

Amount deposited

under protest Rs.71508.00

2. 11 appeals by UGSIL before Hon’ble Allahabad High court against the order passed by CESTAT, disallowing CENVAT credit on certain Input and Capital goods such as welding electrodes, iron and steel materials, electrical fittings etc related to different periods.

Appeal Nos.

507/2007

126/2008

123/2008

198/2008

101/2011

193/2008

099/2011

102/2011

169/2008

125/2008

098/2011



Total Duty demanded in

the said appeals Rs.13,22,320.0

0

Amount deposited in the

said appeals Rs. 8,30,538.00

3. CESTAT New Delhi has remanded 17 matters for fresh adjudication related to CENVAT credit availed on certain input and capital goods and input Services. The department has alleged that the same is in-admissible, as the said goods do not fall within the definition of admissible input/capital goods.

Commissioner (Appeals)/AC, Moradabad

Pending for hearing

Total duty demanded Rs.

1,08,51,088.00

Amount deposited Rs. 33,35,931.00

4. Demand raised towards CENVAT Credit for certain input and capital goods alleging not eligible. The demand has been confirmed by the appellate authority against which 06 appeals have been preferred before CESTAT, New Delhi (presently at Allahabad)

Appeal no. 2024/2010

2983/2009

3038-3039 of 2012

CESTAT Allahabad

Pending for hearing

Total duty demanded Rs. 21,25,373.00

Penalty Rs.45,000.00


5. 03 appeals were preferred by UGSIL before Commissioner

Commissioner (Appeals),

Case is pendin

Duty demand Rs.445479.00


201

Appeals, against the order passed by AC, Moradabad. In the remand proceedings AC, Moradabad has re-confirmed the demand of Rs. 88,482.00; Rs. 1,76,710.00 & Rs. 1,80,287.00 totaling to Rs. 4,45,479.00 and also imposed penalty of Rs. 10,000.00 each case. The demands confirmed relates to CENVAT credit on certain input and capital goods, alleging not eligible for Cenvat credit.

However, in the remand proceedings AC, Moradabad has allowed the appeals of Rs. 8,48,628.00 against which department has preferred an appeal. Both the sets of appeals are pending.

Central Excise, Hapur

g for hearing

Penalty Rs.30000.00

(Rs. 2131910.00

deposited under Protest

including Interest of Rs.

837803.00

Duty demand

Rs 848628.00

6. Demand towards certain goods alleging not admissible as such goods do not fall within the definition of admissible ‘inputs’ was confirmed by AC, Moradabad in the remand matter of Rs 59335.00 with Interest and imposed penalty of Rs.6000.00 against which an appeal has been filed before Commissioner (Appeals), Hapur.

Commissioner (Appeals), Hapur

Pending


Penalty Rs.6000.00

(Rs.4450.00

deposited )

7. The Department preferred an appeal against O.I.O.No.109/AC/CX/MBD/2016 dated 22.08.2016 dropping the demand of Rs.92299.00 along with interest thereon related to cenvat credit taken on paint.

518/2016

Commissioner Appeals (Hapur)

Pending


8. Three show cause notices were confimed by Adjudicating Authority demanding duty on the storage loss of molasses. The Company preferred an appeals and the matters were remanded

Joint / Dy Commissioner Central Excise,

pending

Duty demand

Rs. 360692.00


202

to the the adjudicating Authority for fresh adjudication.


Sr. No.


Name of the Court

Present Status


1. CESTAT New Delhi has remanded 8 matters for fresh adjudication related to CENVAT credit availed on certain input and capital goods and input Services. The department has alleged that the same is in-admissible, as the said goods do not fall within the definition of admissible input/capital goods.

Commissioner (Appeals)/Joint / Asst. Commissioner,

Pending for hearing

Total duty demanded Rs.

50,97,873.00


2. 2 appeals by UGSIL before Hon’ble Allahabad High court against the order passed by CESTAT, disallowing CENVAT credit on certain Input and Capital goods such as welding electrodes, iron and steel materials, electrical fittings etc related to different periods.

Appeal Nos.

96/2011

97/2011



Total Duty demanded in

the said appeals

Rs.8,53,664/-

Amount deposited Rs.

8,53,664/-

3. 2 appeals were preferred by UGSIL before CESTAT, disallowing CENVAT credit on certain Input and Capital goods such as welding electrodes, iron and steel materials, electrical fittings etc related to different periods.

Appeal No.2741

& 2472 of 2007

CESTAT, Allahabad

Case is pending for decision

Duty demand Rs. 1162862.00

Penalty Rs. 1162862.00

(Rs. 581400.00

deposited under Protest)

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


203

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, remanded the case before the concerned Land Ceiling Authority, Bijnor. Accordingly, the fresh case No.7/2009 was heard by the concerned Land Ceiling Authority, Bijnor who has issued Order dated 1-04-2015 that the hearing was to be done on the old case. But the State filed an appeal against this Order before Commissioner, Moradabad who allowed the Appeal vide Order dated 29-12-2016. Accordingly, the case now again stands remanded before the concerned Land Ceiling Authority, Bijnor. At the same time, we have gone in to appeal against the above said Orders of Commissioner, Moradabad with High Court, Allahabad vide Writ Petition No.5712/2017 against which the Hon’ble Court has passed orders dated 7-02-2017 that any action in between would be subject to final decision to be passed in this Writ Petition.

3. Land measuring 6 Bigha, 18 Biswa (pukhta) belonging to one Mrs. Kamini Singh, Naimul

Hasan and Others was acquired by the State Government on 29-01-53 for construction of Labour Quarters of Sugar Mill, Seohara. However, the names of these persons were continuing in the revenue records which were changed to the name of the Sugar Mill, Seohara on 27-09-2012 by the Order of Commissioner, Moradabad. The erstwhile land owners challenged the orders of Commissioner for replacing their names from the Revenue Records with the name of Sugar Mill, Seohara, before the Board of Revenue, Lucknow. The Board remanded the matter to the Commissioner, Moradabad for deciding the case on merits.

4. Land measuring 1 Bigha, 15 Biswa (pukhta) belonging to one Mrs. Kamini Singh was under

cultivation with Sugar Mill, Seohara, since the year 1933 and was transferred in the name of Sugar Mill under provisions of the UP Zamindari (Abolition) Act, 1950 in the year 1950. Now Mrs. Kamini Singh has filed an application with SDM, Dhampur on 11-11-2013, challenging the transfer of name of the Sugar Mill to the ownership of this land. The Company has applied for making itself a party to this application and allowing it to file objections against the application. The matter is pending for hearing with the concerned Court.

III. Claim/Show Cause Notice Pending against the Company

A. Excise Law :

Seohara Sugar Unit a) The Company has been served 3 Show Cause Notices by the Central Excise Authorities

disputing the Cenvat credit taken on Sugar Sales Commission amounting to Rs. 78,26,939/- the same has been duly replied.

Seohara Distillery Unit 1. UGSIL has been served with Four (4) Nos. of Show Cause Notices issued by the Central Excise

Authorities disputing the availment of Cenvat Credit on molasses used for production of Rectified Spirit interalia raising demands amounting to Rs. 4606.70 Lacs. alongwith interest and penalty. UGSIL has duly responded to the said notices.


204

UGSIL has been served with Two (2) Nos. of Show Cause Notices issued by the Central Excise Authorities demanding Rs. 11.70 lacs alongwith interest and penalty, under Rule 6(3) of Cenvat Credit Rules, 2004 on the sale of Javik Khad alleging to be exempted excisable items. UGSIL has duly responded to the said notices.

Rosa Sugar Works, Rosa

1. RSW has filed 4 (four) original suits against the different parties before Additional Civil Judge

and / or Civil Judge- Ist Jr Division, Shahjahanpur praying for Injunction and restraint orders preventing them from illegal occupancy of the land belonging to RSW. The interim restraint / Injunction orders have been passed in favour of RSW.

2. Shri P K Saini then Executive President, filed an FIR against factory union alleging unfair activity of office bearer inside the factory and disturb the industrial peace and the same is pending before Judicial Magistrate Shahjahanpur.

A. Statutory Litigation ((Central Excise matter by or against Rosa Sugar) –

Sr. No.


Name of the Court

Present Status


1. Demand of duty towards storage loss of molasses. The Commissioner has confirmed the demand, against which appeal has been filed by Company in CESTAT New Delhi.

Appeal No. E/2018/2005

CESTAT New Delhi

Pending Rs. 0.08 Lacs

2. Demand of duty towards storage loss of molasses. The CESTAT has allowed the appeals against which 4 appeals has been filed by the department before High Court. Cross objection has been filed.

FAFO No. 666/2007

FAFO No. 395/09 & Connected

appeals

Allahabad High Court,

Lucknow Bench


3. Demand towards inadmissible cenvat credit towards certain goods (welding electrode) alleging that such goods do not fall within the definition of input / capital goods. The CESTAT has allowed the cenavt credit against which appeals has been filed by the department before High Court.

FAFO No. 630 /2011 & FAFO No. 62 / 2010

Allahabad High Court ,

Lucknow Bench



205

4. Demand towards inadmissible cenvat credit towards certain goods (welding electrode) alleging that such goods do not fall within the definition of input / capital goods. The CESTAT has remanded back to Commissioner for fresh adjudication vide order dated 11.01.2010.

Appeal No. 126 of 2008

Commissioner, Lucknow

Pending Rs. 0.60 Lacs and penalty of Rs. 0.60

Lacs

5. Demand towards inadmissible cenvat credit towards certain goods (welding electrode) alleging that such goods do not fall within the definition of input / capital goods. The party has filed two appeals before CESATA New Delhi.

E-3581/2012

& E-3587/2012

and E-50627/2015

CESTAT New Delhi

Pending Rs 2.51 Lacs including penalty of Rs. 2.51

Lacs

6. Demand towards inadmissible cenvat credit towards certain goods (welding electrode & Iron Material) alleging that such goods do not fall within the definition of input / capital goods. The CESTAT has allowed the cenavt credit vide order dated 30.09.2008 on welding electrodes of Rs. 1,59,613/- and remand the matter back to Commissioner (Appeal) for balance credit of Rs. 2,45,209/- on iron material. The department filed an appeal before High Court for allowing credit on welding electrodes.

FAFO No. 1109 /2009

Commissioner (Appeal)/

Allahabad High Court,

Lucknow Bench

Pending Rs. 4.05 Lacs and

Penalty of Rs. 2.45

Lacs

7. Demand towards cenvat credit on Input Services alleging not eligible on GTA on transportation of Cane seed and Bio Compost. The appeal has been filed before CESTAT New Delhi.

E/50666 of 2015

CESTAT New Delhi


including penalty of Rs. 0.18

Lacs

1. RSW has been served with 7 Show Cause Notices by the Central Excise Authorities disputing

the Cenvat credit availed by RSW and also raising demands, aggregating Rs. 13.95 lakhs. RSW has duly responded to the said notices.


206

B. Commercial Litigation and Other Land and Labour Related Litigation –

Sr. No.


Name of the Court

Present Status


1. M/s SAF yeast Co. Ltd has disputed the quality of molasses purchased from Rosa sugar. Thereafter, a counter claim was filed against the Purchaser for claiming an additional amount of Rs.252956.26 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. 553464.30 against which the Company had adjusted Rs. 300508.04.

Case No. 293/2004

Add. Civil Judge Shahjahanpur

Pending

2. State versus RSW

This case is connected with land situated in Chaudera village on which a sugar godown has been constructed. The land has been exchanged with the Gram Samaj under an agreement.

Section 122B of U.P ZA&LR Act 1950

Tehsil Shahjahanpur


3. State Versus RSW

This case is connected with land in Rausar village located near bungalow No. 5 and 6 disputed by Gram Sabha alleging unauthorized possession of Govt land.

Section 122B of U.P ZA&LR Act 1950

Tehsil Shahjahanpur


4. Ram Prakash versus RSW and RSW versus Mukesh Dixit

These case pertains to some land in Rausar village located near bungalow No. 5 claiming the ownership. Both the matter

492 of 2004 and 26 of 2001

Add. Civil Judge Shahjahanpur

Pending Not Ascertainable


207

has been tagged together. The court has passed the restrain orders in favour of RSW.

1. There are 3 (Three) Labour related cases claiming reinstatement, back wages and consequential

benefits and other 5 (Five) cases are demanding compensation for injury to labour filed against the company and matter is pending before the Allahabad High Court, Labour Court, Barelly, and Employees Compensation Commissioner Cum ALC, Shahjahanpur (amount is not ascertainable in these cases).

2. 2 (two) suits has been filed before Additional District Judge, Shahjahanpur by RSW demanding vacation of the shops given to defendants on rent. The first suit against Rampreet has been decided in favour of RSW against which appeal has been preferred. The defendants have also filed counter suits praying for the payment of the rent claiming to be Rs. 2.50 per month as originally fixed.

C. Criminal Cases:

Sr. No.


Name of the Court

Present Status


1. State versus C L Giria & ors.

The matter pertains to the allegation that the factory has dispatched the molasses with incomplete papers.

Case no. 4110/06, 4112/06

and 4113/06

CJM, Shahjahanpur


1. There are 1 (one) cases filed against the RSW before District Consumer Forum, Shahjahanpur

claiming dues towards supply of cane. The Total amount claimed amounts to Rs. 0.35 Lacs.

Hargaon Sugar & Distillery units A. Civil Cases

Sr. No.


Name of the Court

Present Status


1 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 from the year 1984-85 and be allowed to charge price of levy

CA No. 3890 & 3891 of 2010

Supreme Court of India.

Pending for final disposal..

Rs. 83.16 Lacs


208

sugar as admissible in East U.P. Zone since 1984-85. 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. The Company has already been placed in East U. P Zone since August 1992. Hon’ble Allahabad High Court (Lucknow Bench) through its order dated 18.07.2006 dismissed the Petition against which the company has filed SLP No. 20946 of 2006 and 22878 of 2007 before Supreme Court. By an order dated 26.04.2010 , Hon’ble Court was pleased to grant leave in both the SLP’s and was converted into Civil Appeal , In the mean time GOI raised the demand of Rs. 83.16 Lacs towards principle and interest thereon, against which SC in its order dated 10.01.2011 in the stay application directed to deposit the 50% as BG and balance through cash security which was executed.

2 OSML has filed a SLP against the Order dated 14.10.2011 of Allahabad High Court Lucknow Bench challenging the demand towards non receipt of the PD-25/26 on supply of rectified spirit pertaining to Hargaon Distillery . The demand of Rs. 3.98 Lacs has been deposited and charged into expenses.

OSML has also filed the criminal case bearing no. 1322 of 2004 against the party before JM, Sitapur for non returning of PD-25/26.

SLP No. 20204 of 2012

1322 of 2004


JM, Sitapur

Pending NIL


209

3. OSML preferred a Writ praying for setting aside the demand raised by U.P State Excise Authorities towards loss of rectified spirit in transit due to accident.

Writ Petition No. 2448 (M/S) of 2010

Allahabad High Court, Lucknow Bench

Pending Demand of Rs. 2.63 Lacs deposited Rs. 2.63 Lacs

4. The U.P. State Electricity Board demanded electricity duty on OSML’s own generation for the period pertaining to 1978 to 1983 which was challenged by OSML before Allahabad High Court, Lucknow Bench through Writ Petition no. 3006 (M/B) of 1984. The Hon’ble High Court vide its order dated 24.11.2014 permitted OSML to prefer an appeal before Appellant Authority and accordingly appeal has been filed.

State Electricity Regulatory Commission , Lucknow

The matter is pending for hearing.

Rs. 6.45 Lacs

5. The Oudh Sugar Mills Ltd Versus Parmeshwardeen and Anr.

A suit for injunction was filed interalia praying for restraining the defendants from corresponding/Writing letters to OSML.

Interim injunction was granted. Against the said order Writ has been filed before Allahabad High Court, Lucknow Bench.

Suit No. 108/2008

W.P 7104 (M/S) of 2010

Civil Judge, (Junior

Division) Sitapur

For filing of evidence by the plaintiff.

Not Ascertainable

Other Litigation (Land Related and Labour Related) –

Sr. No.


Name of the Court

Present Status


1. The Oudh Sugar Mills Ltd., Vs State of U.P.

OSML has challenged the order dated 14.02.2011 passed by Collector Sitapur related to Land of Gata No. 542

WP NO. 5366 (M/S) of 2011 & Writ Petition No.

4541(M/B) of 2015

Allahabad High

Court, Lucknow

Bench

Pending Rs. 9.096 Lacs has

been deposited

under protest.


210

measuring 0.138 Hect. situated within the factory premises. In the said Order it was directed to vacate the aforesaid area and pay the penalty of Rs. 9.096 Lacs by alleging that the said land belong to Gaon Sabha. The operation of said order has been stayed by the High Court vide its order dated 24.08.2015. In the mean time another Writ Petition was filed by Mr Nirbhaya Singh for not implementing the order dated 14.02.2011. Both the Writ Petitions are pending. In the mean time , the exchange application filed by the OSML for exchange of Gata no. 542 to 162 has been rejected against which appeal has been preferred before Commissioner , Lucknow.

2 The Oudh Sugar Mills Ltd., Vs State of U.P.

The matter relates to land measuring to 2 Acres 12 decimals owned by OSML on which a Hospital has been constructed by the Government. OSML has claimed equivalent land in exchange of the subject land. Civil suit bearing no. 69 of 1983 was filed by OSML and the same was decreed on 28.03.1992 for payment of Rs. 30 per Sft in lieu of said Land. The Company has filed execution Petition.

Exe.12/2000 Before Civil Judge, Sitapur.

Pending for arguments.

Not ascertainable

3 The Oudh Sugar Mills Ltd. Vs Umar Ahmad

The matter relates to declaration of title asserted by OSML on the grounds of

C.S.No.740/89 Before Addl. Civil Judge, Sitapur

Pending for recording evidence.

Not ascertainable


211

adverse possession for the land at village Surjipara, Hargaon. OSML is in possession of the land since 1952 and the Labour quarter has been constructed thereon by OSML.

4 The Oudh Sugar Mills Ltd.Vs Hasina Begum

The matter relates to declaration of title asserted by OSML on the grounds of adverse possession for the land at village Surjipara, Hargaon. OSML is in possession of the land since 1952 and the Labour Quarter has been constructed thereon by OSML.

C.S.No.465/2000 Before Civil Judge, Sitapur

Pending for recording evidence.

Not ascertainable

5. The Oudh Sugar Mills Ltd Versus Anandi Lal Birla and Ors. AND

The Oudh Sugar Mills Ltd Versus Atul Kumar Birla and Ors.

OSML filed a suit claiming ownership of land on the ground of adverse possession. During the pendency of the suit, Anandi Lal Birla expired and OSML filed application for substitution of his legal heirs on record.

The legal heirs on 09.04.20415, wrongly and without taking permission of the court, sold the land to some third person.

OSML filed another suit against Atul Kumar Birla (legal heirs of Anandi Lal Birla) and others, for cancellation of sale deed.

Suit no. 180/2012 before ASDM, Lakhimpur

AND

Suit no 281 of 2015 before Civil Judge, Senior Division, Lakhimpur

ASDM, Lakhimpur

AND

Civil Judge, Senior

Division, Lakhimpur

Pending for Written Submission

Not ascertainable


212

6. The Oudh Sugar Mills ltd. Vs. Balram Prasad and Others

SLP has been filled by the OSML on 09.07.2007 against the order dated 02.04.2007 of Allahabad High Court, Lucknow Bench for taking on duty of cane employees with all other consequential reliefs. Supreme court has granted stay and leave has also been granted.

C.A no. 6932 of 2009

Supreme court of

India

Final hearing

Not ascertainable

7. The Oudh Sugar Mills Ltd Vs Virat Kanya Inter Collage

The cases relates to injunction and declaration of Gata No. 50,51,52,53 measuring 0.490 Hect.

Case No. 144 / 2016

CJ (SD), Sitapur

Written Statement Stage

Not ascertainable

1. OSML has filed 2 recovery suits before JM , Sitapur / JSSC Sitapur amounting to Rs.4.98 lakhs. 2. OSML has filed 3 case before Civil Judge, Jr/Sr. Division, Sitapur / Judicial Magistrate, Sitapur

for vacation of Company’s land/quarter owned by OSML. 3 cases has also been filed against the company for injunction in vacation of the company’s land / quarter.

3. OSML has filed 3 Cases before the Allahabad High Court, Lucknow Bench for setting aside the award passed by the Motor Accident Case Tribunal awarding compensation. The Total amount involved is Rs. 5.20 Lacs against which Rs. 2.70 Lacs has been deposited by OSML.

II. LITIGATION AGAINST OSML

Hargaon Sugar & Distillery A. Other Litigation (Environment related) – B.

Sr. No.


Name of the

Court

Present Status


1. 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.

Writ Petition No. 3727/1985


Pending for hearing

N.A.


213

C. Civil and Other Litigation -

Sr. No.


Name of the Court

Present Status


1. A Complain has been filed by M/s Ester India Chemical Ltd alleging the involvement in the cartelization in the Public Tender floated by Oil Marketing Co’s for procurement of the Ethanol in Jan 13. The Commission vide its order dated 27.05.2013 directed the Director General (DG) for investigation. The Investigation report was submitted. The Commission vide order dated 13.08.2015 directed to submit the objection to the report.

Case of 29/2013

Competition Commission of India


D. Criminal Litigation –

Sr. No.


Name of the Court

Present Status


1. State Versus Shri. C.B.Patodia and Ors.

The complaint has been lodged for non-payment of sugar cane dues.

The complainant vide its letter dated 26.12.2014 has requested for withdrawal of his complaint on the ground of receipt of payment towards cane dues.

Case No. 111/2015

ACJM-1, Sitapur.

Final report of Police station has been filed

Not ascertainable

2. State Versus Shri. C.B.Patodia and Ors

A complaint has been filed before the court of CJM, Sitapur on the allegation that OSM has not complied with Clauses 3, 4, 5 of the Molasses Policy of the Year 2014-2015. The complaint has

Case no. 4056 of 2015

CJM, Sitapur

Pending Not ascertainable


214

been lodged under Section (8) and 22D of UP Molasses Control Act, 1964 and Rules 14 of UP Molasses Control Rules, 1974.

3. State Versus C.B. Patodia and Ors

An appeal has been preferred by the State against order of Acquittal dated 05.05.1998 passed by Ld. CJM, Sitapur.

The complaint was filed against an accident under Section 7A, and 52 B and 52 C of Factory Rules, Punishable under Section 92 of the Factories Act. All the accused were acquitted vide the above said order

Criminal Appeal 611 of 1998

High court of

Allahabad, Lucknow

Bench

For final hearing

Not ascertainable

4. State Vs Manager OSM

A case has been filed by the tehsil Sitapur alleging discharge of effluent water at village Moradnagar. Police is investigating in this regard.

Case No. 04/06

SDM Sitapur

Pending Not Ascertainable.

5. State Versus A. K. Tripathi and Anr

An FIR bearing no. 62/14 under Section 302 of IPC, was lodged against two (2) employees of OSM on the allegation of farmer death within factory premises.

Final report of the police has been filed stating that the cause of death was accident.

Case No 56 of 2014

CJM Sitapur

Final report has been filed. Notice to the complainant is pending issuance.

Not ascertainable

6. State Versus P K Lakhotia & Ors.

An FIR was lodged for discharge of the waste water of the distillery against Mr P K Lakhotia and ors, then Executive President of the company.

Final report of the police has been filed.

MCS No. 9/2016

CJM, Sitapur

Final Report submitted

E. Commercial Litigation –


215

Sr. No.


Name of the

Court

Present Status


1. Food Corporation of India Versus OSML

The Plaintiff has filed an appeal against the order of the lower court in favour of defendant towards their dues of Rs. 1,09,790/-

CA No.150/12

District Judge

Sitapur


2. National Insurance Versus OSML

National Insurance company has been filled an appeal in State Forum, Lucknow against the order dated 20.4.2000 passed by District Forum, Sitapur. The case before District forum bearing no. 72/94 has been decided in favour of OSML, amounting Rs. 67925/-

Appeal no. 703 of 2010

State consumer

forum

For reply by OSML

Rs. 0.67 Lacs

F. Other Litigation ( Land Related and Labour Related) –

Sr. No.


Name of the Court

Present Status


1. Saheel Versus The Oudh Sugar Mill Ltd.

The case relates to Compensation claimed for damage caused to his eyes by the Ash particle along with chemical compound of Distillery Unit.

Case no. 141 of 2011

District Magistrate,

Sitapur

Reply filed by OSM. Listed for evidence of the Petitioner

Not Ascertainable

2. Union of India through Its General Manager N.E.R. Vs. The Oudh Sugar Mills Ltd.

An appeal has been filed by the railway department against the order dated 29-04-2006 passed by civil judge, Sitapur whereby the demand of NER was dismissed and OSML was

FAPL No.151 of 2006

High court of

Allahabad, Lucknow

Bench

Application for condonation of delay by NER is pending hearing.

Rs. 2.38 Lacs


216

directed to pay only Rs. 2,38,177/-

3. State Vs The Oudh Sugar Mills Ltd

The matter relates to use of the land for the purchasing Center.

Case No. 527 /2015

Tahsidar, Sitapur


4. Ram Kumar & Others Vs The Oudh Sugar Mills Ltd.

The plaintiff prayed for an injunction order restraining the Defendant Company from evicting him from the factory’s land occupied and used by him. The Defendant Company filed a counter case against the plaintiff on the ground that the land belongs to the Defendant Company. The Civil Court vide order dated 02.05.2000 dismissed both the suits and held that the land with building belong to Gram Sabha. An appeal has been preferred by both the party. The appeal of Ram Kumar has been dismissed.

Case No.C.S.No.35/95

Counter case filled by Company bearing no.C.A.No.34/2000

Before Civil Judge, Sitapur.

before ADJ (VIII) Sitapur.

Both the cases are pending for arguments.

Not ascertainable

5. Hargaon Sugar Factory Karmchari Sangathan Versus The Oudh Sugar Mills Limited

Writ Petition filed by Parmeshwardeen, claiming to be president of the Union, seeking direction to Labour Commissioner to inspect and ensure compliance of the provisions related to Payment of minimum wages. The Union is not in existence.

WP No-1872(S/S) of 2013

High court of

Allahabad, Lucknow

For filing of Rejoinder

Not ascertainable


217

1. There are 13 (Thirteen) labour related cases claiming permanency of Contractual / temporary labour, challenging termination and demanding reinstatement/compensation and back wages filed against the company and matters are pending before the DM, Sitapur/Labour Court , Lucknow/Allahabad High Court, Lucknow Bench, (amounts not ascertainable in these cases).

G. Other Litigation - [State Sales Tax ]

Sales tax demands -

Sr. No.


Name of the Court

Present Status


1. 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 filed an appeal before the High Court, Lucknow Bench.

Trade Tax Appeal No. 53 & 54/2005

Allahabad High Court , Lucknow Bench

Pending Demand of Rs. 6.73 Lacs deposited Rs. 3.23 Lacs

2. Interest imposed by the Assessing Officer on late deposit of Entry Tax on sale of sugar during the year 2008-2009. The department has alleged in the order that OSML has deposited the entry tax on sale on the sugar sold from outside godown whereas it should be on transfer. OSML has filed an appeal before Dy. Commissioner (Appeal). The demand has been stayed by deposit of Rs. 31,850/-.

329/12 Dy. Commissioner (Appeal)

Pending Demand of 1.06 Lacs deposited Rs. 0.31 Lacs

3. Entry Tax imposed by Assessing officer on inter State sale of sugar during the year 2009-2010 by treating the same as sale within the State of U.P. OSML filed an appeal with the Dy. Com.(Appeal) Sitapur..The Demand has been stayed by deposit of Rs. 1,19,516/-.

511/13 Dy. Commissioner (Appeal)

Pending Demand of 3.58 Lacs deposited Rs. 1.19 Lacs

4. Entry Tax has been imposed due to non appearance of the Marka on sugar Bags for sale of sugar out of U.P in 2013-14.

Appeal Before Assessing Authority

Pending Demand of Rs. 3.43 Lacs and the same has been deposited.


218

5. Penalty was imposed by Assessing officer towards entry tax on inter State sale of sugar during the year 2011-2012 by treating the same as sale within the State of U.P. OSML filed an appeal before Additional Commissioner (Grade-II) Appeal Commercial Tax, Sitapur and the same has been remanded for fresh adjudication.

Adjudicating Authority

Pending Demand of 55.30 Lacs

6. Penalty was imposed by Assessing officer towards entry tax on inter State sale of sugar during the year 2012-2013 by treating the same as sale within the State of U.P. OSML filed an appeal before Additional Commissioner (Grade-II) Appeal Commercial Tax, Sitapur and the same has been remanded for fresh adjudication.


Pending Demand of 184.39 Lacs

7. The Central Sales tax authorities imposed tax of Rs. 4,57,206/- on sale of alcohol out of the State of U.P in 1977-78 to 1981-82. OSML has challenged the applicability of such imposition. The Allahabad High Court Lucknow bench vide its order dated 05.09.2014 remanded the matter to Trade Tribunal for redetermination of tax liability.

Trade Tax Tribunal


8. Demand on account of CST on sale of Bagasse to the parties situated out of U.P. The demand was confirmed by the Assessing Authority against which appeal has been filed before Tribunal.

Appellate Tribunal, Lucknow

Pending Demand of Rs. 5.94 Lacs

9. Appeal has been preferred by the department against the order passed by Appellant Authority towards entry tax on sale of Sugar related to 2005-06 and 2006-07.

Appeal No. 418 of 2009 & 111 of 2014

Tribunal , Lucknow

Pending Demand of Rs. 13,89,760-


219

10. Appeal has been preferred by the department against the order passed by Appellant Authority towards some discrepancies in Form No. 38 related to 2009-10 and 2010-11.

Appeal No. 111 of 2013 & 112 of 2013

Tribunal , Lucknow

Pending Demand of Rs. 4,72,620-

H. Statutory Litigation (Central Excise matter by or against Hargaon Sugar & Distillery) –

Sr. No.


Name of the Court

Present Status


1. Three (3) Appeals were preferred against the demand towards Cenavt credit on input services alleging not eligible. The demand has been confirmed by the Commissioner (Appeal) against which appeal has been filed before CESTAT, Allahabad.

Appeal no. ST/70177/2015 (SM)

& Others

CESTAT Allahabad

Pending Rs. 27.60 lacs alongwith penalty of Rs. 27.60 lacs and interest against which OSM has already deposited Rs. 2.76 lacs

5. Appeal before Hon’ble CESTAT, New Delhi (presently at Allahabad) against the orders passed by Commissioner (Appeal) confirming differential amount of sugar cess after clearance of sugar from the factory. CESTAT has stayed the demand.

Appeal no. E/2611/2011-EX (DB)

CESTAT Allahabad

Pending Rs. 43.09 lacs alongwith penalty of Rs. 09.00 lacs against which a sum of Rs. 8.62 lacs has been deposited.

2. An Appeal before Hon’ble CESTAT Allahabad against the orders passed by Commissioner (Appeal) disallowing utilization of cenvat credit towards payment of Service tax on GTA

ST/55139 of 2013-CU(DB)

CESTAT, Allahabad

Pending Rs. 21.29 lacs and the same has been deposited in


220

during the period from January and February, 2008.

compliance of interim direction of CESTAT

3. An Appeal was preferred by OSM before Allahabad High Court through FAFO no. 65 of 2011 against the Order passed by CESTAT New Delhi related to remission of the Central Excise Duty on 76355.25 Qtls of Molasses, not fit for Consumption and the same has been remanded back to CESTAT.

CESTAT, Allahabad

Pending Rs. 15.27 lacs

4. Allahabad High Court has confirmed the demand disallowing cenvat credit on certain goods like welding electrodes, iron steel materials etc related to different periods in excise appeal no. 7 of 2011 and FAFO 1330 of 2010 against which appeal is being filed before Hon’ble Supreme Court.


Pending Duty demand Rs 4.14 Lacs

and penalty of Rs. 1.98

Lacs

(Rs 1.98 Lacs

deposited)

5. Appeals filed by department before Allahabad High Court vide Central Excise Appeal No. 19 of 2014 against the orders passed by CESTST New Delhi allowing cenvat credit on certain goods like welding electrodes, iron steel materials etc related to different periods. One appeal was also preferred by the Company through appeal no. 10 of 2014 against the order passed by the CESTAT disallowing cenvat credit on certain iron and steel materials. Both the appeals remanded back to CESTAT for fresh adjudication.

CESTAT, Allahabad



221

6. 7 Appeals before Hon’ble CESTAT New Delhi against the orders passed by Commissioner (Appeal) disallowing cenvat credit on certain goods like welding electrodes, iron steel materials, cement and Electrical fittings etc related to different periods.

CESTAT Allahabad


and penalty of Rs. 54.51

Lacs

(Rs 30.88 Lacs

deposited under

Protest)

7. CESTAT New Delhi has remanded the matter to the Adjudicating Authority for fresh adjudication related to service tax cenvat credit taken on the premium of insurance services.


Pending Demand of Rs. 24.48 Lacs (Deposited Rs. 0.19 Lacs)

8. CESTAT New Delhi has remanded three matters to the Commissioner (Appeal) for fresh adjudication related to cenvat credit taken on certain goods like welding electrodes, Iron and Steel Material etc related to different period.

Commissioner (Appeal)

Pending Demand of Rs.

12.90 Lacs and penalty of Rs. 5.15 Lacs

Deposited Rs. 2.62 Lacs

Show Cause Notices With Respect To Central Excise –

1. OSML has been served with Four (4) Nos. of Show Cause Notices issued by the Central Excise

Authorities disputing the availment of Cenvat Credit on molasses used for production of Rectified Spirit interalia raising demands amounting to Rs. 1851.30 Lacs. alongwith interest and penalty. OSM has duly responded to the said notices.

2. OSML has been served with Four (4) Nos. of Show Cause Notices issued by the Central Excise Authorities disputing availment of inadmissible CENVAT credit of Rs. 12.54 lacs alongwith interest and penalty, towards certain Iron and Steel material by alleging that such material do not fall within the definition Input/Capital Goods under the provisions of Cenvat Credit Rules. The demand(s) was originally confirmed by Adjudicating authority, but in the appeal preferred by OSM the matter(s) were remanded back to Adjudicating authority for fresh adjudication. The same is pending before Adjudicating authority.


222

3. OSML has been served with Fifteen (15) Nos. of Show Cause Notices issued by the Central Excise Authorities disputing availment of inadmissible CENVAT credit of Rs. 10.83 lacs alongwith interest and penalty, towards Welding Electrode by alleging that such material do not fall within the definition Input/Capital Goods under the provisions of Cenvat Credit Rules. OSML has duly responded to the said notices.

4. OSML has been served with Two (2) nos. Of Show Cause Notices issued by the Central Excise Authorities disputing the availment of CENVAT credit amounting to Rs. 48.24 lacs, paid by OSML on inward transportation of Sugarcane, under reverse charge mechanism. OSML was also served Two (2) Show Cause Notices, disputing the availment of CENAT credit of Rs. 21.19 lacs towards input services. OSML has duly responded the said notices.

New India Sugar Mills, Hata

A. Criminal Litigation –

Sr. No.


Name of the Court

Present Status


1. New India Sugar Mills Versus Kilburn Engg. Ltd.

M/s Kilburn Engg Ltd. supplied FBD machine to NISM in Nov. 2006. As per the terms of the agreement, the machine was supposed to have operational capacity of 50 Ton per hour. However, when installed it actually performed at the rate 25 ton per hour causing huge loss to the NISM. Even after several reminders it was not rectified. NISM being constrained filed a case before CJM court Kasia, Kushinagar.

Case No 1988/13

ACJM, Kasia, Kushinagar

Summons issued

Not ascertainable

2. New India Sugar Mills (Vishwakarma) Versus National Steel Agro Industries Ltd. (Ashwini Khandelwal)

M/s National Steel And Agro Industries Ltd supplied Colour coated Sheets to NISM against order placed on 18.04.2007. The Sheet was supposed to last for ten years but it started showing rusting and damage. NISM filed a complaint case against the party Kasia, Kushinagar.

FR Case No 16/12

ACJM, Kasia, Kushinagar

For filing of objections and arguments on F.R

Not ascertainable


223

B. Civil -

Sr. No.


Name of the

Court

Present Status


1. A suit has been filed at Civil Court, Mohanlalganj, Lucknow against the company’s sugar unit at Dhadha Bujurg, Hata for non compliance notification dated 10.11.2006 with regard to the establishment of sugar unit.

Civil Suit No. 1192 of 2008

Civil Court, Lucknow

Pending NIL

C. Other Litigations including Land and Labour related Matter -

Sr. No.


Name of the Court

Present Status


1. Muneshwar & Ors. Versus New India Sugar Mills & Galaxy Construction (Case filed by 11 workers)

And

Satya Prakash & Ors. Versus New India Sugar Mills & Galaxy Construction (Case filed by 13 workers)

M/s Galaxy Construction is a Civil Contractor which was awarded some civil work for execution by NISM, for which there is no dispute between NISM and Galaxy Construction as full and final payment has been made by NISM. Contract workers of Galaxy Construction filed complaint with the DLC alleging short payment.

Case No 53/08

And

Case No 54/08

Both cases are arising of the same issue and are pending before Deputy Labour Commissioner, Gorakhpur

Pending for the evidence of workers of the Galaxy Construction.

Rs.3.56 Lacs

And

Rs.3.73 Lacs

2. Bashist Yadav Versus New India Sugar Mills.

The matter pertains to demand of gratuity.

Case No 266/14 Under Payment of Gratuity Act 1972

District Consumer Forum, Deoria

For filing of documents

Gratuity

Rs.0.11 lacs


224

1. There are 2 (Two) Labour related cases claiming permanency of Contractual / temporary Labour, challenging termination and demanding reinstatement and back wages filed against the company and matter is pending before the Labour Court, Gorakhpur and Industrial Tribunal-IV, Gorakhpur (amount is not ascertainable in these cases).

2. 3 cases were filed by various parties before District Consumer Forum, Padrauna claiming dues towards supply of cane. The Total amount claimed in these cases amounts to Rs. 6.71 Lacs along with interest. Out of these case, one case towards demand of Rs. 2.24 Lacs has been decided in favour of company against which appeal has been filed at the State Forum by the party. Another one case has been decided against the company confirming the demand of Rs. 3.49 Lacs against which appeal has been filed at State Forum and the stay has been granted with a direction to deposit 50% of the alleged demand which has been duly complied.

D. Sales Tax related matter:-

Sr. No.


Name of the Court

Present Status


1 Demand towards Entry Tax, VAT and CST on various goods confirmed by Dy Commissioner, Commercial Tax, Padruna, Kushinagar while passing the assessment Order for the year 2011-12 against which appeal has been filed.

Additional Commissioner (Grade-II) (Appeal) Commercial Tax, Gorakhpur


2. Demand towards entry tax on reprocessed sugar during season 2013-14. During 2013-14, 14,287 Qtls of sugar pertaining to sugar season 2011-12 and 2012-13 was reprocessed and the same was sold as sugar of 2013-14. The department has confirmed that since the sugar originally belongs to 2011-12 and 2012-13, the exemption benefit can not be availed as the same was available to the sugar manufactured in 2013-14.

Deputy Commissioner , Commercial Tax, Padruna, Kushinagar.

Pending Rs. 9.14 Lacs along with

penalty of Rs. 13.72 Lacs

E. Criminal Cases:

Sr. No.


Name of the Court

Present Status


1. State versus G.M NISM

A complained has been filed alleging pollution by depositing of molasses

Notice under

SDM, KASIA Court



225

and dirty waters in the pits near to roads. Objection has been filed.

Section 133 of IPC

2. State versus P K Agarwal and Another.

The matter pertains to allegation for under weightment of sugarcane at factory gate. A FIR no. 56/15 dated 03.02.2015 was lodged. The matter is under investigation.

Complaint Case No. 262 of 2015

ACJM, Kushinagar


3 State versus P K Agarwal and Ors.

The matter is pertaining to the allegation for violation of the tagging order issued under the provisions of the U.P Sugarcane (Regulation of Supply & Purchase) Act 1953 issued by the D.M Kushinagar. A FIR bearing no. 0371 dated 12.03.2015 was lodged and the matter is under investigation.


4. State versus P K Agarwal

A FIR was lodged on 03.12.2014 by the Secretary, Cane Development Union, Hata for not starting the crushing operation of 2014-15 in time thereafter a complaint case has been registered and the matter is under investigation.

Complaint Case No. 1523 of 2014

ACJM, Kushinagar


5. State versus P K Saini and Ors.

The matter pertaining to the allegation that the crushing operation of 2014-15 was closed without lifting of the entire cane assigned to the NISM for which an FIR no. 723 of 2015 dated 23.05.2015 was lodged. The matter is under investigation.

Case Crime No. 723 of 2015

ACJM, Kushinagar


F. Statutory Litigation (Central Excise matter by or against New India Sugar, Hata) –

Sr. No.


Name of the Court

Present Status


1. Demand towards inadmissible cenvat credit towards welding electrode alleging that the such goods do not fall

Commissioner (Appeal), Allahabad

Pending Rs. 1.44 Lacs and penalty


226

within the definition of input goods as defined in Cenvat Credit 2004. NISM preferred an appeal before Commissioner Appeal against the order passed by Adjudicating Authority

of Rs. 1.44 Lacs

1. NISM has been served with one (1) Nos. of Show Cause Notices issued by the Central Excise

Authorities demanding Rs. 196.38 lacs alongwith interest and penalty, under Rule 6(3) of Cenvat Credit Rules, 2004 on the sale of Electricity to UPPCL and the same has been duly replied.

2. NISM has been served with one (1) Nos. of Show Cause Notices issued by the Central Excise Authorities demanding Rs. 39.22 lacs alongwith interest and penalty, alleging wrongly availment of cenvat credit on commission paid to sugar selling agents and the same has been duly replied.

3. NISM has been served with another Four (4) Nos. of Show Cause Notices issued by the Central Excise Authorities demanding Rs. 6.82 lacs alongwith interest and penalty, alleging wrongly availment of cenvat credit on various input and capital goods and excess declaration of molasses. NISM has duly responded to the said notices.

GOVERNMENT APPROVALS AND LICENSES

ROSA SUGAR WORKS, ROSA

List of Licenses, Govt. Approvals etc.

Sl. No.

Name of the Act under which

License is granted

Name of the License

License issuing

Authority License No./Date

Validity Status

1 Industries

(Development & Regulation) Act, 1951

Manufacturing of Sugar

Under Secretary, Ministry of Industry, New Delhi

CIL : 14(97) dated 15.07.97

One Time

2 Industries (Development & Regulation) Act, 1951

Substantial Expansion & Enhancement of Installed Capacity for Manufacture of Sugar


IEM letter N0.2665/SIA/ IMO/2002 dated 11. 11. 2002

One Time


227

3 Uttar Pradesh Sugar Cane (Regulation of supply and Purchase Act, 1982)

Cane Crushing License

Secretary of U.P.Govt (Sugar Industries Section)

No. 4 dated 17.10.1998 One Time

4 Rule 9, Central Excise Rules, 2002

Central Excise Registration Certificate

Assistant Commissioner of Central Excise, Sitapur

AABCT0813GXM 020 dated 16.01. 2003

One Time

5 Finance Act, 1994 read with Service Tax Rules, 1994

Certificate of Registration for collecting Service Tax on G.T.A. and others

Assistant Commissioner of Central Excise, Sitapur

AABCT0813GST005 One Time

6 Income Tax Act, 1961 & Income Tax Rules, 1962

Income Tax Permanent Account No. (PAN)

Office of the CCIT Kolkata

AABCT0813G One Time


Income Tax Deduction Account No. (TAN) Sugar-Unit

NSDL Mumbai

LKNR05230B One Time

8 The Uttar Pradesh VAT Rules, 2008

Tax Identification No.(TIN)

Deputy Commissioner, Commercial Taxes, Sitapur

09853600001 One Time

9 Central Sales Tax Act, 1956

Registration under CST

Deputy Commissioner, Commercial Taxes, Sitapur

ST0000237 One Time

10 The Employees' Provident Funds and Misc. Provisions Act, 1952

Allotment of Code Nos.of Sugar Mill and Distillery Units

Enforcement Officer (Compliance)

UP/BLY/0005261/000 One time


228

11 Standards for Weights & Measures (Packaged Commodities) Rules, 1977

Certificate of Registration for packing of Sugar in bags of specified weights

Ministry of Commerce and Civil Supplies, New Delhi

No. UP/76/79 One time

14 Water (Prevention and Control of Pollution) Act, 1974 and Rules made thereunder.

Water Pollution Consent for Sugar Unit

Uttar Pradesh Pollution Control Board, Lucknow.

Letter No. F33972/C-5/ Water/B-30/2004/50 dated 05.07.2004

Up to 31.12.2017

15 Air (Prevention and Control of Pollution) Act, 1981 and Rules made thereunder.

Air Pollution Consent for Sugar Unit


Letter No. F33971/ C-5/Air/B-30/2004/43 dated 05.07.2004

Up to 31.12.2017

3) Pressure 11.00 Kg/Cm2

UP-2938

4) Pressure

11.00 Kg/Cm2

UP-2208


UP-2209

21 Food Safety & Standard Act, 2006

License under Food Safety & Standard Act, 2006 for white Crystal Sugar

Food Safety & Standards Authority of India, Lucknow

CMO/A/2004/01 Up to 19.05.2019

Lic. no.10013051000648

25 Arms Act Gun Licenses for

D.M. Shahjahanpu

r

1) DBBL Gun No. 84116 - 12 Bore

Licence no. 5640 Up to 16.05.2017

2) DBBL Gun No.

Licence no. 5640 Up to 16.05.2017


229

7600471 - 12 Bore

3) DBBL Gun No. 7600510 - 12 Bore

Licence no. 5640 Up to 16.05.2017

4) DBBL Gun No. 7506241 - 12 Bore

Licence no. 8 Up to 02.11.2017

5) DBBL Gun No. 7600339 - 12 Bore

Licence no. 8 Up to 02.11.2017

27 Petroleum Act, 1934

Diesel Storage & Distribution License

District Supply Officer, Bijnor

P/HQ/UP/15/1702 (P9144)

Up to 31.12.2017

Unit New India Sugar Mills , Dhadha Bujurg Hata , Kushinagar Sl. No.


License is granted

Name of the License

License issuing Authority

License No./Date Validity Status

1 U.P. Vaccumm PAN Sugar Factory License Order , 1997 , Under (Second Amendment) Khand-3


Secretary of U.P.Govt (Sugar Industries department)

6/2008 /Dt.20.01.2009

One Time



Assistant Commissioner, Central Excise, Gorakhpur

AABCT0813GXM025 /Dt. 13/12/2006

One Time


Certificate of Registration for collecting Service Tax on Rent -a-Cab, Security & Detective, Manpower Recruitment,

Superintendent, Central Excise, Deoria

AABCT0813GST003 /Dt. 13/12/2006

One Time


230

GTA, Renting on immovable properties, Works contract Service, Legal Service, OtherTaxable services - other than the 119 listed

4 Income Tax Act, 1961



AABCT0813G /Date of incorporation 26.07.1932

One Time


Income Tax Deduction Account No. (TAN)

NSDL Mumbai ALDN00598D /Dt. 11.11.2006

One Time

6 The Uttar Pradesh VAT Act, 2007


Assistant Commissioner, Registring Authority Commercial Taxes, Padrauna , Kushinagar

09320602964 /Dt. 08.07.2009

One Time

7 Central Sales Tax Act, 1956 Rule 7 (1) & 7 (2)


Assistant Commissioner, Registring Authority Commercial Taxes, Padrauna , Kushinagar

PD 5011905 / Dt. 05-12-2016

One Time


Allotment of Code Nos.of Sugar Mill

Regional Provident Fund Commissioner, Gorakhpur

No. UP/GKP/ 35476/ Dt. 13.04.2009

One time

9 Factories Act, 1948 Factory License

Dy, Director of Factories, Lucknow

KN - 51 Up to 31.12.2017

10 Water (Prevention and Control of Pollution) Act, 1974

Water Pollution Consent

Environmental Engineer, Incharge Vritt - 5 Uttar Pradesh

F 76316/C-6 /sahmati (jal)/119/2016 /31.03.16

Up to 31.12.2017


231

and Rules made thereunder.

Pollution Control Board, Lucknow.


Air Pollution Consent

Environmental Engineer, Incharge Vritt - 5 Uttar Pradesh Pollution Control Board, Lucknow.

F 76315/ C-6/119/ sahmati (Vayu)/2016/31.03.16

Up to 31.12.2017

12 Rules 5 of Hazardous waste Rule, 1989

Hazardous waste Consent for Sugar Unit

Member Secretary, UPPCB

F-79689/C-6/Haz-62 /GKP /Date:. 23.05.2016

up to 22.05.2019

13 Boilers Act Certificates for Boiler-Economizer

1) Pressure 85 Kg/Cm2*

Director of Boiler, Kanpur

UP-6541 Up to 07.10.2017

2) Pressure 85 Kg/Cm2*

UP-6630 Up to 07.10.2017

* W.P. limited to 72.0 Kg/Cm2

14 Periodical Inspection of Electrical Installation under Indian Electric Rule 1956

Permission for use of Electrical Installation

Dy.Director, Elelctrical Safety, Gorakhpur

1180 UNI/ BI.SU./ GORAKHPUR REGION

Upto 04.07.2016 (Fee deposited, next inspection awaited)

15 NOC for Fire Safety Adequacy of Fire Fighting Equipments

Chief Fire Officer, Kushinagar

CFO/Vividh/Nirikshan/2015 dated 20.06.2015

for Six months




10012051000299 Dt. 10.06.2013

Up to 31.03.2018


232

18 Pesticides Act, 1968 License for purchase, sales, display, storage and retail distribution of Pesticidal Chemicals

Licence & Agriculture Officer, Kushinagar

48/56158 Dt. 10.03.2017

up to 09.03.2020

20 Zila Parishad Regulation & Control Rules

License to Run

Executive Officer, Zila Parishad, Padrauna Kushinagar

A472-S1 Upto 26.06.2017

21 Bidhik map vigyan, Padrauna

Steel Tank No.1

Bidhik map vigyan, Padrauna

0421237 dt-06.03.2014

Upto 06.03.2019

22 Bidhik map vigyan, Padrauna

Steel Tank No.2

Bidhik map vigyan, Padrauna

034021 dt-07.01.2017

Upto 07.01.2022

HARGAON [ SUGAR UNIT ]

Sl. No.

Name of the Act under

which License is granted

Name of the License





Under Secretary, Ministry of Commerce & Industry, New Delhi

2585/SIA/IMO/2006 /DT. 15.05.2006

One Time

2 U.P. Vaccumm PAN Sugar Factory License Order , 1997 , Under (Second Amendment) Khand-3


Secretary of U.P.Govt (Sugar Industries department)

5/2011 /Dt.19.05.2011 One Time


233



Assistant Commissioner, Central Excise, Sitapur

AABCT0813GXM018 /Dt. 29.05.2007

One Time


Central Excise Registration Certificate for Sugar Godown at Bijwar, Sitapur

Assistant Commissioner, Central Excise, Sitapur

AABCT0813GXM019 /Dt. 16.01.2003

One Time


Certificate of Registration for collecting Service Tax on Rent -a-Cab, Security & Detective, Manpower Recruitment, GTA, Renting on immovable properties, Works contract Service, Legal Service, OtherTaxable services - other than the 119 listed

Superintendent, Central Excise, Lakhimpur -Kheri

AABCT0813GST004 /Dt. 03.05.2007

One Time




AABCT0813G /Date of incorporation 26.07.1932

One Time


Income Tax Deduction Account No. (TAN)

NSDL Mumbai

LKNT05182C /Dt. 11.11.2004

One Time


234

8 Import Export Trade Policy, Government of India

Certificate of Importer Exporter Code (IEC)

Foreign Trade Development Officer, Mininstry of Commerce, Office of DGFT, Kolkata

0288032730 /Dt. 05.08.1988

One Time

9 The Uttar Pradesh VAT Act, 2007


Assistant Commissioner, Registring Authority Commercial Taxes, Sitapur

09853600001 /Dt. 08.07.2009

One Time

10 Central Sales Tax Act, 1956 Rule 7 (1) & 7 (2)


Assistant Commissioner, Registring Authority Commercial Taxes, Sitapur

09853600001C /Dt. 08.07.2009

One Time


Allotment of Code Nos.of Sugar Mill and Distillery Unit

Enforcement Officer (Compliance)

No. UP/182/ / Dt. 01.08.1956

One time

12 Standards for Weights & Measures (Packaged Commodities) Rules, 1977


Assistant Controller, Legal Metrology, Weights & Measure, Sitapur

028552, No. 1537dt. 30.12.2005 Reg. No. ACWM-LKO-52/UP/2005

One time




90/C-5/ sahmati jal/ -25/2016

Up to 31.12.2017


235




90/C-5/ sahmati Vayu/ -179/2016

Up to 31.12.2017

16 Boilers Act Certificates for Boiler-Economizer



AP-105 / Dt.29.09.2015 Up to 01.09.2016


UP-3306 /Dt. 29.09.2015 Up to 03.08.2016


UP-5378 /Dt. 14.11.2015 Up to 10.09.2016

(Applied for renewal awaited)

17 Periodical Inspection of Electrical Installation under Indian Electric Rule 1956


Dy.Director, Elelctrical Safety, Shahjahanpur

224 U./NI./SHAH. REGION/NIRI./SAMANYA

Upto July-17




10012051000301 Dt. 11.03.2013

Up to 31.03.2018

19 Pesticides Act, 1968

License for purchase, sales, display, storage and retail distribution

Licence & Agriculture Officer, Sitapur

STP/1348/PP /Date:27.05.2014

up to 31-12-2017


236

of Pesticidal Chemicals

HARGAON [ DISTILLERY UNIT ]

Sl. No.


License is granted

Name of the License

License issuing

Authority License No./Date

Validity Status

1 Various

Environment Protection Laws

Environmental Clearance for Expansion of Distillery from 40 KLPD to 100 KLPD

Director, Ministry of Environment & Forests, (I.A. Division) Paryavaran Bhavan, New Delhi

F.No. J-11011/265/2006 - IA II (I) / Dt.

14.03.2008

One Time

2 Water (Prevention and Control of Pollution) Act, 1974 and Rules made thereunder



91/ C-5/Consent Water-179/2016 / Dt.

02.03.2016

Up to 31.12.2017

3 Air (Prevention and Control of Pollution) Act, 1981 and Rules made thereunder

Air Pollution Consent Uttar Pradesh Pollution Control Board, Lucknow.

90/ C-5/Consent Air-179/2016 / Dt.

02.03.2016

Up to 31.12.2017

5 Uttar Pradesh Govt. Provincial Excise Act, 1910

Mfg. License of Distillery

Excise Commissioner (U.P.)

41/P.D. 2 Up to 31.03.2017


237

6 Uttar Pradesh Govt. Provincial Excise Act, 1910

For denaturant Storage & Mixing of Spirit

District Magistrate, Sitapur

G-3-1/187/1991-92 Up to 31.03.2017

7 Uttar Pradesh Sales of Motor Spirit, Diesel Oil & Alcohol, Taxation Act, 1939

Registration for Sale of Spirit

District Magistrate, Sitapur

G3/27/1992-93 /Dt. 28.05.1992

Up to 31.03.2017

9 Periodical Inspection of Electrical Installation


Dy.Director, Elelctrical Safety, Shahjahanpur

223 U./NI./SHAH. REGION/NIRI./SAMANYA

Upto July-17

11 Petroleum & Explosives Safety Organization (PESO)

Approval of Drawings

Controller of Explosives, Nagpur

P/HQ/UP/15/5021 (P376783) Dt.

04.10.2016

upto 31.12.2020

12

Central ground Water Board

NOC for Ground Water Extraction

Superintending

Hydrogeologist

No. 21-4(37)/NR/CGWA/2006-1815 / Dt. 08.12.2015 &

No.21-4(37)/NR/CGWA/2006-

47 /Dt.12.01.2016

Upto 08.12.2017

HARGAON [ POWER UNIT ]

Sl. No.


License is granted

Name of the License


License No./Date

Validity Status

1 Boilers Act Certificate for Boiler


238

Pressure 57 Kg/Cm2

Director of Boiler,UP,

Kanpur

UP-6408 Up to 10.09.2016 (Renewal fee

deposited, Certificate to be

obtained) 2 Indian

Electricity Rules, 1956

Periodical Inspection & Testing of Electrical Installation

Dy.Director, Electrical Safety, Shahjahanpur

Upto July-17

SUGAR MILL, SEOHARA

Sl. No.



Name of the License

License issuing

Authority

License No./Date

Validity Status

1 Industries

(Development & Regulation) Act, 1951

Manufacturing of Sugar


316 (94) dated 23.06.1994

One Time




CIL:42(98) dated 29.07.1998

One Time

3 Uttar Pradesh Sugar Cane (Regulation of supply and Purchase Act, 1982)


Secretary of U.P.Govt (Sugar Industries Section)

N0-12 dated 28.10.1998

One Time



Deputy Commissioner, Central Excise, Moradabad

AAACU 3606 K-X M-001 dated 1.10.02

One Time


Central Excise Registration Certificate for Sugar

Assistant Commissioner, Central Excise, Moradabad

AAACU 3606 K-EM-009 dated 21.09.12

One Time


239

Godown at Kuri


Certificate of Registration for collecting Service Tax on G.T.A.

Superintendent, Central Excise, Dhampur

AAACU3606KST002 dated 30-05-08

One Time




AAACU 3606 K One Time


Income Tax Deduction Account No. (TAN) Sugar-Unit

NSDL Mumbai LKNU06248E Date 4.04.12

One Time

9 Import Export Trade Policy, Government of India

Importer Exporter Code

Foreign Trade Development Officer, Mininstry of Commerce, Office of DGFT, Kolkata

288010299 dated 24-05-1988

One Time

10 The Uttar Pradesh VAT Rules, 2008


Deputy Commissioner, Commercial Taxes, Dhampur

09662301913 dated 26-09-13 w.e.f. 1-07-1957

One Time

11 Central Sales Tax Act, 1956


Deputy Commissioner, Commercial Taxes, Dhampur

09662301913C dated 29-06-16

One Time


Allotment of Code No.UP/233

Under Secretary, Government of India, Ministry of Labour & Employment

10155/61 dated 19-05-61

w.e.f. 1-08-1956 (One

time)

Taking on record of change in the name of Establishment

Asstt.PF Commissioner, Meerut

88567/C-III/Exemption/ UP/233

8/8/2008


240

13 Standards fof Weights & Measures (Packaged Commodities) Rules, 1977


Assistant Controller, Legal Metreology, Moradabad

ACWM-0074/UP-MBD/08 dated 16-12-08

One time


Water Pollution Consent for Sugar Unit


26/Sahamati/Jal Adesh/ 2009/Lucknow dated 25-02-16

Up to 31.12.2017


Air Pollution Consent for Sugar Unit


24/Sahamati/Vayu Adesh/ 2016 Lucknow dated 25-02-16

Up to 31.12.2017

19 Boilers Act Certificates for Boilers & Economizers


All Boilers and Economisers are certified for use on periodical basis on payment of inspection fees

20 Periodical Inspection of Electrical Installation under Rule 46 of Electricity Rules


Dy.Director, Elelctrical Safety, Bareilly

Sankhya 263 Ni./(bee.re)/Nireekshan (Ni.-46)/2016-17 dated 23-08-16




1001251000352 dated 25-09-13

Up to 31.03.2018

25 Pesticides Act, 1968

License for purchase, sales, display, storage and retail distribution of Pesticidal Chemicals

Plant Protection Officer, Bijnor

BJR.UP-20-138 dated 22-03-2012

up to 31-12-2017


241

27 Arms Act Gun Licenses DM, Bijnor

All Guns Licenses have been renewed

28 Motor Vehicles Act

RCs of Cars Registration Authority, concerned State

All Cars have vaild Registration Certificates (RCs)

For Petro Dealership

29 Petroleum Act, 1934 Diesel Storage & Distribution License

District Supply Officer, Bijnor

13/HSD/DPR Up to 31.12.2017

SEOHARA DISTIILERY,SEOHARA

Sl. No.



Name of the License




Income Tax Deduction Account No. (TAN) Distillery-Unit

NSDL Mumbai LKNU06249E Dated 27.03.12

One Time

2 Various Environment Protection Laws

Environmental Clearance for Expansion of Distillery from 55 KLPD to 100 KLPD

Director, Ministry of Environment & Forests, Paryavaran Bhavan, New Delhi

No.J-11011/397/2005-IA II (I) dated 3-04-06

One Time

2A The Employees' Provident Funds and Misc. Provisions Act, 1952

Allotment of Code No.UP/1273

Upsachiv, uttar Pradesh Shasan, Shram Vibhag, Lucknow

7689HIQ/XXXVI-C-272/63 dated 16-03-64

w.e.f. 31-03-1962 (One time)

Taking on record of change in the name of Establishment

Asstt.PF Commissioner, Meerut

88568/C-III/Exemption/ UP/233

8/8/2008

3 Water (Prevention and Control of



24/Sahamti/Jal Adesh/ 2016/Lucknow dated

25-02-16

Up to 31.12.2017


242

Pollution) Act, 1974 and Rules made thereunder.




22/Sahamti/Vayu Adesh/2016 Lucknow

dated 25-02-16

Up to 31.12.2017

9 Indian Explosive Act, 1884 & Rules made thereunder.

Explosive License for 3 Vertical Vessels for storage of C0 2 Gas.

Jt Chief Controller of Explosive Agra.

S/HO/UP/03/67 (S3876)

Up to 31.03.2017

Filling of Cylinderswith compressed Gas

G/HO/UP/05/101 (G1731)

Up to 30.09.2017


Pressure 53.0 Kg/Cm2


UP- 6068 Up to 06.09.2016 (Renewal fee

deposited, Certificate to be

obtained)

11 Periodical Inspection of Electrical Installation


Dy.Director, Elelctrical Safety, Bareilly

Sankhya 48 Ni./(bee.re)/Nireekshan (Ni.-46)/2016-17 dated

05-05-16

Though not mentioned on

Letter, as verbally

informed by Department, it is valid for 3 years i.e. up to 4-05-

2019

13 Petroleum & Explosives Safety Organization (PESO)

Approval of Drawings

Jt Chief Controller of Explosive Agra.

Acknowledement Letter No.

AIP/CC/UP/15/3256 (P384647) dated

23-08-16

Approval under process

14 Central ground Water Board

NOC for Ground Water Extraction

Reginal Director Application No.387 dated 3-08-16

submitted

Approval under process


243

15 The Standards of Weights & Measures Act, 1976

Verification of Weights & Measures

Officer Incharge, Legal Metreology,

Dhampur

All weighbridges & storage vats,

tanks are certified for use on periodical basis

on payment of inspection fees

CO-GEN.PLANT, SEOHARA

Sl. No.



Name of the License




Pressure 99.5 Kg/Cm2


UP- 6318 Up to 06.09.2016

(Renewal fee deposited,

Certificate to be obtained)

2 Electricity Rules, 2005

Periodical Inspection & Testing of Electrical Installation

Dy.Director, Electrical Safety, Bareilly

48/ni/ba.ra./Nirikshan (ni.-46)/2016-17 dated 05-05-2016

Up to 04.05.2017


Water Pollution Consent for Co-Gen.


25/Sahamati/Jal Adesh/ 2016/Lucknow dated 25-02-16

Up to 31.12.2017


Air Pollution Consent for Co-Gen.


23/Sahamati/Vayu Adesh/ 2016 Lucknow dated 25-02-16 Up to

31.12.2017


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INTELLECTUAL PROPERTY & TRADEMARKS REGISTRATION

Trade Mark No.

Application Date Mark Class G o o d s

Certificate effective upto

85868 13.09.1943

Word MORTON with Semi Circles 5

Medicinal and Pharmaceuticals preperations, Dietic Foods etc.

13.09.2017

85869 13.09.1943

Word MORTON with two Semi Circles

29

Meat, Fish, Poultry and Semi-meat extracts, preserved, dried and cooked fruits and vegetables, jellies, jams, eggs, milk and other dairy products edible oils and fats, preserves, pickles

13.09.2017

85870 13.09.1943

Word MORTON with two Semi Circles

30

Coffee, tea, cocoa, sugar, rice, tapioca, sago, coffee, substitutes flour and preparations made from cereals, bread, biscuits, cakes, pastry and confectionery, ices, honey treacles, yeast, baking powder, salt, mustered, pepper, vinegar, sauces, spices, ice

13.09.2017

545098 11.02.1991

MORTIN COCONUT COOKIES (Label) 30

Confectionery such as lozenges, toffees, drops and like

10.02.2015

826656 09.11.1998 MORTON ROZO (Pouch) 30

Sweets & Confectionery 09.11.2018

826658 09.11.1998

MORTON DYNAMIC COOKIES (Label) 30

Sweets & Confectionery 09.11.2018

830385 02.12.1998

MORTON CHEER-UP (Label) 30 Sugar boiled confectionery

02.12.2018

830386 02.12.1998

MORTON TOFFEE (Label)

30 Sugar boiled confectionery

Certificate sent for renewal for a further period of 10 years ie. upto 02.12.2018

830387 02.12.1998

MORTON COFFEE PLUS (Label) 30 Sugar boiled confectionery

02.12.2018

830388 02.12.1998

MORTON TOFFEE (Label) 30 Sugar boiled confectionery

02.12.2018


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SECTION VII- OTHER INFORMATION

830390 02.12.1998

MORTON COCONUT COOKIES (Label) 30 Sugar boiled confectionery

02.12.2018

830391 02.12.1998

MORTON CHEER-UP (Label) 30 Sugar boiled confectionery

02.12.2018

830393 02.12.1998

MORTON COCONUT COOKIES (Pouch) 30 Sugar boiled confectionery

02.12.2018

830394 02.12.1998

MORTON COCONUT COOKIES (Label) 30 Sugar boiled confectionery

02.12.2018

830396 02.12.1998

MORTON COFFEE PLUS (Label)

30 Sugar boiled confectionery

02.12.2018

892745 20.12.1999

MORTON (Label)

1

Confectionery and allied products and chemicals products used in Industry for Industrial use, chemical substances for preserving food stuffs

20.12.2019

892747 20.12.1999

MORTON (Label)

5

Pharmaceuticals veterinary and sanitary substances, infants and invalids foods, plasters, material for bandaging, material for stopping teeth, dental wax, disinfectants, preparation for killing weeds and destroying vermin

20.12.2019


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MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

Interpretation clause

1. In the interpretation of these Articles, unless repugnant to the subject or context:

“Act” means “The Companies Act, 2013” read with the provisions of the Companies Act, 1956, to the extent applicable and/ or and includes any statutory modification or re-enactment thereof for the time being in force.

“Articles” means these Articles of Association as maybe amended from time to time.

“Auditors” means and include those persons appointed by the Company under the Applicable Laws.

“Applicable Law” means the Act, and as appropriate, includes any statute, law, listing agreement, regulation, ordinance, rule, judgment, order, decree, bye-law, clearance, directive, guideline, policy, requirement, notifications and clarifications or other governmental instruction or any similar form of decision of, or determination by, or any interpretation or administration having the force of law of any of the foregoing, by any governmental authority having jurisdiction over the matter in question, or mandatory standards as may be applicable from time to time.

“Beneficial Owner” means and include beneficial owner as defined under clause (a) sub-Section (1) of Section 2 of the Depositories Act, 1996.

“Board” or “Board of Directors” means the board of Directors of the Company in office at the relevant time.

“Capital” means the share capital for the time being raised or authorised to be raised, for the purpose of the Company

“Committee” means any committee of the Board of Directors formed as per the requirements of the Act or for any other purpose as the Board may deem fit.

“Company” or “This Company” means AVADH SUGAR & ENERGY LIMITED.

“Chief Executive Officer” means an officer of the Company, who has been designated under Section 2 (17) of the Act.

“Chief Financial Officer” means a person appointed under Section 2 (18) of the Act.

“Company Secretary” or “Secretary” means a company secretary as defined under Section 2 (25) of the Act.


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“Debenture” means and includes debenture-stock, bonds and any other instrument of the Company evidencing a debt, whether constituting a charge on the assets of the Company or not.

“Director” means a director appointed by the Board of the Company.

“Dividend” includes interim Dividend.

“Financial Year” means the period ending on the 31st day of March every year.

“Free Reserves” means free reserves as defined under Section 2 (43) of the Act;

“In writing” or “written” means and include printing, typing, lithographing, computer mode and other modes of reproducing words in visible form.

“Independent Director” means an independent director as defined under the Act read with the Listing Agreement amended from time to time.

“Key Managerial Personnel” means such persons as defined under Section 2 (51) of the Act.

“Managing Director” means a managing director as defined under Section 2 (54) of the Act.

“Office” means the Registered Office for the time being of the Company.

“Ordinary Resolution” means a resolution referred to in Section 114 of the Act.

“Persons” includes any artificial juridical person, corporations or such other entities as are entitled to hold property in their own name.

“Postal Ballot” means voting by post through any electronic mode as permitted under Applicable Law.

“Register of Beneficial Owners” means the register of members in case of shares held with a Depository as may be permitted by law.

“Register of Members” means the register of Members, including any foreign register which the Company may maintain pursuant to the Act.

“Registrar” means the Registrar of Companies.

“Rules” means the applicable rules for the time being in force as prescribed under relevant sections of the Act.

“Seal” means the common seal of the Company.

Securities” means shares, Debentures and/or such other securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956.

“Shares” means the shares as defined under Section 2 (84) of the Act.


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“Small Shareholder” means a shareholder holding shares of the nominal value of not more than twenty thousand rupees or such other sum as may be prescribed under Applicable Law

“Special Resolution” means a resolution referred to in Section 114 of the Act.

“Tribunal” means the National Company Law Tribunal constituted under Act and Rules made there under and includes Appellate Tribunal constituted under the Act or any other authority under Applicable Laws.

These Presents” means the Memorandum of Association and the Articles of Association of the Company.

Term(s) and phrases) not specifically defined in these Articles shall bear the same meaning as assigned to the same in the Act and such other Applicable Laws.

Reference to the singular includes reference to the plural and vice versa;

Reference to any gender includes a reference to all genders;

The marginal notes used in these Articles shall not affect the construction hereof. Save as aforesaid any words or expressions defined in the Act shall, if not inconsistent with the subject or context, bear the same meaning in these Articles.

At all times these Articles should be in compliance with the Act and the Rules thereof along with such Applicable Laws.

The intention of these Articles is to be in consonance with the contemporary rules and regulations prevailing in India.

If there is an amendment in any Act, rules and regulations allowing what were not previously allowed under the statute, the Articles herein shall be deemed to have been amended to the extent that Articles will not be capable of restricting what has been allowed by the Act by virtue of an amendment subsequent to registration of the Articles.

SHARE CAPITAL, INCREASE AND REDUCTION OF CAPITAL

Amount of Capital

2. The Authorised Share Capital of the Company shall be the capital as specified in Clause 5 of the Memorandum of Association. Subject to the applicable provisions of the Act and these Articles and the Applicable Laws, the Company from time to time shall have the power to increase, reduce, sub divide the shares into several classes as permissible in law and to attach thereto respectively such preferential, deferred, qualified or special rights, privileges or conditions as may be determined by or in accordance with these Articles.


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Increase of Capital by the Company

3. The Company in General Meeting may, from time to time, increase the capital by the creation of new Shares. Subject to the provisions of the Act, any Shares of the original or increased capital shall be issued upon such terms and conditions and with such rights and privileges annexed thereto, as the Board shall determine, and in particular, Such shares may be issued with a preferential or qualified right to Dividends, or otherwise, or with a right to participate in some profits or assets of the Company, or with such differential or qualified right of voting at General Meetings of the Company, as permitted in terms of Section 47 of the Act. Whenever the Capital of the Company has been increased under the provisions of this Article, the Directors shall comply with the provisions of Section 64 of the Act or any such compliance as may be required by the Act for the time being in force.

Issue of redeemable preference shares

4. Subject to the provisions of Section 55 of the Act and other Applicable Law, any preference shares may be issued from time to time, which are at the option of the Company and Applicable Laws are liable to be redeemed on such terms and in such manner as the Company by the terms of the issue of the said shares may determine.

Power to issue shares at a discount

5. Subject to the provisions of the Act and Applicable Laws the Company may issue shares at a discount.

Provisions applicable to any other Securities:

6. The Board shall be entitled to issue, from time to time, subject to the provisions of the Act and Applicable Laws, any such Securities, including Share Warrants, Securities convertible into Shares, exchangeable into Shares, or carrying a warrant, with or without any attached Securities, carrying such terms as to coupon, returns, repayment, servicing, as may be decided by the terms of such issue. Subject to the provisions of the Act and Applicable Laws such Securities may be issued at premium or discount, and redeemed at premium or discount, as may be determined by the terms of the issuance.

Offer or invitation for subscription of securities on private placement

7. Subject to the provisions of Section 42 of the Act and the Applicable Laws, the Company may make an offer or invitation for subscription of Securities on a private placement basis.

Reduction of Capital

8. The Company may (subject to the provisions of Section 52, 55, 66, of the Act or any other applicable provisions of law for the time being in force) from time to time by way of Special Resolution reduce its Share capital, any Capital Redemption Reserve Account or Share premium account in any manner for the time being authorized by law.

Sub-division consolidation and cancellation of Shares

9. Subject to the provisions of Section 61 of the Act, the Company in General Meeting may from time to time (a) consolidate its Shares and (b) sub-divide its existing shares.


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Subject as aforesaid, the Company in General Meeting may also cancel Shares which 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.

Variation of rights

10. Subject to the provisions of the Act and these Articles, the shares in the capital of the company shall be under the control of the Directors who may issue, allot or otherwise dispose off the same or any of them to such persons, in such proportion and on such terms and conditions, rights conferred upon the holders of the shares of any class issued with preferred or other rights either at a premium or at par and at such time as they may from time to time think fit.

Further issue of Capital

11. Where at any time it is proposed to increase the subscribed capital of the Company by allotment of further shares, such shares shall be offered in compliance with the Act to persons, who on the date of the offer are holders of the equity shares of the Company, in proportion as nearly as circumstances admit, to the paid-up share capital on those shares by sending a letter of offer.

Notwithstanding anything contained in these Article further shares may be offered in any manner whatsoever, to :

Employees under a scheme of employees stock option scheme, subject to special resolution passed by the Company and subject to other conditions prescribed under the Act and the rules made there under; to any persons on private placement or on preferential basis whether or not those persons include those persons include the persons referred to above, either for cash or for a consideration other than cash, if so decided by a Special Resolution, subject to conditions prescribed under the Act and rules made there under and other Applicable Laws.

Shares at the disposal of the Board

12 Subject to the provisions of the Applicable Laws, the Securities of the Company for the time being shall be under the control of the Board who may issue, allot or otherwise dispose of the same or any of them to such person, in such proportion and on such terms and conditions and either at a premium or at par and at such time as they may from time to time think fit and to give to any person or persons the option or right to call for any Shares either at par or premium during such time and for such consideration as the Board think fit, and may issue and allot Shares in the capital of the Company or other Securities on payment in full or part of any property sold and transferred or for any services rendered to the Company in the conduct of its business and any Shares which may so be allotted may be issued as fully paid up shares and if so issued, shall be deemed to be fully paid shares. Provided that option or right to call of Shares shall not be given to any person or persons without the sanction of the Company in the General Meeting.


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Power to issue Shares outside India

13 Pursuant to the provisions of Section 62 and other applicable provisions, if any, of the Act, and subject to such approvals, permissions and sanctions as may be necessary from the Government of India, Reserve Bank of India and/or any other authorities or institutions as may be relevant (hereinafter collectively referred to as “Appropriate Authorities”) and subject to such terms and conditions or such modifications thereto as may be prescribed by them in granting such approvals, permissions and sanctions, the Company will be entitled to issue and allot in the international capital markets, Equity Shares and/or any instruments or securities (including Global Depository Receipts) representing Equity Shares, any such instruments or securities being either with or without detachable Warrants attached thereto entitling the Warrant holder to Equity Shares/instruments or securities (including Global Depository Receipts) representing Equity Shares, (hereinafter collectively referred to as “the Securities”) to be subscribed to in foreign currency / currencies by foreign investors (whether individuals and/or bodies corporate and/or institutions and whether shareholders of the Company or not) for an amount, inclusive of such premium as may be determined by the Board. The provisions of this Article shall extend to allow the Board to issue such foreign Securities, in such manner as may be permitted by Applicable Law.

Liability of Members

14 Every member, or his heirs, executors or administrators shall pay to the Company the portion of the capital represented by his share or shares which may, for the time being, remain unpaid thereon, in such amounts, at such time or times, and in such manner as the Board shall, from time to time in accordance with the Company’s regulations, require or fix for the payment thereof.

Shares not to be held in trust

15 Except as required by law, no person shall be recognised by the Company as holding any Share upon any trust, and the Company shall not be bound by, or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any Share, or any interest in any fractional part of a Share, or (except only as by these regulations or by law otherwise provided) any other rights in respect of any Share except an absolute right to the entirety thereof in the registered holder.

The first named joint holder deemed to be sole holder

16 If any Share stands in the names of two or more persons, the person first named in the register shall, as regards receipt of Dividends or bonus or service of notice and all or any earlier matter connected with the Company, except voting at meetings, be deemed the sole holder thereof, but the joint holders of a Share shall be severally as well as jointly liable for the payment of all installments and calls due in respect of such Shares for all incidents thereof according to the Company’s regulations. However, the Company shall not be bound to register more than four persons as the joint-holder of any share.


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Register of Members and index

17 The Company shall maintain a Register of Members and index in accordance with Section 88 of the Act. The details of shares held in physical or dematerialized forms may be maintained in a media as may be permitted by law including in any form of electronic media.

The Company may also keep a foreign register in accordance with Section 88 of the Act and rules made there under, containing the names and particulars of the Members, Debenture- holders, other Security holders or Beneficial Owners residing outside India;

SHARES CERTIFICATES

Share certificate to be numbered progressively and no Share to be subdivided

18 The shares certificates shall be numbered progressively according to their several denominations specify the shares to which it relates and bear the Seal of the Company, and except in the manner hereinbefore mentioned, no Share shall be sub-divided. Every forfeited or surrendered Share certificate shall continue to bear the number by which the same was originally distinguished.

Limitation of time for issue of certificates

19 Every Member, other than a Beneficial Owner, shall be entitled, without payment, to one or more certificates in marketable lots, for all the shares of each class or denomination registered in his name, or if the Board so approve (upon paying such fee as the Board may from time to time determine) to several certificates each for one or more of such Shares and the Company shall complete and have ready for delivery of such certificates within two months from the date of allotment, unless the conditions of issue thereof otherwise provide or within one months of the receipt of application of registration of transfer, transmission, sub-division, consolidation or renewal of any of its shares as the case may be. Every certificates of Shares shall be under the Seal of the Company which shall be affixed as prescribed in the Applicable Law and shall specify the number and distinctive numbers of Shares in respect of which it is issued and the amount paid-up thereon and shall be in such form as the Board may prescribe and approve, provided that in respect of a Share(s) held jointly by several persons, the Company shall not be bound to issue more than one certificate and delivery of a certificate of shares to one or several joint holders shall be a sufficient delivery to all such holders. For any further issue of certificate to such joint allottees, the Board shall be entitled, but shall not be bound to prescribe a charge not exceeding Rupee One.

Issue of new certificate in place of one defaced, lost or destroyed

20 If any certificate be worn out, defaced, mutilated, old/ or torn or if there be no further space on the back thereof for endorsement of transfer or in case of sub-division or consolidation then upon production and surrender such certificate to the Company, a new certificate may be issued in lieu thereof, and if any certificate is lost or destroyed then upon proof thereof to the satisfaction of the Company and on execution of such indemnity and the payment of out-of-pocket expenses incurred by the Company in investigating the evidence produced as the Board deems adequate, being given, a new certificate in lieu thereof shall be given to


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the party entitled to such lost or destroyed certificate. Every certificate under the article shall be issued in case of splitting or consolidation of Share certificate(s) or in replacement of Share certificate(s) that are defaced, mutilated, torn or old, decrepit or worn out without payment of fees if the Board so decide, or on payment of such fees (not exceeding Rs.50 for each certificate) as the Board shall prescribe.

Further, no duplicate certificate shall be issued in lieu of those that are lost or destroyed, without the prior consent of the Board and only on furnishing of such supporting evidence and/or indemnity as the Board may require, and the payment of out-of-pocket expenses incurred by the Company in investigating the evidence produced, without payment of fees if the Board so decide, or on payment of such fees (not exceeding Rs.50 for each certificate) as the Board shall prescribe.

Provided that notwithstanding what is stated above the Board shall comply with such rules or regulation or requirements of any Stock Exchange or the rules made under the Act or rules made under Securities Contracts (Regulation) Act, 1956, as amended or any other Act, or rules applicable thereof in this behalf; provided further, that the Company shall comply with the provisions of Section 46 of the Act and other Applicable Law, in respect of issue of duplicate shares.

21 The provision of these Articles shall mutatis mutandis apply to issue of certificates of Debentures of the Company or to any other securities issued by the Company.

BUY BACK OF SECURITIES BY THE COMPANY

22 Subject to the provisions of Sections 68, 69 and 70 of the Act and such other regulations as prescribed by Securities and Exchange Board of India (SEBI) or any other authority for the time being in force, the Company may purchase its own shares or other specified securities. The power conferred herein may be exercised by the Board, at any time and from time to time, where and to the extent permitted by Applicable Law, and shall be subject to such rules, applicable consent or approval as required.

UNDERWRITING AND BROKERAGE

Commission may be paid

23 The Company may pay commission or brokerage or underwriting fee to any person in connection with the subscription to its securities subject to such prescribed conditions under the Act or Applicable Laws.

INTEREST OUT OF CAPITAL

24 Where any shares are issued for the purpose of raising money to defray the expenses of the construction of any work or building, or the provision of any plant, which cannot be made profitable for a lengthy period, the Company may pay interest on so much of that share capital as is for the time being paid-up, for the period, at the rate and subject to the conditions and restrictions provided by the Applicable Laws and


254

may charge the same to capital as part of the cost of construction of the work or building, or the provision of plant.

CALL ON SHARES

Board of Directors may make calls

25 The Board of Directors may, from time to time and subject to the terms on which Shares have been issued and subject to the conditions of allotment, by a resolution passed at a meeting of the Board, or otherwise as permitted by Applicable Law make such call as it thinks fit upon the Members in respect of all moneys unpaid on the Shares held by them respectively, and each member shall pay the amount of every call so made on him to the person or persons and at the times and places appointed by the Board of Directors. A call may be made payable by installments.

26 The option or right to make calls on Shares shall not be given to any person except with the sanction of the issuer in general meetings.

Notice of calls 27 Each member shall, subject to receiving fifteen days’ notice specifying the time or times and place of payment, pay to the Company, at the time or times and place so specified, the amount called on his shares.

28 A call may be revoked or postponed at the discretion of the Board.

Calls to date from resolution

29 A call shall be deemed to have been made at the time when the resolution authorising such call was passed as provided herein and may be required to be paid by installments.

Calls to carry interest

30 If any member fails to pay any call due from him on the day appointed for payment thereof, or any such extension thereof as aforesaid, he shall be liable to pay interest on the same from the day appointed for the payment thereof to the time of actual payment at a rate, as the Board may determine and as permissible under the Applicable law. Nothing in this Article shall render it obligatory for the Board of Directors to demand or recover any interest from any such member.

31 The Board shall be at liberty to waive payment of any such interest wholly or in part.

Sums deemed to be calls

32 Any sum, which may by the terms of issue of a Share becomes payable on allotment or at any fixed date, whether on account of the nominal value of the Share or by way of premium, shall for the purposes of these Articles be deemed to be a call duly made and payable, on the date on which by the terms of issue the same becomes payable and in case of non-payment, all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise, shall apply as if such sum had become payable by virtue of a call duly made and notified.

Proof on trial of suit for money due on Shares

33 At the trial or hearing of any action or suit brought by the Company against any member or his representatives for the recovery of any money claimed to be due to the Company in respect of his shares, it shall be sufficient to prove that the name of the member, in respect of whose shares, the money is sought to be recovered appears entered on the


255

Register of Members as the holder, at or subsequently to the date at which the money is sought to be recovered, is alleged to have become due on the shares in respect of such money is sought to be recovered, that the resolution making the call is duly recorded in the Minute Book, and that notice of such call was duly given to the member or his representatives used in pursuance of these Articles and that it shall not be necessary to prove the appointment of the Directors who made such call, nor that a quorum of Directors was present at the Board at which any call was made nor that the meeting at which any call was made duly convened or constituted nor any other matters whatsoever, but the proof of the matter aforesaid shall be conclusive evidence of the debt.

Partial payment not to preclude forfeiture

34 Neither the receipt by the Company of a portion of any money which shall from time to time be due from any member to 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 hereinafter provided.

Payment in anticipation of call may carry interest

35 The Board may, if they think fit, subject to the provisions of Section 50 of the Act, agree to and receive from any Member willing to advance the same whole or any part of the moneys due upon the shares held by him beyond the sums actually called for, and upon the amount so paid or satisfied 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 pay interest at such rate, as the member paying such sum in advance and the Board agree upon provided that money paid in advance of calls shall not confer a right to participate in profits or Dividend. The Board may at any time repay the amount so advanced. The Members shall not be entitled to any voting rights in respect of the moneys so paid by him until the same would but for such payment, become presently payable.

36 The provisions of these Articles shall mutatis mutandis apply to the calls on Debenture or other Securities of the Company.

LIEN & FORFEITURE

Company to have lien on shares

37 The Company shall have a first and paramount lien upon all the shares/ Debentures/Securities (other than fully paid-up shares/Debentures) 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/Debentures/Securities and no equitable interest in any shares shall be created except upon the footing, and upon the condition that this Article will have full effect and any such lien shall extend to all Dividends and bonuses 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/ Debentures/ Securities.


256

38 Subject to Applicable Laws, the Board may at any time declare any shares/ Debentures/ Securities wholly or in part to be exempt from the provision of this Article. Provided that, fully paid shares shall be free from all lien and that in case of partly paid shares the Company’s lien shall be restricted to moneys called or payable at a fixed time in respect of such shares.

As to enforcing lien by sale

39 For the purpose of enforcing such lien, the Board may sell the Shares subject thereto in such manner as they shall think fit, and for that purpose may cause to be issued a duplicate certificate in respect of such shares and may authorise one of their member to execute a transfer thereof on behalf of and in the name of such member. The purchaser of such transferred shares shall be registered as the holder of the shares comprised in any such transfer. The purchaser shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.

40 No sale shall be made unless a sum in respect of which the lien exists is presently payable or until the expiration of the period as determined by the Board after a notice in writing, of the intention to sell shall have been served on such member or his representatives and default shall have been made by him or them in payment, fulfillment, or discharge of such debts, liabilities or engagements for fourteen days after such notice.

Application of proceeds of sale

41 The net proceeds of any such sale shall be received by the Company and applied in or towards payment of such part of the amount in respect of which the lien exists as is presently payable and the residue, if any, shall (subject to a like lien for sums not presently payable as existed upon the shares before the sale) be paid to the persons entitled to the shares at the date of the sale.

If call or installment not paid notice may be given

42 If any member fails to pay any call or installment on or before the day appointed for the payment of the same the Board may at any time thereafter during such time as the call or installment remains unpaid, serve 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 43 The notice shall: 43.1 name a further day (not being earlier than the expiry of

thirty days from the date of service of the notice) on or before which the payment required by the notice is to be made.

43.2 shall detail the amount which is due and payable on the shares and shall state that in the event of non-payment at or before the time appointed the shares will be liable to be forfeited.


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If notice not complied with Shares may be forfeited

44 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 Board to that effect. Such forfeiture shall include all Dividends declared in respect of the forfeited Shares and not actually paid before the forfeiture.

Notice of forfeiture to a Member

45 When any Shares 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 of Members, but no forfeiture shall be in any manner invalidated, by any omission or neglect to give such notice or to make any such entry as aforesaid.

Forfeited Share to become property of the Company

46 Any Share so forfeited shall be deemed to be the property of the Company, and the Board may sell, re allot or otherwise dispose of the same in such manner as think fit.

Power to cancel forfeiture

47 The Board may, at any time before any Share so forfeited shall have been sold, re-allotted or otherwise disposed of, cancel the forfeiture thereof upon such conditions as it thinks fit.

Liability on forfeiture

48 A person whose Share has been forfeited shall cease to be a Member in respect of the forfeited Share, but shall notwithstanding, remain liable to pay, and shall forthwith pay to the Company, all calls, or installment, interest and expenses, owing in respect of such Share at the time of the forfeiture, together with interest thereon, from the time of forfeiture until payment, at such rate as the Board may determine and the Board may enforce the payment thereof, to any party 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. The liability of such person shall cease if and when the Company shall have received payment in full of all such monies in respect of the Shares.

Effect of forfeiture

49 The forfeiture of a Share involve extinction, at the time of the forfeiture, of all interest and 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

50 A duly verified declaration in writing that the declarant is a Director, the manager or the secretary 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.

Cancellation of Share certificate

51 Upon any sale, re-allotment or other disposal under the provisions of the preceding Articles, the certificate or certificates originally issued in respect of the relative shares shall (unless the same shall on demand by


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in respect of forfeited shares

the Company have been previously surrendered to it by the defaulting member) stand cancelled and become null and void and of no effect, and the Board shall be entitled to issue a duplicate certificate or certificates in respect of the said shares to the person or persons, entitled thereto as per the provisions herein –

51.1 The Company may receive the consideration, if any, given for the Share on any sale or disposal thereof and may execute a transfer of the Share in favour of the person to whom the Share is sold or disposed off.

51.2 The transferee shall thereupon be registered as the holder of the Share; and

The transferee shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the Share.

These Articles to apply in case of any non-payment

52 The provisions of these regulations as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the nominal value of the Share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.

CAPITALISATION OF PROFITS

53 The Company in general meeting may, upon the recommendation of the Board, resolve—

53.1 that it is desirable to capitalise any part of the amount for the time being standing to the credit of any of the Company’s reserve accounts, or to the credit of the profit and loss account, or otherwise available for distribution; and

53.2 that such sum be accordingly set free for distribution in the manner specified in amongst the members who would have been entitled thereto, if distributed by way of Dividend and in the same proportions.

The sum aforesaid shall not be paid in cash but shall be applied, subject to applicable provisions contained herein, either in or towards—

paying up in full, unissued shares of the Company to be allotted and distributed, credited as fully paid-up, to and amongst such members in the proportions aforesaid; A securities premium account and a Capital Redemption Reserve Account may, for the purposes of this regulation, be applied in the paying up of unissued shares to be issued to members of the Company as fully paid bonus shares; Whenever such a resolution as aforesaid shall have been passed, the Board shall—


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make all appropriations and applications of the undivided profits resolved to be capitalised thereby, and all allotments and issues of fully paid shares if any; and generally do all acts and things required to give effect thereto.

TRANSFER AND TRANSMISSION OF SHARES

Register of transfers

54 The Company shall keep a book to be called the “Register of Transfers”, and therein shall be fairly and directly entered particulars of every transfer or transmission of any Share. The Register of Transfers shall not be available for inspection or making of extracts by the Members of the Company or any other Persons.

Instruments of transfer

55 The instrument of transfer shall be in the form prescribed under section 56 of the Act and rules made there under.

To be executed by transferor and transferee

56 Every instrument of transfer shall be executed both by transferor and the transferee and the transferor shall be deemed to remain the holder of such Share until the name of the transferee shall have been entered in the Register of Members in respect thereof. The Board shall not issue or register a transfer of any Share in favour of a minor (except in cases when they are fully paid up)

Application for Transfer

57 Application for the registration of the transfer of a Share may be made either by the transferee or the transferor, no registration shall, in the case of the partly paid Share, be affected unless the Company gives notice of the application to the transferee subject to the provisions of these Articles and Section 56 of the Act and/or Applicable Law, 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 transferee in the same manner and subject to the same conditions as it the application for registration of the transfer was made by the transferee.

Notice of transfer to registered holder.

58 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 is such registered holder fails to lodge an objection in writing at the Officer 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

59 Neither the Company nor its Directors shall incur any liabilities for registering or acting upon a transfer of shares apparently made by


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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 b e 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 recognized as the holder of such share and the previous holder shall so far as the company is concerned be deeded to have transferred his whole title thereto.

Transfer books when closed

60 The Board shall have power to give at least seven days’ previous notice by advertisement in some newspaper circulating in the district in which the registered office of the Company is situated, in accordance with Section 91 of the Act and Applicable Laws, to close the transfer books, the Register of Members, Register of Debenture holders or the Register of other Security holders at such time or times and for such period or periods, not exceeding thirty days at a time and not exceeding in the aggregate forty-five days in each year, as it may deem expedient.

Board may refuse to register transfer

61 Subject to the provisions of Section 56, 58 of the Act, these Articles and other applicable provisions of the Act or any other law for the time being in force, the Board may refuse, or in pursuance of power under any Applicable Law, to register the transfer of, or the transmission by operation of law of the right to, any shares or interest of a member in or Debentures of the Company.

62 Subject to the provisions of the Act and other Applicable Laws, the Board may refuse to register the transfer of any of its securities in the name of the transferee on any one or more of the following grounds and on no other ground, namely :-

62.1 that the instrument of transfer is not proper or has not been duly stamped and executed or that the certificate relating to the security has not been delivered to the Company or that any other requirement under the law relating to registration of such transfer has not been complied with;

62.2 that the transfer of the security is in contravention of any law;

62.3 that the transfer of the security to prohibited by any order of any court, tribunal or other authority under any law for the time being in force.


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Board to recognize Beneficial Owners of securities

63 Notwithstanding anything to the contrary contained in these Articles, a Depository shall be deemed to be the registered owner for the purpose of effecting transfer of ownership of Securities on behalf of a Beneficial Owner.

64 Save as otherwise provided hereinabove, the Depository as a registered owner shall not have any voting rights or any other rights in respect of securities held by it, and the Beneficial Owner shall be entitled to all the rights and benefits and be subject to all the liabilities in respect of its securities held by a Depository.

65 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 as the Beneficial Owner of the securities in the records of the Depository as the absolute owner thereof and accordingly the Company shall not be bound to recognise any benami, trust or equitable, contingent, future or partial interest in any Security or (except otherwise expressly provided by the Articles) any right in respect of a Security 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.

Nomination 66 Every holder of Shares in, or Debentures of the Company or any other Security of the Company may at any time nominate, in the manner prescribed under the Act, a person to whom his shares in or Debentures of the Company shall vest in the event of death of such holder.

67 Where the Shares in, or Debentures of the Company are held by more than one person jointly, the joint holders may together nominate, in the prescribed manner, a person to whom all the rights in the shares or Debentures of the Company, as the case may be, held by them shall vest in the event of death of all joint holders. However, the Company shall not be bound to register more than four persons as the joint-holder of any share.

Persons entitled to share by Transmission

68 The executors or administrators of a deceased member (not being one of several joint holders) shall be the only person or persons recognized by the Company as having any title to or interest in such share but the Board may require such evidence only recognized of death as it may deed fit, including requiring him to obtain grant of Probate or letters of Administration or other legal representation as the case may be from some competent Court.

Transmission in the name of nominee

69 Any person becoming entitled to shares in consequence of the death, lunacy, bankruptcy or insolvency of any member, or the marriage of a female member, or by any lawful means other than by a transfer in accordance with these presents, may with the consent of the Board of Directors and subject as hereinafter provided, elect, either:

69.1 to be registered himself as holder of the shares or Debentures, as the case may be; or


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69.2 to make such transfer of the shares or Debentures, as the case may be, as the deceased shareholder or Debenture holder, as the case may be, could have made.

Provided nevertheless that it shall be lawful for the Board in their absolute discretion to dispense with the production of any evidence including any legal representation upon such terms as to indemnity or otherwise as the Board may deem fit.

Provided nevertheless, that if such person shall elect to have his nominee registered he shall testify the election by executing to his nominee an instrument of transfer in accordance with the provisions herein contained and until he does so, he shall not be freed from any liability in respect of the shares.

70 The Board shall, in either case, have the same right to decline or suspend registration as it would have had, if the deceased or insolvent member had transferred the Share before his death or insolvency.

71 If the nominee, so becoming entitled, elects himself to be registered as holder of the shares or Debentures, as the case may be, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects and such notice shall be accompanied with death certificate of the deceased shareholder or Debenture holder and the certificate(s) of shares or Debentures, as the case may be, held by the deceased in the Company.

72 If the person aforesaid shall elect to transfer the Share, he shall testify his election by executing a transfer of the Share.

73 All the limitations, restrictions and provisions of these regulations relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or insolvency of the member had not occurred and the notice or transfer were a transfer signed by that member.

74 Subject to the provisions of Section 56 of the Act and these Articles, the Board may register the relevant shares or Debentures in the name of the nominee of the transferee as if the death of the registered holder of the shares or Debentures had not occurred and the notice or transfer were a transfer signed by that shareholder or Debenture holder, as the case may be.

75 A nominee on becoming entitled to Shares or Debentures by reason of the death of the holder or joint holders shall be entitled to the same Dividend and other advantages to which he would be entitled if he were the registered holder of the Share or Debenture, except that he shall not before being registered as holder of such shares or Debentures, be entitled in respect of them to exercise any right conferred on a member or Debenture holder in relation to meetings of the Company.


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No transfer to minor, insolvent etc.

76 No transfer shall be made to a minor or person of unsound mind. However in respect of fully paid up shares, shares may be transferred in favor of minor acting through legal guardian, in accordance with the provisions of law.

Person entitled may receive Dividend without being registered as a Member

77 A person entitled to a Share by transmission shall, subject to the right of the Directors to retain such Dividends or money as hereinafter provided, be entitled to receive and may give discharge for any Dividends and other advantages to which he would be entitled if he were the registered holder of the Share, except that he shall not, before being registered as a member in respect of the Share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company.

Conditions of registration of transfer

78 For the purpose of the registration of a transfer, the certificate or certificates of the Share or shares to be transferred must be delivered to the Company along with (same as provided in Section 56 of the Act) a properly stamped and executed instrument of transfer.

No fee on transfer or transmission

79 No fee shall be charged for registration of transfer, transmission, probate, succession certificate and letters of administration, certificate of death or marriage, power of attorney or similar other document.

Company not liable for disregard of a notice in prohibiting registration of transfer

80 The Company shall incur no liability or responsibility whatsoever in consequence of its registering or giving effort to any transfer of shares made or purporting to be made by any apparent legal owner thereof (as shown or appearing in the Register of Members) to the prejudice of persons having or claiming any equitable right, title or interest to or in the said shares, notwithstanding that the Company may have had notice of such equitable right, title or interest or notice prohibiting registration of such transfer, and may have entered such notice, or deferred thereto, in any book of the Company, and the Company shall not be bound or required to regard or attend or give effect to any notice which may be given to it of any equitable right title or interest, or be under any liability whatsoever for refusing or neglecting so to do, though it may have been entered or referred to in some book of the Company; but the Company shall nevertheless be at liberty to regard and attend to any such notice and give effect thereto, if the Board of Directors shall so think fit.

DEMATERIALISATION OF SECURITIES

81 The provisions of this Article shall apply notwithstanding anything to the contrary contained in any other Articles.

Dematerialization and Rematerializationof Securities

82 The Board shall be entitled to dematerialize Securities or to offer securities in a dematerialized form pursuant to the Depositories Act, 1996, as amended. The Board shall also be authorized to rematerialize its Securities. The provisions of this Section will be applicable in case of such Securities as are or are intended to be dematerialised.


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Options for investors

83 Every holder of or subscriber to Securities of the Company shall have the option to receive certificates for such securities 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 securities in the manner provided by the Depositories Act, 1996, and the Company shall, in the manner and within the time prescribed by law, issue to the Beneficial Owner the required certificates for the Securities.

Securities in depositories to be in fungible form

84 All securities held by a Depository shall be dematerialized and be in fungible form. Nothing contained in Sections 89 and 186 of the Act shall apply to a Depository in respect of the securities held by on behalf of the Beneficial Owners.

The Company shall pay the Depositories an annual custodial fee at such rates as may specified by SEBI or other Applicable Laws.

Rights of Depositories and Beneficial Owners

85 85.1 Notwithstanding anything to the contrary contained in these Articles, a Depository shall be deemed to be the registered owner for the purposes of effecting transfer of ownership of Securities of the Company on behalf of the Beneficial Owner.

85.2 Save as otherwise provided in the Articles 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.

85.3 Every person holding Securities of the Company and whose name is entered as the Beneficial Owner of securities in the record of the Depository shall be entitled to all the rights and benefits and be subject to all the liabilities in respect of the Securities which are held by a Depository and shall be deemed to be a Member of the Company.

Service of Documents

86 Notwithstanding anything to the contrary contained in these Articles, where Securities of the Company are held in a Depository, the records of the beneficiary ownership may be served by such Depository on the Company by means of electronic mode or by delivery of floppies or discs.

Transfer of securities

87 Nothing contained in Section 56 of the Act or anything to the contrary contained in these Articles shall apply to a transfer of Securities effected by a transferor and transferee both of whom are entered as Beneficial Owners in the records of a Depository.

Allotment of securities dealt with in a Depository

88 Notwithstanding anything to the contrary contained in 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.

Register and index of Beneficial Owners

89 The Register and Index of Beneficial Owners maintained by Depository under the Depositories Act, 1996, as amended shall be


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deemed to be the Register and Index of Members and Security holders for the purposes of these Articles.

Listing of Securities

90 Subject to the Applicable Laws, the Company may list Securities in stock exchange(s).

The Company agrees that as soon as its securities are listed on the Exchange, it will pay to the Exchange an initial listing fee as prescribed in the listing agreement entered into by the Company with the concerned Stock Exchanges and that thereafter, so long as the securities continue to be listed on the Exchange, it will pay to the Exchange on or before the 30th April, (or such other date as may be prescribed under the applicable laws) in each year an annual listing fee computed on the basis of the capital of the Company as on 31st March and worked out as provided in the respective listing agreements with the concerned Stock Exchange. The Company also agrees that it shall pay the additional annual listing fee, at the time of making the application for listing of its securities arising out of further issue, as is computed in terms of the respective listing agreements with the concerned Stock Exchange for any addition in the capital after 31st March.

BORROWING POWERS

Power to borrow 91 The Board may, from time to time, at its discretion subject to the provisions of these Articles, Section 73 to 76, 179, 180 of the Act or Applicable Law, raise or borrow, either from the Directors or from elsewhere and secure the payment of any sum or sums of money for the purpose of the Company.

Conditions on which money may be borrowed

92 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, or other Securities, 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.

Terms of issue of Debentures

93 Any Debentures, Debenture stock, bonds or other Securities may be issued on such terms and conditions as the Board may think fit. Provided that Debenture with a right to allotment or conversion into shares shall be issued in conformity with the provisions of Section 62 of the Act and the Rules thereof. Debentures, Debenture stock, bonds and other securities may be made assignable free from any equities from the Company and the person to whom it may be issued. Debentures, Debenture- stock, bonds or other securities with a right of conversion into or allotment of shares shall be issued only with such sanctions as may be applicable.

Instrument of transfer

94 Save as provided in Section 56 of the Act, no transfer of Debentures shall be registered unless a proper instrument of transfer duly executed by the transferor and transferee has been delivered to the Company


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together with the certificate or certificates of the Debentures: Provided that the Company may issue non transferable Debentures and accept an assignment of such instruments.

Delivery of certificates

95 Deliver by the Company of certificates upon allotment or registration of transfer of any Debentures, Debenture stock or bond issued by the Company shall be governed and regulated by Section 56 of the Act.

Register of charge, etc.

96 The Board shall cause a proper Register to be kept in accordance with the provisions of Section 85 of the Act of all mortgages, Debentures and charges specifically affecting the property of the Company, and shall cause the requirements of Sections 77 to 87 of the Act, both inclusive of the Act in that behalf to be duly complied with, so far as they are ought to be complied with by the Board.

Register and index of Debenture holders

97 The Company shall, if at any time it issues Debentures, keep Register and Index of Debenture holders in accordance with Section 88 of the Act. The Company shall have the power to keep in any State or Country outside India a Branch Register of Debenture-stock, resident in that State or Country.

CONVERSION OF SHARES INTO STOCK AND RECONVERSION

98 The Company in General Meeting may convert any paid-up shares into stock; and when any shares shall have been converted into stock, the several holders of such stock may thenceforth transfer their regulations as, and subject to which the shares from which the stock arose might have been transferred, if no such conversion had taken place or as near thereto as circumstances will admit. The Company may at any time re-convert any stock into paid-up shares of any denomination.

Power to Issue share warrants

99 Subject to and in accordance with the provisions of the Act, the Company may issue share warrants in its discretion with respect to any share which is fully paid, upon application in writing, signed by the person registered as holder of the share, and authenticated by such evidence (if any) as the Board may, from time to time, require as to identity of the person signing the application, and on receiving the certificate(if any) of the share, and the amount of the stamp duty on the warrant and such fees as the Board may from time to time require for the issue of a share warrant.

Deposit of share warrant

100 (1) The bearer of a share warrant may at any time deposit the warrant at the office of the Company, and so long as the warrant remains so deposited, the depositor shall have the same right of signing a requisition for calling a meeting of the Company, and of attending, and voting and exercising the other privileges of a member at any meeting held after the expiry of two clear days from the time of deposit, as If his name were inserted in the Register of Members as the holder of the share included in the deposited warrant.


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(2) Not more than one person shall be recognised as depositor of the share warrant.

(3) The Company shall, on two days' written notice, return the deposited share warrant to the depositor.

Privileges and disabilities of the holders of share warrants

101 (1) Subject a herein otherwise expressly provided, no person shall, as bearer of a share warrant. sign a requisition for calling a meeting of the Company, or attend, or vote or exercise any other privileges of a member at a meeting of the Company or be entitled to receive any notices from the Company.

(2) The bearer of a share warrant shall be entitled, in all other respects, to the same privileges and advantages as if he was named in the Register of Members as the holder of the share included in the warrant, and he shall be a member of the Company.

Issue of new share warrant or coupon

102 The Board may, from time to time, make rules as to the terms on which (if it shall think fit) a new share warrant or coupon may be issued by way of renewal, in case of defacement, loss or destruction.

SWEAT EQUITY

Issue of sweat

equity shares

103 Subject to the provisions of the Act and Applicable Laws, the Company may issue sweat equity shares

Employee Stock Option

104 Subject to Applicable Laws, the Company may allot stocks to its employees under a scheme of employees stock option

GENERAL MEETINGS

Annual General Meeting

105 The Company shall in each year hold a General Meeting as its Annual General Meeting in addition to any other meetings in that year.

106 Every Annual General Meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the Company or at some other place within the city, town or village in which the registered office of the Company is situated.

For the purpose of this Article, National Holiday means and includes a day declared as National Holiday by the Central Government.

107 In the case of an Annual General Meeting, all businesses to be transacted at the meeting shall be deemed special, with the exception of business relating to:

107.1 the consideration of financial statements and the reports of the Board of Directors and the Auditors;

107.2 the declaration of any Dividend; 107.3 the appointment of Directors in place of those retiring; 107.4 the appointment of, and the fixing of the remuneration of, the

Auditors


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Extra-Ordinary General Meeting

108 All general meetings other than Annual General Meeting shall be called extraordinary general meeting.

109 The Board may, whenever it thinks fit, call an extraordinary general meeting.

Postal Ballot 110 Where permitted or required by Applicable Law, Board may, instead of calling a meeting of any members/ class of members/ Debenture-holders, seek their assent by postal ballot. Such postal ballot will comply with the provisions of the Act and rules made there under in this behalf.

Sufficiency of Ordinary Resolution

111 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 ordinal resolution unless either the Act or the Articles specifically require such act to be done or resolution passed by a Special Resolution.

Voting by electronic mode

112 A member may exercise his vote at a General Meeting by electronic mode in accordance with Section 108 of the Companies Act 2013 and rules made there under.

Calling of general meeting on requisition

113 The Board may, call an extraordinary general meeting upon receipt of a requisition in writing by any member or members holding in the aggregate not less than one-tenth of such of the paid-up capital as at the date carries the right of voting in regard to the matter in respect of which the requisition has been made.

Notice of General Meetings

114 At least 21 clear days’ notice of every General Meeting, specifying the day, date, place and hour of meeting, containing a statement of the business to be transacted thereat, shall be given, either in writing or through electronic mode, to every member or legal representative of any deceased member or the assignee of an insolvent member, every Auditor(s) and Director of the Company. Any accidental omission to give any such notice as aforesaid to any of the members, or the non receipt thereof, shall not invalidate the holding of the meeting or any resolution passed at any such meeting.

115 A General Meeting may be called at a shorter notice if consented to by either by way of writing or any electronic mode by not less than 95% of the Members entitled to vote at such meeting.

Quorum at General Meeting

116 No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business.

117 Save as otherwise provided herein, the quorum for the general meetings shall be as provided in Section 103 of the Act

118 A body corporate being a Member shall be deemed to be personally present if it is represented in accordance with Section 113 of the Act.


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119 If, at the expiration of half an hour from the time appointed for holding a meeting of the Company, a quorum shall not be present, the meeting, if convened by or upon the requisition of members shall stand dissolved, but in any other case the meeting shall stand adjourned to the same day in the next week or, if that day is a public holiday, until the next succeeding day which is not a public holiday, at the same time and place, or to such other day and at such other time and place as the Board may determine and if at such adjourned meeting a quorum is not present at the expiration of half an hour from the time appointed for holding the meeting, the members present shall be quorum and may transact the business for which the meeting was called.

Chairman/ Chairperson at General Meetings

120 The Chairman/ Chairperson (if any) of the Board of Directors, or in his absence, the Managing Director of the Company shall be entitled to take the chair at every General Meeting, whether Annual or Extraordinary.

121 If there is no such Chairman/ Chairperson of the Board or Managing Director, or if he is not present within fifteen minutes after the time appointed for holding the meeting, or is unwilling to act as Chairman/ Chairperson of the meeting, the Directors present shall elect one among themselves to be Chairman/ Chairperson of the meeting.

122 No business shall be discussed at any General Meeting except the election of a Chairman/ Chairperson, while the chair is vacant.

Adjournment of Meeting

123 The Chairman/ Chairperson may, with the consent of any meeting at which a quorum is present, and shall, if so directed by the meeting, adjourn the meeting from time to time and from place to place.

124 No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

125 When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting.

126 Save as aforesaid, and as provided in Section 103 of the Act, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.

Voting rights 127 No member shall be entitled to vote either personally or by proxy, at any General Meeting or Meeting of a class of shareholders in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or, in regard to which the Company has, and has exercised any right of lien.

128 Subject to any rights or restrictions for the time being attached to any class or classes of shares,— 128.1 on a show of hands, every member present in person shall have

one vote; and 128.2 on a poll, the voting rights of members shall be in proportion to

his Share in the paid-up equity Share capital of the Company.


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128.3 A member may exercise his vote at a meeting by electronic means in accordance with Section 108 of the Act and shall vote only once.

129 In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders.

For this purpose, seniority shall be determined by the order in which the names stand in the register of members.

130 A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee or other legal guardian, and any such committee or guardian may, on a poll, vote by proxy.

131 Any business other than that upon which a poll has been demanded may be preceded with, pending the taking of the poll.

132 No member shall be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of shares in the Company have been paid.

133 No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes.

134 If a poll is demanded as aforesaid, the same shall, be taken at such time (not later than forty-eight hours from the time when the demand was made) and place in the city or town in which the office of the Company is for the time being situate and either by open voting or by ballot, as the Chairman/ Chairperson shall direct, and either at once or after an interval or adjournment or otherwise, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn at any time by the person or person who made the demand.

135 Any such objection made in due time shall be referred to the Chairman/ Chairperson of the meeting, whose decision shall be final and conclusive.

Chairman’s / Chairperson’s casting vote

136 In the case of an equality of votes, the Chairman/ Chairperson shall, both on a show of hands and at a poll (if any), have a casting vote in addition to the vote or votes to which he may be entitled as a member.

Proxy

137 Subject to the provisions of these Articles, votes may be given either personally or by proxy. A body corporate being a member may vote by a representative duly authorised in accordance with Section 113 of the Act, and such representative shall be entitled to exercise the same rights and powers (including the rights to vote by proxy) on behalf of the body corporate which he represents as the body could exercise if it were an individual member.


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138 The instrument appointing a proxy and the power-of-attorney or other authority, if any, under which it is signed or a notarised copy of that power or authority, shall be deposited at the registered office of the Company not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote, or, in the case of a poll, not less than 24 hours before the time appointed for the taking of the poll; and in default the instrument of proxy shall not be treated as valid.

139 Every proxy (whether a member or not) shall be appointed in writing under the hand of the appointer or his attorney, or if such appointer is a body corporate, under the common Seal of such corporate, or be signed by an officer or any attorney duly authorised by it, and any committee or guardian may appoint such proxy. An instrument appointing a proxy shall be in the form as prescribed in terms of Section 105 of the Act.

140 A member present by proxy shall be entitled to vote only on a poll, except where Applicable Law provides otherwise.

141 The proxy so appointed shall not have any right to speak at the meeting.

142 A vote given in accordance with the terms of an instrument of proxy shall be valid, notwithstanding the previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy is given:

Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the Company at its office before the commencement of the meeting or adjourned meeting at which the proxy is used.

Passing of resolution by Postal ballot

143 Where permitted or required by the Act, Board may, instead of calling a meeting of any Members/ class of Members/ Debenture-holders, seek their assent by postal ballot. Such postal ballot will comply with the provisions of Applicable Law in this behalf.

144 Where permitted/required by Applicable Law, Board may provide Members/Members of a class/Debenture-holders right to vote through e-voting, complying with Applicable Law.

145 Notwithstanding anything contained in the foregoing, the Company shall transact such business, follow such procedure and ascertain the assent or dissent of Members for a voting conducted by postal ballot, as may be prescribed by Section 110 of the Act and rules made there under.

146 In case of resolutions to be passed by postal ballot, no meeting needs to be held at a specified time and space requiring physical presence of Members to form a quorum.

Maintenance of records and

147 Where permitted/required by the Act, all records to be maintained by the Company may be kept in electronic form subject to the provisions of the


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Inspection of minutes of General Meeting by Members

Act and rules made there under. Such records shall be kept open to inspection in the manner as permitted by the Act and Applicable Law. The term ‘records’ would mean any register, index, agreement, memorandum, minutes or any other document required by the Act and Applicable Law made there under to be keptby the Company.

148 The Company shall cause minutes of all proceedings of every General Meeting to be kept by making within thirty days of the conclusion of every such meeting concerned, entries thereof in books kept for that purpose with their pages consecutively numbered.

149 Each page of every such book shall be initialed or signed and the last page of the record of proceedings of such meeting in such books shall be dated and signed by the Chairman / Chairperson of the same meeting within the aforesaid period of thirty days or in the event of the death or non availability of that Chairman/ Chairperson within that period, by a Director duly authorised by the Board for the purpose.

150 The book containing the minutes of proceedings of General Meetings shall be kept at the registered office of the Company and shall be open during business hours, for such periods not being less than 2 hours on any day, as may be fixed by the Board from time to time, to the inspection of any Member without charge.

BOARD OF DIRECTORS

151 The number of Directors of the Company which shall be not less than 3 (three) and not more than 15 (Fifteen). However, the Company may appoint more than 15 Directors after passing a Special Resolution.

The composition of the Board shall be in accordance with the provisions of Section 149 of the Act and other Applicable Laws.

152 The first Directors of the Company are :

Shri Chand Bihari Patodia

Shri Dilip Patodia

Shri Brij Mohan Agarwal

Eligibility of Directorship

153 No person who is disqualified under Section 164 of the Act and such Applicable Laws shall be eligible to hold the position of a director in the Company.

Qualification of Directors

154 A Director of the Company shall not be required to hold qualification shares.

Board’s power to appoint Additional Directors

155 Subject to the provisions of Sections 149, 152 and 161 of the Act and Applicable Laws, the Board shall have power at any time, and from time to time, to appoint a person as an additional Director, provided the number of the Directors and additional Directors together shall not at any time exceed the maximum strength fixed for the Board by these Articles.


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156 Such person shall hold office only up to the date of the next annual general meeting of the Company but shall be eligible for appointment by the Company as a Director at that meeting subject to the provisions of the Act.

Nominee Directors

157 The Company shall, subject to the provisions of the Act and these Articles, may appoint any person as a director nominated by any institution in pursuance of the provisions of any law for the time being in force or of any agreement or by the Central Government or the State Government by virtue of its shareholding in a Government company.

In the event of Company borrowing any money from any financial corporation or institution or Government or any Government body or a collaborator, bank, person or persons or from any other source, while any money remains due to them or any of them, the lender concerned may have and may exercise the right and power to appoint, from time to time, any person or persons to be a Director or Directors of the Company.

158 A nominee Director may at any time be removed from the office by the appointing authority who may from the time of such removal or in case of death or resignation of person, appoint any other or others in his place. Any such appointment or removal shall be in writing, signed by the appointer and served on the Company. Such Director need not hold any qualification shares.

Appointment of Alternate Directors

159 Subject to the provisions of Section 161(2) of the Act, the Board may appoint an Alternate Director to act for a Director (hereinafter called “the Original Director”) during his absence for a period of not less than three months from India. No person shall be appointed as an Alternate Director in place of an Independent Director unless he is qualified to be appointed as an Independent Director under the Act and Applicable Law. An Alternate Director appointed under this Article shall not hold office for a period longer than that permissible to the Original Director in whose place he has been appointed and shall vacate the office if and when the Original Director returns to India. If the terms of office of the Original Director are determined before he so returns to India, any provisions in the Act or in these Articles for the automatic reappointment of any retiring Director in default of another appointment shall apply to the Original Director, and not to the Alternate Director.

For the purpose of absence in the Board meetings in terms of Section 167 (1) (b) of the Act, the period during which an Original Director has an Alternate Director appointed in his place, shall not be considered.

Board’s power to fill casual vacancies

160 Subject to the provisions of Sections 152(7), 161(4) and 169(7) of the Act, the Board shall have power at any time and from time to time to appoint any other qualified person to be a Director to fill a casual vacancy. Any person so appointed shall hold office only up to the date


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to which the Director in whose place he is appointed would have held office if it had not been vacated by him.

161 If the place of the retiring Director is not so filled up and the meeting has not expressly resolved not to fill the vacancy, the meeting shall stand adjourned until the same day in the next week, at the same time and place in accordance with the provisions of Section 152(7) of the Act.

Independent Directors

162 The Company shall appoint such number of Independent Directors as required by the Act and other Applicable Laws and the Company and Independent Directors are required to abide by the provisions specified in Schedule IV of the Act.

163 Any casual vacancy in the post of an Independent Director caused by way of removal, resignation, death, vacation of office under Section 167 of the Act and Applicable Law, removal from Directorship pursuant to any court order or due to disqualification under Section 164 of Act shall be filled by following the process laid down in the Act and rules made there under.

Retirement and rotation of Directors

164 At least two-thirds of the total number of Directors, excluding Independent Directors, be persons whose period of office is liable to determination by retirement of directors by rotation (hereinafter called “the Rotational Directors”).

165 At every Annual General Meeting of the Company, one-third of the Rotational Directors, or if their number is not three or a multiple of three, then, the number nearest to one-third, shall retire from office.

166 A retiring Director shall be eligible for re-election.

Adjournment of meeting for election of Directors.

167 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 Director or such of them as have not had their placed filled up shall (if willing to continue in office) be deemed to have been re-elected at the adjourned meeting.

Resignation of Directors

168 Subject to the provisions of the Act, a Director may resign from his office by giving a notice in writing to the Company and Board shall take note of the same.

Provided that the provisions regarding resignation of Managing Director or a Whole-time Director or any Executive Director who has any terms of employment with the Company shall be governed by such terms.

169 The resignation of a Director shall take effect from the date on which the notice is received by the Company or the date, if any, specified by the Director in the notice, whichever is later.


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Removal of Directors

170 Any Director of the Company, except the one appointed by the National Company Law Tribunal or any other authority under Applicable Laws, may be removed by way of Ordinary Resolution before the expiry of his term of office, subject to the provisions of Section 169 of Act.

Remuneration of Directors

171 Subject to the provisions of Section 197 of the Act, a Director may be paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the Company or partly by one way and partly by the other.

172 Subject to the provisions of the Act and rules made there under, the fees payable to a Director for attending the meetings of the Board or Committee thereof shall be such sum as may be decided by the Board of Directors from time to time. The Fee, that may be determined by the Board, may also be paid for attending any separate meeting of the Independent Directors of the Company in pursuance of any provision of the Act.

The Board may allow any pay to any director who is not a bonafide resident of the place where the meetings of the Board are ordinarily held and who shall come to such place for the purpose of attending any meeting, such sum as the Board may consider fair compensation for traveling, boarding, lodging and other expenses, in addition to his fee for attending such meeting as above specified; and if any Director be called upon to go or resided out of the ordinary place of his residence on the Company’s business, he shall be entitled to be repaid and reimbursed any traveling or other expenses incurred in connection with business of the Company.

Directors may act notwithstanding any vacancies on Board

173 The continuing Directors may act notwithstanding any vacancy in their body but if, and so long as their number is reduced below the minimum number the continuing Directors may act for the purpose of increasing the number of Directors to the minimum number or for summoning a General Meeting for the purpose increasing the number of Directors to such minimum number, but for no other purpose.

Vacation of office of Director

174 The office of a Director shall ipso facto be vacated: 174.1 on the happening of any of the events as specified in Section 167

of the Act. 174.2 if a person is a Director of more than the number of Companies

as specified in the Act at a time; 174.3 in the case of alternate Director, on return of the original

Director in terms of Section 161 of the Act; 174.4 having been appointed as a Director by virtue of his holding any

office or other employment in the holding, subsidiary or associate company, he ceases to hold such office or other employment in that company;

174.5 if he is removed in pursuance of Section 169 of the Act;


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174.6 any other disqualification that the Act for the time being in force may prescribe.

Notice of candidature for office of Directors except in certain cases

175 No person not being a retiring Director, shall be eligible for appointment to the office of Director at any General Meeting unless he or some Member intending to propose him as a Director, has, not less than fourteen days before the meeting, left at the registered office of the Company a notice in writing under his hand signifying his candidature for the office of Director or the intention of such Member to propose him as a candidate for that office along with the requisite deposit of such sum as prescribed under the Act and rules made there under.

176 Every person (other than a Director retiring by rotation or otherwise or a person who has left at the office of the Company a notice under Section 160 of the Act signifying his candidature for the office of a Director) proposed as a candidate for the office of a Director, shall sign and file with the Company, the consent in writing to act as a Director, if appointed.

177 A person other than a Director reappointed after retirement by rotation immediately on the expiry of his term of office, or an Additional or Alternate Director, or a person filling a casual vacancy in the office of a Director under Section 161 of the Act, appointed as a Director or reappointed as an Additional or Alternate Director, immediately on the expiry of his term of office, shall not act as a Director of the Company unless he has submitted consent in writing to act as a Director of the Company and the same is filed with the Registrar within thirty days of his appointment.

Director may contract with the Company

178 Subject to Applicable Law, a Director or any Related Party as defined in Section 2 (76) of the Act or other Applicable Law may enter into any contract with Company for the sale, purchase or supply of any goods, materials, or services, or other contract involving creation or transfer of resources, obligations or services, subject to the compliance with the Act and rules made there under and other Applicable Law.

179 Unless so required by the Act, no sanction shall, however, be necessary for any contracts with a related party entered into on arm’s length basis.

Further, no sanction shall be required for any transactions entered by the Company during ordinary course of business.

Disclosure of interest

180 A Director of the Company who is in any way, whether directly or indirectly concerned or interested in a contract or proposed contract or arrangement entered into or to be entered into by or on behalf of the Company, shall disclose the nature of his concern or interest at a meeting of the Board in the manner provided in Section 184(2) of the Act; provided that it shall not be necessary for a Director to disclose his concern or interest in any contract or arrangement entered into or to be entered into with any other body corporate where the Director of the Company either himself or in association with any other Director hold


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or holds less than two per cent of the shareholding in such other body corporate.

Interested Director not to participate or vote in Board’s proceeding

181 Subject to the provisions of Section 184 of the Act, no Director shall as Director take any part in the discussion of, or vote on any contract or arrangement entered into by or on behalf of the Company, if he is in any way whether directly or indirectly concerned or interested in such contract or arrangement; nor shall his presence count for the purpose of forming a quorum at the time of any such discussion or vote; and if he does vote, his vote shall be void.

Provided however, that nothing herein contained shall apply to :- (a) any contract of indemnity against any loss which the Directors

or any one or more of them, may suffer by reason of becoming or being sureties or a surety for the Company.

(b) any contract or arrangement entered into or to be entered into with a public company or a private company which is a subsidiary of a public company in which the interest of the Director consists solely :

a. in his being: i. a director in such company, and

ii. the holder of not more than shares of such number or value therein as is requisite to qualify him for appointment as a Director thereof, he having been nominated as such Director by the Company; OR

b. in his being a member holding not more than 2% of its paid-up share capital.

Register of contracts in which Directors are interested

182 The Company shall keep a Register in accordance with Section 189 (1) of the Act and Applicable Law. The Register shall be kept at the registered office of the Company and shall be preserved permanently be kept in the custody of the Company Secretary of the Company or any other person authorized by the Board for the purpose.

Register of Directors and Key Managerial Personnel and their shareholding

183 The Company shall keep at its registered office a register containing the particulars of its Directors and Key Managerial Personnel, which shall include the details of Securities held by each of them in the Company or its holding, subsidiary, subsidiary of Company’s holding Company or associate companies in accordance to Section 170 of the Act and Applicable Law.

Miscellaneous 184 All cheques, promissory notes, drafts, hundis, bills of exchange and other negotiable instruments, and all receipts for monies paid to the Company, shall be signed, drawn, accepted, endorsed, or otherwise executed, as the case may be, by such person and in such manner as the Board shall from time to time by resolution determine.

Directors may be directors of

185 A Director may be or become a director of any company promoted by the Company or in which it may be interested as a vendor, shareholder,


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companies promoted by the company.

or otherwise, and no such director shall be accountable for any benefits received as director or shareholder of such company except in so far as Section 188 of the Act may be applicable.

PROCEEDINGS OF THE BOARD

Meetings of Board

186 The Directors may meet together as a Board from time to time for the conduct and dispatch of the business of the Company, adjourn or otherwise regulate its meetings, as it thinks fit.

Notice 187 A meeting of the Board shall be called by giving not less than seven days' notice in writing to every Director at his address registered with the Company and such notice shall be sent by hand delivery or by post or by electronic means.

188 The notice of the meeting shall inform the Directors regarding the option available to them to participate through electronic mode, and shall provide all the necessary information to enable the Directors to participate through such electronic mode.

Shorter Notice 189 A meeting of the Board may be called at shorter notice to transact urgent business subject to the condition that at least one Independent Director, if any, shall be present at the meeting, or in case of absence of Independent Directors from such a meeting of the Board, decisions taken at such a meeting shall be circulated to all the Directors and shall be final only on ratification thereof by at least one Independent Director.

Minimum number of meetings

190 The Board shall so meet at least once in every four months and at least four such meetings shall be held in every year. The Directors may adjourn and otherwise regulate their meetings as they think fit.

When meeting to be convened

191 The Managing Director or a Director or a Secretary upon the requisition of Director(s), may at any time convene a meeting of the Directors.

Meetings of Board by Video/audio-visual conferencing

192 Subject to the provisions of Section 173(2) of the Act and rules made there under, the Directors may participate in meetings of the Board by electronic mode as the Board may from time to time decide and Directors shall be allowed to participate from multiple locations through modern communication equipments for ascertaining the views of such Directors who have indicated their willingness to participate by such electronic mode, as the case may be.

Chairman/ Chairperson for Board Meetings

193 The Board may elect a Chairman/ Chairperson, and determine the period for which he is to hold office. If no such Chairman/ Chairperson is elected, or if at any meeting the Chairman/ Chairperson is not present within fifteen minutes after the time appointed for holding the meeting, the Directors present may choose one of their numbers to be Chairman/ Chairperson of the meeting.

Quorum 194 The quorum for a meeting of the Board shall be determined from time to time in accordance with the provisions of the Section 174 of the Act. If a quorum is not present within fifteen minutes from the time appointed


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for holding a meeting of the Board it shall be adjourned until such date and time as the Chairman/ Chairperson of the Board shall decide.

195 The continuing Directors may act notwithstanding any vacancy in the Board; but, if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing Directors or Director may act for the purpose of increasing the number of Directors to that fixed for the quorum, or of summoning a general meeting of the Company and for no other purpose.

Exercise of powers to be valid in meetings where quorum is present

196 A meeting of the Board of which a quorum be present shall be competent to exercise all or any of the authorities, powers and discretions by or under these Articles for the time being vested in or exercisable by the Board, or in accordance with Section 179 (1) of the Act, the powers of the Company.

Matter to be decided on majority of votes

197 Save as otherwise expressly provided in the Act, questions arising at any meeting of the Board shall be decided by a majority of votes. In case of an equality of votes, the Chairman/ Chairperson of the Board shall have a second or casting vote.

Power to appoint Committee and to delegate powers

198 The Board may, subject to the provisions of the Act, from time to time and at any time delegate any of its powers to committees consisting of such Director or Directors as it thinks fit, and may from time to time revoke such delegation. Unless a power of the Board is not capable of being delegated, such power may be delegated by the Board to any officer or committee of officers as the Board may determine.

199 Any committee of the Board 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 Board.

Resolution by Circulation

200 A resolution may be passed by the Board by circulation in accordance with the provisions of Section 175 of the Act and Rules thereof.

Acts of Board / Committee valid notwithstanding formal appointment

201 All acts done in any meeting of the Board or of a Committee thereof or by any person acting as a Director, shall, notwithstanding that it may be afterwards discovered that there was some defect in the appointment of any one or more of such Directors or of any person acting as aforesaid, or that they or any of them were disqualified or had vacated office or that the appointment of any of them had been terminated by virtue of any provisions contained in the Act or in these Articles, be as valid as if every such Director or such person had been duly appointed and was qualified to be a Director and had not vacated his office or his appointment had not been terminated; provided that nothing in this Article shall be deemed to give validity to acts done by a Director after his appointment has been shown to the Company to be invalid or to have been terminated.

Minutes of proceedings of meeting of Board

202 The Company shall cause minutes of proceedings of every meeting of the Board and Committee thereof to be kept in such form by making within thirty days of the conclusion of every such meeting, entries


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thereof in the books kept for that purpose with their pages consecutively numbered in accordance to Section 118 of the Act or Applicable Laws.

203 Each page of every such book shall be initialled or signed and the last page of the record of proceedings of each meeting in such book shall be dated and signed by the Chairman/ Chairperson of the said meeting or the Chairman/Chairperson of the next succeeding meeting.

204 Where the meeting of the Board takes place through electronic mode, the minutes shall disclose the particulars of the Directors who attended the meeting through such means. The draft minutes of the meeting shall be circulated among all the Directors within fifteen days of the meeting either in writing or in electronic mode as may be decided by the Board and/or in accordance with Applicable Laws.

205 Every Director who attended the meeting, whether personally or through electronic mode, shall confirm or give his comments in writing, about the accuracy of recording of the proceedings of that particular meeting in the draft minutes, within seven days or some reasonable time as decided by the Board, after receipt of the draft minutes failing which his approval shall be presumed.

206 All appointments of officers made at any of the meetings aforesaid shall be included in the minutes of the meetings.

207 Minutes of meetings kept in accordance with the aforesaid provisions shall be evidence of the proceedings recorded therein.

Powers of Board 208 The Board shall have all the powers as provided under the Act and such Applicable Laws. However, the Board may exercise all such powers of the Company and do all such acts, and things as are not, by the Act and Applicable Law made there under, or any other Act, or by the Memorandum, or by these Articles of the Company, required to be exercised by the Company in General Meeting subject nevertheless to these Articles, to the provisions of the Act and the rules made there under, or any other Act and to such regulations being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by the Company in General Meeting; but no regulations made by the Company in General Meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.

209 The Board may, subject to the Act, also give a loan to a Director or any entity in which the Director is interested. Where any sum of money is payable by a Director, the Board may allow such time for payment of the said money as is acceptable within customary periods for payment of similar money in contemporaneous commercial practice. Grant of such period for payment shall not be deemed to be a “loan” or grant of time for the purpose of sec 180 (1) (d) of the Act and Applicable Law.

210 The Board may subject to Section 186 of the Act and provisions of Applicable Law made there under shall by means of unanimous resolution passed at meeting of Board from time to time, invest, provide


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loans or guarantee or security on behalf of the Company to any person or entity.

Restriction on powers of Board

211 Board of Directors should exercise the following powers subject to the approval of Company by a Special Resolution:

211.1 To sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the Company or where the Company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings.

211.2 To invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation;

211.3 To borrow money, where the money to be borrowed, together with the money already borrowed by the Company will exceed aggregate of its paid-up Share capital and free-reserves, apart from temporary loans obtained from the Company’s bankers in the ordinary course of business.

211.4 To remit, or give time for the repayment of, any debt due from a Director.

Contribution to charitable and other funds

212 The Board of Directors of a Company may contribute to bona fide charitable and other fund. A prior permission of the Company in general meeting (Ordinary Resolution) shall be required for if the aggregate of such contributions in a financial year exceeds 5 % (five percent) of its average net profits for the three immediately preceding financial years.

Contribution towards Corporate Social Responsibility

213 If eligible, the Board shall take adequate measures for compliance under Section 135 of the Act and Rules thereof and make contributions towards activities in relation to corporate social responsibilities.

MANAGING DIRECTOR, WHOLE TIME DIRECTOR

Board may appoint Managing Director(s)/ Whole time Director

214 The company may appoint Managing or Whole time 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.

Chairperson or Chairman & Managing Director

215 The Managing Director may also be appointed by the Board as the Chairperson or Chairman and may be designated as the Chairperson or Chairman and Managing Director of the Company.

Notwithstanding anything to the contrary contained elsewhere in these Articles it will be permissible for the Company to appoint the same individual as the Chairperson or Chairman as well as the Managing Director or Chief Executive Officer of the Company at the same time.


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Restriction on Management

216 The Board of Directors may, subject to Section 179 of the Act, entrust to and confer upon a Managing or Whole time Director any of the powers exercisable by them, upon such terms and conditions and with such restrictions, as they may think fit and either collaterally with or to the exclusion of their own powers and may, from time to time, revoke, withdraw or alter or vary all or any of such powers.

CHIEF EXECUTIVE OFFICER, MANAGER, COMPANY SECRETARY OR CHIEF FINANCIAL OFFICER

217 Subject to the provisions of the Act and rules made there under, the Board may appoint a Chief Executive Officer, Manager, Company Secretary or Chief Financial officer, at such remuneration and upon such conditions as it may thinks fit; and any Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer so appointed may be removed by means of a resolution at a Board Meeting.

Subject to the article above, the powers conferred on the Chief Financial Officer shall be exercised for such objects and purpose and upon such terms and conditions and with such restrictions as the Board may think fit and it may confer such powers either collateral with or to the exclusion of and in substitution of all or any of the powers of the Board in that behalf and may from time to time revoke, withdraw, alter or vary all or any of such powers.

POWER TO AUTHENTICATE DOCUMENTS

218 Any Director or the Company Secretary or any officer appointed by the Board for the purpose shall have power to authenticate any documents affecting the constitution of the Company and any books, records, documents and accounts relating to the business of the Company and to certify copies or extracts thereof; and where any books, records documents or accounts are then, at the office, the local manager or other officer of the Company having the custody thereof, shall be deemed to be a person appointed by the Board as aforesaid.

THE SEAL

219 The Board shall provide a common Seal for the purposes of the Company, and shall have power from time to time to destroy the same and substitute a new Seal in lieu thereof and the Seal shall never be used except by the authority of the Board or a Committee of the Board previously given. The Company shall also be at liberty to have an official Seal for use in any territory, district or place outside India.

220 The Seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the Board or of a Committee of the Board authorised by it in that behalf, and except in the presence of one director and that one director shall sign every instrument to which the seal of the Company is so affixed in his presence. The Board shall provide for the safe custody of the Seal.


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MANAGEMENT OUTSIDE INDIA AND OTHER MATTERS


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221 Subject to the provisions of the Applicable Laws the following shall have effect:

221.1 The Board may from time to time provide for the management of the affairs of the Company outside India (or in any specified locality in India) in such manner as it shall think fit and the provisions contained in the four next following paragraphs shall be without prejudice to the general powers conferred by this paragraph.

221.2 Subject to the provisions of the Applicable Laws, the Board may at any time establish any local Directorate for managing any of the Delegation. affairs of the Company outside India, and may appoint any person to be member of any such local Directorate or any manager or agents and may fix their remuneration and, save as provided in the Act, the Board may at any time delegate to any person so appointed any of the powers, authorities and discretions for the time being vested in the Board and such appointment or delegation may be made on such terms and subject to such conditions as the Board may think fit and the Board may at any time remove any person so appointed and annual or vary any such delegations.

221.3 The Board may, at any time and from time to time by power of attorney under Seal, appoint any person to be the attorney of the Company for such purposes and with such powers, authorities and discretions not exceeding those which may be delegated by the Board under the Act and for such period and subject to such conditions as the Board may, from time to time, thinks fit, and such appointments may, if the Board thinks fit, be made in favour of the members or any of members of any local Directorate established as aforesaid, or in favour of the Company or of the members, Directors, nominees or officers of the Company or firm or In favour of any fluctuating body of persons whether nominated directly or indirectly by the Board, and any such Power of Attorney may contain such provisions for the protection or convenience of persons dealing with such attorneys as the Board thinks fit.

221.4 Any such delegate or Attorney as aforesaid may be authorized by the Board to sub-delegate all or any of the powers, authorities and discretions for the time being vested in them.

221.5 The Company may exercise the power conferred by the Act with regard to having an Official seat for use abroad, and such powers shall be vested in the Board, and the Company may cause to be kept in any state or country outside India, as may be permitted by the Applicable Law, a Foreign Register of Member or Debenture holders


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residents in any such state or country and the Board may, from time to time make such regulations not being inconsistent with the provisions of the Act, and the Board may, from time to time make such provisions as it may think fit relating thereto and may comply with the requirements of the local law and shall In any case comply with the provisions of the Act.

DIVIDENDS AND RESERVE

Division of profits 222 The profits of the Company, subject to any special rights as to Dividends or authorized to be created by these Articles, and subject to the provisions of these Articles and Applicable Laws shall be divisible among the members in proportion to the amount of capital paid-up on the shares held by them respectively.

The Company in general meeting may declare a Dividend

223 The Company in general meeting may declare Dividends to be paid to members according to their respective rights, but no Dividend shall exceed the amount recommended by the Board. No Dividend shall bear interest against the Company.

Dividend only to be paid out of profits

224 The Dividend shall be declared and paid as per provisions of Chapter VIII of the Act as amended from time to time.

Transfer to reserve

225 The Board may, before recommending any Dividend, set aside out of the profits of the Company such sums as it thinks fit as a reserve or reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may be properly applied, including provision for meeting contingencies or for equalising Dividends; and pending such application, may, at the like discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company) as the Board may, from time to time, thinks fit.

226 Such reserve, being free reserve, may also be used to declare Dividends in the event the Company has inadequate or absence of profits in any financial year, in accordance to Section 123 of the Act and Applicable Law made in that behalf. The Board may also carry forward any profits which it may consider necessary not to divide, without setting them aside as a reserve.

Interim Dividend 227 Subject to the provisions of Section 123 of the Act and Applicable Law, the Board may from time to time pay to the Members such interim Dividends as appear to it to be justified by the profits of the Company.

Calls in advance not to carry rights to participate in profits

228 Where Capital is paid in advance of calls such Capital may carry interest but shall not in respect thereof confer a right to Dividend or participate in profits.


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Payment of pro rata Dividend

229 All Dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares during any portion or portions of the period in respect of which the Dividend is paid; but if any Share is issued on terms providing that it shall rank for Dividend as from a particular date such Share shall rank for Dividend accordingly.

Deduction of money owed to the Company

230 The Board may deduct from any Dividend payable to any member all sums of money, if any, presently payable by him to the Company on account of calls or otherwise in relation to the shares of the Company.

Rights to Dividend where shares transferred

231 A transfer of Share shall not pass the right to any Dividend declared thereon before the registration of the transfer.

Dividend to be kept in abeyance

232 The Board may retain the Dividends payable in relation to such Shares in respect of which any person is entitled to become a Member by virtue of transmission or transfer of Shares and in accordance sub-Section (5) of Section 123 of the Act or Applicable Law. The Board may also retain Dividends on which Company has lien and may apply the same towards satisfaction of debts, liabilities or engagements in respect of which lien exists.

Manner of paying Dividend

233 Any Dividend, interest or other monies payable in cash in respect of shares may be paid by any electronic mode to the shareholder entitled to the payment of the Dividend, or by way of cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of that one of the joint holders who is first named on the register of members, or to such person and to such address as the holder or joint holders may in writing direct.

234 Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. The Company shall not be liable or responsible for any cheque or Warrant or pay-slip or receipt lost in transmission, or for any Dividend lost to the member of person entitled thereto by the forged endorsement of any cheque or warrant or the forged signature of any pay-slip or receipt or the fraudulent recovery of the Dividend by any other means.

Receipts for Dividends

235 Any one of two or more joint holders of a Share may give effective receipts for any Dividends, bonuses or other monies payable in respect of such Share.

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.

ACCOUNTS


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Directors to keep true accounts

236 The Company shall keep at the registered office or at such other place in India as the Board thinks fit, proper books of account and other relevant books and papers and financial statement for every financial year in accordance with Section 128 of the Act and such Applicable Laws.

237 Where the Board decides to keep all or any of the Books of Account at any place in India other than the registered office of the Company the Company shall within seven days of the decision file with the Registrar a notice in writing giving, the full address of that other place.

Preparation of revised financial statements or Boards’ Report

238 Subject to the provisions of Section 131 of the Act and the Applicable Law made there under, the Board may require the preparation of revised financial statement of the Company or a revised Boards’ Report in respect of any of the three preceding financial years, if it appears to them that (a) the financial statement of the Company or (b) the report of the Board do not comply with the provisions of Section 129 or Section 134 of the Act.

Places of keeping accounts

239 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 members not being Directors.

240 No member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by law or authorised by the Board or by the Company in general meeting.

AUDIT

Auditors to be appointed

241 Statutory Auditors and Cost Auditors, if any, shall be appointed and their rights and duties regulated in accordance with Sections 139 to 148 of the Act and Applicable Laws. Where applicable, a Secretarial Auditor shall be appointed by the Board and their rights and duties regulated in accordance with Section 204 of the Act and Applicable Laws.

242 Subject to the provisions of Section 139 of the Act and rules made there under, the Statutory Auditors of the Company shall be appointed for such period subject to ratification by members at every annual general meeting. Provided that the Company may, at a General Meeting, remove any such Auditor or all of such Auditors and appoint in his or their place any other person or persons as may be recommended by the Board, in accordance with Section 140 of the Act or Applicable Laws.

Remuneration of Auditors

243 The remuneration of the Auditors shall be fixed by the Company in Annual general meeting or in such manner as the Company in general meeting may determine.

REGISTER

Statutory register 244 The company shall keep and maintain at its registered office all statutory registers, namely register of charges, register of members, register of debenture holders ,register of any other security holder, and the register and index of beneficial owners, and annual return, register of loan,


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guarantees, security and acquisitions, register of investments not held in its own name and register of contracts and arrangements for such duration as the Board may unless otherwise prescribe, decide, and in such manner and containing such particulars as prescribed by the Act and the Rules. The registers and copies of annual return shall be open for inspection for two business hours on all working days, other than Saturday , at the registered office of the company by the person entitled thereto on payment, where required, of such fees as may be fixed by the Board but not exceeding the limit prescribed by the Rules.

DOCUMENTS AND NOTICES

Service of documents and notice

245 A document or notice may be served or given by the Company on any member either personally or sending it by post to him to his registered address or (if he has no registered address in India) to the address, if any, in India supplied by him to the Company for serving documents or notices on him or by way of any electronic transmission, as prescribed in Section 20 of the Act and rules made there under.

Notice to whom served in case of joint shareholders

246 A document or notice may be served or given by the Company on or given to the joint-holders of a Share by serving or giving the document or notice on or to the joint-holders named first in the Register of Members in respect of the Share.

Notice to be served to representative

247 A document or notice may be served or given by the Company on or to the persons entitled to a Share in consequence of the death or insolvency of a member by sending it through post in a prepaid letter addressed to him or them by name or by the title of representatives of the deceased or assignee of the insolvent or by any like description, at the address if any) in India supplied for the purpose by the persons claiming to be entitled, or (until such an address has been so supplied) by serving the document or notice in any manner in which the same might have been given if the death or insolvency had not occurred.

Service of notice of General Meetings

248 Documents or notices of every General Meeting shall be served or given in the same manner hereinbefore on or to (a) every member of the Company, legal representative of any deceased member or the assignee of an insolvent member, (b) every Director of the Company and (c) the Auditor(s) for the time being of the Company.

The accidental omission to give notice or the non-receipt of notice by any member or other person to whom it should be given shall not invalidate the proceedings at the meeting.

Members bound by notice

249 Every person who, by operation of law, transfer or other means whatsoever, shall become entitled to any Share, shall be bound by every document or notice in respect of such shares, previously to his name and address being entered on the Register of Members, shall have been duly served on or given to the person from whom he drives his title to such shares.


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Notice to be served by post or other electronic means

250 All documents or notices to be served or given by members on or to the Company or any office thereof shall be served or given by sending it to the Company or officer at the office by post under a certificate of posting or by registered post, or by leaving it at the office or by such other electronic means as prescribed in Section 20 of the Act and the Applicable Law made there under.

Admissibility of micro films, computer prints and documents to be treated as documents and evidence

251 Any information in the form of a micro film of a document or image or a facsimile copy or any statement in a document included in a printed material produced by a computer shall be deemed to be a document and shall be admissible in any proceedings without further production of original, provided the conditions referred in Section 397 of the Act are complied with.

252 All provisions of the Information Technology Act, 2000 relating to the electronic records, including the manner and format in which the electronic records shall be filed, in so far as they are consistent with the Act, shall apply to the records in electronic form under Section 398 of the Act.

RECONSTRUCTION

Payment by post. 253 Subject to Applicable Laws, 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 realization or vest the same in trustees from 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, 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

254 Subject to the provisions of Chapter XX of the Act and Applicable Law made there under – 254.1 If the Company shall be wound up, the liquidator may, with the

sanction of a Special Resolution of the Company and any other


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sanction required by the Act, but subject to the rights attached to any preference Share Capital, divide among the contributories in specie 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 as the Liquidator, with the like sanction shall think fit.

254.2 For the purpose aforesaid, the liquidator may set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members.

254.3 The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories if he considers necessary, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.

BONAFIDE EXERCISE OF MEMBERSHIP RIGHTS

255 Every Member and other Security holder will use rights of such Member/ security holder as conferred by Applicable Law or these Articles bonafide, in best interest of the Company or for protection of any of the proprietary interest of such Member/security holder, and not for extraneous, vexatious or frivolous purposes. The Board shall have the right to take appropriate measures, and in case of persistent abuse of powers, expulsion of such Member or other Security holder, in case any Member/Security holder abusively makes use of any powers for extraneous, vexatious or frivolous purposes.

INDEMNITY

256 Every officer of the company shall be indemnified out of the assets of the company against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or in which relief is granted to him by the court or the Tribunalor any other authority under Applicable Laws.

SECRECY

257 Every manager, Auditor, trustee, member of a committee, officer, servant, agent, accountant or other person employed in the business of the Company shall, if so required by the Board of Directors, before entering upon the duties, sign a declaration pledging himself to observe strict secrecy respecting all bonafide transactions of the Company with its customers and the state of accounts with individuals and in matters relating thereto and shall by such declaration pledge himself not to reveal any of the matters which may come to his knowledge In the discharge of his duties except when required to do so by the Directors or by any general meeting or by the law of the country and except so far as maybe necessary in order to comply with any of the provisions in these presents and the provisions of the Act.


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258 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 to 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 expedient in the interest of the Company to communicate.

GENERAL POWERS

General powers 259 Where ever in the Act, it has been provided that the company shall have any right, privilege or authority or that the company could carry out any transaction only if the company is so authorized by its Articles, then and in that case this article authorize and empowers the company to have such rights, privileges or authorities and to carry such transaction as have been permitted by the Act, without there being any specific Article in that behalf herein provided.