MODI INDUSTRIES LIMITED · 2014-11-18 · MODI INDUSTRIES LIMITED (3) NOTICE NOTICE is hereby given that the 78th Annual General Meeting of Modi Industries Limited will be held on

MODI INDUSTRIES LIMITED (1)

MODI INDUSTRIES LIMITED

78thAnnual Report

andAccounts 2011-12

CONTENTS

Board of Directors,Secretary, Bankers, Auditors andRegistered Office 2

Notice 3

Directors’ Report 7

Management Discussion and Analysis Report 12

Corporate Governance Report 14

Compliance Certificate 18

Auditors’ Report 20

Accounts 26

Notes to the Accounts 38

Auditors’ Report on Consolidated 55Financial Statements

Consolidated Financial Statements 57

Notes to the Consolidated Financial Statements 69

(2) MODI INDUSTRIES LIMITED

BOARD OF DIRECTORS

MANAGING DIRECTORS Shri Mahendra Kumar ModiShri Umesh Kumar Modi

DIRCETORS Shri Krishan Kumar ModiShri Vinay Kumar ModiShri Rakesh Kumar ModiShri Manish ModiShri Abhishek ModiShri Santosh Kumar AggarwalShri Krishna Kumar Jain

DEPUTY COMPANY SECRETARY Shri Ramesh Kumar

BANKERS Allahabad BankPunjab National BankState Bank of IndiaCiti Bank N.A.

AUDITORS M/s. P.R. Mehra & Co.,Chartered Accountants,56, Darya Ganj,New Delhi-110002

STOCK EXEHANGES U.P. Stock Exchange Ltd.,14/113, Padam Towers, Civil Lines,Kanpur (U.P.) 208001

Delhi Stock Exchange Ltd.,DSE House, 3/1 Asaf Ali Road,New Delhi 110 002.

REGISTERED OFFICE ModinagarDistrict Ghaziabad (U.P.) 201204

NAME OF UNITS Modi Sugar MillsModi Vanaspati Mfg. Co.Modi Paint & Varnish WorksModi Gas & ChemicalsModi DistilleryModi Arc Electrodes Co.Modi Steels


NOTICENOTICE is hereby given that the 78th Annual General Meeting of Modi Industries Limited will be held on Wednesday, the 19thDecember, 2012, at 12.30 P.M., at Modi Industries Transit House (Modi Industries Complex), Modinagar, to transact the followingbusiness :ORDINARY BUSINESS:1. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2012 and Profit & Loss Account for the year

ended on that date and the reports of the Directors’ and Auditors’ thereon and Compliance Certificate obtained in terms ofprovision of Section 383A (1) of the Companies Act. 1956.

2. To appoint Directors, who retire by rotation and being eligible, offer themselves for re-appointment and to consider and, ifthought fit, to pass, with or without modification(s), the following Resolution(s) as ordinary resolution(s):(a) “RESOLVED that Shri Krishan Kumar Modi, who retires by rotation and is eligible for re-appointment be and is hereby re-

appointed as Director of the Company.”(b) “RESOLVED that Shri Santosh Kumar Aggarwal, who retires by rotation and is eligible for re-appointment be and is

hereby re-appointed as Director of the Company.”(c) “RESOLVED that Shri Krishna Kumar Jain, who retires by rotation and is eligible for re-appointment be and is hereby re-

appointed as Director of the Company.”3. To consider and, if thought fit, to pass, with or without modification(s), the following Resolution as a Special Resolution:

“RESOLVED as a Special Resolution that pursuant to the provisions of Section 224-A and other applicable provisions, if any,of the Companies Act, 1956, M/s. P.R. Mehra & Co., Chartered Accountants, New Delhi, the retiring Auditors, be and arehereby re-appointed as Auditors of the Company to hold office from the conclusion of this Annual General Meeting until theconclusion of the next Annual General Meeting, on such remuneration as may be determined by the Board of Directors plusapplicable Service Tax payable to them together with out of pocket expenses actually incurred by them in connection with theStatutory Audit of the Company.”

SPECIAL BUSINESS:4. To consider and, if thought fit, to pass, with or without modification(s), the following Resolution as a Special Resolution:

“RESOLVED that pursuant to the provisions of Section 198, 269, 309 and 311 read with Schedule XIII and other applicationprovisions, if any, of the Companies Act, 1956, approval of the Shareholders of the company be and is hereby accordedsubject to the prior approval of Central Government to the payment of remuneration to Shri Mahendra Kumar Modi asManaging Director of the company as stated hereunder for two years with effect from 1st November, 2012;1. Salary 2,00,000/- Per month.2. PERQUISITES:CATEGORY ‘A’:i) HOUSING: Housing including Gas, Electricity, Water and Furnishings.

PROVIDED, however, that the expenditure on hiring unfurnished accommodation and the expenditure incurred on Gas,Electricity, Water and Furnishings shall be valued as per the Income Tax Rules.

ii) MEDICAL: Expenses incurred for self and family subject to a ceiling of one month’s salary per year.iii) LEAVE TRAVEL CONCESSION: For self and family in India in accordance with the Rules of the Company.iv) CLUB FEES: Fees of Clubs subject to a maximum of two Clubs.v) PERSONAL ACCIDENT INSURANCE PREMIUM AND/OR GROUP INSURANCE PREMIUM: As per Company Policy.CATEGORY ‘B’:i) PROVIDENT FUND AND SUPERANNUATION FUND: Contribution to Provident Fund, Superannuation Fund or Annuity

Fund as per Rules of the Company.ii) GRATUITY: Half-a-month’s salary for each completed year of service.iii) LEAVE ENCASHMENT: Encashment of leave at the end of the tenure.

PROVIDED however that (i) the contribution to Provident Fund, Superannuation Fund or Annuity Fund to the extent thatthese either singly or put together are not taxable under the Income Tax Act, (ii) Gratuity, and (iii) Leave encashmentshall not be included in the computation of ceiling on perquisites.

CATEGORY ‘C’:He shall also be entitled for the following, which will not be considered as perquisites:i) Provision of a car with driver for company’s business.ii) Two Telephones at his residence and one Mobile phone.He shall also be entitled to the reimbursement of all the expenses actually and properly incurred by him for or in connectionwith the company’s business.


RESOLVED FURTHER that the Board of Directors be and is hereby authorized to review the remuneration payable to ShriMahendra Kumar Modi as Managing Director of the Company in the event of profit arising henceforth in the company duringany financial year subject to relevant provisions of Companies Act, 1956.RESOLVED FURTHER that Board of Directors of the Company be and is hereby authorized to take such steps as may benecessary to give effect to this resolution and to make necessary alterations, if any, that may be made by the CentralGovernment in the remuneration.”

BY ORDER OF THE BOARDfor MODI INDUSTRIES LIMITED

RAMESH KUMARDY. COMPANY SECRETARY

MODINAGARDATED : 12th November, 2012

NOTES:1 A member, entitled to attend and vote, is entitled to appoint a proxy to attend and vote instead of himself, a proxy need not

be a member of the company. The Proxy Form, duly completed and signed, should reach the Company’s Registered Officeatleast 48 hours before the time fixed for the meeting. The Proxy Form is enclosed.

2. Explanatory Statement in respect of Item No. 4 of the Notice as required under Section 173(2) of the Companies Act, 1956,is annexed hereto.

3 Brief resume of Directors seeking re-appointment at the Annual General Meeting are annexed hereto.4. The Register of Members of the Company will remain closed from 14th December, 2012 to 19th December, 2012 (both days

inclusive).5. All documents referred to in the accompanying Notice are open for inspection at the Registered Office of the Company on all

working days, except Sundays and Bank Holidays, between 9.00 A.M. to 11.00 A.M. upto the date of the Annual GeneralMeeting.

6. Shareholders are requested to intimate change in their address, if any, to the company.7. The Ministry of Corporate Affairs (“Ministry”) has undertaken a “Green Initiative in Corporate Governance” by allowing

paperless compliances by companies through electronic mode. Shareholders are requested to register their e-mailID in the format given below with the company to receive communication through electronic mode as permitted by CircularNo. 17/2011 dated 21st April, 2011 and Circular No. 18/2011 dated 29th April, 2011 issued by the Ministry of Corporate Affairs.

E-COMMUNICATION REGISTRATION FORM(In terms of Circular No. 17/2011 dated 21st April, 2011 issued by the Ministry of Corporate Affairs)

Folio No. : ……………………………………………………………………………………………..

Name of 1st Registered Holder : ……………………………………………………………………………………………..

Name of Joint Holder(s) : ……………………………………………………………………………………………..

Registered Address : ……………………………………………………………………………………………..

: ……………………………………………………………………………………………..

: ……………………………………………………………………………………………..

E-mail ID (to be registered) : ……………………………………………………………………………………………..

: ……………………………………………………………………………………………..I/We shareholder(s) of Modi Industries Limited agree to receive communication from the Company in electronic mode. Pleaseregister my above e-mail in your records for sending communication through e-mail.

Signature:………………………………….(First Holder)

Date: ……………………

Note: Shareholder(s) are requested to keep the company informed as and when there is any change in the e-mail address.


EXPLANATORY STATEMENT PURUSANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.Item No. 4:Shri Mahendra Kumar Modi was appointed as Managing Director of the Company w.e.f. 1st November, 1969 and subsequentlyrenewed from time to time. The reappointment of Shri Mahendra Kumar Modi as Managing Director of the company was lastapproved in the Annual General Meeting of the company held on 29th September, 2009 with effect from 1st Novermber, 2009 to 31st

October, 2014 i.e. for five years and remuneration with basic salary 2,00,000/- plus perquisites, payable to him for three years i.e.from 1st November, 2009 to 31st October, 2012, was also approved in the said Annual General Meeting. The Central Government hasapproved remuneration of 18,00,000/- per annum to Shri Mahendra Kumar Modi, Managing Director for the said period of threeyears.Shri Mahendra Kumar Modi has been working as Managing Director of the Company for the last 42 years and has been managingthe affairs of Electrodes, Vanaspati, Paint and Gas units of the Company.Shri Mahendra Kumar Modi who is 68 years of age qualified as B.Sc. (Chem. Engg), A.I.C.E. from Banaras Hindu University, securingfirst division and first position and is a Gold Medalist. He had completed the course on Managing International Collaboration fromHarvard University, Graduate School of Business Administration in May, 1994. He was conferred Doctor of Science Honoris Causa byCh. Charan Singh University, Meerut (U.P.) in 1996.Considering the efforts made by the Managing Director to enhance the manufacturing capacity, substantial improvement in theperformance of the company and keeping in view the inflationary pressure, cost of living, his qualification and also the comparativeremuneration in the industry, the Remuneration Committee approved and recommended to the Board for payment of basic salary of

2,00,000/- per month plus perquisites stated above to Shri Mahendra Kumar Modi for remaining tenure of two years of hisappointment i.e. from 1st November, 2012 to 31st October, 2014. Accordingly, the Board of Directors had approved the payment ofsaid remuneration subject to your approval and prior approval of Central Government.I. General Information:1. Nature of Industry Manufacturing of Sugar, Industrial alcohol, Industrial Gases,

Paint, Electrodes.2. Date or expected date of commencement of The company commenced commercial production on

commercial production. 3rd January, 19333. In case of new companies, expected date of Not Applicable

commencement of activities as per project approvedby financial institutions appearing in the prospectus.

4. Financial performance based on given indicators:( in lakhs)

Financial Parameters Year ended 31.3.2012Revenue from Operations (Net of Excise Duty) and Other Income. 31,177.77Loss before Finance Costs, Depreciation, Exceptional Items and Tax 1,767.03Finance Costs 1,038.94Depreciation 622.36Loss for the year before Exceptional items and Tax. 3,428.33Cane price differential (2007-08) 847.77Loss for the year before Tax. 4,276.10Tax expenses -Loss for the year carried to Balance Sheet 4,276.10

5. Export performance and net foreign exchange collaborations -6. Foreign Investments or collaborators, if any. -II. Information about the appointee:

(1) Background details: Shri Mahendra Kumar Modi is qualified as B.Sc (Chem. Engg), A.I.C.E from Banaras HinduUniversity, securing first division and first position and is a Gold Medalist. He had completed the course on ManagingInternational Collaboration from Harvard University, Graduate School of Business Administration in May, 1994. He hasundertaken practical training in the plants and offices of Messrs Lurgi Geselleschaft Mineraloltechnik Gmbh, Frankfurt(Main), West Germany to equip himself with the latest technology and expertise in the Industry. He is on the board of othercompanies.

(2) Past remuneration: Shri Mahendra Kumar Modi presently is not drawing remuneration from any other company. At the75th Annual General Meeting of the company held on 29th September, 2009, the shareholders approved subject toapproval of Central Government, the basic salary of 2,00,000/- per month plus perquisites to Shri Mahendra KumarModi for three years w.e.f from 1st November, 2009 to 31st October, 2012. The Central Government has approvedremuneration of 18,00,000/- per annum to Shri Mahendra Kumar Modi, Managing Director for the said period of threeyears.

(3) Recognition of awards: Shri Mahendra Kumar Modi was conferred Doctor of Science Honoris Causa by Ch. Charan SinghUniversity, Meerut (U.P) in 1996.


(4) Job profile and his suitability: He is working as Managing Director of the company. He has given his valuable contributiontowards continuous growth of the company over the years. He is also Managing Director of Modipon Limited.

(5) Remuneration proposed: Details of the proposed remuneration is given in Item no. 4 of the notice convening the 78th

Annual General meeting of the company.(6) Comparative remuneration profile with respect to Industry, size of the company, profile of the position and person:

In the similar sized company in the business of Sugar, Distillery, Electrodes and Paints and having similar turnover of morethan 250 crores, remuneration is ranging between Rs. 48 Lacs to 84 Lacs per annum.

(7) Pecuniary relationship directly or Indirectly with the Company or relationship with the managerial personnel, if any:Shri Mahendra Kumar Modi is one of the promoters and Managing Director of the Company. Shri Manish Modi, Directoris his son.

III. Other Information:(1) Reasons of loss or Inadequate profits: Despite of increase in turnover every year, the profitability has suffered due to

heavy accumulated losses as the Company is a Sick Industrial Company declared by BIFR.(2) Steps taken or proposed to be taken for improvement: The Management of the company has continuously making

serious efforts to prepare a rehabilitation scheme for the revival of the company and to take it out from the BIFR.(3) Expected increase in productivity and profits in measurable terms: The Company expects to achieve turnover of

400.00 Crores and operational profit of approx. 14.00 Crores for the year 2012-13.Since payment of remuneration to the Managing Director requires approval of the shareholders by way of special resolution interms of the provisions of Schedule XIII of the Companies Act, 1956, therefore, the Board recommends this resolution to bepassed as a special resolution.None of the directors except Shri Mahendra Kumar Modi and Shri Manish Modi being son of Shri Mahendra Kumar Modi areinterested or concerned in the resolution. The above may be treated as an abstract of the remuneration under Section 302 ofthe Companies Act, 1956.

BRIEF RESUME, EXPERIENCE AND OTHER DIRECTORSHIPInformation of Directors retiring by rotation seeking reappointment at this Annual General Meeting are given hereunder:SHRI KRISHAN KUMAR MODI :Shri Krishan Kumar Modi has been a director of the Company since 30th April, 1970. Shri Krishan Kumar Modi, B.Sc., is aleading industrialist and has vast experience in various industries. He holds directorship/ membership of Committees of theBoard in the following other Public Limited Companies:1. Godfrey Phillips India Limited.2. Indofil Industries Limited3. Indian Cricket League Limited4. Good Investment India Limited5. Modi Reach Finance & Investment India Limited6. Modi Spinning & Weaving Mills Company Limited7. Modi Entertainment Limited8. MEN Interactive Network Limited9. Modern Home Care Products Limited10. Modi Care Limited11. Premium Merchants Limited

He holds 9,664 Equity Shares and 8 Redeemable Cumulative Preference Shares of the Company in his name.SHRI SANTOSH KUMAR AGGARWALShri Santosh Kumar Aggarwal has been a Director of the Company since 27th January, 2007. He is a Bachelor of Arts andBachelor of Law as well. He is an Advocate practicing since 1972 in the High Court of Delhi and in the Supreme Court of India.He deals in revenue matters especially in Taxation. He is not a Director/ Committee Member of any other listed company. Heholds 100 equity shares of the company in his name.SHRI KRISHNA KUMAR JAINShri Krishna Kumar Jain has been a Director of the Company since 27th January, 2007. He is fellow member of The Instituteof Chartered Accountants of India and Law Graduate and has more than 45 years experience in Accounts, Taxation andCompany Law matters. He is also a Director/Member of Committees of Board of Directors of Bihar Sponge Iron Limited. Heholds 100 equity shares of the company in his name.

BY ORDER OF THE BOARDfor MODI INDUSTRIES LIMITED

RAMESH KUMARDY. COMPANY SECRETARY

MODINAGARDATED : 12th November, 2012


To,The Shareholders,The Directors of your Company hereby present the 78th AnnualReport together with the Audited Statement of Account of theCompany and the Auditors’ Report thereon for the year ended on31st March, 2012. The working results of the year are summarizedas under:

DESCRIPTION YEAR ENDED YEAR ENDED31.03.2012 31.03.2011

in Lac in LacREVENUE FROM OPERATIONS(NET OF EXCISE DUTY) 30,615.71 34,509.96OTHER INCOME 562.06 642.22

TOTAL REVENUE 31,177.77 35,152.18

PROFIT/(LOSS) BEFOREDEPRECIATION, FINANCECOSTS AND EXCEPTIONAL ITEMS (1,767.03) 1,409.70LESS:Finance Costs 1,038.94 1,193.77Depreciation 622.36 564.46

1,661.30 1,758.23

PROFIT/(LOSS) BEFOREEXCEPTIONAL ITEMS (3,428.33) (348.53)ADD: EXCEPTIONAL ITEMSCane Price differential (2007-08) (847.77) -Interest income on Income tax Refund - 816.11

(847.77) 816.11

PROFIT/(LOSS) BEFORE TAX (4,276.10) 467.58Less: Tax Expenses - -

PROFIT/(LOSS) FOR THE PERIOD (4,276.10) 467.58

DIVIDEND:On account of accumulated losses, your directors are not in aposition to recommend any dividend for this year.PERFORMANCE OF THE UNITS FOR THE YEAR UNDER REPORT:(a) SUGAR UNIT : The cane crushing in the year under review

was 71.08 lacs qtls. as against 63.45 lacs qtls. in last year.Sugar recovery in the year under review decreased from8.946% to 8.81% due to heavy rainfall resulted in waterlodging in fields and also affected from insect & diseasei.e. White Gurb, grassy shoot borar etc. Market sentimentduring the financial year remained bearish owing to thecontinued mismatch between supply and demand of sugar,affecting sales realization. Further during the year U.P.Government has announced very high cane price hasresulted in loss of 3,654.87 lacs as against loss of

664.51 lacs in the last year.(b) DISTILLERY UNIT : During the year under review, the

DIRECTOR’S REPORT

production of Spirit (RS/ENA) was 4548 Kl. as comparedto last year 4048 Kl. The sale of country liquor was 609880cases during the year 2011-12 as against 391000 cases inthe last year. Due to Distribution Policy, the margins inCountry Liquor remained tight. There was improvementin working of the unit which has resulted in decrease in netloss to 15.78 lacs during the current year as against netloss of 96.04 lacs in the last year.

(c) ELECTRODE UNIT : Sales in quantities registered a positivegrowth of approx. 21% as compared to the previous year.The net profit was also lower in comparison with theprevious year. The raw material prices went up substantiallyputting severe pressure on the margins. The unit couldnot pass on the increase in the raw material price due tosevere competition from the global as well as domesticcompetitors. The pressure on the margins was particularlyhigh in general purpose welding electrodes and the solidwire business.

(d) GAS UNIT : The sales and profitability of the unit weresatisfactory under the prevailing circumstances

(e) PAINT UNIT: The unit registered a growth both in waterbase and solvent base products. Overall the unit had agrowth in excess of 13.7% over last year, in which marketsegment registered 18.75% and industry segment 7.32%.

FIXED DEPOSITS:The deposits of 1270 depositors amounting to 84.74 Lacsincluding interest thereon till the date of maturity was claimed,but remained unpaid as on 31st March, 2012. During the yearunder review company has paid 33.19 Lacs to 272 depositorstowards their deposits, this includes interest upto the date ofmaturity as per the conditions laid down in the scheme ofacceptance of public deposits. The company has written lettersto all the depositors whose fixed deposits have not yet beenrepaid requesting them to confirm their address so that theirfixed deposit can be repaid to them.The deposits of 161 depositors amounting to 9.77 Lacsincluding interest thereon till the date of maturity remainedunclaimed as on 31st March, 2012.DEBENTURES:Debentures worth 537.32 Lacs are due for payment as on 31stMarch, 2012. The Company will repay to debenture-holders asper final orders of BIFR that may be passed.DIRECTORS’ RESPONSIBILITY STATEMENT:Pursuant to the requirement under Section 217(2AA) of theCompanies Act, 1956, in respect of all units of the company,(excluding Balance Sheet of Steel Unit - refer Note 27(4) ofAnnual Accounts) it is hereby confirmed:( i) that in the preparation of the annual accounts, the

applicable accounting standards have been followed andwherever required proper explanations relating to materialdepartures have been given;

( ii) that the directors have selected such accounting policiesand applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a


true and fair view of the state of affairs of the company atthe end of the financial year and of the profit or loss of thecompany for that period;

(iii) that the directors have taken proper and sufficient care forthe maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguardingthe assets of the company and for preventing and detectingfraud and other irregularities;

(iv) that the annual accounts have been prepared on a goingconcern basis.

DIRECTORS:Shri Suraj Parkash Modi has resigned and ceased to be directorof the Company from 17th March, 2012. The Board wishes toplace on record its sincere appreciation for his valuable guidanceand services to the Company during his tenure as Director.Shri Krishan Kumar Modi, Shri Santosh Kumar Aggarwal andShri Krishna Kumar Jain are due to retire by rotation this yearand being eligible, offer themselves for re-appointment.COMPLIANCE CERTIFICATE UNDER SECTION 383A (1) :In terms of Proviso to Section 383A (1) of the Companies Act,1956 as inserted by Companies (Amendment) Act, 2000Compliance Certificate as obtained from Shri R. K. Guptapracticing Company Secretary is attached herewith.CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION & FOREIGN EXCHANGE:As required under Rule 2 of the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, theparticulars relating to Conservation of Energy in Form ‘A’pertaining to Sugar Unit is annexed hereto. The particularsrelating to Technology Absorption in Form ‘B’ and of the ForeignCurrency in Form ‘C’ are annexed hereto for the units, whereverapplicable.PARTICULARS OF EMPLOYEES:The particulars of employees, as required under Section 217(2A)of the Companies Act, 1956, are given in a separate annexureattached hereto and form part of this report.SUBSIDIARY COMPANIES:The Company has two subsidiaries namely, Your Investment(India) Limited and Own Investment (India) Limited.The statement under Section 212(3) of the Companies Act, 1956in respect of subsidiary companies is separately annexed.In accordance with the general circular No. 2/2011 dated 8th

February, 2011 issued by the Ministry of Corporate Affairs,Government of India, the Balance Sheet, Profit & Loss Accountand other documents of the subsidiary companies are not beingattached with the Balance Sheet of the Company. The annualaccounts of the subsidiary companies and the related detailedinformation shall be made available to shareholders of theholding and subsidiary companies seeking such information atany point. The annual accounts of the subsidiary companiesshall be kept for inspection by any shareholders at RegisteredOffice of the holding company and of the subsidiary companiesconcerned.CONSOLIDATED FINANCIAL STATEMENTS:In compliance with the Accounting Standards 21 and 23 of the

Companies (Accounting Standards) Rules, 2006 and pursuant tothe Listing Agreement with the Stock Exchanges, the consolidatedfinancial statements form a part of this Annual Report.LISTING AGREEMENT:The securities of the Company are listed with U.P. Stock ExchangeLimited, Kanpur as a Regional Exchange and Delhi StockExchange Limited, New Delhi. The Company has paid the AnnualListing Fees to each Exchange.APPOINTMENT OF AUDITORS:M/s. P.R. Mehra & Co., Chartered Accountants, the retiringauditors, being eligible, offer themselves for re-appointment.The appointment of auditors has to be done by a SpecialResolution in terms of Section 224A of the Companies Act, 1956.AUDITORS’ REPORT:With reference to the qualifications contained in the Auditors’Report, the Directors wish to state that the Notes referred to by theauditors in their report are self-explanatory and hence do not callfor any further comments.MANAGEMENT DISCUSSION & ANALYSIS REPORT:In terms of Clause 49 of the Listing Agreement with the StockExchanges, Management Discussion & Analysis Report is annexedand forms part of this report.CORPORATE GOVERNANCE:The report on the Corporate Governance together with theAuditors’ Certificate thereon are annexed hereto and forms partof this Report. All Board Members and Senior ManagementPersonnel have affirmed compliance with the Code of Conductfor the year under review.COST AUDITORS:Pursuant to the order of the Central Government under theprovisions of Section 233B of the Companies Act, 1956, M/s.M.K. Singhal & Co., Cost Accountants, were appointed to conductcost audits relating to Sugar, Industrial Alcohol and Paints &Varnishes.The Cost Audit Report for the last audited accounts for thefinancial year ended 31st March, 2011 was filed by the CostAuditors with respect to the sugar and industrial alcohol units ofthe company on 30th September, 2011.LABOUR RELATIONS:The labour management relations generally remainedharmonious.ACKNOWLEDGMENT:The Directors wish to thank the Central Government, Governmentof Uttar Pradesh, Financial Institutions and the Company’s Bankersfor all the help and encouragement they extended to theCompany. Your Directors gratefully acknowledge the continuedtrust and confidence; you have placed in this Company. TheDirectors also wish to place on record their deep appreciation forthe services rendered by the officers, staff and workers of theCompany at all levels and for their dedication and loyalty.

for & on behalf of the BoardM.K. MODI U.K. MODI

MANAGING DIRECTOR MANAGING DIRECTORNEW DELHIDATED : 12th November, 2012


ANNEXURE TO DIRECTORS’ REPORTPARTICULARS REQUIRED UNDER THE COMPANIES(DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF

DIRECTORS) RULES, 1988FORM “A”: DISCLOSURE OF PARTICULARS WITH RESPECT OF CONSERVATION OF ENERGY

PARTICULARS SUGARYEAR ENDED YEAR ENDEDON 31.3.2012 ON 31.3.2011

(A) POWER & FUELCONSUMPTION :1) ELECTRICITY:

a) Purchased Units :Total Amount - -Rate/Unit

b) Own Generation through Diesel Generator :Unit 804886 874512Unit per Ltr.of Diesel Oil - -Cost/Unit 13.56 12.05Through Steam Turbine/ GeneratorUnit 18033433 17039021Unit per Ltr.of Fuel Oil/Gas - -Cost/Unit ‘ 0.87 1.50

2) COALQuantity (MT)Total Cost ( ) - -Average Rate ( ) - -

3) FURNACE OIL :Quantity K.Ltr. - -Total Amount ( ) - -Average Rate ( ) - -

4) OTHERS/INTERNAL GENERATION :Quantity - -Total Cost ( ) - -Rate/Unit ( ) - -

B) CONSUMPTION PER UNIT OF PRODUCTIONProduct(with details)UnitElectricity KWH PMT 293.24 312.70Furnace Oil Ltr.PMT - -Coal (Specify Quantity) - -

FORM “B: DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION:

DESCRIPTION ELECTRODE PAINT

RESEARCH & DEVELOPMENT (R & D) :1. Specific areas in which R&D Development of new products, Epoxy Stoving Black Finishing for 1000

carried out by the Company. improvement in existing products, (SST) Hrs.PU Base Paint. M&C/PCN/cost reduction through improvement 123/06.in production system. Acid Resistance Epoxy Paint for 2000

Hrs. Dip Test.2. Benefits derived as a result Increase of product sale with Percentage contribution has

of the above R&D. newly developed products increased.3. Future Plan of Action New development/upgradation of Development of High Resistant Paint.

products as per market requirementsand cost control of products.



EXPENDITURE ON R&D :a. Capital ( ) - -b. Recurring ( ) 12,75,147.00 26,87,820.91

TOTAL ( ) 12,75,147.00 26,87,820.91c. R&D Expenditure 0.13% 1.00%

percentage of total turnover

TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION :


1. Efforts in brief made towards N.A. N.A.technology absorption,adaptation and innovation.

2. Benefits derived as a result of N.A. N.A.the above efforts e.g. productimprovement cost reduction,product development, importsubstitution etc.

3. In case of imported technology(imported during the last five yearsreckoned from the beginning of thefinancial year) following informationmay be furnished :


a. Technology imported N.A. N.A. b. Year of Import N.A. N.A. c. Has Technology been fully N.A. N.A.

absorbed.d. If not fully absorbed areas, N.A. N.A.

where this has not taken place,reasons therefore and futureplan of action.

FORM “C”: FOREIGN EXCHANGE EARNINGS & OUTGO

Name of Units Activities Relating to Exports, Initiative Total Foreign Exchange UsedTaken to Increase Exports Development and Earnedof New Export Markets for Products andServices and Export Plans

in LacElectrode Earnings Nil

Outgo Raw Material 151.10Components & Spare Parts 0.61Other Matters 1.86

Distillery Earnings NilOutgo Raw Material 46.72

Capital Goods (Moulds) 19.66Stores Purchased 123.57Travelling 0.31

M.D. Office Earnings NilOutgo Travelling 2.19

Steel Earnings NilOutgo Travelling 7.63


STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES

1. Name of the Subsidiary Companies. Own Investment (India) Limited Your Investment (India) Limited

2. Number of Shares held in Subsidiary 13,200 Equity Shares of Rs.100/- 21,450 Equity Shares of Rs.100/-Companies each fully paid up. each fully paid up.

3. Percentage of Holding in the Subsidiary 99.89% 99.93%Companies.

4. Financial year ended 31st March, 2012 31st March, 2012

5. Profit/(Loss) of the subsidiary Companies fortheir Financial Year so far as they concernthe members of Modi Industries Ltd., whichhave not been dealt with in the Accounts ofModi Industries Limited for the year ended31st March, 2012:For the year ended 2.71 Lac 2.69 LacFor the previous years 4.58 Lac 8.70 Lac

6. The net aggregate of Profit/(Loss) of the SubsidiaryCompanies which have been dealt with in theAccounts of Modi Industries Limited for the yearended 31st March 2012.For the year ended Nil NilFor the previous years Nil Nil

FINANCIAL INFORMATION OF SUBSIDIARY COMPANIES: in Lacs

Name of the Reporting Capital Reserves Total Total Invest Turnover/ Profit/(Loss) Provision Profit/(Loss) DividendSubsidiary Currency Assets Liabilities -ments TotalIncome Before For After paidCompany Taxation Taxation TaxationOwn 13.22 7.31 20.70 20.70 11.72 31.62 31.21 0.08 31.13 24.45Investment(India) LimitedYour 21.46 11.40 33.42 33.42 20.23 31.98 31.57 0.19 31.38 24.68Investment(India) Limited

PARTICULARS OF EMPLOYEES IN TERMS OF SECTION 217(2A) OF THE COMPANIES ACT, 1956(FORMING PART OF THE DIRECTOR’S REPORT)

(A) Persons employed throughout the financial year under review and were in receipt of remuneration for the yearaggregating of not less than 60,00,000/- :

Sl. Name Designation Nature Qualifications Experience Date of Total Age LastNo. of Duties (Years) commencement Remu (Years) employment

of employment -neration( ) before joiningthe company

1. Mr. Group Overall responsibilities M.B.A. 32 Years 15.1.2011 65,09,547.00 56 Puzzolana Ltd.Sanjay C.E.O. of Paint, Gas &Bhatia Electrode units.

(B) Persons employed for part of the financial year under review and were in receipt of remuneration not less than 5,00,000/- per month :

Sl. Name Designation Nature Qualifications Experience Date of Total Age LastNo. of Duties (Years) commencement Remu (Years) employment

of employment -neration( ) before joiningthe company

NIL

01 Remuneration includes salary, commission, exgratia, company’s contribution to Provident Fund and money value of perquisites. 02 Employee mentioned above is not a relative of any Director of the Company.


(a) INDUSTRY SCENARIO :SUGAR UNIT: The sugarcane area is expected to increaseby 2.1% in crushing season 2012-13. The sugar productionin the country is expected to be 24.5-25.5 million tons inthe season 2012-13 against the production of 26 milliontons in 2011-12.The consumption of sugar is likely to be 23 million tonsduring 2012-13.DISTILLERY UNIT: The industry continues to be regulatedat various levels by Government. The potable alcoholpolicy of last year has been continued by U.P. Government.In the policy the whole sale rights of Country Liquor hasbeen given to one party.ELECTRODE UNIT: The Indian economy grew at about8% in the financial year 2011-12 due to growth inautomobile and infrastructure related industries andbusiness. Majority of welding growth was driven byautomobile, power, oil and gas and ship building sectors.The year was also marked by high inflation andpostponement of the much expected CAPEX plans of theindustry. In the second half, raw material prices went upsubstantially putting severe pressure on the margins. A keydriver boosting market revenues has also been the gradualmove from manual to automatic and semi-automaticwelding equipment and thus the corresponding change inconsumables. The spiraling demand for steel is promotingthe use of innovative state-of-art uses of steel whiletriggering the uptake of high volumes of welding equipmentand consumables.PAINT UNIT: The Indian Paint Industry, estimated to be a

21,000.00 Crore Industry has been growing at 15% perannum for quite some years now. As far as the futuregrowth prospects are concerned, the industry is expectedto grow at 12 to 13% annually over the next five years.GAS UNIT : There are presently over 300 small & mediumsize plants and approximately 25 large tonnage plants allover the country. These gases are supplied throughpipelines to captive customers in adjacent factories; incryogenic transport tanks for bulk deliveries to long distancecustomers; or filled in cylinders.The present annual turnover of the gas industry, excludingcaptive production is about 3,000 crores ($650 million).With increased industrialization, the demand pattern ofindustrial gases is also changing fast. Modern applicationin the food processing industry, agro industries, healthcareand technology are growing at a tremendous pace. Thishas driven the industry to adopt stringent quality controlsystems and an efficient distribution network.Major players in India include BOC India, INOX Air ProductsLimited, Praxair Oxygen Co. Ltd., Air Liquid India Pvt.Ltd., Gotal MG Gases, IGL Kashipur, Jubilant etc.

(b) OPPORTUNITIES AND THREATS :SUGAR UNIT : The State Government has so far beenunable to evolve an equitable policy for allocation ofsugarcane area amongst factories. Efforts are continuingat various levels to evolve an equitable methodology forreservation of cane area on factory wise basis, in the overallinterest of the industry. The Government is considering forfull decontrol on sugar industry.

ANNEXURE TO DIRECTORS’ REPORTMANAGEMENT DISCUSSION AND ANALYSIS REPORT

After the decision of Hon’ble Supreme Court empoweringthe State Government to fix Cane Price, one of the majorthreat to the Sugar Industry relates to the successiveinterventions of the Government in the pricing as well asdistribution of Sugarcane.DISTILLERY UNIT : With the likely increase in productionof sugar output, resulting an increase in production andavailability of Molasses, the production of Rectified Spiritwill be better as compare to last year.ELECTRODE UNIT: Enhanced foreign direct investment(FDI) equity inflow in India has supported projects in theoil and gas sector, offshore activities, aerospace and heavymachinery industries. Several foreign automobilescompanies have established their manufacturing base inIndia. Such trends have had a positive impact on theuptake of welding equipment and consumables. Anotherchallenge faced by Indian welding consumablesmanufacturers is the unorganized sector that currentlyoccupies close to 50-55 percent of the market. This sectoris continuously growing due to lack of specifications andapprovals required for welding activities in end-userindustries. Although some approvals are required for highrisk jobs in power and offshore, there are no suchrequirements in the fabrication industry where weldingfinds extensive use.PAINT UNIT: Potential for the Indian Paint Industry ishuge given the comparison in terms of per capitaconsumption. India is still very low at 0.50 kg. against 15kg. in the USA and 6.4 Kg. in China. With large number ofresidential and commercial projects underway in most cities,the outlook for the Indian Paint Industry appears brighter.It may jump from its current growth rate of 15% to 20-25%in the next two years.However, the rise in crude prices and shortage of key rawmaterials led to a steady increase in prices across allcategories of raw materials. Sharp increase of raw materialprices is one of the key concerns for the industry posingsignificant challenges resulting in lowering down themargin of all the companies. The competition will alsoincrease with entry of new large companies having soundfinancial condition.GAS UNIT: The Indian gas industry is growing at an averagerate of 12 per cent per annum during the last couple ofyears, with the industrial oxygen growing consistently at15-17 percent per annum. The growth of industrial gasindustry can be easily forecast on the basis of projectionsof the steel and other metallurgical industry. Steel demandis seen rising by 10% in the fiscal year March, 2012, helpedby higher spending on infrastructure will continue to drivegrowth of the gas industry. Metals production andfabrication will continue to be the largest market forindustrial gases, accounting for 31% of total demand invalue terms in coming years. The second largest marketwil l be the chemical processing/ petroleum refiningsegment. The medical/healthcare market, though smallerin size, will be the fastest growing and record gains fromthe expansion of healthcare services in developing nationsand rapidly increasing use of home healthcare respiratorytherapies in advance economics. The industrial gasindustry has a very bright future in the coming years.


Although there is a big threat from unorganized sectorsand increase in usage of liquid gases pose threat to gasbusiness in cylinders, we still have adequate opportunityin our area of operation.

(c) OPERATIONAL PERFORMANCE :SUGAR UNIT: The cane crushing in the year underreview was 71.08 lacs qtls. as against 63.45 lacs qtls. inlast year. Sugar recovery in the year under review decreasedfrom 8.946% to 8.81% due to heavy rainfall resulted inwater lodging in fields and also affected from insect &disease i.e. White Gurb, grassy shoot borar etc. Marketsentiment during the financial year remained bearish owingto the continued mismatch between supply and demandof Sugar, affecting sales realization. Further during theyear UP Government has announced very high cane pricehas resulted in loss of 3654.87 lacs as against loss of

664.51 lacs in the last year.DISTILLERY UNIT: During the year under review, theproduction of Spirit (RS/ENA) was 4548 Kl. as comparedto last year 4048 Kl. The sale of country liquor was 609880cases during the year 2011-12 as against 391000 cases inthe last year. Due to Distribution Policy, the margins inCountry Liquor remained tight. There was improvementin working of the unit which has resulted in decrease in netloss to 15.78 Lacs during the current year as against netloss of 96.04 Lacs in the last year.ELECTRODES UNIT: Sales in quantities registered apositive growth of approx. 21% as compared to the previousyear. The net profit was also lower in comparison with theprevious year. The raw material prices went up substantiallyputting severe pressure on the margins. The unit couldnot pass on the increase in the raw material price due tosevere competition from the global as well as domesticcompetitors. The pressure on the margins was particularlyhigh in general purpose welding electrodes and the solidwire business.PAINT UNIT: The unit registered a growth both in waterbase and solvent base products. Overall the unit had agrowth in excess of 13.7% over last year, in which marketsegment registered 18.75% and industry segment 7.32%.GAS UNIT: The sales and profitability of the unit weresatisfactory under the prevailing circumstances.

(d) FUTURE OUTLOOK :SUGAR UNIT: The sugar prices and profitability of IndianSugar companies would remain volatile and dependenton domestic and international supply and demand trends.These in turn would depend on agro-climatic conditionsin major producing countries and crude oil price trends,which determine the diversion of sugarcane crop to ethanol.Consequently, the price trends in international marketswould be the key determinants of future profitability.DISTILLERY UNIT: The molasses production is expectedto be good in coming years which will result in higherproduction of rectified spirit with lower cost of production.The unit has also introduced scotch blended whiskey, andwill further expand the supplies in the whole country.In the light of India’s growing fuel demand and the surgein the global pricing, the Government of India is keen topromote admixing of ethanol with petrol. Keeping this inview and the normal growth in the Chemicals and Potablesectors, the demand for alcohol are expected to remainstrong in the future.

ELECTRODE UNIT: Outlook for the financial year 2012-13 looks generally encouraging with the provisions of ahigher Central Government budgetary allocation to theinfra sector. The unit plans to improve the service portfolioand broaden the market reach to increase the penetrationinto new end user industries such as fabrication andautomotives. This becomes necessary so as to exploreopportunities in other general fabrication which havemoved to higher automation levels. New competitionfrom the global players setting up manufacturing activitieslocally would increase pressure on margins.PAINT UNIT: The market for paints in India is expected togrow at 1.5 times to 2 times GDP in the next 5 years.Decorative paints segment is expected to witness highergrowth going forward. The fiscal incentives given by thegovernment to the housing sector have benefited this sectorimmensely. This will benefit the players in the long term.Although the demand for the industrial paints is lukewarm,it is expected to increase going forward. This is on accountof increasing investment in infrastructure. Domestic andglobal auto majors have long term plans for the IndianMarket, which augur well for automotive paints.GAS UNIT: Our main focus will be to enhance the sale ofhigh contributory gases such as D.A. and Argon gases andby adding and in-house developing new product mix. Weare also planning to enter in the sale of gases in liquidform and by installing storage tank at the end users worksalso by making a minimum three to five years contract sothat we may secure our business for those periods. Wehope, the unit is expected to maintain the growth rate.

(e) RISKS & CONCERNS :The company is a Sick Industrial Company within themeaning of Section 3(1)(o) of Sick Industrial Companies(Special Provisions) Act, 1985. Hence fresh funds both forworking capital requirement and/or long term requirementsare not made available by Banks/Financial Institutions.

(f) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:The key features of the Internal Control Systems are givenbelow :1. Well defined organization structure, documented policy

guidelines, predefined authority levels ensures optimalutilization and protection of resources.

2. Assets are adequately maintained and protectedagainst Theft, Burglary and other Losses.

3. Transactions are properly recorded and accounted for.4. Accounting records are maintained complying with all

the statutory laws and reflect true and fair view.5. There are adequate Management reporting systems

for control and monitoring of performance.6. Budgetary control system is in place.7. Periodical review by the Management is being done.8. Periodical review of system, procedures and transactions

by internal Auditors is conducted.(g) MATERIAL DEVELOPMENT IN HUMAN RESOURCES/

INDUSTRIAL RELATIONS FRONT :The underlying rule of company’s policy towards humanresource development is that competent and motivatedmanpower is the most important factor in achieving businessgoals. The policies in this regard are evolved and pursuedto achieve this objective. Industrial relations remainedcordial throughout the year.As on 31st March, 2012 the total number of employees onthe payrolls of the company were 1103.


CORPORATE GOVERNANCE REPORTCORPORATE GOVERNANCE AS REQUIRED BY CLAUSE 49 OF THE LISTING AGREEMENT WITH STOCK EXCHANGES

1. COMPANY’S PHILOSOPHYYour company firmly believes in good corporate governance. Towards this end, the company consistently evaluates anddefines its management practices aimed at enhancing its commitment and delivery of the basic tenets of the corporategovernance.

2. BOARD OF DIRECTORS(a) COMPOSITION OF BOARD :The Board consists of nine directors as on the date of report. Out of these Nine directors, seven are non-executive directorswhich include three independent directors. The Company did not have any material pecuniary relation or transaction withnon-executive directors during the year under review.(b) BOARD PROCEDURE :During the year, five Board meetings were held on 9th May, 2011, 9th August, 2011 adjourned and held on 16th August, 2011, 29th

August, 2011, 11th November, 2011 and 14th February, 2012 adjourned and held on 21st February, 2012. The Board waspresented with the relevant and necessary information at its meetings. None of the directors is a member of more than tenCommittees or acting as Chairman of more than five Committees across all companies in which he is a director. Theattendance at the Board meetings during the year 2011-12 and at the last Annual General Meeting held on 29th September,2011 and also number of other directorship are given herein below:

Name Cate- No.of Attendance No.of No. of othergory Board at previous outside Committee(s)$

meetings AGM director- Member Chairman-attended ships @ ship ship

Shri Mahendra Kumar Modi MD 5 Yes 2 1 -Shri Umesh Kumar Modi MD 5 Yes 7 - -Shri Krishan Kumar Modi NED - No 11 2 1Shri Vinay Kumar Modi NED - No 3 2 1Shri Rakesh Kumar Modi NED 5 No - - -Shri Suraj Parkash Modi * NED 5 Yes - - -Shri Manish Modi NED 3 Yes 3 - -Shri Abhishek Modi NED 5 Yes 6 - -Shri Santosh Kumar Aggarwal NED 5 No - - -Shri Krishna Kumar Jain NED 5 No 1 1 1 MD: Managing Director, NED: Non-Executive Director

@Excludes Private Limited Companies & Foreign Companies.$Represents Audit Committee and Investors’ GrievanceCommittee.* Shri Suraj Parkash Modi has ceased to be Director with effect from 17th March, 2012

(c) RELATIONSHIP AMONGST DIRECTORS :Shri Krishan Kumar Modi, Non-Executive Director, Shri Vinay Kumar Modi, Non-Executive Director and Shri Umesh KumarModi, Managing Director are real brothers. Shri Manish Modi, Non-Executive Director, is son of Shri Mahendra Kumar Modi,Managing Director and Shri Abhishek Modi, Non-Executive Director, is son of Shri Umesh Kumar Modi, Managing Director.

3. AUDIT COMMITTEE :(a) TERMS OF REFERENCE :Terms of Reference of the Audit Committee specified by the Board are as contained in Clause 49 of the Listing Agreement.(b) COMPOSITION :The ‘Audit Committee’ of the Company, as on the date of report, consists of 3 Non-Executive Independent Directors, namely,(1) Shri Rakesh Kumar Modi, (2) Shri Santosh Kumar Aggarwal and (3) Shri Krishna Kumar Jain, as members.During the year, five Audit Committee Meetings were held on 9th May, 2011, 9th August, 2011 adjourned and held on 16th

August, 2011, 29th August, 2011, 11th November, 2011 and 14th February, 2012 adjourned and held on 21st February, 2012. Allfive meetings were attended by all its members.

4. REMUNERATION OF DIRECTORS :The Remuneration Committee, as on the date of report, consists of 3 Non-Executive Independent Directors, namely, (1) ShriRakesh Kumar Modi, (2) Shri Santosh Kumar Aggarwal and (3) Shri Krishna Kumar Jain, as members. The decisions regardingremuneration of executive and non-executive directors are taken by the entire Board on recommendation of the RemunerationCommittee subject to such approvals from the Shareholders or Central Government as may be necessary. The Company doesnot pay any remuneration to the non-executive directors except payment of Sitting Fees for attending Board/ Committeemeetings.Details of remuneration paid to the directors during the year under review are given below:


(a) Executive Directors :No remuneration has been paid to Shri Umesh Kumar Modi, Managing Director during the year under review. The CentralGovernment has accorded its approval for payment of remuneration to Shri Mahendra Kumar Modi as Managing Director forthe period 1st November, 2009 to 31st October, 2012 and accordingly the Company has made a payment of 18.00 Lacs to himfor the period 1st April, 2011 to 31st March, 2012.(b) Non-Executive Directors :

Name Sitting Fees Shares held( in thousands) Equity Preference

Shri Krishan Kumar Modi - 9664 8Shri Vinay Kumar Modi - 25477 8Shri Rakesh Kumar Modi 16.0 48901 10Shri Suraj Parkash Modi 21.0 870 -Shri Manish Modi 6.0 22050 -Shri Abhishek Modi 10.0 100 -Shri Santosh Kumar Aggarwal 12.5 100 -Shri Krishna Kumar Jain 12.5 100 -

5. SHARE TRANSFER & INVESTORS’ GRIEVANCE COMMITTEE:During the year under review Shri Suraj Parkash Modi had resigned from the directorship of the company with effect from 17th

March, 2012. Now the Committee, consisting of three members i.e. Shri Mahendra Kumar Modi, Managing Director, ShriUmesh Kumar Modi, Managing Director, and Shri Rakesh Kumar Modi, Independent-Non-Executive Director, has beenentrusted with the work of Share/Debenture Transfer and dealing with Investors grievances. Shri Suraj Parkash Modi chairedall meetings of the Committee held during the year under review. The Company Secretary, acts as Secretary to the Committeeand is Compliance Officer under Clause 49 of the Listing Agreement. All transfers, transmissions etc. of Shares and Debentureswere effected within the stipulated period by the Company.All 29 Shareholders/Investors complaints, received directly from them or through SEBI/Stock Exchanges and other authoritiesduring the year under review, have been replied by the company and none remained outstanding at the end of the year underreview. The status of Shareholders/Investors complaints received during the period under review were reported to the ShareTransfer and Investors’ Grievance Committee by the Compliance Officer.

6. GENERAL BODY MEETINGS :The last three Annual General Meetings were held at Modi Industries Transit House (Modi Industries Complex), Modinagar, onthe following dates and time:

Financial year Date Time2010-11 29.09.2011 12.30 P.M.2009-10 27.09.2010 12.30 P.M.2008-09 29.09.2009 03.00 P.M.

Special resolutions for re-appointment of Statutory Auditors of the Company were passed in the last three Annual GeneralMeetings of the Company. However, Special Resolution for remuneration payable to Shri Mahendra Kumar Modi as ManagingDirector of the Company was passed in the Annual General Meeting of the Company held on 29th September, 2009.The Company has so far no business which had to be conducted through postal ballot for passing any resolution at generalmeetings.

7. DISCLOSURES :There were no transactions of the company of material significance with its directors or the management, their subsidiaries orrelatives during the year which may have potential conflict with interest of the company. There was no non-compliance duringthe last three years by the company on any matters related to capital markets. Consequently, neither any penalties wereimposed nor strictures passed on the company by Stock Exchanges, SEBI or any Statutory Authority. The company hascomplied with all the mandatory requirements of revised Clause 49.

8. MEANS OF COMMUNICATION :The Quarterly results of the Company are published in English and local language news-papers as required under the ListingAgreement. All financial and other vital information are promptly communicated to the Stock Exchanges on which company’sshares are listed. Company’s Financial Results and Shareholding Pattern for each quarter and Annual Accounts of theCompany are being uploaded on the Company’s Website – www.modiindustries.net. Management discussion and analysisreport form a part of annual report and is given in a separate chapter thereto.


9. GENERAL SHAREHOLDERS’ INFORMATION :(a) Annual General Meeting :

Date : 19th December, 2012Time : 12.30 P.M.Venue : Modi Industries Transit House

(Modi Industries Complex) Modi Nagar.(b) Financial Calendar :

(i) Financial year : April to March(ii) First quarter results : Within 45 days from the end of the quarter(iii) Second quarter results : - do -(iv) Third quarter results : - do -(v) Fourth quarter results : - do -

(c) Date of Book Closure :14th December, 2012 to 19th December, 2012 (both days inclusive).

(d) Dividend payment date :The Directors have not recommended any dividend on shares in view of accumulated losses.

(e) Stock Exchange Listing :Shares of the company are listed on:Uttar Pradesh Stock Exchange Ltd., Kanpur (U.P.)Delhi Stock Exchange Ltd., New Delhi.

(f) Stock Code :Uttar Pradesh Stock Exchange Ltd. Z-493Delhi Stock Exchange Ltd. 013154

(g) Market Price Data : High/Low during each month in the year 2011-12:The Company is a Sick Industrial Unit. There have been no transactions of Company’s shares on the Stock Exchanges, wherethe shares of the Company are listed, since long.

(h) Registrar and Transfer Agents :Company has not appointed any Registrar for Shares/ Debenture Transfer. All such work is done in-house at Company’s ShareDepartment.

(i) Share Transfer System :Shares lodged with the Company for transfer are processed and returned to the Shareholders within the stipulated time,provided transfer documents are complete and valid in all respect.

(j) Distribution of Shareholding as on 31.03.2012 :Distribution of Number of No. of %age ofshareholding Shareholders Shareholding

Equity shares Pref. shares Equity Pref. Equity Pref.of 10 each of 100 each shares shares shares shares

Upto 500 681007 248 8932 19 20.58 0.61501 - 1000 94524 - 126 - 2.86 -1001 - 2000 98522 - 66 - 2.98 -2001 - 3000 39160 - 16 - 1.18 -3001 - 4000 32732 3520 10 1 0.99 8.644001 - 5000 27988 9005 6 2 0.84 22.105001 – 10000 92957 14344 13 2 2.81 35.2110000 and above 2242324 13624 53 1 67.76 33.44Total 3309214 40741 9222 25 100.00 100.00

(k) Dematerialisation of Shares and Liquidity :The Company is a Sick Industrial Company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (SpecialProvisions) Act, 1985 and all its shares are held in physical form.

(l) Outstanding GDRs/ADRs/Warrant or any ConvertibleInstruments, Conversion date and likely impact on Equity :The Company has no GDRs/ADRs/or any convertible instrument.

(m) Plant Location :At Modinagar, District Ghaziabad (U.P.) 201204.

(n) Address for Correspondence :Modi Industries LimitedRegistered Office,P.O. Modinagar,District Ghaziabad (U.P.)Pin 201204.


CERTIFICATE

To

The Members ofModi Industries LimitedModinagar.

We have examined the compliance of conditions of corporate governance by Modi Industries Limited, for the year ended on 31stMarch, 2012, as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited toprocedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of the CorporateGovernance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, the company has complied with theconditions of corporate governance for the year ended 31st March, 2012 as stipulated in the above mentioned Listing Agreementexcept that disclosures of details of material individual transactions with related parties were not placed before the Audit Committee{Refer foot notes in note 27(38) of annual account and paragraph 3(1) of our main Audit Report.}

We state that no investor grievances are pending for a period exceeding one month against the company as per the recordsmaintained by the Shareholders/ Investors Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency oreffectiveness with which the management has conducted the affairs of the company.

for and on behalf ofP.R. MEHRA & CO.,

Chartered Accountants,(Regn. No. 000051N)

RAMESH CHAND GOYALPLACE: New Delhi PARTNERDATED: 12th November, 2012 Membership No. 12628


COMPLIANCE CERTIFICATE

CIN: L15429UP1932PLC000469AUTHORISED CAPITAL : Rs.5,00,00,000.00PAID UP CAPITAL : Rs.3,71,42,240.00

TO,THE MEMBERS,MODI INDUSTRIES LIMITEDMODINAGAR.I have examined the registers, records, books and papers of MODI INDUSTRIES LIMITED as required to be maintained under the Companies Act,1956, and the rules made there under and also the provisions contained in the Memorandum and Articles of Association of the Company for thefinancial year ended on 31st March, 2012. In my opinion and to the best of my information and according to the examinations carried out by me andexplanations furnished to me by the company, its officers and agents, I certify that in respect of the aforesaid financial year:01 The company has kept and maintained all registers as stated in Annexure “A” to this certificate, as per the provisions and the rules made there

under and all entries have been duly recorded.02 The company has duly filed the forms and returns as stated in Annexure “B” to this certificate, with the Registrar of Companies, Regional

Director, Central Government, Company Law Board or other authorities within the time prescribed under the Act and rules made there under.03 The company, being a public limited company, has the minimum prescribed paid-up capital.04 The Board of Directors duly met five time on 9th May, 2011, 9th August, 2011 adjourned and held on 16th August, 2011, 29th August, 2011, 11th

November, 2011 and 14th February, 2012 adjourned and held on 21st February, 2012, in respect of which meetings, proper notices were givenand the proceedings were properly recorded, and signed including the circular resolutions passed, in the minutes book maintained for thepurpose.

05 The company closed its register of members from 24th September, 2011 to 29th September, 2011 and necessary compliance of section 154of the Act has been made.

06 The Annual General Meeting for the financial year ended on 31st March, 2011 was held on 29th September, 2011, after giving due notice to themembers of the company and the resolutions passed thereat were duly recorded in Minutes Book for the purpose.

07 No Extra Ordinary meeting was held during the financial year.08 The company has not advanced any loan to its directors or persons or firms or companies referred in Section 295 of the Act.09 The company has duly complied with the provisions of Section 297 of the Act, in respect of contracts specified in that section.10 The company has made necessary entries in the register maintained under Section 301 of the Act.11 As there were no instances falling within the purview of section 314 of the Act, the company is not required to obtain any approval from the

Board of Directors, Members, Central Government, as the case may be.12 The Board of Directors or duly constituted Committee of Directors has approved the issue of duplicate share certificates.13 The Company has:

i) not allotted any securities during the financial year.ii) not deposited any amount in a separate bank account as no dividend was declared during the financial year.iii) the company has not posted warrants to any member of the company as no dividend was declared during the financial year.iv) duly complied with the requirements of Section 217 of the Act.

14 The Board of Directors of the Company is duly constituted. There was no appointment of Additional Directors or Alternate Director during thefinancial year.

15 The Company has not appointed any Managing/ Whole Time Director/Manager during the financial year.16 The Company has not appointed any sole-selling agent during the financial year.17 The Company has obtained all necessary approvals of the Central Government, Company Law Board/ Regional Director, Registrar of

Companies and/or such authorities prescribed under the various provisions of the Act as detailed below:(i) Appointment of Cost Auditors (Distillery Unit) under Section 233B(2).(ii) Appointment of Cost Auditors (Sugar Unit) under Section 233B(2).(iii) Appointment of Cost Auditors (Paint Unit) under Section 233B(2).

18 The Directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of Act and the rulesmade there under.

19 The company has not issued any shares, debentures or other securities during the financial year.20 The company has not bought back any shares during the financial year.21 There was no redemption of Preference Shares or Debentures during the financial year.22 There was no transaction necessitating the company to keep in abeyance the rights to dividends, right shares and bonus shares pending

registration of transfer of shares.23 The company has not invited/accepted any deposits including any unsecured loans falling within the purview of Section 58A, during the

financial year.24 The Company has not made any borrowings during the financial year.25 The company has not made any loans or advances or given guarantees or provided securities to bodies corporate during the financial year.26 There has been no change in situation of the registered office from one state to another state during the year under scrutiny and hence

company has not altered the provisions of the Memorandum with respect thereto.27 The company has not altered the provisions of the Memorandum with respect to the objects of the company during the year under scrutiny.28 The company has not altered the provisions of the Memorandum with respect to name of the company during the year under scrutiny.29 There has been no alteration in the Share Capital of the company and hence company has not altered the provisions of Memorandum with

respect thereto.30 The company has not altered its Articles of Association during the financial year.31 There was no prosecution initiated against or show cause notices received by the company and no fines or penalties or any other punishment

was imposed on the Company during the financial year.32 The company has not received any money as security from its employees during the financial year.


33. The company has deposited both employees and employer’s contribution to Provident Fund with Prescribed Authorities except Sugar andDistillery Units pursuant to Section 418 of the Act.

R.K.GUPTACompany SecretaryCP NO. 3139543/102, “K” Block,Kidwai Nagar,Kanpur 208011Ph.No. 0512-2662870Mob.No. 9336861680e-mail:[email protected]

Place: New DelhiDated: 12th November, 2012

ANNEXURE “A”Registers as maintained by the Company:01 Register of members under Section 150.02 Register of debenture holders.03 Register of Directors Particulars under Section 303.04 Register of Loans under Section 372 A.05 Register of Directors’ shareholding under Section 307.06 Register of contracts under Section 301.07 Register of Mortgage and charges.08 Minute Books under Section 193 for Board of Directors and its constituted committees Meetings.09 Minute Book under Section 193 for Annual General Meetings.Other Registers:01. Share Transfer Register02. Debenture Transfer Register03. Proxy Register04. Attendance Registers of Board of Directors and its constituted committees.05. Shareholders Attendance Register.06. Complaint/grievances register.

Note:The other statutory registers are not required to be maintained by the Company as the same are not applicable or there exists no transactions tobe recorded therein.ANNEXURE “B”Forms and Returns as filed by the Company with the Registrar of Companies, Regional Director, Central Government or Other Authorities duringthe financial year ended on 31st March, 2012.Sl.No. Form No./ Return Under Date of Whether If delay,Additional

Section Filing Filed in time Fee paidYes/ No1 Form 25C 269(2) 07/04/2011vide MCA Yes No

SRN No. B094863332 Form 23C Appointment of Cost Auditors (Distillery Unit) 233B(2) 02/06/2011Vide MCA Yes No

SRN No. S052412863 Form 23C Appointment of Cost Auditors (Sugar Unit) 233B(2) 02/06/2011Vide MCA Yes No

SRN No. S052412944 Form No. 62 Return of Deposit 58A 09/06/2011vide MCA

SRN No. B13828769 Yes No5 Form 23C Appointment of Cost Auditors (Paint Unit) 233B(2) 07/09/2011Vide MCA

SRN No. S05831326 Yes No6 Form No. I Cost Audit Report (Distillery) 233B(4) 30/09/2011vide MCA

SRN No. B21811856 Yes No7 Form No. I Cost Audit Report (Sugar) 233B(4) 30/09/2011vide MCA

SRN No. B21810528 Yes No8 Form 23 Appointment of Statutory Auditors and to carry 224A& 18/10/2011vide MCA Yes No

out business pursuant to object clause 3(34) of 149(2A) SRN No. B23064314the Memorandum of Association.

9 Form No20A DeclarationStamp Duty 149 18/10/2011vide MCA Yes No(2A)(ii) SRN No. B23062813

10 Form No. 20B Annual Return (31.3.2011) 159 25/11/2011vide MCA Yes NoSRN No. P80524788

11 Form No. 23ACXBRL & Form No. 23ACAXBRL 220 24/12/2011vide MCA SRN No. P83642504 Yes NoBalance Sheet & Profit & Loss Account (31.3.2011)

12 Form No. 32Resignation of Director 303 17/3/2012vide MCA SRN No. B34659987 Yes No


To the Members ofMODI INDUSTRIES LIMITED(1) We have audited the attached Balance Sheet of MODI INDUSTRIES LIMITED as at 31st March, 2012 and the Statement of Profit and Loss and

Cash Flow Statement for the year ended on that date, both annexed thereto. The attached Balance Sheet does not include Assets and Liabilitiesincluding Contingent Liabilities and other additional information of Steel Unit as at 31st March, 2012 but includes balances as on 31st March,1992,except for reduction of: (i) unsecured loans by 323.95Lac in view of write-back of 278.95Lac during the financial year 2004-05 andpayment of 45Lac during 2005-06 on account of one-time settlement of dues of a bank and (ii) net fixed assets by 669.37Lac (Previous year

662.52Lac) on account of provision for depreciation for the period 01.04.1993 to 31.03.2012 on fixed assets as stated in Note 27(4)(c) of AnnualAccounts. The Statement of Profit and Loss does not include: (i) certain provisions as stated in Note 27(4)(f) and (ii) loss, amount unascertained,of the Steel Unit for the year 1992-93 in view of non-incorporation of Annual Accounts of the Steel Unit for the above year. The Cash Flow Statement,except for certain adjustments made as stated in foot-note 2 of cash flow statement, does not include adjustments for Cash Flows from investing/financing activities and changes in assets and liabilities of Steel Unit in view of non-availability of audited Balance Sheets of the Unit as on31.03.2011 and 31.03.2012 {Refer Note 27(4)}. These financial statements are the responsibility of the Company’ management. Our responsibilityis to express an opinion on these financial statements based on our audit.

(2) Subject to paragraphs 1 & 3 of this report, we conducted our audit in accordance with auditing standards generally accepted in India. ThoseStandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

(3) We report that:(A) The books of accounts, vouchers and other documents of the Steel Unit for 1992-93 were not made available to us and consequently audit

could not be conducted in respect of the same {Note 27(4)}. Therefore, as stated in Para 1 above, the attached Balance Sheet, Statement ofProfit and Loss and Cash Flow Statement does not include: (a) the financial data/impact of working results and of declaration of closure/post-closure transactions, which includes realization of depot sales/dues from debtors, provision/payment of final dues of employees and paymentsto various parties and manufacturing/personnel/administration expenses etc., of the Steel Unit for the year 1992-93 during which the Unit hadoperated for ten months the exclusion of which, in our opinion, substantially impairs the presentation of above financial statements of theCompany especially in view of the fact that (i) the assets and liabilities of Steel Unit constituted 28% and 43% respectively of the total Assets& Liabilities of the Company as at 31st March, 1992 and the Income & Expenditure of the Steel Unit constituted 30% and 32% respectively ofthe total Income & Expenditure of the Company for the said year which resulted in a loss of 787.22Lac for the Unit and (b) impact on assets, liabilities and cash flows on account of non-incorporation of balance sheets for the years 1993-94 to 2011-12 as stated in note 27(4)(c).

(B) As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Sub-Section (4A) ofSection 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the saidorder except for certain matters relating to Steel Unit of the company in view of non-availability of information / details on account of non-incorporation of: (i) annual accounts of the Steel Unit for the year 1992-93 and (ii) balance sheets for the years 1993-94 to 2011-12 as statedin note 27(4)(c) . (See Paragraph 3(A) above).

(C) Further to our comments in paragraphs 1 and 3(A) above and in the Annexure referred to in paragraph 3(B) above, we report that:(i) We have obtained the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of

our audit of the Company except in respect of Steel Unit as mentioned below and matter referred in paragraph 3(K) below:\In case of Steel Unit, no details, information and explanations are available for the opening assets and liabilities as on 01.04.2011 andfor contingent liabilities and additional information etc. as on 01.04.2011 in view of non-incorporation of: (i) annual accounts of Steel Unitfor 1992-93 and (ii) balance sheets for the years 1993-94 to 2011-12 as stated in note 27(4)(c). (See paragraphs 1 and 3A above).

(ii) In our opinion, proper books of accounts as required by Law have been kept by the Company so far as appears from our examinationof the books except in respect of Steel Unit, where audited balances of opening assets, liabilities, contingent liabilities and additionalinformation etc. as on 01.04.2011 were not available and consequently not incorporated in the books of account. (See Paragraph 3(A)above).

(iii) The Balance Sheet referred to in this report is in agreement with the books of accounts of all units and accounting centres taken together,other than Steel Unit, as on 31st March, 2012 as consolidated with the Balance Sheet of Steel Unit as stated in Note 27(4) (c)&(d) ofAnnual Accounts and hence is not in agreement with the books of account of the Company as a whole. Further, the Cash Flow Statementfor the year ended on that date, which does not include adjustments for Cash Flows from investing/financing activities and changes inassets and liabilities in view of non-availability of audited Balance Sheet of Steel Unit as on 31.03.2011 & 31-03-2012, is also not inagreement with the books of account. (Refer foot-note 2 of cash flow statement). Except for non-incorporation of Statement of profit andloss of Steel Unit for the year 1992-93, the Statement of Profit and Loss is in agreement with the books of accounts.

(iv) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with theAccounting Policies and Notes thereon, so far as they relate to the remaining Units i.e. other than Steel Unit, give the informationrequired by the Companies Act, 1956 in the manner so required except for non-disclosure of information relating to micro, small andmedium enterprises {Refer note 27(14)}. In the case of Steel Unit, in view of non-incorporation of balance sheets of Steel unit as on31.03.2012 and 31.03.2011 on account of non-availability and consequently non-incorporation of audited opening balances as on01.04.2011 and 01.04.2010 respectively of assets, liabilities, contingent liabilities and other additional information etc., the accounts donot give the information required by the Companies Act, 1956 in the manner so required for the Company as a whole. {Refer Note 27(4)}.

(v) On the basis of written representations received from the directors and taken on record by the Board of Directors, none of the directorsis disqualified, as on 31st March, 2012, from being appointed as a director in terms of Clause (g) of Sub-Section (1) of Section 274 ofthe Companies Act, 1956.Further, the company has been legally advised that provisions of Section 274(1)(g) are prospective in nature and the defaults madeby it prior to 13th December, 2000, for non-payment of deposits/interest on deposits on due dates and non-redemption of debentureson due dates, are not covered by Section 274(1)(g) of the Companies Act, 1956, on which we have relied upon.

(D) (i) Understatement of accumulated losses on account of non-incorporation of impact of operational/working results/declaration of closureand post closure transactions of Steel Unit for the year 1992-93, amount/impact unascertained. (Refer Note 27(4) and Paragraph 3(A)above).

ii. Though the Company has incurred losses far in excess of paid-up capital/reserves and has been declared a sick company, the accountshave been prepared on a going concern basis for reasons stated in Note 27(17).

iii. Understatement of losses on account of:(1) Non-provision of earned leave encashment for Steel Unit, amount unascertained {Note 27(23)};(2) Non-provision of interest on loans, obsolete inventories, doubtful debtors/loan and advances and impairment loss, etc. in Steel Unit

as stated in Note 27(4)(f)(i) to (x) of Annual Accounts. Amount of non-provision not ascertained.iv. (1) Non-provision of interest 124.28 Lac up to 31st March, 2012 on disputed price of levy sugar {Note 27(7)};

AUDITORS’ REPORT


(2) (a)Non-provision of late payment surcharge/recovery charges 302.66Lac (Previous year 302.66Lac) {Note 27(9)} and(b)Non-provision of demands of U.P.Power Corporation Ltd of 1311.49Lac (Previous year 1311.49Lac) {Note 27(4)(f) (xi)(c)};

(3) Non-provision of disputed ESI demand 60.03Lac (for the year 1.17Lac) {Note 27(10)};(4) Non-provision of disputed House-tax demand 188.63Lac (Previous year 188.63Lac) {Note 27(11)};(5) Non-provision of Gratuity Liability on actuarial basis for the period up to 30th September, 1987, 84.82Lac (Previous year

84.82Lac) {Note 27(13a)};(6) Non-provision of simple, penal and compound interest of 20184.08Lac (for the year 3172.65Lac) on term loans/debentures

and public deposits {Note 27(18)(a) and (f)) and interest/ bank charges 2205.82Lac (for the year 322.05Lac) on cash creditfrom banks {Note 27(18)(d) & (e)};

(7) Non-provision of: (i) Sales-tax 2455.78Lac excluding interest (Previous year 2455.78Lac) {Note 27(19)(a)} and (ii) demandsfor sales-tax & penalty of 175.24Lac {Note 27(1)(c)}. Further, no due certificate of Sale-tax authorities is awaited for waiverof balance amount of interest and penalty as mentioned in Note 27(19)(c);

(8) Non-provision of Wages 27.46Lac (Previous year 27.46Lac) for the lock-out period {Note 27(21)};(9) Non-provision of excise-duty 167.43Lac (Previous Year 167.43Lac) {Note 27(29)};(10) Non-provision of recovery charges of 917.75Lac (Previous Year 912.09Lac) in view of the reasons stated in Note 27(35)(a)

to (c).(11) Valuation of closing stock in Sugar Unit is higher by 605.65Lac (Previous Year 623.10Lac) {Note 27(36)}.

(E) Subject to our observations in paragraph (D) above, in our opinion, the Statement of Profit and Loss and Balance Sheet, so far as they relateto the remaining units i.e. other than Steel Unit, comply with the requirements of the Accounting Standards referred to in Sub-Section (3c) ofSection 211 of the Companies Act, 1956. However, in view of non-availability and consequently non-incorporation of audited (i) openingbalances as on 01.04.2011 of assets, liabilities, contingent liabilities and other additional information etc. and (ii) statement of profit and lossfor 1992-93 of Steel Unit (Refer Paragraph 3(A) above), the accounts do not comply with the requirements of Accounting Standards referredto in Section 211(3c) of the Companies Act, 1956 for the Company as a whole.

(F) Confirmation of Debit/Credit balances of debtors/ creditors/certain banks and of parties who have discounted sale bills of Sugar Unit were notobtained. Impact on annual accounts not ascertainable.{Note 27(27)}.

(G) The Company has not deposited unpaid unclaimed public deposits and interest accrued thereon amounting to 9.77Lac with InvestorEducation & Protection Fund .Further, unpaid amount of such unclaimed debentures ,if any, as on 31.03.2012 has not been identified . {Note27(30)}.

(H) Cars costing 92.82Lac (Previous Year 100.30Lac) purchased in the name of employees/Corporate Advisor are yet to be transferredto the name of the company. However, these persons have given disclaimer in favor of the company. (Refer Foot-Note E of Note 10).

(I) Our audit observations under sections 227(1A) & 372A of The Companies Act, 1956 are as under:As stated by the management in foot-note 8 of note 27(38), the company has given unsecured interest free security deposit amounting to

1100Lac during the month of May 2011 and additional security of 145Lac on 30th March, 2012 against temporary possession of 59 housesto Ashoka Mercantile Limited, a related party, and the amount of 1100Lac ( 145Lac received back on 03.04.2012) is still outstanding assecurity deposit in the books of account of the company. We are informed by the company that few of these houses were allotted toemployees of the company and the same are yet to be occupied by them. In our opinion, the above interest free unsecured loans given bythe company {i.e. a sick company as mentioned in note 27(17)} to a related party amounting to 1245Lac have been shown as deposits bythe company as on 31st March, 2012.

(J) We invite attention to:(i) Note 27(33) regarding entering into agreements to sell 215 (previous year 215) residential quarters, note 27(34)(a) regarding entering

into lease, including perpetual lease agreements for 18428.46 Sq. Meters out of total area of 6.75Lac Sq. Meters approx. of factoryland & buildings and note 27(34)(b) regarding entering into perpetual lease agreement for 1584 Sq. Mtrs. of factory land for which theapprovals of financial institutions, to whom these quarters and factory land & buildings are mortgaged, were not obtained.

(ii) Accounting treatment given to the manufacture and sale of Vodka and whisky by the Distillery unit of company as stated in note 27(16)whereas it has no impact on the net loss for the year.

(K) As stated by the management in note 27(39), the Electrode Unit of the company has incurred expenditure for advertisement of productsamounting to 391.77Lac (previous year 37.29Lac) including 350Lac by way of slide shows in media like film theatres through twoparties. In the absence of sufficient appropriate audit evidence i.e. prevailing market rates/charges paid to theatre owners / list of theatreswhere slide shows have been exhibited and non-confirmation of the authorized signatories of those theatres for the agreed exhibitions of slideshows having actually taken place during that contracted period and also on account of nature of services i.e. slide shows in theatres, whichcould not be verified / vouched from any other supporting evidences except invoices of parties, we do not express an opinion on theseexpenses included in Statement of Profit and Loss of the company.

(L) We further report that, without considering items mentioned at 3 (D) (i) to (iii) and 3(F) to 3(J)(i) and 3(K) above, the possible effects of whichcould not be determined, had the observations made by us in paragraphs 3D (iv) and 3(J)(ii) above been considered, the loss for the year wouldhave been 33,087.22Lac (as against the reported loss of 4,276.10Lac), negative balance of Reserves and Surplus in note 2 would havebeen 37,220.81Lac (as against the reported negative figure of 8,409.69Lac), current assets would have been ‘ 17,722.14Lac (asagainst the reported figure of 19412.74Lac), current liabilities would have been 56,033.18Lac (as against reported figure of

28,071.86Lac), long-term borrowings would have been 5,051.96Lac (as against reported f igureof 5,892.76Lac), revenue from operations would have been 40,597.14Lac (as against the reported figure of 41,424.44Lac) and totalexpenses (before exceptional items) for the year would have been 62,589.92Lac (as against the reported figure of 34,606.10Lac).

(M) In view of the significance of our observations in paragraphs 1 and 3(A) to (L) above including paragraph 3(K) above regarding inability toexpress an opinion on certain expenses and especially in view of the fact that the state of affairs would change substantially in case thestatement of profit and loss for the financial year 1992-93 and balance sheet as on 31st March, 2012 of Steel Unit were included, which we areunable to quantify, we are of the opinion, the said accounts DO NOT give a true and fair view: (a) In the case of the Balance Sheet, of the stateof affairs of the Company as at 31st March, 2012, (b) in the case of Statement of Profit and Loss, of the loss for the year ended 31st March,2012 and (c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

for P.R. MEHRA & CO.,CHARTERED ACCOUNTANTS

( Regn. No. 000051N )

(RAMESH CHAND GOYAL)PARTNER

Membership No.12628PLACE: NEW DELHIDATED: 12th November, 2012


ANNEXURE REFERRED TO IN PARAGRAPH 3B OF OUR MAIN REPORT OF EVEN DATE

As required by the Companies (Auditors’ Report) Order, 2003 and on the basis of such checks as were considered appropriateand according to the information and explanations given to us, we further state that in our opinion:

(A) The following matters reported at paragraphs (B) 2, 6, 9(ii & iii),11,12,15 and 16 do not cover Steel Unit since (i) theaccounts of the Steel Unit for the year 1992-93 have not been incorporated and consequently the audit of which has notbeen carried out and (ii) the balance sheets of Steel Unit for 1993-94 to 2011-12 have not been incorporated due tonon-availability of audited opening balances as on 01.04.1993. (Refer Note 27(4) and paragraphs 1 & 3A of our main auditreport).

(B) Subject to our comments in paragraphs (A) above and 3(K) in our main audit report of even date, we report as under:

(1) (a) Company’s Sugar Unit since inception and other Units since November, 1968, have generally maintained properrecords including quantitative details and situation of their major fixed assets except for : (i) locations in case offurniture and fixture and (ii) recording of additions/deletions of certain previous years. Fixed asset register of SteelUnit has not been produced to us. No physical verification of assets has been conducted by the Management since1989 in sugar, steel and distillery Units and of Corporate office and since 2001-02 in respect of other units.

(b) The Company has not disposed off substantial part of fixed assets during the year.

(2) (a) The inventory of the company has been physically verified during the year by the management. In respect of stockslying with C&F/consignee agents, these have substantially been confirmed.

(b) Subject to foregoing, the procedures of physical verification of inventory followed by the management were foundreasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of records of inventory, the company has maintained proper records of inventory andthe discrepancies noticed on verification between the physical stocks and book records were not material.

(3) The Company has not given any loans, secured or unsecured to companies, firms or other parties covered in the registermaintained u/s 301 of the Companies Act, 1956 except for unsecured interest free loan given to a company of ‘ 4.01Lacs(net) during the previous years, the terms and conditions of which are prima facie not prejudicial to the interest of theCompany and repayment of the principal amount will be as per the terms of sanctioned rehabilitation scheme of thatcompany. We are unable to comment on the rate of interest and other terms and conditions with the two companiescovered in the register maintained u/s 301 of the Companies Act, 1956 in view of pending execution of terms of settlementwith those companies to whom Punjab National Bank and IFCI have assigned their debts by executing deed of assignmentsafter 31st March, 2012 and IDBI has agreed to assign their debts in view of the one time settlement of their dues. (Refernote 27(4)(f)(i) (a) & (b) of annual accounts). The company has taken interest free loans of 374.88Lacs ( 350Lacs takenon 31st March, 2012 & returned on 3rd April, 2012) from two companies covered in the register maintained under section301 of the Companies Act, 1956, the terms and conditions of which are not prejudicial to the interests of the company.

(4) There are generally adequate internal control procedures commensurate with the size and nature of the Company’sbusiness for the purchase of inventory and fixed assets and for the sale of goods. However, some of the key areas includingadvertisement expenses mentioned in paragraph 3(K) of our main audit report, recovery from customers and balanceconfirmation of customers /suppliers/parties who have discounted sale bills of Sugar Unit of the company needs to bestrengthened. During the course of our audit, except as stated above, we have not observed any continuing failure tocorrect major weaknesses in internal controls.

(5) (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of theopinion that the particulars of contracts or arrangements referred to in section 301 of the Act, read with note 27(4)(f)(i)& (ii) of annual accounts, have been entered in the register maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance ofcontracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 andexceeding the value of Rupee five lac in respect of any party during the current financial year have been made atprices which are reasonable having regard to prevailing market prices at the relevant time. (Refer also paragraph 3


above).

(6) In our opinion and according to the information and explanations given to us, the Company has complied with theprovisions of Sections 58A, 58AA or any other relevant provisions of the Act and the Rules framed there under except thatdue to accumulated losses, deposits outstanding as on 31st March, 2012 are in excess of the limit and matured/claimedand unclaimed deposits amounting to 69.22Lac and interest accrued are outstanding as on 31st March, 2012. (Referparagraph 3 (G) of our main audit report).The Company Law Board (CLB) vide its order dated 13th December,1991,inter-alia, directed the company to pay principal amount of the deposits commencing from April, 1992 with a moratorium of3 years from the date of the original maturity of the deposits. Against the above order, the company filed writ petitionbefore Hon’ble Allahabad High Court and vide its order dated 25th February,1992, the court directed that no penal actionshall be taken against the company in pursuance of the order of CLB. We are informed that the matter is still pending forfinal adjudication of the court.

(7) In our opinion, the company has an Internal Audit System commensurate with the size and nature of its business exceptin respect of corporate office and Steel Unit where no internal audit is being conducted since long.

(8) We have broadly reviewed the cost records maintained by the Company in respect of manufacture of Sugar, Gas andDistillery Units pursuant to the Rules made by the Central Government for the maintenance of cost records under section209(1)(d) of the Companies Act, 1956 and we are of the opinion that prima facie, the prescribed cost records have beenmaintained. We have not, however, made a detailed examination of the records with a view to determining whether theyare accurate or complete. We are informed that the cost records of Paint & Electrode Units are still under preparation andhence we can’t comment on the same. Further, Vanaspati and Steel Units are lying closed and hence no cost records arerequired to be maintained.

(9) (i) During the current year, the company was regular in depositing with the appropriate authorities undisputed statutorydues except in following cases:

(a) Sugar and Distillery units of the company were not regular in deposit of Provident Fund (PF) and Family PensionScheme (FPS) dues and interest on overdue PF/FPS dues.

(b) In respect of excise-duty and Tax Deducted at source, these have been regularly deposited though there havebeen delays generally in Sugar Unit and in a few cases of tax deducted at source in Distillery & Electrode units.In respect of tax collection at source, there have been delays generally in Distillery Unit and a few delays in SugarUnit. In respect of sales-tax/ vat, these have been regularly deposited though there has been a slight delay in fewcases in sugar unit and in certain depots of Paint & Electrode Units. In respect of service-tax, there have beendelays generally in deposit by Steel Unit.

(c) Investor Education and Protection Fund :

As on 31st March, 2012, there were public deposits amounting to 7.35Lac which has remained unclaimed andunpaid for a period of more than seven years and interest accrued but not paid on these unclaimed deposits tillthe date of maturity amounts to 2.42Lac. Details of unclaimed and unpaid debentures for a period of more thanseven years have not been ascertained. These amounts have not been deposited with Investor Education andProtection Fund (Refer Note 27(30) of Annual Accounts).

(ii) On the basis of such checks as were considered appropriate and according to the information and explanations givento us, Statement of Arrears of unpaid undisputed Statutory Dues (excluding of Steel Unit) outstanding for more thansix months as on 31st March,2012 as per books of account are as under :Nature of dues ( in Lac)EPS 0.06Interest on Provident Fund/FPS 104.15Tax deducted at source/Tax collection at source 20.99Interest on TCS/water cess 2.51Excise duty including interest 5.99U.P. Trade Tax/CST 1287.05

(iii) According to the records of the company and based on information and explanations furnished to us, the following


custom duty, Excise duty, Income-tax and sales-tax dues (excluding unascertainable amounts and of Steel Unit) werenot deposited on account of disputes pending at various forums:

( in Lac)

Name of Nature of the dues Amount of Amount deposited Period to which the Forum wherestatute dues under protest amount relates disputes is pendingU.P.VAT VAT Tax, Penalty, Interest, 2584.59 5.98 1987-88, 1990-91 & Allahabad High Court.Act Exemption to New Units. 1991-92, May 91

to March 96VAT Tax and Penalty @ 732.80 377.08 1982-83 to 1986-87, Commercial Tax

1988-89,1992-93,1994-95 Tribunal,to 1997-98, 1999-2000 to Ghaziabad2001-02

VAT Tax and Penalty 68.24 0.24 1986-87 + Interest and Jt.Commr.(A),2007-08 Ghaziabad.

VAT Tax 0.56 0.44 2005-06 and 2009-10 Dy. Commr. (Assess-ment), Modinagar.

Central Central 213.14 36.40 1985-86, 1988-89, Commercial TaxSales Tax Sales Tax 1992-93, 1994-95 to Tribunal, Ghaziabad.Act 1997-98, 1999-2000 to

2000-01Central Sales Tax 1.01 - 2005-06 Dy.Commr.(A),

Modinagar.Sales Tax 3.32 3.32 2011-12 Deputy Commissioner

(Assessment),State Sales State Tax 10.56 0.20 1992-93 Addl.Commr. SalesTax, Act. Tax Delhi

Sales Tax 5.97 2.00 1985-86,1997-98,2002-03 State Tax2004-05 & 2005-06

Penalty (HGST) 0.30 - 1991-92 Tribunal Sales Tax,Chandigarh.

State Tax 15.79 1.79 1989-90 to 1993-94, Dy.Commr. (A), States1998-99 and 2006-07

Central Central Sales Tax 1.92 0.29 1988-89 to 1992-93 AppellateSales Tax Authority/DCAct (States) (Appeals)Wealth Tax Wealth Tax 1.16 0.59 2007-08 I.T.A.T.,New DelhiActWealth Tax Wealth Tax 0.65 0.65 2008-09 CIT(Appeals)New DelhiCentral Custom Duty *43.91 - 1.3.2001 to 25.4.2001 Civil Court GhaziabadExcise &Custom Act

Excise Duty 0.70 - 2002-03 and 2003-04 Supreme Court of IndiaExcise Penalty 0.07 - 2010-11 Commissioner of

Central Excise,Ghaziabad.

Excise Duty 167.43 50.00 1985-86 Delhi High Court0.49 0.25 2004-05 Allahabad High Court

68.54 - February 1981 to CESTATFebruary, 1987, 2002-03to 2009-10

5.00 - Information not available. Information notavailable.

59.17 - 2009 onwards Supreme Court of India6.34 6.34 2009 onwards Supreme Court of India


@ Provided for 82.60 Lac in the Accounts*Provided for in the Accounts.**Provided for 32.20 Lac in the Accounts.

(10) In our opinion, after considering the effect of the qualifications on the figures of cash/accumulated losses as perStatement of Profit and Loss, the accumulated losses of the Company at the end the Financial Year exceeds its net worthand the company was declared a sick industrial undertaking on 14th March,1991 and the Company has incurred cashlosses in this Financial Year and in the immediately preceding financial year.

(11) In our opinion, and according to the information and explanations given to us, the Company has defaulted in repaymentof dues to Financial Institutions, banks and debenture-holders of the Company. The details of defaults and period ofdefaults are as under:

( in Lac)Particulars Loan Interest Total Period of default of principal amount

Amount including dues**unprovided

interestLoans from Financial 423.13 13,214.30 13,637.43 Loan amounts due for 19 years i.e. since 1991-92.InstitutionsLoan from banks 40.51 2,223.43 2,263.94 Entire amount due. Refer note 27(18) (c).(Cash credit/ overdraft)Debentures 537.32 11,453.62 11,990.94 53 Lac due since August, 1990, 30 Lac due since

December, 1994 & 454.32 Lac duesince February,1995 to February, 1997.

Total 1,000.96 26,891.35 27,892.31

*excluding amounts relating to Steel Unit but including dues of IDBI/IFCI relating to other units. Refer note 27(4) (f)(i) to(iv) regarding assignment of debts by bank and financial institutions & paragraph A above.

(12) According to the information and explanations given to us, the company has not granted loans and advances on the basisof any security by way of pledge of shares, debentures and other securities.

(13) The provisions of any special statute as specified under Clause 4(xiii) of the Order are not applicable to the Company.(14) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investment. Accordingly,

the provision of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.(15) In our opinion, and according to the information and explanations given to us, during the current year, the Company has

not given any guarantee for loans taken by others from Banks or Financial Institutions. However, in the past, the Companyhad given guarantees/ undertakings as mentioned in Note 27(5) of Annual Accounts in respect of certain Companies(which presently have become Sick Industrial Undertakings) to Financial Institutions.

(16) In our opinion, and according to the information and explanations given to us, term loans were applied for the purposefor which loans were raised.

(17) According to the information and explanation given to us and on an overall examination of the balance sheet of thecompany, we report that no funds raised on short-term basis have been used for long-term investment.

(18) The company has not made any preferential allotment of shares during the year.(19) The company has created security in respect of debentures issued in the past.(20) The company has not raised any money by way of public issue during the year.(21) According to the information and explanation given to us, no fraud on or by the company has been noticed or reported

during the course of audit


(Regn. No. 000051N)

(RAMESH CHAND GOYAL)PARTNER

PLACE : NEW DELHI Membership No.12628DATED : 12th November, 2012


Balance Sheet as at 31st March, 2012( in Lac)

Particulars Note As at As atNo. 31.03.2012 31.03.2011

1 2 3 4

I EQUITY AND LIABILITIES :(1) Shareholders’ funds:

(a) Share Capital 1 371.42 371.42(b) Reserves & Surplus 2 (8,409.69) (4,133.59)

(8,038.27) (3,762.17)

(2) Non-current liabilities :(a) Long term borrowings 3 5,892.76 4,694.34(b) Other long term liabilities 4 1,411.79 1,287.77(c) Long term provisions 5 1,094.60 1,073.04

8,399.15 7,055.15

(3) Current liabilities :(a) Short term borrowings 6 1,878.69 1,508.46(b) Trade payables 7 13,714.26 7,363.53(c) Other current liabilities 8 11,721.31 12,307.66(d) Short term provisions 9 757.60 482.07

28,071.86 21,661.72

TOTAL 28,432.74 24,954.70

II ASSETS(1) Non-current assets

(a) Fixed assets :i) Tangible assets 10 7,552.98 7,722.99ii) Intangible assets 11 27.91 24.53iii) Capital work-in-progress 38.84 45.37iv) Intangible assets under development - 9.19

(b) Non-current investments 12 804.28 798.00(c) Long term loan and advances 13 595.99 591.37

9,020.00 9,191.45

(2) Current assets(a) Inventories 14 8,291.95 4,513.74(b) Trade receivables 15 5,829.93 5,367.79(c) Cash and bank balances:-

(i) Cash and cash equivalents 16(i) 871.44 1,947.49(ii) Other bank balances 16(ii) 875.09 809.84

(d) Short term loans and advances 17 3,402.65 1,950.70(e) Other current assets 18 141.78 1,173.69

19,412.74 15,763.25

Accounting policies and other notes to financial statements 26 & 27TOTAL 28,432.74 24,954.70

As per our report of even date attachedfor P.R. Mehra & Co.Chartered Accountants, Rakesh Kumar ModiRegn. No. 000051N Manish Modi

Abhishek ModiRamesh Chand Goyal Mahendra Kumar Modi Santosh Kumar AggarwalPartner Ramesh Kumar Umesh Kumar Modi Krishna Kumar JainMembership No. 12628 Dy. Company Secretary Managing Directors Directors

Date : 12th November, 2012New Delhi


Statement of Profit and Loss for the year ended 31st March, 2012( in Lac)

S.No. Particulars Note For the For theyear ended year ended

No. 31.03.2012 31.03.2011

I Revenue from operations 19 41,424.44 41,127.45Less:- Excise duty 10,808.73 6,617.49

30,615.71 34,509.96II Other income 20 562.06 642.22III Total Revenue ( I + II ) 31,177.77 35,152.18IV Expenses:-

Cost of materials consumed 27(40)(ii) 24,916.85 19,595.83Purchases of stock-in-trade 27(40)(iv) 113.07 154.26Changes in inventories of finished goods,work-in-progress and stock-in-trade 21 (3,373.91) 5,694.61Employee benefits expense 22 3,250.02 2,740.24Finance costs 23 1,038.94 1,193.77Depreciation and amortization expense 10 & 11 622.36 564.46Other expenses 24 8,038.77 5,557.54

Total expenses 34,606.10 35,500.71

V Profit/(Loss) before exceptional and (3,428.33) (348.53)extra-ordinary items and tax ( III-IV )

VI Exceptional items:-Cane price differential for 2007-08 27(8) (847.77) -Interest income on income tax refund - 816.11

VII Profit/(Loss) before extra-ordinary items (4,276.10) 467.58and tax ( V-VI )

VIII Extra-ordinary items - -

IX Profit/(Loss) before tax ( VII-VIII ) (4,276.10) 467.58X Tax expenses:-

(1) Current tax - -(2) Deferred tax - -

XI Profit/(Loss) for the period (4,276.10) 467.58

XII Profit/(Loss) from continuing operations (4,134.28) 619.75

XIII Profit/(Loss) from discontinuing operations 27(4)(e) (141.82) (152.17)

XIV Tax expense of discontinuing operations - -

XV Profit/(Loss) from discontinuing operations (141.82) (152.17)(after Tax) (XIII-XIV)

XVI Profit/(Loss) for the period (XIII+XV) (4,276.10) 467.58

XVII Basic /Diluted Earnings per equity share of 10 each (in Rupees) 25 (129.40) 13.95Accounting policies and other notes to financial statements 26 & 27





CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012.

Particulars 2011-12 2010-11 in Lac in Lac in Lac

A. CASH FLOW FROM OPERATING ACTIVITES :Profit before Tax (4,276.10) 467.58Add: Adjustments for :i) Depreciation 622.36 564.46ii) Assets/Investment written off/ 5.71 9.77

Loss on Sale of Fixed Assets/Storesiii) Interest Expenses 1,038.94 1,193.77iv) Provision for Doubtful Debts & Advances 40.55 8.16v) Amounts/Claims/Bad Debts written off 0.52 5.02

(Net of provisions)vi) Provision for obsolete spare-parts & stores 2.00 -

1,710.08 1,781.18

(2,566.02) 2,248.76Less: Adjustment for :i) Interest Income 106.55 129.95ii) Profit on Sale of Fixed Assets 3.82 12.76iii) Excess Provision written back 30.19 57.62iv) Unclaimed credit balances W/back 47.75 3.24v) Amount written back 5.63 7.52vi) Interest Income on Income Tax refund - 816.11vii) Profit on sale of stores - 3.81viii) Depreciation add back 0.09 -ix) Dividend Income 80.59 89.25

274.62 1,120.26

Operating Profit before Working Capital Changes (2,840.64) 1,128.50

Adjustments for :Trade Receivables (501.47) (2,235.29)Inventories (3,785.19) 5,740.54Trade Payable 7,138.90 (2,436.46)Loans/Advances and other assets (1,511.13) (148.40)Other bank balances (65.25) 75.83

Cash Generated from Operations (1,564.78) 2,124.72Interest Paid (Foot-note 1 below) (158.62) (305.07)Interest received on tax refund 827.73 -income tax refund 229.93 -

Net Cash from Operating Activities (A) (665.74) 1,819.65


(B) CASH FLOW FROM INVESTING ACTIVITIES :Purchase of Fixed Assets (435.70) (885.30)Sales of Fixed Assets 14.26 45.68Interest Received 81.00 124.41Dividend Received 80.59 89.25

Net Cash Flow from Investing Activities (B) (259.85) (625.96)(C) CASH FLOW FROM FINANCING ACTIVITIES :

Secured term borrowings from bank 1.43 -Secured borrowings from banks (over draft) 30.50 64.04Unsecured Fixed Deposits paid (25.92) (27.10)Debentures redeemed - (0.04)Unsecured borrowings from others (net) 1,445.29 699.47Interset paid on borrowings (1,641.46) (749.57)

Net Cash from Financing Activities (C) (190.16) (13.20)

*Inter Unit Balances (Net) (D) (Foot note 2 below) 39.70 (634.88)Net Increase/(decrease) in cash and Cash Equivalents (A+B+C+D) (1,076.05) 545.61Opening Cash and Cash Equivalents 1,947.49 1,401.88Closing Cash and Cash Equivalents 871.44 1,947.49

FOOT-NOTES :1. (a) Interest credited to accounts of suppliers, C & F agents and dealers etc. is treated as paid.

(b) Interest paid & increase in Unsecured borrowing from others includes 759.51 lac (Previous Year 633.60 lac) eachbeing Interest accrued & due on 31.03.2011 converted into Loan.

2. In view of non availability of audited balance sheet as on 31.03.2011 and 31.03.2012 of Steel Unit, cash flow from investing/financing activities and changes in current assets & liabilities of steel unit are not included in the Cash Flow Statement exceptfor inclusion of net inflow of 39.70 Lac on account of net decrease in inter unit balances appearing in Note 17 i.e. Short termloans & advances {Refer Note 27(4)}.

3. Figures in brackets represents outflows.4. Previous Year figures have been rearranged/regrouped wherever considered necessary.

Particulars 2011-12 2010-11 in Lac in Lac





Notes forming part of the financial statements for the year ended 31st March, 2012

Note no.1 : SHARE CAPITALParticulars As at As at

31.03.2012 31.03.2011

Authorised:-40,00,000 Equity shares of 10/- each 400.00 400.00

1,00,000 15% Redeemable cumulative 100.00 100.00Preference shares of 100/- each

500.00 500.00Issued, subscribed and paid up:-33,09,214 Equity shares of 10/- each fully paid-up 330.92 330.92

Less: Calls unpaid (Directors and Office rs) - -Less: Calls unpaid (others) 0.24 0.24

330.68 330.6840,741 15% Redeemable cumulative

Preference shares of 100/- each fully paid-up 40.74 40.74

TOTAL 371.42 371.42

Foot notes:(1) (a) Details of equity shares held by each shareholder holding more than 5 percent shares as at the end of financial year

are as under: As at 31.03.2012 As at 31.03.2011

Name of share holder No.of shares Percetage No.of Percetageheld shares held

(i) Status Mark Finvest Limited 227844 6.885 227844 6.885(b) Details of preference shares held by each shareholder holding more than 5 percent shares as at the end of financial year



(i) ICICI Bank 7794 19.13 7794 19.13(ii) The Oriental Insurance Company Limited 6550 16.08 6550 16.08(iii) The New India Assurance Company Limited 13624 33.44 13624 33.44(iv) The United India Insurance Company Limited 4093 10.05 4093 10.05(v) General Insurance Corporation of India 3560 8.74 3560 8.74(vi) National Insurance Company Limited 4912 12.06 4912 12.06

(2) (a) Cumulative Preference Shares were due for redemption on 31st December, 2010. The company moved Misc. Application(MA) u/s 22(3) of the SICA before Hon’ble BIFR, whereby it had sought extension and suspension of obligation in relationto the 15% Preference Shares concerning Preference Shareholders for two years. The Hon’ble BIFR vide its order dated18th January, 2011 dismissed the application of the Company. Consequent to the order, the company had written lettersto the Institutional Preference Shareholders for settlement and redemption of Preference Shares. Further, negotiationsare pending and preference shares are overdue for redemption as on 31st March, 2012.

(b) Arrears of dividend on Cumulative Preference Shares amounts to 129.84 Lac (upto 31st March, 2011 123.73 Lac).

in Lac


Note no. 2 : RESERVES & SURPLUS( in lac)

Sl.No. Particulars Opening Balance Addition Deduction Closing Balance

(1) Capital Reserve 459.34 - - 459.34(2) Capital Redemption Reserve 25.11 - - 25.11(3) Shares Premium Account 22.57 - - 22.57(4) Debenture Redemption Reserve 113.00 - - 113.00(5) Revaluation Reserve 2,012.51 - - 2,012.51(6) Share options outstanding accounts - - - -(7) Other Reserves/Funds:-

-Storage fund for MolassesAccount (see-foot note below) 70.57 5.31 - 75.88

(8) Surplus i.e. balance inStatement of Profit and Loss (6,836.69) (4,276.10) 5.31 (11,118.10)

TOTAL (4,133.59) (4,270.79) 5.31 (8,409.69)

Previous year (3,074.96) 472.61 1,531.24 (4,133.59)

Foot-note:-

Storage fund for Molasses is Created @ 1.50 per Qtls. of Molasses sold as per the provision of “ The Molasses control (Regulationof fund erection of storage facilities ) order, 1976” and is to be utilised for construction or erection of storage facilities for Molasses.

Note no. 3 : LONG TERM BORROWINGS( in lac)

Particulars As at As at31.03.2012 31.03.2011

Secured:-Bonds/debentures - -Term loan from banks (see-foot note below ) 44.09 51.34Term loans from others - -Loan and advance from related parties - -Unsecured:-Bonds/debentures - -Term loan from banks - -Term loans from others 5,739.81 4,422.92Deferred payment liabilities - -Deposits - -Loan and advance from related parties-A to Z holdings private limited - 24.89Long term maturities of finance lease obligations {Note 27(20)(a)} 108.86 195.19

TOTAL 5,892.76 4,694.34

Foot-note:-Secured by hypothecation of vehicles and is repayable in monthly installments. There are no defaults as on 31st March,2012.


Note no. 4 : OTHER LONG TERM LIABILITIES( in lac)


Trade payable - -Others:Security received against houses 597.92 510.00Security received from others 256.88 252.41Advance received against houses 504.50 504.50{Note 27 (33)}Interest payable on term loan 42.73 -Other liabilities 9.76 20.86

TOTAL 1,411.79 1,287.77

Note no. 5 : LONG-TERM PROVISIONS( in lac)


Provision for employee benefits:-Provision for gratuity:-As per last balance sheet 955.86 957.19Add: Provided during the year 61.59 58.79Less: Paid during the year 37.27 60.12

Sub total (A) 980.18 955.86

Provision for leave encashment:-As per last balance sheet 117.18 127.45Add: Provided during the year 15.42 8.66Less: Paid during the year 18.18 18.93

Sub total (B) 114.42 117.18

TOTAL (A+B) 1,094.60 1,073.04

Note no. 6 : SHORT TERM BORROWINGS( in lac)


Secured:-Loans repayable on demand:--from banks-Cash credit (including interest 1,498.19 1,498.19accrued)(see-foot note below)-overdraft from bank againstpledge of FDR’s 30.50 --from others - -Loan and advance from related parties - -Other loans and advances - -

Note no. 6 : (Contd.)( in lac)


Unsecured:-Loans repayable on demand:--from banks - --from others - 10.27Loan and advance from related parties:--Weld Excel India Limited 350.00 -Deposits - -Other loans and advances - -

TOTAL 1,878.69 1,508.46

Foot-note:-1 Cash credit of 1498.19 Lac ( including interest accrued and

due of 17.61 Lac ) is secured by hypothecation of RawMaterials, Stock in Progress, Finished Goods, Stores andSpares and Book Debts and guaranteed by a ManagingDirector.{ Refer note 27(4) (f) (i) (a)}.

2 Cash credit of 58.12 Lac from Allahabad Bank is in defaultsince 1996 and 1440.03 Lac from PNB is in default since1992. Interest payable on cash credit has not been paid sincethen. {Refer note 27(4) (f) (i) (a)}

Note no. 7: TRADE PAYABLES( in lac)


Purchase of raw material and store 12,722.83 6,325.96{Note 27 (14)}Customers/ Agents for purchase of goods 991.43 1,037.57

TOTAL 13,714.26 7,363.53

Note no.8 : OTHER CURRENT LIABILITIES( in lac)


Current maturities oflong-term debts ( unsecured )-From related parties:-- A to Z Holding Pvt. Ltd. 24.89 125.00-From others - -Current maturities of long-term debts ( secured )-From banks 21.38 12.70-From other parties (see foot-note 1) 1,506.85 1,506.85Current maturities of financelease obligations {Note 27 (20) (a)} 155.88 212.44Deferred credits {Note 27 (6)} 35.11 35.11Interest accrued but not dueon borrowings (unsecured) 61.45 61.45


Note no.8 : (Contd.)( in lac)


Interest accrued but not dueon borrowings (secured) 0.20 0.24Interest accrued and dueon borrowings ( secured ) 1,707.46 1,707.46Interest accrued and dueon borrowings (unsecured)-from banks - - -from others 2.99 799.01Income received in advances 0.11 0.10Unpaid matured deposits andinterest accrued thereon(unsecured):-(see foot-note 2)-Fixed deposits 69.22 95.14-Interest accrued thereon 282.56 289.47Unpaid matured debentures andinterest accrued thereon (secured):-(see foot-note 3)-Debentures (Net calls in arrears) 537.32 537.32-Interest accrued thereon 3,052.50 3,052.50Other Payable:-Employees dues 775.98 629.66Statutory liabilities 2,097.73 2,051.83Security received from others 69.90 71.29Other liabilities 1,319.78 1,120.09

Total 11,721.31 12,307.66

Notes:-Others :-(a) Loans aggregating to 1377.87 Lac (IDBI 627.74 Lac, ICICI

235.00 Lac, IFCI 287.66 Lac, LIC 138.97 Lac, GIC andits subsidiaries 88.50 Lac) are secured against securities asmentioned in 3(b) below. {Refer Note 27(4)(f) (i) (b) & (f) (ii)}.

(b) Loan of 8.08 Lac from Government of Uttar Pradesh underthe Industrial Subsidised Housing Scheme is secured by 1st

Mortgage of Land and tenaments constructed under theScheme.Details of default not available.

(c) Loan from IDBI under Technical Development Fund Schemeamounting to 74.70 Lac is secured against Electrolyser andCopper Electrodes Machine.{Refer Note 27(4)(f) (i) (b)(i)}.

(d) Loan taken under Equipment Finance Scheme amounting to 46.20 lac is secured against Efluent treatment plant.{ Refer

Note {27(4)(f) (i) (b) (ii)} and loan repayment is in default priorto year 1996 and interest payable has not been paid sincethen.

(2) Fixed deposits:-(a) Fixed deposits guaranted by managing directors 23.83 Lac

(Previous year 37.47 lac )(b) Fixed deposits and interest payable on fixed deposits has not

been paid since 1989-90.

(3) Debentures:-

(a) (i) 2,27,660 12.5% Mortgage Debentures (Non-Convertiblepart of 200/- each) redeemable in three yearlyinstalments of 65.00, 65.00 and 70.00 respectivelycommencing from the expiry of seventh year from the dateof allotment i.e. 29th February, 1988 and due forpayment. Interest not paid since 29th febuary, 1988.

(ii) 30,000-15% Mortgage Debentures of 100/- eachredeemable at 5% premium on the expiry of seventh yearfrom the date of allotment i.e. 18th December 1987 anddue for payment. Interest not paid since 1987- 88.

(iii) 5,300-15% Mortgage Debentures of 1000/- eachredeemable upto 20th August, 1990 and due for payment.1,000 Debentures redeemed during the year 1998-99 forwhich discharged debenture certificates not yet received.Interest not paid since 1987- 88.

(b) The above debentures are secured by Joint Mortgage of allfixed assets present and future by hypothecation of the saidassets and by deposit of title deeds relating to company’simmovable properties, f loating charges on all movable/current assets, other than assets.

Note no. 9 : SHORT-TERM PROVISIONS( in lacs)



Sub total (A) 242.79 214.58


Sub total (B) 15.38 15.30

Others:-Provision for Incentive:As per last balance sheet 37.33 48.82Add: Provided during the year 11.63 46.08Less: Paid / ( Recoverd )during the year 15.60 24.63Excess provision w/back 11.72 32.94

Sub total 21.64 37.33

Provision for excise duty 477.79 214.86

Sub total (C) 499.43 252.19

TOTAL (A+B+C) 757.60 482.07


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.71

-56

.04

24.5

3


Note no. 12 : NON CURRENT INVESTMENT( in lac)


Trade investments - -Other investments(a) Investment in Equity Instruments:-

In subsidiaries:- (unquoted )21,450 fully paid-up shares of

100/-each in Your investment(India)Ltd. 21.45 21.4513,200 fully paid-up shares of

100/-each in Own investment(India)Ltd. 13.20 13.20Others :-Unquoted:-10,50,000 fully paid-up sharesof 10/-each in Indofil OrganicIndustris Limited 437.43 437.431,200 partly paid-up sharesof 10/- each in Vital ChemicalsPrivate Limited.(Transferrefused by the Board-matter indispute before the Court). 0.07 0.07Quoted:-7,00,000 fully paid-up sharesof 10/-each in Modipon limited. 20.00 20.0019,99,960 fully paid-up sharesof 10/-each in Bihar spongeiron limited. 200.00 200.008,00,000 fully paid-up shares of

10/-each in Modi Rubber Limited. 80.00 80.0062,755 fully paid-up shares of

10/-each in Lord Chloro Alkali Limited 6.28 6.28Less: Provision for diminution in Value - (6.28)4 fully paid-up shares of 10/-eachin Mukund Limited. 0.01 0.01

(b) Investment in preference shares:- ( quoted )1 fully-paid preference Sharein Mukund Limited - -

(c) Investment in Government ortrust securities:- ( quoted )*75551.226 fully-paid Units in UTIInfrastructre Fund-Growth Plan 25.84 25.84Total 804.28 798.00

* Corporate lien marked on these infrastructure fund unitsFoot Notes:(1) Carrying amount of quoted

investments 332.12 325.84(2) Market value of quoted investments 412.83 831.98(3) Carrying amount of unquoted

investments 472.15 472.15(4) Aggregate provision for dimunition

in value of investments{ Note 27(31)} - 6.28

Note no. 13 : LONG TERM LOANS AND ADVANCES( in lac)


Capital advances ( unsecured ) 1.90 14.45

Security Deposits:-- Secured, considered good - -- Unsecured, considered good- Related parties:- Weld Excel India Limited 43.00 39.00- Others 154.28 142.34- Doubtful - -Loans and advances to related parties;-- Secured, considered good - -- UNSECURED CONSIDERED GOOD- Unsecured, considered good- Weld Excel India Limited 371.22 371.22Doubtful - -

Other Loans and Advances:-(Unsecured, considered good)(a) Prepaid expenses 4.49 1.92(b) Amount recoverable 11.46 11.46(c) Loans to employees 1.64 2.98(d) Loans to others 8.00 8.00

TOTAL 595.99 591.37

Note no. 14 : INVENTORIES( in lac)


(a) Raw materials 456.76 365.20(b) Raw materials (in transit ) 98.17 26.47(c) Work-in-progress 455.32 406.61(d) Finished goods 6,181.99 2,854.98(e) Stock-in-trade 1.81 3.62(f) Stores and spare parts 1,073.45 832.34(g) Loose tools 24.45 24.52

TOTAL 8,291.95 4,513.74

Note no. 15 : TRADE RECEIVABLES( in lac)


Trade receivables outstandingfor a period exceeding 6 months:--Secured, considered good 4.85 5.28-Unsecured, considered good 457.61 608.56-Doubtful 511.00 473.91Less:-Allowance for bad and doubtful debts (511.00) (473.91)


Note no. 15 : (Cont.)( in lac)


Other Debts:--Secured, considered good 99.04 101.23-Unsecured, considered good 5,268.43 4,652.72-Doubtful 0.05 0.26Less:-Allowance for bad and doubtful debts (0.05) (0.26)

TOTAL 5,829.93 5,367.79

Note no. 16 : CASH AND BANK BALANCES( in lac)


(i) Cash and cash equivalents:-(a) Balances with banks:

-In Current Accounts 566.25 601.85-In FDR’s 208.95 1,190.20

(b) Cheques, drafts on hand 82.96 97.02(c) Cash on hand 13.20 58.38(d) Others:-

-Postage imprest &stamps in hand 0.08 0.04

TOTAL 871.44 1,947.49

(ii) Other bank balances:-(a) Earmarked balance with

banks/post office:--Saving account(molasses storage fund) 0.31 0.30-Fixed deposits (molassesstorage fund )* 83.30 68.65

(b) Fixed deposits with banks(Pledged with Excise Authorties) 52.49 41.42

(c) Fixed deposits with banks(Pledged with tender) 47.08 40.22

(d) Fixed Deposits with Banks(Pledged against overdraft) 39.93 38.60

(e) Balance with banks heldas margin money againstguarantees 176.98 175.65

(f) Bank deposits with morethan 12 months maturity 425.00 395.00

(g) Deposits with Allahabadbank in-no lien account 50.00 50.00{Note 27 (18) ( c) }

TOTAL 875.09 809.84

* These FDR’s are in the joint name of Modi Sugar Mills and SubInspector, Molasses Excise.

Note No. 17 : SHORT-TERM LOANS AND ADVANCES( in lac)


(a) Loans and advances to related parties:-(i) -Secured considered good - -(ii) -Unsecured considered good

-Bihar Sponge Iron Ltd. 1.36 1.36-Win Medicare Pvt. Ltd. 0.28 0.08-Weld Excel India limited 11.19 54.86-Modipon Limited 7.30 13.02-Ashoka Mercantile Ltd. 0.40 1.59-Managing Director - 6.33

(iii) -Doubtful-Modi senator Pvt. Ltd. 0.85 0.85Less:Allowance for doubtful (0.85) (0.85)

(b) Others (unsecured, consided good):-(i) Unutilized balances of

CENVAT/ VAT 103.87 70.39(ii) Tax deducted at source 1.00 0.13(iii) Loans & Advances to employees 20.07 33.03(iv) Prepaid expenses 82.18 46.68(v) Amount recoverable 263.28 122.48(vi) Deposits with excise /

sale tax authorties 191.94 111.73(vii) Others 223.28 198.15(viii) Unreconciled Inter-unit

balances { Note 27 (4) } 920.59 960.76(c) Others (doubtful):-(i) Loans & Advances to employees 2.29 2.04(ii) Amount recoverable 11.79 13.28(iii) Others 139.44 144.57

Less: Allowance for doubtful (153.52) (159.89)(d) Security Deposits:-

-Secured considered good - --Unsecured considered good-Related parties:-Ashoka Mercantile Ltd. 1,245.00 --Modi Pon Limited 147.63 146.20-Others 183.18 183.91-Doubtful 9.55 10.19Less: Allowance for doubtful (9.55) (10.19)

Total 3,402.55 1,950.70

Note no. 18 : OTHER CURRENT ASSETS( in lac)


Income Tax refund receviable 71.89 1,117.93Interest accrued on fixeddeposits with banks 47.28 33.35Rent receivables:--Unsecured, considered good 0.87 0.67-Doubtful 22.78 22.67Less:-Allowance for bad and doubtful debts (22.78) (22.67)Deferred revenue expenditure 11.07 11.07Stores and spare parts 10.67 10.67

TOTAL 141.78 1,173.69


Note No. 19 : REVENUE FROM OPERATIONS( in lac)

Particulars For the For theyear ended year ended

31.03.2012 31.03.2011

Sale of products 40,975.67 40,944.50Sales of services 73.19 75.95Other operating revenue 88.50 107.00Sale of Export Entitlement 287.08 -

TOTAL 41,424.44 41,127.45

Note no. 20 : OTHER INCOME( in lac)


31.03.2012 31.03.2011

Interest income 106.55 129.95Dividend received (gross)* 80.59 89.25Rental income 211.36 221.97Profit on sale of fixed assets 3.82 12.76Excess provision written back 30.19 57.62Unclaimed Credit Balances W/Back 47.75 3.24Amounts written back 5.63 7.52Other non-operating income 76.17 119.91

TOTAL 562.06 642.22

*Received from subsidiary companies. 49.09 57.75

Note no. 21 : CHANGE IN INVENTORIES OF FINISHEDGOODS , WORK-IN-PROGESS AND STOCK-IN-TRADE

( in lac)Particulars For the For the

year ended year ended31.03.2012 31.03.2011

(A) Finished goodsOpening stock 2,662.07 8,215.55Less: Closing stock 6,021.45 2,662.07Sub Total (A) (3,359.38) 5,553.48

(B) Stock in tradeOpening stock 3.65 3.99Less: Closing stock 1.81 3.65Sub Total (B) 1.84 0.34

(C) Goods in processOpening stock 406.61 474.48Less: Closing stock 455.32 406.61Sub Total (C) (48.71) 67.87

(D) By ProductOpening stock 192.88 265.80Less: Closing stock 160.54 192.88

Sub Total (D) 32.34 72.92

Net (Increase) / Decreasein Stock (A+B+C+D) (3,373.91) 5,694.61

Note no. 22 : EMPLOYEE BENEFITS EXPENSES

( in lac)Particulars For the For the


Salary, wages, gratuity &other allowances 2,789.72 2,323.37Contribution to provident andother funds 205.00 178.41Staff welfare expenses 255.30 238.46

TOTAL 3,250.02 2,740.24

Note no. 23 : FINANCE COSTS( in lac)


31.03.2012 31.03.2011(a) Interest expenses:-{Note 27(4) (f) (i) to (iv) and 27 (18)}

(i) On borrowings 847.58 824.03(ii) On statutory dues 17.61 12.99(iii) On trade payable 105.51 281.47(iv) On security 31.32 10.24(v) On Finance Lease 33.68 61.61(vi) On car loans taken by

employees / corporate adviser 2.33 2.52(vii) On others (specify nature) 0.91 0.91

(b) Other borrowing costs - -(c) Net gain/loss on foreign currency - -

transactions and translationTOTAL 1,038.94 1,193.77

Note no. 24 : OTHER EXPENSES( in lac)


31.03.2012 31.03.2011Consumption of stores & spare parts 414.42 303.28Consumption of packing materials 1,784.03 1,090.60Power & fuel 614.00 522.28Repairs to machinery 921.82 908.63Repairs to building 126.40 138.99Lease rent 162.56 117.47Rates & taxes 160.82 72.13Excise duty on stock 273.18 (128.52)Insurance 35.75 30.13Auditor’s remuneration(see foot-note below) 17.02 17.46Loss on sale of fixed assets 0.72 7.35Loss on sale of stores 6.41 2.26Less: Adjustment of provision forobsolete stores (1.50) -Donations 3.25 3.00Bad debt written-off 2.41 5.44Less : Adjustment of provision fordoubtful debts (2.03) (0.55)Claims / amounts written-off 8.64 0.32


Note no. 24 : (Cont.)( in lac)


31.03.2012 31.03.2011Less : Adjustment of provision for doubtful (8.50) (0.19)Fixed assets written-off 0.08 0.16Provision for obsolete spare-parts & stores 2.00 -Provision for doubtful debts and advances 40.55 8.16Freight/ transport & forwarding 752.39 549.75Commission to selling agent 310.77 316.38Discount & sale promotion 262.95 173.08Advertisement expenses 401.02 43.16Travelling expenses 375.22 308.86Legal & professional charges 305.83 351.98Trade mark licensce & marketing fees 168.73 79.06Job work charges 80.31 68.95Retainership Expenses 143.42 79.13Other general expenses 676.10 488.79

TOTAL 8,038.77 5,557.54

NOTE:Auditor’s remuneration:-(a) As auditor 6.18 6.06(b) For taxation matter 2.54 1.93(c) For company law matter 0.83 1.59(d) For management services 1.72 2.06(e) For other services including

certification work 4.25 4.62(f) For reimbursement of expenses 1.50 1.20

TOTAL 17.02 17.46

Note No.25. Earnings per Share (EPS) basic and diluted, computed in

accordance with Accounting Standard-20:( in lac)

Particulars 2011-12 2010-11Profit/(Loss) for the year asper accounts (4276.10) 467.58Less/Add: Dividend onPreference Shares 6.11 6.11

Total (A) (4282.21) 461.47

Number of Equity Shares issued (B) 33,09,214 33,09,214Earning per share (in ) (A)/(B) (129.40) 13.95Face Value of Equity Share in Rupees 10 10

26 ACCOUNTING POLICIES:(1) INVENTORY VALUATION

(a) Stocks of raw materials and stores and spares arevalued at weighted/moving average cost. (Net ofCenvat benefits/input tax credit of U.P.VAT) or net

realizable value whichever is less.(b) Loose tools are valued at depreciated cost.(c) Cost of machinery spares, which can be used only in

connection with an item of fixed asset and whoseuse is expected to be irregular, are charged torevenue over useful life of the principal item.

(d) Goods-in-transit are valued at cost.(e) Finished goods/Goods-in-Process are valued at

lower of cost and net realisable value except by-product i.e. molasses which is valued at netrealizable value. Cost inter-alia, includes directcost, depreciation, excise duty, lease rentals andfactory overheads but excludes generaladministration and selling expenses, CorporateOffice administration expenses and Interest. Theclosing stocks out of inter divisional transfer ofgoods, is being treated as finished goods insteadof raw materials/stores and valued accordingly.

(2) FIXED ASSETS(i) Major improvements to fixed assets that increases

the future benefits from the existing assets beyondits previously assessed standard of performance isincluded in the gross block and is depreciated overthe remaining life of the original assets.

(ii) Financing cost (upto the date the assets are ready tobe put to use for commercial production) relating toborrowed funds attributable to acquisit ion ofconstruction of fixed assets are included in the grossbook value of fixed assets to which they relate.

(3) DEPRECIATION(a) Depreciation on Plant & Machinery is provided on

Straight Line Method except in Corporate Office. Inrespect of other assets including OfficeEquipments, depreciation is provided on WrittenDown Value Method in all units except Sugar andSteel Units where it is provided on Straight LineMethod. (Also refer Accounting Policy No. 2(i)above).

(b) Assets for which Straight Line Method basis isadopted and acquired prior to 2nd April, 1987, aredepreciated at rates prevail ing in the year ofacquisition.

(c) Depreciation on additions/deletions is charged onprorata basis and in accordance with Schedule XIVof the Companies Act, 1956.

(4) INTANGIBLE ASSETS:Intangible assets are stated at cost of acquisition lessaccumulated amortization. Computer Software isamortized over a period of five years.

(5) REVENUE RECOGNITION:( i) Export incentives under the duty entitlement pass

book scheme is recognized on accrual basis.(ii) Revenue arising by use of company’s properties by

others yielding rent is recognized when nosignificant uncertainty as to measurabil ity orcollectability exists.

(iii) Sale of goods is recognized at the point of dispatchof goods to customers.


(6) INVESTMENTS:Long-term investments are valued at cost less provisionfor diminution, other than temporary, in the value ofinvestments.

(7) RETIREMENT BENEFITS:(a) Contribution to Provident Fund is made at a

predetermined rate to the Provident Fund Trust andcharged to the Statement of Profit & Loss on accrualbasis.

(b) Gratuity Liability is accounted for on accrual basis,computed actuarially, except for Steel Unit upto31st March, 2002 which is accounted for on cashbasis.

(c) Leave encashment is accounted for accrual basis,computed actuarially.

(8) OPERATING LEASE:Lease payments under an operating lease arerecognized as an expense in Statement of Profit & Losson a straight line basis over the lease term.

27. CONTINGENT LIABILITIES AND OTHER NOTES:( in lac)

As at As at2011-12 2010-11

1. (a) Claims against the Companynot acknowledged as debts :(i) Workmen (excluding

unascertainable amounts) 168.22 168.58(ii) Others 238.29 438.29

(b) Partly paid-up Equity Shares ofVital Chemicals Private Limited 0.08 0.08

(c) Disputed Liability for Excise-duty, Sales-tax, Entry-taxmatters and liquidateddamages on Provident Funddues {excluding interestunascertainable andundisputed Sales Tax/penalty demands (net ofprovision made of

62.21 Lac ) of 175.24 Lac}. 1190.85 1399.28(d) Wealth Tax 1.81 1.16(e) Bills discounted 1041.06 914.96

2. Estimated amount of contracts remaining to be executedon Capital Account 66.12 Lac (Previous Year 140.77Lac).

3. Guarantees given to Sales-tax/Excise Departments onbehalf of Companies in the same group amountsto 139.42 Lac (Previous year 139.42 Lac). Informationregarding outstanding position is not available. Thisexcludes guarantees of 109.63 Lac (Previousyear 109.63 Lac) vacated by Sales Tax Department forwhich guarantee bonds not yet received back.

4. (a) The Steel Unit is lying closed since 24th January, 1993due to strike/lock-out and thereafter closure wasdeclared with effect from 24th November, 1993, as theUnit was found to be unviable. The Company has not

been able to obtain access to the accounting, financialand production records of the unit necessary forupdating the said books of accounts/compiling thedata to prepare the annual accounts as well as forfinalising the audit for the year ended 31st March, 1993.Transactions subsequent to the closure of the unit couldnot be incorporated in the annual accounts of 1992-93and onwards in view of pending access to the earlieraccounts viz., 1st April, 1992 to 24th January, 1993, theabsence of which would leave the books sti l lincomplete. However, the Statement of Profit & Loss forthe current financial year 2011-12 and from 1993-94 to2010-11 have been incorporated in current financialyear and in various previous financial years respectively.As an interim measure 920.59 Lac (Previousyear 960.76 lac) which represents: (i) 1,205.32 Lac(Previous year 1021.52 lac) being net cumulativeinter-unit debit balance on account of transactions ofother units of the company with Steel Unit during 1st

April, 1992 to 31st March, 2012, (i i) payment ofunsecured loan of 45.00 Lac [Refer Note (c) below]and (iii) net loss of 240.73 lac for the years 1993-94to 2011-12 (before inter unit rental income, write-backof 278.95 lac and provision for depreciationof 669.37 lac) have been clubbed with Current Assetsof the company as on 31st March, 2012 and 31st March,2011 respectively as “Inter- Unit Balances” pendingincorporation of (i) Annual Accounts for the period 1st

April, 1992 to 31st March, 1993 and (i i) assets andliabil it ies including inter unit balances arising onaccount of transactions for the period 1st April, 1993 to31st March, 2012.

(b) The financial results for the year 1992-93 would beincorporated as soon as the company is able to obtainaccess to/reconstruct the financial, accounting andproduction records.

(c) In view of above, as per past practice, the auditedopening balances of Assets and Liabil it ies,quantitative details, contingent liabilities [excludingold electricity dues – Refer Note 4f(vii)] and notes of theSteel Unit as on 1st April, 1992, subject to (i) reduction ofunsecured loans taken by 278.95 Lac in view of writeback on account of one-time settlement (O.T.S.) of dueswith Hong Kong and Shanghai Banking CorporationLimited (HSBC) during the year 2004-05, and furtherreduction of 45.00 lac on account of payment during2005-06 of O.T.S. to H.S.B.C.; (ii) reduction of fixedassets (net) by 669.37 Lac being depreciationprovided during 1993-94 to 2011-12 on fixed assetsand (iii) decrease in Inter-Unit balance by 285.73Lac which represents; the sum of net loss of 240.73lacs for the years 1993-94 to 2011-12 (before inter-unitrental income, write-back of above amount of 278.95Lac and provision for depreciation of 669.37 Lac)and repayment of unsecured loan of 45.00 Lac. Theabove inter-unit balance will actually represent eithernet increase in assets or net decrease in liabilities as on31st March, 2012 over balances as on 31st March, 1993of the Steel Unit.

(d) Assets and Liabilities of the Steel Unit incorporated inthe Balance Sheet of the company as on 31.03.2011and 31.03.2012 are as under:


( in Lac)

Liabilities As on As on Assets As on As on31.3.2012 31.3.2011 31.3.2012 31.3.2011

Secured Loans 3421.08 3421.08 Fixed Assets (Net) 456.72 463.57Current Liabilities& Provisions 2838.28 2838.28 Investments 0.11 0.11AccumulatedProfits (631.15) (489.33) Current Assets &/(Losses) (net): Advances:

Inventories 1340.14 1340.14(1993-94 to1995-96 (687.81) Sundry Debtors 1199.25 1199.25(1996-97 and1997-98 (58.56) Cash & Bank Balance 150.78 150.78(1998-99 to2000-01 (29.83)2001-02 to Loans and Advances 249.70 249.702003-04 56.532004-05 300.902005-06 (36.67) Miscellaneous 11.07 11.072006-07 (18.94) Expenditure2007-08 (10.86) (to the extent not written2008-09 (24.40) off or adjusted)2009-10 172.482010-11 (152.17)2011-12 (141.82) Inter-unit Balances 1433.22 1568.19

Loss for the year 1991-92 787.22 787.22Total 5628.21 5770.03 Total 5628.21 5770.03

( e) Statement of Profit and Loss of the Steel Unit for the yearended 31st March, 2012 and 31st March, 2011 (excludinginter-unit rental income of 46.73 Lac) (Previousyear 46.99 Lac).

( in lac)Particulars 2011-12 2010-11INCOME :Rental Income 184.41 177.92

184.41 177.92EXPENDITURE :Employees Benefit Expenses 77.53 74.22Finance Cost 166.24 139.05Depreciation 6.85 6.77Legal and Professional Expenses 44.21 53.38Other Expenses 31.40 326.23 56.67 330.09

Loss for the year 141.82 152.17

(f) The Profit & Loss Account/Statement of Profit & Loss of SteelUnit for the years 1993-94 to 2011-12 are subject to thefollowing notes on accounts:-

(i) Shri U.K. Modi stated that:-“(a) During the year 2006-07, an agreement dated 22nd

January, 2007 for One Time Settlement (OTS) of duesof Punjab National Bank (PNB) was entered intobetween the Company, PNB, Shri U.K. Modi (asGuarantor) and SBEC Sugar Limited (SSL), on theterms as contained in the PNB’s Letter dated 28th

September, 2006. Under the said agreement, PNB hasagreed to assign all its claims against Steel Unit of thecompany together with all securit ies and charges

created by the company to SSL. on payment of fullsettlement amount of 2810.60 Lac together withinterest. SSL made full payment to PNB of thesettlement amount together with interest. PNBthereafter executed a Deed of Assignment on 15th May,2012 in favour of SSL by which PNB assigned all itsclaims together with all securities and charges createdby the Company in its favour to SSL. The Registrar ofCompanies has registered the modification to thecharges in favour of SSL. In view of the above, thesecured debt is now payable by the Company to SSL.The company proposes to enter into revised terms ofpayment of this secured debt with SSL.

(b) (i) With reference to the company’s liabilities to IDBILimited, a settlement agreement was concludedbetween the Company , IDBI Limited and SBEC BioEnergy Limited (SBEL) on 6th October, 2007. Thissettlement agreement was in terms of IDBI’s letterdated 9th February, 2007. Under the said agreementIDBI agreed to assign its entire debt due and payableby the Company to SBEL subject to SBEL paying toIDBI its OTS claim amount of 1232.20 lac. Acting onthe said agreement, SBEL made a paymentof 1232.20 Lac to IDBI together with interest. Thesaid payment of 1232.20 Lac along with interest wascompleted on 6th October 2007. IDBI’s claim againstthis company stood assigned to SBEL together with thesecurities and charges and the said debt is now payableby this company to SBEL.The Hon’ble BIFR vide its orders dated 12th December,2011 and 19th April, 2012 recognized SBEL as thiscompany’s creditor in place of IDBI and by an orderdated 17th July, 2012 directed IDBI (OA) to execute theDeed of Assignment in favour of SBEL. The companyproposes to enter into fresh terms of payment of theIDBI’s assigned debt with SBEL.

(ii) With reference to this company’s liabilities to IFCILimited, a settlement agreement dated 30th December,2009 was concluded between this company, IFCILimited and SBEC Bio-Energy Limited, (SBEL). Thissettlement agreement was in terms of IFCI’s letter dated30th December, 2009. Under the said settlementagreement, IFCI agreed to assign to SBEL its entiredebt as due and payable by this company to it subjectto SBEL paying to IFCI its OTS claim of 775.00 Lac.Acting on the said settlement agreement, SBEL madea payment of 775.00 Lac to IFCI on 30th December,2009 and in consideration thereof IFCI Limitedexecuted a Deed of Assignment dated 19th April, 2012,and assigned its all claims against this companytogether with the securities and charges in favour ofSBEL. The Registrar of Companies has registered themodification to the charges in favour of SBEL. Thesaid secured debt is payable by this Company to SBEL.The company proposes to enter into fresh terms ofpayment of this debt with SBEL.

(iii) At the hearings before the Hon’ble BIFR and with theconsent of Advocates for Mr. U.K. Modi and Mr. M.K.Modi, the Hon’ble BIFR passed orders and issueddirections in M.A. No. 754/BC/2011 (filed on behalf of


Mr. U.K. Modi) and clarified that the OA shall considerthe representations from Mr. U.K. Modi, Mr. M.K.Modi, Mr. D.K. Modi and also from SBEC BioenergyLtd. and SBEC Sugar Ltd.

(iv) The Bench directed that, SBEC Bioenergy andSBEC Sugar be heard and consulted by IDBI (OA) inconnection with the preparation of the DRS.

(v) In the order dated 22nd June, 2012 the Hon’ble BIFRobserved and noted that IFCI and PNB have executeddeeds of assignments in favour of SBEC BioenergyLtd. and SBEC Sugar Ltd. respectively after receivingentire OTS amount along with interest, whereas theIDBI has received the entire OTS amount alongwithinterest and had only entered into an agreement totransfer all the rights, title and interest in the FinancialAssistance / Financial Instruments and the underlyingsecurities in respect thereof to the Applicant (SBECBioenergy) of MA No. 224/BC/2012 but has notexecuted the deed of assignment. The Bench alsoobserved that the IDBI, vide their letter dated 7th May,2012 has approached BIFR regarding the execution ofthe assignment deed in respect of assignment of debtto the applicant (SBEC Bioenergy Ltd.).

(vi) The BIFR by its order dated 22nd June, 2012 allowedMA No. 224/BC/2012 and directed that the name ofApplicant (SBEC Sugar Ltd.) be substituted for PNBand the name of the Applicant (SBEC Bioenergy Ltd.)be substituted, in place of IFCI, as the deed ofassignment has since been executed.

(vii) In the proceedings held on 17th July, 2012, theHon’ble BIFR directed IDBI to execute the deed ofassignment in favour of the Applicant (SBECBioenergy Ltd.), with respect to the assignment of itsclaims against this company together with securitiesand charges in favour of SBEC Bioenergy Ltd. subjectto the various other directions stated therein.

(viii) Pursuant to the order passed by AAIFR, Shri U.K. Modiand Shri M.K. Modi have now submitted theirseparate Draft Rehabilitation proposals to the IDBI.”

(ii) Shri M.K. Modi stated –“(a) That the said settlements based on assignment in

favour of one of the Managing Directors of theCompany are neither legal nor binding and arewithout approval of the Board. The same are alsocontrary to the 1989 Modi Family MOU, theagreement between the two Managing Directors, theBoard Resolution and the “Status Quo” order ofHon’ble Supreme Court of India.

(b) Without prejudice to what is stated in para (i) above, inview of the orders passed by Hon’ble BIFR,assignments and the terms of payment etc. shall nowbe governed by the directions passed by Hon’ble BIFRin its hearing held on 17.07.2012

(c) Hon’ble BIFR has, in the proceedings of the hearingheld on 19th April, 2012, already directed IDBI (OA) toassess the liabil it ies of each unit of the company(Group wise) and while making an assignment to UKMGroup Companies, to see that the security charged toBanks/FIs belonging to his own units are assigned andthe security belonging to MKM Group is to be freed. It

is thus abundantly clear that the security pertaining tohis own units only is to be charged to SBEC BioenergyLtd and SBEC Sugar Ltd.

(d) Hon’ble BIFR has, in the subsequent hearing held on17th July, 2012 authorised IDBI to execute theAssignment Deed in favour of SBEC Bioenergy Ltd.with the following conditions:(a) There wil l be no clause in the deed of

assignment which allows the assignee toconvert the acquired debt of the company intoequity company’s rehabilitation scheme issanctioned by BIFR. Conversion of loan intoequity cannot be allowed until it is made apart of Rehabilitation Scheme sanctioned bythe Board.

(b) There will be no change in ownership ormanagement and that no new director will beinducted in company’s Board till sanction ofcompany’s rehabilitation scheme.

(c) The benefit of sacrif ice by the securedcreditors will remain with the company andwill not get passed to any private parties inwhose favour assignment deeds are executed.

Accordingly, the secured debts shall now be payablesubject to the above conditions imposed by the BIFR.

(e) In view of the above directions of Hon’ble BIFR, MKMGroup has, without prejudice to their legal contentionsin the matter, already approached both IDBI and IFCIfor making payment of the dues pertaining to the sixunits under management and control of Shri M.K.Modion assignment basis subject to the above conditions.

(f) As reported last year, Shri M.K.Modi had fi led aSpecial Leave Petition before the Supreme Court ofIndia on 27th July, 2010 challenging the order dated19.05.2010 of Hon’ble Delhi High Court. The Hon’bleSupreme Court vide its order dated 27th August, 2010held that “the parties are directed to maintain statusquo with regard to the management of the Company,but we make it clear that this will not in any way affectthe proceedings pending before the Board forIndustrial and Financial Reconstruction and also theAppellate Authority (AAIFR).”Pursuant to the order dated 22nd June, 2011 passed byHon’ble AAIFR, Shri M.K.Modi and Shri U.K.Modi havesubmitted their separate Draft Rehabilitation proposalsto IDBI (OA).Subsequently, BIFR has heard the matter on 25th July,2011, 08th September, 2011, 13th October, 2011, 12thDecember, 2011, 06th February, 2012, 17th February,2012, 19th April, 2012, 22nd June, 2012 and 17th July,2012 and passed certain directions with regard to theissue of assignment of debts and rights of the assigneesetc. Accordingly, the assignments of debts, if any, shallbe governed by such directions unless directedotherwise by any Court or Tribunal.Shri U.K. Modi disagrees with the above statementsand subimitions made by Shri M.K. Modi.As per Shri. U.K. Modi these liabilt ies wil l now bequantified with the assignees of PNB, IDBI and IFCIdebts.


As per Shri M.K. Modi, the above contention of ShriU.K. Modi is incorrect.

(iii) In view of non-availability of book balance of l iabilit iestowards PNB, IDBI and IFCI in the books of Steel Unit of theCompany on account of non-incorporation of annualaccounts and balance sheets of Steel Unit {Refer Note 27 (4)(a to c) of Annual Accounts}, the difference between OTSamounts and book balances could not be ascertained.

(iv) No-provision of interest, amount unascertained, is requiredto be made, on loans from other Financial Institutions as theexisting amounts appearing in the books of accounts of thecompany will be more than sufficient in view of in-principleapproval/discussions being held for one time settlement ofdues with the Financial Institutions.

(v) In view of clear cut delineation of responsibilties of the twoManaging Directors of the Company, the accounts of twodivisions of six units and three units of the company arebeing prepared and finalized independently andaccordingly Shri M.K. Modi and Shri U.K. Modi arecertifying the accounts as relate to the two divisions of thecompany i.e. six units and three units respectively, themanagement whereof is looked after by them.

(vi) The impact, if any, on account of non-availabil ity andconsequently non incorporation of audited openingbalances of assets and liabilities of the Steel Unit as on 1st

April, 2011;(vii) Non-provision of obsolete/damaged stocks and fixed assets,

if any, in view of non-incorporation of earlier year’s accountsand non-physical verification of inventories and fixed assetsas on 31st March, 2012;

(viii) Non-confirmation/reconciliation of balances of debtors,creditors, banks, financial institutions etc. and impact, if any,on the Statement of Profit & Loss;

(ix) Non-provision of doubtful debts and loans & advances,amount unascertained;

(x) Non-provision of Impairment of Assets, if any, of the fixedassets as per Accounting Standard (AS 28) i.e. Impairment ofAssets, amount unascertained.

(xi) (a) Uttar Pradesh Electricity Board (now U.P. PowerCorporation Ltd.) raised various demand noticesagainst electricity dues and late payment surchargeamounting to 2435.48 lac on the Steel unit of theCompany.

(b) In terms of One Time Settlement with U.P. PowerCorporation Limited regarding arrears of electricitydues, the Steel unit paid during the year2009-10 563.90 lac against the demandof 1123.99 lac included in (ix)(a) above. Accordinglyshortfall in provision of 243.37 lac has been chargedto revenue during the year 2009-10.

(c) The company fi led writ petit ion in Allahabad HighCourt challenging the said demand notices. TheHon’ble Allahabad High Court dismissed the writpetit ion fi led by the Company. The company fi ledSpecial Leave Petit ion (SLP) with the Hon’bleSupreme Court of India, who has granted interim stayon 14th March, 2005 for stay of recovery by way of saleof property which is still continuing.

In view of the above and pending incorporation of annualaccounts of Steel Unit for 1992-93, no provision isconsidered necessary against the balance demand

of 1311.49 lac at this stage.5. Undertakings given to Financial Institutions on behalf of

Lords Chloro Alkali Limited, Modi Rubber Limited and BiharSponge Iron Limited:

(a) To procure funds jointly/severally with other promotersto meet any shortfall in the resources of the Companyfor completing their projects and/or for working capital.The funds made available/to be made available canonly be withdrawn with the prior approval of FinancialInstitutions and shall not involve any charge or lien onthe assets of the said Companies.

(b) That the company shall not transfer, assign, pledge,hypothecate or otherwise dispose of in any manner it’sholding in their capital without Institutions’ priorapproval in writing.

6. Deferred credit including liability for interest payable forunexpired period have been guaranteed by the Bankers ofthe Company against hypothecation of Gas Cylinders andMachinery purchased under the Scheme in Steel Unit.

7. The Company has disputed the price of levy sugar fixedduring the year 1970-71 to 1974-75 and recovered amountof 37.73 Lac in excess of control price which was paidsubsequently in pursuance of Supreme Court Order dated22nd September, 1993. However, the Company obtainedStay Order from Hon’ble Allahabad High Court againstdemand of interest made by the Food Corporation of India,which is still continuing.However, during the current year, the Food Corporation ofIndia has adjusted a sum of 124.28 Lac towards interestdues from the differential amount recoverable by Sugar Unitof the Company on account of price increase in levy sugarsupplied for season 2009-10.The above adjustment hasbeen done without prejudice to the right and contention ofthe company.In view of the above, interest on excess realizations for theyear 1970-71 to 1974-75 amounting to 124.28 Lac, asadjusted by the FCI, will be accounted for as expenses in theyear of disposal of the above writ petition.

8. Exceptional items in Statement of Profit & Loss represent:(i) For the year ended 31st March, 2012 the differential

l iabil ity paid amounting to 847.77 Lac towardsSugarcane price for the sugar season 2007-08 as perorder dated 17th January, 2012 of Hon’ble SupremeCourt of India.

(ii) For the year ended 31st March, 2011 interest amountreceived of 816.11 Lac on refund from the IncomeTax Department pertaining to the period upto 31st

March, 2011.9. The Company has entered into an agreement with U.P.

Power Corporation Limited for its Residential Feeder SC No.2005 on 29th March, 2000. In pursuance of that agreement,the Company has paid for the existing authorised occupantsonly after 1st July, 1998 computed prorata based on coveredarea of quarters occupied by the employees. In view of theabove, no provision has been made for electricity charges of

131.46 Lac upto the period of permanent disconnectionof residential feeder SC No. 2005 i.e. 31st May, 2001(Previous year 131.46 Lac) for the unauthorizedoccupants and late payment surcharge/recovery chargesamounting to 302.66 Lac upto 31st May, 2001 (Previousyear 302.66 Lac). In accordance with the agreement,


matter regarding waiver of late payment surcharge andrecovery charges after 1st July, 1998 will be referred to theGovernment.

10. ESI authorit ies had raised a demand on the companyfor 60.03 Lac (upto previous year 58.86 Lac) (inclusiveof interest) towards company’s liability for ESI for the years1968 to 1986. The demand is disputed by the company andno provision has been made against this liability.

11. Modinagar Municipal Committee had determined thebasis/liability of house tax payable by the Company for theyears 1982-83 to 2006-07 at 213.98 Lac. The saidliabil ity/demand/basis is disputed by the company atvarious levels and has deposited 16.51 Lac on accountupto 31st March, 2011. Pending final decision of the Court/settlement and after taking into account the provision/payment already made by the Company, there is a netliability of 188.63 Lac (upto the previous year 188.63Lac), which has not been provided for in the accounts.

12. Excise duty on uncleared manufactured finished goods andcustom duty in respect of imported goods lying in bond inrespect of Steel Unit amounting to 43.09 Lac and 24.35Lac respectively is accounted for as and when such goodsare cleared. However, this has no impact on the loss of theCompany.

13. (a) In respect of Steel Unit, gratuity liability upto 30thSeptember, 1987 amounting to 84.82 Lac has notbeen provided in the books on accrual basis. However,this said l iabil ity has subsequently been paid/deposited.

(b) The Gratuity Liability of continuing employees in SteelUnit was being accounted for on cash basis from 1993-94 to 2001-02. During 2002-03, past Gratuity Liabilityof continuing employees amounting to 14.96 Lacs wasprovided on accrual basis computed on actual basis andw.e.f. 2003-04, Gratuity liability is computed on actuarialbasis and provided for in the books of account.

(c) The Company has adopted Accounting Standard 15(Revised) on employees benefits with effect from 1st

April, 2007 in respect of provision for Gratuity liability.Details in respect of Gratuity are as under:

( in Lac)

As on As on31.03.2012 31.3.2011

Present value of Obligations 1,140.93 1,094.72Fair Value of Plan Assets - -Net Liability (1,140.93) (1,094.72)Reconciliation of Opening andClosing Balances of ObligationObligation as at beginning of the year 1,094.72 1,100.59Current Service Cost 59.80 57.88Interest Cost 93.05 88.05Actuarial Losses/(Gain) (4.21) (35.42)Benefits paid (102.43) (116.38)Obligations as at the end of the year 1,140.93 1,094.72Expenditure to be recognized during the yearCurrent Service Cost 59.80 57.88Interest Cost 93.05 88.05Expected Return on Plan Assets - -Net Actuarial Losses/(Gains)Recognized during the year (4.21) (35.42)Total expenditure included in “Employees’ Emoluments” 148.64 110.51AssumptionsDiscount Rate (per annum) 8.50% 8.00%Expected rate of Return on Assets (per annum) 0% 0%Salary Escalation Rate 9.00% 8.5%

The Company has unfunded scheme for paymentof gratuity to all eligible employees calculated atspecified number of days of last drawn salarydepending upon tenure of service for each year ofcompleted service subject to minimum five years of servicepayable at the time of separation upon superannuation oron exit otherwise.(d) (i) The Company has adopted Accounting

Standard 15 ( Revised) on employeesbenefits with effect from 1st April, 2008 inrespect of Earned Leave.

(ii) Details in respect of Earned Leave are asunder:

( in Lac)

As on As on31.03.2012 31.3.2011

Present value of Obligations 132.50 135.15Fair Value of Plan Assets - -Net Liability (132.50) (135.15)Reconciliation of Opening andClosing Balances of ObligationObligation as at beginning of the year 135.15 148.02Current Service Cost 14.10 14.33Interest Cost 11.49 11.84Actuarial Losses/(Gain) 11.24 0.95Benefits paid (39.48) (39.99)Obligations as at the end of the year 132.50 135.15Expenditure to be recognized during the yearCurrent Service Cost 14.10 14.33Interest Cost 11.49 11.84Expected Return on Plan Assets - -Net Actuarial Losses/(Gains)Recognized during the year 11.24 0.95Total expenditure included in “Employees’ Emoluments” 36.83 27.12AssumptionsDiscount Rate (per annum) 8.50% 8.00%Expected rate of Return on Assets (per annum) 0% 0%Salary Escalation Rate 9.00% 8.5%

14. The company has not received information from vendorsregarding their status under the Micro, Small and MediumEnterprises Development Act, 2006 and hence disclosurerelating to amounts unpaid as at the year end together withinterest paid/payable under this act has not been provided.

15. Government of India has issued guidelines dated 15thJanuary, 1987 which requires companies raising resourcesthrough issue of Debentures to create a DebentureRedemption Reserve. The Company has not created such areserve in view of the accumulated losses.

16. (a) During the previous year, the disti l lery unit of thecompany (Bottler) has entered into an agreement i.e. a“Bottling Agreement including addendum to bottlingagreement dated 26th April, 2012” with MI Spirit IndiaPrivate Ltd (MISIP) whereby the parties i.e. bottler andMISIP have agreed to the blending, manufacturing andbottl ing of the products by the bottler. Bottl ingagreement inter-alia includes: (i) the bottler shallmanufacture the products in accordance with the quality

Liability to be recognized in Balance Sheet

Liability to be recognized in Balance Sheet


standards, standard manufacturing procedures, theprocess and other specifications laid down by MISIP fromtime to time and in such quantities as may be specifiedby MISIP from time to time (ii) the bottler shall procurethe materials i.e. concentrates, spirit, flavouring agents,de-mineralised water, packages and levels from MISIPor from the suppliers suggested or recommended byMISIP (iii) products manufacturing by the bottler shall besupplied, dispatched or sold by the bottler as per thepurchase orders procured by MISIP and bad-debts fromdirect indenters supplied on credit upon request byMISIP are to MISIP’s Account (iv) MISIP will beresponsible for working capital financing. Bottler shallopen a bank account (“Account”) which is to be operatedjointly by the bottler and MISIP and all funds in theaccount shall belong to MISIP notwithstanding that theaccount may be in the name of the bottler (v) MISIP willreimburse the manufacturing expenses and paymanufacturing margin (i.e. 10% of the aggregate of themanufacturing expenses as reduced by statutorycharges, taxes and duties and selling and distributionexpenses) from the above account (vi) all paymentsreceived by the bottler for sale of products shall becredited to the account and manufacturing expensesincurred by the bottler, manufacturing margin shall bereimbursed by MISIP to bottler. Any surplus remainingin the account shall therefore be paid to the company asfee.

(b) In the opinion of the management, since the productsare being manufactured and sold in the name of thebottler, the purchase invoices in respect of raw material,packing material and consumables and sales invoicesfor the finished goods are being issued in the name ofthe bottler, necessary compliances under various taxlaws are also being done by the bottler and specialbank account is also in the name of the bottler, thetransactions of the above business of manufacture andsale of “Vodka and Whisky” have been treated as part ofbooks of account of the bottler and these have beenincluded in sales, expenses, assets and liabilities of thebottler as stated in paragraph (c) below.

(c) Balance Sheet and Statement of Profit & Loss of thebottler for the financial year ended 31st March, 2012includes the following items relating to the aboveactivit ies of manufacture and sale of “Vodka andWhisky”:

Balance Sheet( in lac)

Particulars As at As at 31st March, 2012 31st March 2011

INCOME :Sundry Debtors 556.98 127.08Bank Balances 25.99 41.33Security Deposits 48.80 27.40Closing Stock 428.47 46.83Advance Recoverable 51.37 32.56Total Current Assets 1,111.61 275.20

Balance Sheet (Cont.)( in lac)


Less: Current Liabilities 244.15 91.02Credit Balance of MISIP 840.80 1,084.95 172.84 263.86Net Current Assets 26.66 11.34Recognized as net profit for the yearInstead of manufacturing margin 26.66 11.34IMPACT OF NET PROFIT NIL NIL

Statement of Profit & Loss( in lac)


Turnover (Net of discount) 853.59 210.68Other Income 0.37 853.96 - 210.68Excise duty paid 157.61 13.89Cost of materials consumed 57.16 14.15Change in Inventories (54.30) (11.23)Employees Benefits Expenses 29.35 4.99Finance Costs 0.36 -Other Expenses 637.12 177.54Total Expenses 827.30 199.34Net Profit for the year 26.66 11.34Recognized as net profit for the yearInstead of manufacturing margin 26.66 11.34IMPACT OF NET PROFIT NIL NIL

(d) The Expert Advisory Committee of Institute ofChartered Accountants of India in an almost similarcase do not agree with the above mentionedaccounting treatment. The opinion is governed by thesubstance of the transaction and not by the legal formi.e. sales, purchases, assets and liabilities relating tosuch business controlled by the brand owners should notbe recorded in the books of account of the companyeven though supporting vouchers are in the name ofthe company and the correct accounting treatment ofthe transactions in the books of account of thecompany would be to recognize only the fixed margin/charge received by it rather than to recognize salesand purchases of the business of manufacturing IMFLand also should not recognize any current asset orliabilities of the said business in its books of account.Further, the brand owners entit lement paid by thecompany should be booked as a mere cash outflow.Further the Expert Advisory Committee had clarifiedthat the opinion expressed by the committee is purelyfrom the accounting point of view withoutconsideration of any implication thereof, from thepoint of view of the provisions of TDS/TCS in theIncome Tax Act 1961 or any other legal/ statutoryrequirement.

17. Consequent to the losses, the Company had been declareda Sick Industrial Company on 14th March, 1991 in terms ofSection 3(1)(o) of the Sick Industrial Companies (SpecialProvisions) Act, 1985. Further proceedings before the BIFR


are pending. Pending final orders of BIFR, the accounts ofthe company have been prepared on a going concern basis.

18. (a) No provision has been made for penal/delayed/simple/compound interest amounting to 19907.96 Lac upto31st March, 2012 (for the year 3157.18 Lac) on termborrowings of Financial Institutions and debenturespending final order of BIFR.

(b) Interest payable by Vanaspati Unit of the Company toFinancial Institutions since the date of disbursement ofthe loan on simple rate of interest basis amountsto 1242.45 Lac upto 31st March, 2012 and the unitholds total interest provision of 732.41 Lac as on 31stMarch, 2012 resulting in the short provision of 510.04Lac on simple interest basis.

(c) The Sugar & Disti l lery Units of the Company havegiven a proposal for settlement of their dues withAllahabad Bank of 227 Lac against which an upfrontpayment of 50 Lac has already been made under ‘NoLien Account’ and included under ‘Cash and BankBalances’ and to pay the balance amount of 177.00Lac in two equal monthly instalments after the receiptof sanction from the Bank. The shortfall in interestprovision amounting to 168.84 Lac will be providedin the books of account in the year of approval of OTSproposal by the Bank.

(d) The Sugar Unit of the Company has not madeprovision for interest/bank charges amountingto 2003.89 Lac (for the year 286.17 Lac) on cashcredit loan taken from Allahabad Bank in view of para (c)above.

(e) No provision has been made for interest on Cash Creditfrom Allahabad Bank amounting to 201.93 Lac (forthe year 35.88 Lac) in Distillery Unit in view of para (c)above.

(f) Till 31st March, 2000, simple interest on matured fixeddeposits and interest upto date of maturity wasprovided in the books of account. With effect from 1stApril, 2000, no provision has been made for interest of

276.12 Lac upto 31st March, 2012 (for theyear 15.47 Lac), computed as per past practice, onthese fixed deposits in view of a legal opinion receivedby the Company to the effect that as per terms andconditions of Fixed Deposit Scheme, deposits do notcarry any interest beyond due dates unless these arerenewed. Since these deposits were never renewedafter their due dates as such, the question of payment ofinterest after due dates does not arise at all. However, asa prudent measure, the provision made of 282.56Lac in the past (net of payments) has been retained inthe books of account as on 31st March, 2012.

19. (a) The Vanaspati Unit had applied for Sales Tax relief/exemption to U.P. Government in terms of Section 4A ofU.P. Sales Tax Act. Consequent to rejection, theCompany has filed a writ petition in Lucknow Bench ofAllahabad High Court and Court granted stay. Pendingdisposal of the case, no provision has been made forsales-tax 2455.78 Lac relating to the period May,1991 to July, 1994 (Previous year 2,455.78 Lac).

(b) The Vanaspati Unit had preferred an application fordeferment of Sales-tax with effect from July, 1994under Section 38 of the U.P. Sales Tax Act and thesame has been rejected by the State Government.The company has also filed Writ Petition against therejection and consequent to the orders of the Court, therecovery of Sales-tax has been kept in abeyance.Accordingly, Sales-tax amounting to 440.46 Lac(previous year 440.46 Lacs) relating to the periodAugust, 1994 to March, 1996 has not been depositedwith the authorities.The above writ petit ion fi led by the company waslisted for hearing on 2nd May, 2008 at High court,Lucknow Bench. The company had filed an affidavitwith the Court that BIFR had passed an order dated 26th

March, 2008 by virtue of which the Bench permitted theCommercial Tax Department, Government of U.P. torecover its outstanding dues, due after 30th June, 2007.The company had also stated in the said affidavit thatthe Hon’ble Supreme Court of India had affirmed theorder of the BIFR and therefore in view of the saidorders of BIFR as affirmed by the Hon’ble SupremeCourt the said Writ Petit ion may be dismissed asinfructuous. Accordingly the High Court, LucknowBench has dismissed the said writ petit ion asinfructuous.

(c) In accordance with the scheme announced by U.P.Government regarding Waiver of Interest & Penalty onSales Tax, the Distillery Unit of the Company has paidand provided interest during 2005-06 of 54.77 Laci.e. 10% of the total interest as per the scheme. No DuesCertificate of Sales Tax authorities is awaited.

20. (a) Finance LeaseFixed Assets of Modi Sugar Mills (MSM) as on 31stMarch, 2012 includes Turbine acquired under financelease. Details are as under:

( in lac)

Particulars TurbinePresent

ValueLease Period 5 YearLease Amount 398.55Interest Amount 170.88Total Lease Rent Payable 569.43Payable as on 31st March, 2012 245.18 212.72Payable during 2012-13 122.59 114.04Payable during 2013-14 to not later than 5 years 122.59 98.68Option of purchase at the end of Lease Yes

(b) Operating Leases :The Company has taken following premise and Plant& Machinery on operating lease basis. Disclosurerequirement as per AS-19 are as under :

( in lac)Particulars Year ended Year ended

31.03.2012 31.03.2011No late than one year 107.88 73.44Later than one year but not later than five yars 41.13 52.48Later than five years NiI Nil


The above includes :(i) During the current year, Gas Unit of the company has

entered into lease agreement, as amended, with WeldExcel India Ltd. (WEIL), a related party, taking Oxygenfil ing plant under operating lease for 2 years noncanelable lease period at montly rent of 1.00 Lacfrom Weld Excell India Ltd. (WEIL), a related party. Thecompany has option for further renewal of lease for twoyears at the expiry of lease period.

(ii) During the year 2010-11, Electrodes unit of thecompany has taken office premises in Dlehi onsublease basis from WEIL, a related party, underoperating lease for three years non cancelable periodat montly rent of 4.37 Lac and allowed space for twowork stations to WEIL.

(iii) Electrodes Unit of the company has taken office cumGuest house premises in Chatarpur and Aman, NewDlehi on operating lease basis and having sharingarrangement with WEIL, a related party, and Shri M.K.Modi, Managing Director for a period of two years wef1 st November, 2011 and 1st January, 2011 respectivelyat montly rent of 1.25 Lac (our share) and per dayrent of 0.08 Lac (our share) respectively.

21. The Distillery Unit declared cessation and lock-out of theUnit with effect from 19th December, 1991 and 5th January,1992 respectively. The lockout has since been lifted. TheU.P. Government, suo moto, has referred the matter to theIndustrial Tribunal to decide the legality of the lockout.Pending final decision, no provision has been made forwages 27.46 Lac for the lockout period.

22. Provision/payments (including value of perquisites) hasbeen made to Managing Directors for the remunerationof 80.68 Lac in terms of shareholders resolution, which issubject to approval of the Financial Institutions.

23. No provision has been made for Earned Leave for SteelUnit- upto 1991-92, amount unascertained.

24. The Sugar Unit of the Company has discounted sales billsraised on SBEC Sugar Limited amounting to 3,883.70Lac (Previous year 3,525.31 Lac) from certain persons/limited companies etc. and the same (net of discountingcharges borne by drawee) has been credited to the accountof SBEC Sugar Limited. The above includes 3,304.56Lac (Previous year 2,837.67 Lac) being bills discountedfrom individual persons/HUF/Firms. Balance outstanding ofbil ls discounted as on 31st March, 2012 amountsto 892.47 Lac (Previous Year 766.37 Lac) (which werepaid fully subsequently by the drawees) and has been shownin Note 27{1(e)} of Annual Accounts as Bills Discounting.

25. Allahabad Bank had fi led a recovery suit for recoveryof 21.41 Crore against Modi Industries Limited and othersbefore the Debt Recovery Tribunal (DRT), Lucknow in April,2005 The Company challenged the recovery suit on thegrounds that bank required prior permission under section 22(1) of the Sick Industrial Companies (Special Provisions) Act,1985 for fi l ing recovery suit. Debt Recovery Tribunal,Lucknow, allowed continuation of recovery suit against whichcompany fi led appeal with Debt Recovery AppellateTribunal, (DRAT) Allahabad. The DRAT had stayed furtherproceedings by DRT in the matter. A writ petition was filed by

the Company before the Lucknow Bench of Allahabad HighCourt challenging the orders of the DRT, Lucknow and DRAT,Allahabad. The Lucknow Bench of Allahabad High Courtnoting the contention of the Company has disposed off theWrit Petition by its order dated 18th July, 2008. The Companyhas filed review petition against the said order seeking thequashing of the Allahabad Bank’s suit before the DRT.

26. Consequent to the notification of Revised Schedule VI underCompanies Act, 1956, the financial statements for the yearended 31st March, 2012, have been prepared as perRevised Schedule VI. Accordingly, the previous year figureshave also been reclassified to confirm to this year’sclassification. Further, previous year’s figures have beenregrouped/rearranged wherever necessary.

27. No confirmation letters were sent to debtors/creditors and toparties who have discounted sale bills. In the absence ofsuch confirmations, the balances in respect of SundryDebtors/Creditors/Bills discounted (Contingent Liability),Loans taken/given and Advances and other accounts aretaken as shown by the books of accounts and are subject toadjustments and reconciliation, if any.

28. In view of non-viability of the Vanaspati Unit, which was aseparate business segment as per AS-17, SegmentReporting, the company declared closure of the Unit witheffect from 3rd February, 2003 and prior information, asrequired under law, was given to the State Government on4th December, 2002. The closure is consistent with thecompany’s strategy to focus on its other viablemanufacturing activities.

29. Delhi Excise Authorities issued Show Cause Notices andraised demand for 167.43 Lac towards Risk-Purchase ofCountry Liquor in view of non-supply of the same byDistillery Unit of the Company. Company has disputed theabove demand and a Writ Petition was filed before theHon’ble Delhi High Court who ordered case to be referredback to Collector of Excise for taking final decision. TheCollector of Excise vide its order dated 27th June, 2003 hasconfirmed the above demand against which the companyhas filed a writ petition before the Hon’ble Delhi High Court.On the basis of orders of Hon’ble Delhi High Court, thecompany deposited 50.00 Lac till date against the abovedemand. No provision is considered necessary at this stagesince the matter is sub-judice.

30. As on 31st March, 2012, there were 161 Public Depositsamounting to 7.35 Lac which have remained unclaimedand unpaid for a period of more than seven years andinterest accrued but not paid on these unclaimed depositstill the date of maturity amounts to 2.42 Lac. Details ofunclaimed and unpaid debentures for a period of more thanseven years are presently not available.The Company has filed a return dated 14th June, 2002 withthe Registrar of Companies duly certified by practicingCompany Secretary stating that the Company is a SickIndustrial Company as per orders of BIFR dated 14th March,1991 and rehabilitation proposal for payment in respect ofdebentures and fixed deposits etc. is pending before theIDBI (as the Operating Agency)/BIFR for consideration. TheCompany will pay/credit the amount as per final orders ofBIFR. Accordingly, no amount was credited/paid toInvestor’s Education and Protection Fund till date.


31. There has been temporary diminution of Rs.68.00 Lacs ason 31st March, 2012 (Previous Year Rs. Nil Lacs) in themarket value of one of its investments in the GroupCompanies. However, being long-term investment, this isvalued at cost with no provision made for fall in the marketvalue. These investments are considered strategicinvestments and also having long-term involvement withthe above companies, no provision is considered necessarysince the decline is also not permanent in nature.

32. Deferred Tax Assets are 2844.92 Lac as on 31st March,2012 (Previous year 1749.84 Lac) constituting mainly ofunabsorbed depreciation, unabsorbed losses, provision fordoubtful debts, provisions disallowed and interest on termloans disallowed in Income Tax. Deferred Tax Liabilitiesis 531.27 Lac as on 31st March, 2012 (Previousyear 601.48 Lac) on account of higher depreciationclaimed in Income Tax. On conservative basis as required bythe Accounting Standard 22, the net Deferred Tax Assetshave not been recognized and position will be re-assessed atnext balance sheet date. However, the estimated DeferredTax Assets and Liabilities details are given as under:

( in lac)


(a) Deferred Tax Assets :(i) Disallowances under the

Income Tax Act. 1377.21 1409.74(ii) Provision for Doubtful Debts 157.90 153.78(iii) Unabsorbed Depreciation 263.52 186.32(iv) Unabsorbed Loss 1046.28 -

Total 2844.92 1749.84(b) Deferred Tax Liabilities:

Related to Fixed Assets 531.27 601.48(c) Deferred Tax Assets (Net) (a-b) 2313.65 1148.36

33. Till 31st March, 2012, Certain Quarters of the Company areoccupied unauthorisedly by ex-employees/outsiders. Thecompany has entered into “Agreement to Sell” for 215(Previous year 215), such residential quarters with suchparties. Sale consideration amounting to 504.50 Lac(Previous year 504.50 Lac) has been received as interestfree advance. These “agreements” clearly stipulates thatfinal sale of such quarters are subject to approval ofFinancial Institutions to whom these quarters have beenmortgaged and the company proposes to seek the samebefore affecting final sale of such quarters. Accordingly thesale of such quarters will be accounted for only on receipt ofapproval of Financial Institutions. Further the company hasbeen legally advised that it can enter into such “Agreementsto Sell”.

34. (a) The Steel Unit of the company has entered into fewleases, including perpetual leases, agreements forcertain portions of the factory land and building18428.46 Sq. Mtrs (Previous year 18428.46 Sq. Mtr.) forwhich approval of financial institutions, to whom thefactory land and buildings are mortgaged, is yet to beobtained. However, the company has been legallyadvised that it can enter into such lease agreements.Further, the lease money has mainly been utilized for

payment of workers dues. (b) The company has entered into a perpetual lease

agreement for certain portion of closed Soap factory,land & building (1584 sq. mtrs.) to a related party. Asthe said land and building is mortgaged with thefinancial institutions therefore the company hadsought the approval of IDBI Limited (the lead financialinstitution) to the said transaction vide its letter dated6th September, 2006. Since IDBI Limited did notrespond, therefore the company again wrote a letter toIDBI Limited on 5th April, 2007 requesting for itsapproval to the said transaction. The company in theletter under reference also mentioned that if IDBI doesnot respond to the company’s request, it wil l bedeemed that the company’s request has beenapproved by IDBI Limited and the company will goahead with the said leasing agreement. The IDBI hasso far not responded to the company’s letter.

35. (a) Recovery Certificate (RC) was issued on 1st May, 2004on account of non payment of cane price/commission/interest due to Co-operative Societies. The Hon’bleHigh Court has stayed the recovery proceedings againstthe company subject to payment of dues upto 31stJuly, 2004. The Company has complied with theconditions regarding payment of cane price andcommission on basic SMP upto 31st July, 2004.However, the company has disputed the payment ofinterest of 142.00 Lac and recovery chargesof 236.00 Lac in the Hon’ble Allahabad High Courtwhich is still pending. On consideration of prudence,the company has made provision for interestof 142.00 Lac during the year 2004-05.

(b) Recovery Certificate (RC) was issued on 18th March,2008 on account of non payment of cane price/commission/interest due to Co-operative Societies forthe sugar season 2007-08. The above RC alsoincludes recovery charges of 413.50 Lac which hasnot been provided for in the books of account.

(c) Recovery Certificate (RC) was issued on 20th April,2011 on account of non-payment of cane price/commission/interest due to Co-operative Societies forthe sugar season 2010-11. The above RC alsoincludes recovery charges of 268.25 Lac which hasnot been provided for in the books of account as staygranted by Hon’ble Allahabad High Court. Furtherproceedings are pending.

(d) Recovery Certificate (RC) was issued on 10th August,2007 on account of non payment of cane price/commission/Interest due to Co-operative Societies forthe sugar season 2006-07. The above RC alsoincludes interest of 340.66 Lac upto 7th August, 2007on cane price/ commission payable to societies andrecovery charges of 426.95 Lac which has not beenprovided for in the books of account. As per the InterimOrder dated 27th February, 2008 of Hon’ble SupremeCourt, there shall not be any recovery charges orinterest for delayed payment at this stage

36. As per past practice, the closing stock of finished goods inSugar Unit has been valued at cost or net realizable value(NRV) whichever is lower.


Upto 2008-09, for computing NRV, the closing stock of finished goods, to the extent of levy obligation pending as at the year end,was valued at levy sale price and balance quantity was valued at prevailing free market prices. However, with effect from financialyear 2009-10, for computing NRV, the closing stock, to the extent of levy quantity quota allotted to the Sugar Unit for the period fromApril, 2012 to August, 2012, has been valued at levy, sale price and the balance quantity has been valued at prevailing free marketprices. Had the NRV been computed as per past practice followed upto 2008-09 as stated above, the value of closing stock wouldhave been lower by 605.65 Lac (Previous Year 623.10 Lac).

37. The following are the particulars of dues on account of sales tax, excise duty, income tax and others as at 31st March, 2012 thathave been disputed by the Company in appeals pending before appellate authorities.

Name of Nature of the dues Amount of Amount Period to which the Forum wherestatute dues deposited amount relates disputes is pending

( Lac) underprotest

( ‘ Lac)U.P.VAT Act VAT Tax, Penalty, 2584.59 5.98 1987-88, 1990-91 & Allahabad High Court.

Interest, Exemption 1991-92, May 91 toto New Units. March 96VAT Tax and Penalty @ 732.80 377.08 1982-83 to 1986-87, Commercial Tax

1988-89, 1992-93, Tribunal, Ghaziabad1994-95 to 1997-98,1999-2000 to 2001-02

VAT Tax and Penalty 68.24 0.24 1986-87 + Interest and Jt.Commr.(A), Ghaziabad.2007-08

VAT Tax 0.56 0.44 2005-06 and 2009-10 Dy. Commr. (Assessment),Modinagar.

Central Central Sales Tax, 213.14 36.40 1985-86, 1988-89, Commercial Tax Tribunal,Sales Tax 1992-93, 1994-95 to Ghaziabad.Act 1997-98, 1999-2000

to 2000-01Central Sales Tax 1.01 - 2005-06 Dy.Commr.(A),Modinagar.Sales Tax 3.32 3.32 2011-12 Deputy Commissioner

(Assessment), ModinagarState Sales State Tax 10.56 0.20 1992-93 Addl.Commr. Sales Tax,Tax Act Delhi.

Sales Tax 5.97 2.00 1985-86, 1997-98, State Tax2002-03, 2004-05 & 2005-06

Penalty (HGST) 0.30 - 1991-92 Tribunal Sales Tax,Chandigarh.

State Tax 15.79 1.79 1989-90 to 1993-94, Dy.Commr. (A), States1998-99 and 2006-07

Central Sales Central Sales Tax 1.92 0.29 1988-89 to 1992-93. Appellate Authority/DCTax Act (States) (Appeals)Wealth Tax Act Wealth Tax 1.16 0.59 2007-08 I.T.A.T.,New DelhiWealth Tax Act Wealth Tax 0.65 0.65 2008-09 CIT(Appeals)New DelhiCentral Excise Custom Duty *43.91 - 1.3.2001 to 25.4.2001 Civil Court Ghaziabad& Custom Act

Excise Duty 0.70 - 2002-03 and 2003-04 Supreme Court of IndiaExcise Penalty 0.07 - 2010-11 Commissioner of Central

Excise, Ghaziabad.Excise Duty 167.43 50.00 1985-86 Delhi High Court

0.49 0.25 2004-05 Allahabad High Court68.54 - February 1981 to CESTAT

February, 1987,2002-03 to 2009-10

5.00 - Information not Information notavailable. available.

59.17 - 2009 onwards Supreme Court of India6.34 6.34 2009 onwards Supreme Court of India

@ Provided for 82.60 Lac in the Accounts

*Provided for in the Accounts. **Provided for 32.20 Lac in the Accounts


38. RELATED PARTIES DISCLOSURE01 Entities under the Control of the Company :

Subsidiaries :Own Investment (India) LimitedYour Investment (India) Limited

02 Key Management Personnel :Shri Mahendra Kumar Modi Managing DirectorShri Umesh Kumar Modi Managing Director

03 Other Related Parties with whom theCompany had transactions etc :Enterprises over which the Key Management Personnel and their relatives are able to exercise significant influence:

Modipon LimitedBihar Sponge Iron LimitedSBEC Sugar LimitedMorgardshammar India LimitedModi Mundipharma Pvt. LimitedWin-Medicare Pvt. LimitedModi Motors Private LimitedModi Line Travel Services Pvt. Ltd.Modi Revlon Private LimitedH.M. Tubes & Containers Pvt. Ltd.Modi Senator (I) Pvt. LimitedJayesh Tradex Pvt. LimitedA to Z Holding Pvt. LimitedAshoka Mercantile LimitedWeld Excel India Limited

04 Disclosure of transactions between the Company and related parties and the status of outstanding balances as at 3lst March,2012:

(A) Transactions with the enterprises over which the Key Management Personnel and their relatives are able to exercisesignificant influence:

( in Lac)

Year2011-12 2010-11

Sale of GoodsSBEC Sugar Limited 4870.72 7461.19Weld Excel India Limited 202.07 253.78

5072.79 7714.97Sale of Assets

Bihar Sponge Iron Limited 3.01 -Purchase of Goods/Raw Materials

Weld Excel India Limited 202.55 335.71SBEC Sugar Limited 52.93 4.37Jayesh Tradex Pvt. Limited 52.49 -Others 15.04 12.88

323.01 352.96

Purchase of Assets 2.00 1.65Rental Income

Win Medicare Private Limited 81.64 58.15Weld Excel India Limited 4.62 4.62Modi Motors Pvt. Ltd. 15.73 12.15Modi Mundipharma Pvt. Ltd. 11.66 7.65Others 14.36 8.01

128.01 90.58

Particulars


( in Lac)

Year2011-12 2010-11

Payment of Lease RentWeld Excel India Limited (Foot note No. 6 & 7) 14.42 10.58

Expenses reimbursedWeld Excel India Limited (Foot note No. 2) 75.57 58.22Others 0.38 0.46

75.95 58.68

Job Work Charges Paid 54.35 9.82Expenses realized

Weld Excel India Limited (Foot note No. 3) 38.87 21.06Modipon Ltd. 0.38 3.09Win Medicare Pvt. Ltd. 3.45 -Others 2.80 3.03

45.50 27.18

Job Charges receivedWeld Excel India Limited 34.14 -

Royalty Fee receivedWeld Excel India Limited 19.77 22.14

Commission paid for sale promotionAshoka Mercantile Ltd. 22.34 15.44

Receiving of Services 2.79 1.34

Security deposits givenModipon Limited 1.43 97.95Ashoka Mercantile Ltd. 1245.00 -Weld Excel India Limited 4.00 -

1250.43 97.95

Advance received against sale of goodsSBEC Sugar Limited - 450.00Interest paid on above advance - 17.23

Loans and Advances takenWeld Excel India Limited (Foot Note No. 4) 350.00 -

(B) Balances outstanding at the year end:Amount recoverable

Good 27.36 58.58Doubtful 3.78 3.78

Loans and advance recoverableWeld Excel India Limited (Foot Note No. 5) 372.67 399.58

Security deposit to Weld Excel India LimitedAgainst Cylinders (Foot Note No. 6) 39.00 39.00Against Oxygen Filling Plant (Foot Note No. 7) 4.00 -

Security deposit recoverable for quartersAshoka Mercantile Limited (Foot Note No. 8) 1245.00 -Modipon Limited 147.63 146.20

Sundry DebtorsSBEC Sugar Limited 1888.77 1734.48Weld Excel India Limited 67.71 -

Particulars


( in Lac)

Year2011-12 2010-11

Amount payable 10.68 77.63Unsecured Loan taken Outstanding

Weld Excel India Limited 350.00 -A to Z Holding Pvt. Ltd. 24.88 149.88

Lease rent payable - 23.40

(C) Disclosure of transactions with subsidiaries:( in Lac)

Year2011-12 2010-11

Loan repaid Own Investment (India) Ltd. - 1.25Your Investment (India) Ltd. - 6.00

Dividend IncomeOwn Investment (India) Ltd. 24.42 27.72Your Investment (India) Ltd. 24.67 30.03

Interest expense - 0.47

(D) Payment to the Key Management Personnel:( in Lacs)

Year2011-12 2010-11

i) Managerial RemunerationShri Mahendra Kumar Modi 18.00 14.38

ii) Amount recoverableShri Mahendra Kumar Modi - 6.33(recovered subsequently)

iii) Amount payable to Managing Director Shri Mahendra Kumar Modi 0.62 -

iv) Amount payable (for gratuity) 3.35 3.35

Foot Notes :1. This excludes amount of Steel Unit in view of non-incorporation of Balance Sheets for these years on account of non-availability

of opening audited balances as on 01.04.1993.2. During the year 2010-11, Electrodes unit of the company has taken office premises in Delhi on sublease basis from Weld Excel India

Limited (WEIL), a related party, under operating lease for three years non cancelable period at montly rent of 4.37 Lac andallowed space for two work stations to WEIL.

3. During the current year, Electrode unit of the company has taken office cum guest house premises in Chatarpur and Aman, NewDelhi on operating lease basis and having sharing arrangement with WEIL, a related party, and Shri Mahendra Kumar Modi,Managing Director for a period of two years wef 1st November, 2011 and 1st January, 2011 respectively at monthly rent of 1.25Lac (our share) and per day rent of 0.08 Lac (our share) respectively.

4. Loan taken on 31st March, 2012 and repaid fully on 3rd April, 2012..5. Pursuant to an agreement for commitment to supply electrodes, an unsecured interest free advance of 500 Lac was given during

2009-10 which is being adjusted from supply of goods @ 20% of invoice value. Accordingly, 28.36 Lac (Previous year 62.27Lac) was recovered/adjusted against above advance.

6. 1960 Cylinders taken on operating lease at monthly rent of 45.00 per cylinder.7. Oxygen Filling Plant taken on operating lease for 2 years (non-cancelable) at monthly rent of 1.00 Lac for a period of two years

with an option two renew for another two years.8. Security deposits (unsecured interest free) amounting to 1245.00 Lac given ( 1100 Lacs during May, 2011 and 145.00 Lac

on 30th March, 2012) against temporary possession of 59 houses in Modinagar.


39. In the recent past, the Arc Electrode Industry in the country has been facing stiff competition from international players who enteredIndian market and started aggressive publicity to capture it. This resulted in adverse impact on domestic companies. To cope withthe treat, the electrode unit of the company has also undertaken publicity campaign through advertisement in theaters in differentstates, Banners, Wall Painting, Hoarding, New Bulletin, Calendars etc. this has enabled the company to sustain the competitionand resutled in increase in turnover by almost 30%.

Further, we give below figures on advertisement during last three years :

2009-10 39,95,226

2010-11 37,28,669

2011-12 3,91,77,460

40. Additional information as required by Revised Schedule VI of Companies Act, 1956:(i) Prior period items:

( in Lacs)

Sl.No. Particulars For the year For the yearended 31st ended 31st

March, 2012 March, 2011(A) Income

(i) Revenue from operation (2.34) -(ii) Other Income 0.14 -(iii) Reversal of finance costs 2.05 -(iv) Reversal of other expenses 0.40 -

Total 0.25 -

(B) Expenditure(i) Finance costs 1.09 10.68(ii) Employee benefits expenses 1.94 1.41(iii) Other expenses 28.21 18.46

Total 31.24 30.55

(ii) Cost of raw materials consumed:( ‘in Lacs)


March, 2012 March, 2011

(a) Sugar cane 17,959.05 13,939.39(b) Molasses 7.54 4.72(c) Extra neutral alcohol (ENA) 43.35 240.37(d) Vatted Malt Scotch Whisky 7.66 -(e) Oils 80.82 90.28(f) Chemical 3,043.92 2,456.51(g) Wire 3,465.36 2,606.33(h) Carbide 199.44 183.87(i) Carbondioxcide (CO2) 52.96 64.07(j) Argon Gas 38.75 -(k) Others 18.00 10.29

Total 24,916.85 19,595.83


(iii) Manufactured goods:( in Lac)

Sl.No. Particulars Sales @ Opening Inventory Closing InventoryFor the year For the year For the year For the year For the year For the year

ended ended ended ended ended ended31 March 2012 31 March 2011 31 March 2012 31 March 2011 31 March 2012 31 March 2011

(a) Sugar 15,744.67 22,488.11 1,014.71 6,550.02 4,151.93 1,014.71(b) Molasses (By product) 502.18 459.38 157.03 265.80 124.07 157.03(c) Bagasse (By product) 452.00 633.59 35.85 - 27.50 35.85(d) Spirit 7.39 302.70 6.59 217.63 57.13 6.59(e) Extra neural alchohol (ENA) - - 7.62 3.03 26.18 7.62(f) Indian made foreign liquor (IMFL) 704.39 210.72 9.89 - 99.07 9.89(g) Country liquor 10,163.80 5,525.81 30.49 - 162.03 30.49(h) Bio-organic manure 19.47 12.02 9.72 3.96 - 9.72(i) Special denatured spirit 552.78 792.66 - - - -(j) Paints & varnish 2,720.79 2,492.08 168.79 135.57 72.11 168.79(k) Disolved Acetylene 317.70 296.66 3.42 2.94 5.91 3.42(l) Carbon di oxide 101.95 124.20 0.38 0.30 0.61 0.38

(m) Argon 84.53 - - - 0.74 -(n) Oxygen 4.18 - - - 0.65 -(o) Welding Electrodes 9,239.53 7,197.23 514.72 406.36 549.35 514.72(p) Flux 154.59 118.67 - - - -(q) Wires* - - 442.63 442.63 442.63 442.63(r) Rods,Flats,Sections* - - 398.25 398.25 398.25 398.25(s) Oxygen Gas* - - 0.05 0.05 0.05 0.05(t) Scrap* - - 54.81 54.81 54.81 54.81

(u) Others - - - - 8.97 -TOTAL 40,769.95 40,653.83 2,854.95 8,481.35 6,181.99 2,854.95

* This represents figures of steel unit as at 31st March, 1992.{ Refer note 27(4) }.@ Inclusive of Excise-duty but excludes rebates and discounts.

(iv) Traded goods:-( in Lac)

Sl.No. Particulars Sales Purchases Opening Inventory Closing InventoryFor the For the For the For the For the For the For the For the

year year year year year year year yearended ended ended ended ended ended ended ended

31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March2012 2011 2012 2011 2012 2011 2012 2011

Satina Uni.Stainer 18.96 9.16 10.14 5.83 1.70 1.61 0.47 1.70Glowlite putty 1.94 8.77 0.94 4.24 0.23 0.38 0.27 0.23Oxygen Gas 90.16 114.24 53.25 68.85 0.09 0.08 0.02 0.09Nitrogen Gas 23.07 30.17 11.17 14.81 0.17 0.23 0.19 0.17Hydrogen Gas 37.46 26.24 23.34 16.49 0.63 1.03 0.71 0.63N2H2 Mixure 9.55 8.16 2.84 2.88 0.03 0.04 0.06 0.03Carbon di oxide Gas 21.53 16.46 10.79 9.37 0.03 0.05 0.06 0.03Argon Gas 1.41 75.73 0.02 31.10 0.72 0.54 - 0.72Zero Air Gas 1.64 1.74 0.58 0.69 0.05 0.03 0.03 0.05

205.72 290.67 113.07 154.26 3.65 3.99 1.81 3.65(v) Services rendered:-

( in Lac)

Sl.No.Particulars For the year For the yearended ended

31 March 12 31 March 11(a) Conditioning charges of cylinders 9.57 8.27(b) Job work charges 63.62 67.68

TOTAL 73.19 75.95


(vi) Work-in-progress:-( in Lac)

Sl.No.Particulars Opening Inventory Closing InventoryFor the year For the year For the year For the year

ended ended ended ended31 March 12 31 March 11 31 March 12 31 March 11

(a) Sugar 124.98 198.83 168.88 124.98(b) Indian made foreign liquor (IMFL) 2.17 - 4.37 2.17(c) Country liquor 5.66 6.33 4.78 5.66(d) Paints & varnish 57.90 46.80 30.11 57.90(e) Welding Electrodes 143.58 133.08 174.87 143.58(f) Flux 32.00 49.12 31.99 32.00(g) steel 40.32 40.32 40.32 40.32

TOTAL 406.61 474.48 455.32 406.61

(vii) Other Information:-( in Lac)

Sl.No.Particulars For the year For the yearended ended

31 March 12 31 March 11( in Lac) % ( in Lac) %

(A) Value of imports on CIF basis:(i) Raw materials(cost of material acquired) 197.82 69.62(ii) Components & spare parts 0.61 -(iii) Capital goods (moulds ) 19.66 -

(B) Expenditure in foreign currency:(i) Travelling 10.13 3.98(ii) Stores purchased 123.57 1.00(iii) Other matters 1.86 0.04

(C) Value of imported/indigenous:(a) Raw materials consumed:(i) Imported 179.24 0.72 49.28 0.25(ii) Indigenous 24,737.61 99.28 19,546.55 99.75

TOTAL 24,916.85 100% 19,595.83 100%

(b) Spare parts and components consumed: (i) Imported 0.69 0.18 0.01 0.00(ii) Indigenous 387.77 99.82 380.95 100.00

TOTAL 388.46 100% 380.96 100%

Foot Note :-As segregation between spare parts and components is not possible, the value of consumption of spare parts and components hasbeen aggregated. The figures given in (vii)(c)(b) above are as certified by the Officials of the Company.





AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF MODI INDUSTRIES LIMITED(1) We have audited the attached Consolidated Balance Sheet of the Group, comprising of MODI INDUSTRIES LIMITED (‘the company’) and its

two subsidiaries as at 31st March, 2012 and also the consolidated Statement of Profit and Loss and the consolidated Cash Flow Statementfor the year ended on that date, both annexed thereto. The attached consolidated Balance Sheet does not include Assets and Liabilitiesincluding Contingent Liabilities and additional information of Steel Unit of the company as at 31st March, 2012 but includes balances as on 31st

March, 1992 except for reduction of: (i) unsecured loans by 323.95Lac in view of write-back of 278.95Lac during the financial year 2004-05 and payment of 45Lac during 2005-06 on account of one-time settlement of dues of a bank and (ii) net fixed assets by 669.37Lac(Previous year 662.52Lac) on account of provision for depreciation for the period 01.04.1993 to 31.03.2012 on fixed assets as stated inNote 27(4)(c). The consolidated Statement of Profit and Loss does not include: (i) certain provisions as stated in Note 27(4) and (ii) loss, amountunascertained, of the Steel Unit for the year 1992-93 in view of non-incorporation of annual accounts of the Steel Unit for the above year. Theconsolidated Cash Flow Statement, except for certain adjustments made as stated in foot-note 2 of cash flow statement, does not includeadjustments for Cash Flows from investing/financing activities and changes in assets and liabilities of Steel Unit of the company in view of non-availability of audited Balance Sheets of the Unit as on 31.03.2011 and 31.03.2012. {Refer Note 27(4)}. These financial statements are theresponsibility of the Company’ management and have been prepared by the management on the basis of separate financial statements ofthe components. Our responsibility is to express an opinion on these financial statements based on our audit.

(2) Subject to paragraphs 1 & 5 of this report, we conducted our audit in accordance with auditing standards generally accepted in India. ThoseStandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

(3) We did not audit the financial statements of both the subsidiaries, whose financial statements reflect total assets of 54.11Lac (Previousyear 48.40Lac) as at 31st March, 2012, the total revenue of 63.60Lac (Previous year 75.71Lac) and cash inflows (net) amounting

5.55Lac (Previous year 15.70Lac) for the year then ended. These financial statements and other financial information have been auditedby other auditor whose reports have been furnished to us and our opinion is based solely on the report of other auditor.

(4) We report that the consolidated financial statements have been prepared by the company’ management in accordance with the requirementsof Accounting Standards (AS) 21, Consolidated financial statements notified pursuant to the Companies (Accounting Standards) Rules, 2006,(as amended). {Refer note 27(40)}.

(5) We report that the books of accounts, vouchers and other documents of the Steel Unit of the company for 1992-93 were not made available tous and consequently audit could not be conducted in respect of the same {Note 27(4)}. Therefore, as stated in Para 1 above, the attachedConsolidated Balance Sheet, Consolidated Statement of Profit and Loss and Consolidated Cash Flow Statement does not include: (a) thefinancial data/impact of working results and of declaration of closure/post-closure transactions, which includes realization of depot sales/duesfrom debtors, provision/payment of final dues of employees and payments to various parties and manufacturing/personnel/administrationexpenses etc., of the Steel Unit of the company for the year 1992-93 during which the Unit had operated for ten months the exclusion of which,in our opinion, substantially impairs the presentation of above Consolidated financial statements of the Group especially in view of the fact that(i) the assets and liabilities of Steel Unit constituted 28% and 43% respectively of the total Assets & Liabilities of the Company as at 31st March,1992 and the Income & Expenditure of the Steel Unit constituted 30% and 32% respectively of the total Income & Expenditure of the Companyfor the said year which resulted in a loss of 787.22Lac for the Unit and (b) impact on assets , liabilities and cash flows on account of non-incorporation of balance sheets for the years 1993-94 to 2011-12 as stated in note 27(4)(c).

(6) We have obtained the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our auditof the Company except in respect of Steel Unit as mentioned below and matter referred in paragraph 12 below: In case of Steel Unit, no details, information and explanations are available for the opening assets and liabilities as on 01.04.2011 and forcontingent liabilities and additional information etc. as on 01.04.2011 in view of non-incorporation of: (i) accounts of Steel Unit for 1992-93 and(ii) balance sheets for the years 1993-94 to 2011-12 as stated in note 27(4)(c). (See paragraphs 1 and 5 above).

(7) i. Understatement of accumulated losses on account of non-incorporation of impact of operational/working results/declaration of closure andpost closure transactions of Steel Unit for the year 1992-93, amount/impact unascertained. (Refer Note 27(4) and Paragraph 5 above).

ii. Though the Company has incurred losses far in excess of paid-up capital/reserves and has been declared a sick company, the accountshave been prepared on a going concern basis for reasons stated in Note 27(17).

iii. Understatement of losses on account of:(1) Non-provision of earned leave encashment for Steel Unit, amount unascertained. {Note 27(23)};(2) Non-provision of interest on loans, obsolete inventories, doubtful debtors/loan and advances and impairment loss, etc. in Steel Unit as

stated in Note 27(4)(f(i) to (x) of consolidated financial statements. Amount of non-provision not ascertained.(3) Non-provision for diminution in market / book value of quoted & unquoted investments (amount unascertained) held by both the

subsidiaries as required by AS-13 i.e. Accounting for Investments as issued by the Institute of Chartered Accountants of India.{Note27(37)}

iv. (1) Non-provision of interest 124.28 Lac up to 31st March, 2012 on disputed price of levy sugar{Note 27(7)});(2) (a)Non-provision of late payment surcharge/recovery charges 302.66Lac (Previous year 302.66Lac) {Notes 27(9)} and (b)Non-provision of demands of U.P. Power Corporation Ltd of 1311.49Lac (Previous year 1311.49Lac). {Note 27(4)(f) (xi)(c)}.(3) Non-provision of disputed ESI demand 60.03Lac (for the year 1.17Lac {(Note 27(10)};(4) Non-provision of disputed House-tax demand 188.63Lac (Previous year 188.63Lac) {Note 27(11)};(5) Non-provision of Gratuity Liability on actuarial basis for the period up to 30th September, 1987, 84.82Lac (Previous year 84.82Lac)

{Note 27(13)(a)};(6) Non-provision of simple, penal and compound interest of 20184.08 Lac (for the year 3172.65 Lac) on term loans/debentures and

public deposits {Note 27(18)(a) and (f)) and interest/ bank charges 2205.82Lac (for the year 322.05Lac) on cash credit from banks{Note 27(18)(d) & (e)};


(7) Non-provision of: (i) Sales-tax 2455.78Lacs excluding interest (Previous year 2455.78Lacs) {Note 19(a)} and (ii) demands forsales-tax & penalty of 175.24Lacs {Note 27(1)(c)}. Further, no due certificate of Sale-tax authorities is awaited for waiver ofbalance amount of interest and penalty as mentioned in {Note 27(19)(c)};

(8) Non-provision of Wages 27.46 Lac (Previous year 27.46 Lac) for the lock-out period {Note 27(21)};(9) Non-provision of excise-duty 167.43Lacs (Previous Year 167.43Lacs) {Note 27(29)};(10)Non-provision of recovery charges of 917.75 Lac (Previous Year 912.09Lac) in view of the reasons stated in Note 27(35)(a) to (c).(11) Valuation of closing stock in Sugar Unit is higher by 605.65Lac (Previous Year 623.10Lac. {Note 27(36)}.

(8) Confirmation of Debit/Credit balances of debtors/ creditors/certain banks and of parties who have discounted sale bills of Sugar Unit werenot obtained. Impact on annual accounts of the company not ascertainable.{Note 27(27)}.

(9) Cars costing 92.82Lac (Previous Year 100.30Lac) purchased in the name of employees/Corporate Advisor are yet to be transferredto the name of the company. However, these persons have given disclaimer in favor of the company. (Refer Foot-Note E of Note10).

(10) Our audit observations under sections 227(1A) & 372A of The Companies Act, 1956 are as under:As stated by the management in foot-note 8 of note 27(38), the company has given unsecured interest free security deposit amounting to

1100Lac during the month of May 2011 and additional security of 145Lac on 30th March, 2012 against temporary possession of 59houses to Ashoka Mercantile Limited, a related party, and the amount of 1100Lac ( 145Lac received back on 03.04.2012) is stilloutstanding as security deposit in the books of account of the company. We are informed by the company that few of these houses wereallotted to employees of the company and the same are yet to be occupied by them. In our opinion, the above interest free unsecured loansgiven by the company {i.e. a sick company as mentioned in note 27(17)} to a related party amounting to 1245Lac have been shown asdeposits by the company as on 31st March, 2012.

(11) We invite attention to:(i) Note 27(33) regarding entering into agreements to sell 215 (Previous year 215) residential quarters, note 27(34)(a) regarding entering into

lease, including perpetual lease agreements for 18428.46 Sq. Meters out of total area of 6.75Lac Sq. Meters approx. of factory land& buildings and note 27(34)(b) regarding entering into perpetual lease agreement for 1584 Sq. Mtrs. of factory land for which theapprovals of financial institutions, to whom these quarters and factory land & buildings are mortgaged, were not obtained.

(ii) Accounting treatment given to the manufacture and sale of Vodka and whisky by the Distillery unit of company as stated in note 27(16)whereas it had no impact on the net loss of the company for the year.

(12) As stated by the management in note 27(42), the Electrode Unit of the company has incurred expenditure for advertisement of productsamounting to 391.77Lac (previous year 37.29Lac) including 350Lac by way of slide shows in media like film theatres through twoparties. In the absence of sufficient appropriate audit evidence i.e. prevailing market rates/charges paid to theatre owners / list of theatreswhere slide shows have been exhibited and non-confirmation of the authorized signatories of those theatres for the agreed exhibitions of slideshows having actually taken place during that contracted period and also on account of nature of services i.e. slide shows in theatres, whichcan’t be verified / vouched from any other supporting evidences except invoices of parties, we do not express an opinion on these expensesincluded in Statement of Profit and loss.

(13) We further report that, without considering items mentioned at 7 (i) to (iii) and 8 to 11 (i) & 12 above, the possible effects of which could notbe determined, had the observations made by us in paragraphs 7(iv) and 11(ii) above been considered, the loss for the year beforeappropriations and minority interest would have been 33,073.80Lac ( as against the reported loss of 4,262.68Lac), negative balancein Reserves and Surplus in note 2 would have been 37,202.12Lac (as against the reported negative figure of 8,391.00Lac), currentassets would have been 17,744.32Lacs (as against the reported figure of 19,434.92Lacs), Current Liabilities would have been

56,033.91Lac (as against the reported figure of 28,072.59Lac), long-term borrowings would have been 5,051.96Lac (as against thereported figure of 5,892.76Lac), revenue from operations income would have been 40,659.06Lac (as against the reported figureof 41,486.36Lac) and total expenses ( before exceptional items) would have been 62,590.74Lac (as against the reported figureof 34,606.92Lac).

(14) In view of the significance of our observations in paragraphs 1 and 5 to 13 above including paragraph 12 above regarding inability to expressour opinion on certain expenses and especially in view of the fact that the state of affairs would change substantially in case the statementof profit and loss for the financial year 1992-93 and balance sheet as on 31st March, 2012 of Steel Unit of the company were included, whichwe are unable to quantify, we are of the opinion, the said consolidated accounts DO NOT give a true and fair view: (a) In the case of theconsolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2012, (b) in the case of consolidated Statement of Profitand Loss, of the loss for the year ended 31st March, 2012 and (c) in the case of consolidated Cash Flow Statement, of the cash flows for theyear ended on that date.


( Regn. No. 000051N )

© (RAMESH CHAND GOYAL)PARTNER

PLACE: NEW DELHI Membership No.12628DATED: 12th November, 2012


Consolidated Balance Sheet as at 31st March, 2012( in Lac)

Particulars Note As at As atNo. 31.03.2012 31.03.2011

1 2 3 4

I EQUITY AND LIABILITIES :(1) Shareholders’ funds:(a) Share Capital 1 371.42 371.42(b) Reserves & Surplus 2 (8,391.00) (4,120.31)

(8,019.58) (3,748.89)(2) Minority interests 0.06 0.07(3) Non-current liabilities :(a) Long term borrowings 3 5,892.76 4,694.34(b) Other long term liabilities 4 1,411.79 1,287.77(c) Long term provisions 5 1,094.60 1,073.04

8,399.15 7,055.15(4) Current liabilities :(a) Short term borrowings 6 1,878.69 1,508.46(b) Trade payables 7 13,714.26 7,363.53(c) Other current liabilities 8 11,721.51 12,307.82(d) Short term provisions 9 758.13 482.33

28,072.59 21,662.14TOTAL 28,452.22 24,968.47

II ASSETS(1) Non-current assets(a) Fixed assets :

i) Tangible assets 10 7,552.98 7,722.99ii) Intangible assets 11 27.91 24.53iii) Capital work-in-progress 38.84 45.37iv) Intangible assets under development - 9.19

(b) Non-current investments 12 801.58 795.30(c) Long term loan and advances 13 595.99 591.37

9,017.30 9,188.75(2) Current assets(a) Inventories 14 8,291.95 4,513.74(b) Trade receivables 15 5,829.93 5,367.79(c) Cash and bank balances:-

(i) Cash and cash equivalents 16(i) 893.00 1,963.50(ii) Other bank balances 16(ii) 875.09 809.84

(d) Short term loans and advances 17 3,402.52 1,950.72(e) Other current assets 18 142.38 1,174.13

19,434.92 15,779.72Accounting policies and other notes to financial statements 25 to 27TOTAL 28,452.22 24,968.47





Consolidated Statement of Profit and Loss for the year ended 31st March, 2012( in Lac)

S.No. Particulars Note For the For theyear ended year ended

No. 31.03.2012 31.03.2011

I Revenue from operations 19 41,486.36 41,202.33Less:- Excise duty 10,808.73 6,617.49

30,677.63 34,584.84II Other income 20 514.65 584.84III Total Revenue ( I + II ) 31,192.28 35,169.68IV Expenses:-

Cost of materials consumed 27(44)(ii) 24,916.85 19,595.83Purchases of stock-in-trade 27(44)(iv) 113.07 154.26Changes in inventories of finished goods, 21 (3,373.91) 5,694.61work-in-progress and stock-in-tradeEmployee benefits expense 22 3,250.16 2,740.38Finance costs 23 1,038.94 1,193.35Depreciation and amortization expense 10 & 11 622.36 564.46Other expenses 24 8,039.45 5,557.94Total expenses 34,606.92 35,500.83

V Profit/(Loss) before exceptional and (3,414.64) (331.15)extra-ordinary items and tax ( III-IV )

VI Exceptional items:-Cane price differential for 2007-08 27(8) (847.77) -Interest income on income tax refund - 816.11

VII Profit/(Loss) before extra-ordinary items (4,262.41) 484.96and tax ( V-VI )

VIII Extra-ordinary items - -IX Profit/(Loss) before tax (VII-VIII) (4,268.41) 484.96X Tax expenses:-

(1) Current tax 0.27 0.09(2) Deferred tax - -

XI Profit/(Loss) after tax but before minority interest (4,262.68) 484.87Minority interest (0.06) (0.07)

(4,262.74) 484.80XII Profit/(Loss) from continuing operations (4,120.92) 636.97XIII Profit/(Loss) from discontinuing operations 27(4)(e) (141.82) (152.17)XIV Tax expense of discontinuing operations - -XV Profit/(Loss) from discontinuing operations (141.82) (152.17)

(after Tax) (XIII-XIV)XVI Profit/(Loss) for the period (XIII+XV) (4,262.74) 484.80

XVII Basic /Diluted Earnings per equity share of 10 each (in Rupees) 27(45) (129.00) 14.47

Accounting policies and other notes to financial statements 25 to 27





CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012.

Particulars 2011-12 2010-11 in Lac in Lac in Lac

A. CASH FLOW FROM OPERATING ACTIVITES :Profit before Tax (4,262.41) 484.96Add: Adjustments for :i) Depreciation 622.36 564.46ii) Assets/Investment written off/ 5.71 9.77

Loss on Sale of Fixed Assets/Storesiii) Interest Expenses 1,038.94 1,193.35iv) Provision for Doubtful Debts & Advances 40.55 8.16v) Amounts/Claims/Bad Debts written off 0.52 5.02

(Net of provisions)vi) Provision for obsolete spare-parts & stores 2.00 -

1,710.08 1,780.76

(2,552.33) 2,65.72Less: Adjustment for :i) Interest Income 108.23 130.32ii) Profit on Sale of Fixed Assets 3.82 12.76iii) Excess Provision written back 30.19 57.62iv) Unclaimed credit balances W/back 47.75 3.24v) Amount written back 5.63 7.52vi) Interest Income on Income Tax refund - 816.11vii) Profit on sale of stores - 3.81viii) Depreciation add back 0.09 -ix) Dividend Income 31.50 31.50

227.21 1,062.88

Operating Profit before Working Capital Changes (2,779.54) 1,202.84

Adjustments for :Trade Receivables (501.47) (2,235.29)Inventories (3,785.19) 5,740.54Trade Payable 7,138.52 (2,440.42)Loans/Advances and other assets (1,511.13) (148.70)Other bank balances (65.25) 75.83

Cash Generated from Operations (1,503.66) 2,194.80Interest Paid (Foot-note 1 below) (158.62) (304.64)Income Tax Paid (0.15) (0.14)Interest received on tax refund 827.73 -income tax refund 229.93 -

Net Cash from Operating Activities (A) (604.77) 1,890.02


(B) CASH FLOW FROM INVESTING ACTIVITIES :Purchase of Fixed Assets (435.70) (885.30)Sales of Fixed Assets 14.26 45.68Interest Received 82.68 124.78Dividend Received 31.50 31.50

Net Cash Flow from Investing Activities (B) (307.26) (683.34)(C) CASH FLOW FROM FINANCING ACTIVITIES :

Secured term borrowings from bank 1.43 -Secured borrowings from banks (over draft) 30.50 64.04Unsecured Fixed Deposits paid (25.92) (27.10)Dividend Paid (including Dividend distribution tax) (8.01) (9.65)Debentures redeemed - (0.04)Unsecured borrowings from others (net) 1,445.29 706.72Interset paid on borrowings (1,641.46) (749.57)

Net Cash from Financing Activities (C) (198.17) (15.60)

*Inter Unit Balances (Net) (D) (Foot note 2 below) 39.70 (634.88)Net Increase/(decrease) in cash andCash Equivalents (A+B+C+D) (1,070.50) 556.20Opening Cash and Cash Equivalents 1,963.50 1,407.30Closing Cash and Cash Equivalents 893.00 1,963.50

FOOT NOTES :1. (a) Interest credited to accounts of suppliers, C & F agents and dealers etc. is treated as paid.

(b) Interest paid & increase in Unsecured borrowing from others includes 759.51 Lac (Previous Year 633.60 Lac) eachbeing Interest accrued & due on 31.03.2011 converted into Loan.

2. In view of non availability of audited balance sheet as on 31.03.2011 and 31.03.2012 of Steel Unit, cash flow from investing/financing activities and changes in current assets & liabilities of steel unit are not included in the Cash Flow Statement exceptfor inclusion of net inflow of 39.70 Lac on account of net decrease in inter unit balances appearing in Note 17 i.e. Short termloans & advances {Refer Note 27(4)}.

3. Figures in brackets represents outflows.4. Previous Year figures have been rearranged/regrouped wherever considered necessary.

Particulars 2011-12 2010-11 in Lac in Lac





Notes Forming part of the Consolidated Financial Statements for the year ended 31st March, 2012

Note no.1 SHARE CAPITALParticulars As at As at

31.03.2012 31.03.2011

Authorised:-40,00,000 Equity shares of 10/- each 400.00 400.001,00,000 15% Redeemable cumulative 100.00 100.00

Preference shares of 100/- each 500.00 500.00Issued, subscribed and paid up:-33,09,214 Equity shares of 10/- each fully paid-up 330.92 330.92

Less: Calls unpaid (Directors and Office rs) - -Less: Calls unpaid (others) 0.24 0.24

330.68 330.6840,741 15% Redeemable cumulative 40.74 40.74

Preference shares of 100/- each fully paid-up

TOTAL 371.42 371.42

Foot notes:(1) (a) Details of equity shares held by each shareholder holding more than 5 percent shares as at the end of financial year



(i) Status Mark Finvest Limited 227844 6.885 227844 6.885(b) Details of preference shares held by each shareholder holding more than 5 percent shares as at the end of financial year



(i) ICICI Bank 7794 19.13 7794 19.13(ii) The Oriental Insurance Company Limited 6550 16.08 6550 16.08(iii) The New India Assurance Company Limited 13624 33.44 13624 33.44(iv) The United India Insurance Company Limited 4093 10.05 4093 10.05(v) General Insurance Corporation of India 3560 8.74 3560 8.74(vi) National Insurance Company Limited 4912 12.06 4912 12.06

(2) (a) Cumulative Preference Shares were due for redemption on 31st December, 2010. The company moved Misc. Application(MA) u/s 22(3) of the SICA before Hon’ble BIFR, whereby it had sought extension and suspension of obligation in relationto the 15% Preference Shares concerning Preference Shareholders for two years. The Hon’ble BIFR vide its order dated18th January, 2011 dismissed the application of the Company. Consequent to the order, the company had written lettersto the Institutional Preference Shareholders for settlement and redemption of Preference Shares. Further, negotiationsare pending and preference shares are overdue for redemption as on 31st March, 2012.

(b) Arrears of dividend on Cumulative Preference Shares amounts to 129.84 Lac (upto 31st March, 2011 123.73 Lac).

in Lac


Note no. 2 RESERVES & SURPLUS( in Lac)

Sl.No. Particulars Opening Balance Addition Deduction Closing Balance

(1) Capital Reserve 459.34 - - 459.34(2) Capital Redemption Reserve 25.11 - - 25.11(3) Shares Premium Account 22.57 - - 22.57(4) Debenture Redemption Reserve 113.00 - - 113.00(5) Revaluation Reserve 2,012.51 - - 2,012.51(6) Share options outstanding accounts - - - -(7) General Reserve 10.90 6.27 17.17(8) Other Reserves/Funds:-

-Storage fund for Molasses 70.57 5.31 - 75.88Account (see-foot note below)-Statutory Reserves 1.09 - - 1.09

(9) Surplus i.e. balance inconsolidatede Statement of Profit (6,835.40) (4,262.74) 19.53 (11,117.67)TOTAL (4,120.31) (4,251.16) 19.53 (8,391.00)Previous year (3,069.30) 497.42 1,548.43 (4,120.31)

Foot-note:-Storage fund for Molasses is Created @ 1.50 perQtls. of Molasses sold as per the provision of “ The Molasses Control (Regulationof Fund Erection of Storage Facilities ) order, 1976” and is to be utilised for construction or erection of storage facilities for Molasses.

( in Lac)

*Consolidated Statement of Profit and Loss :- 2011-12 2010-11Opening Balance (6,835.40) (7,297.98)Transferred from Profit /( Loss) for the period (4,262.74) 484.80Transferred to General Reserve 6.27 7.59Transferred to Storage fund for Molasses 5.31 5.03Share of Minority interest (0.02) -Dividend distribution tax 7.97 9.60Closing Balance (11,117.67) (6,835.40)

Note no. 3 LONG TERM BORROWINGS( in Lac)


Secured:-Bonds/debentures - -Term loan from banks (see-foot-note below ) 44.09 51.34Term loans from others - -Loan and advance from related parties - -Unsecured:-Bonds/debentures - -Term loan from banks - -Term loans from others 5,739.81 4,422.92Deferred payment liabilities - -Deposits - -Loan and advance from related parties-A to Z Holdings Private Limited - 24.89Long term maturities of finance lease obligations 108.86 195.19{Note 27 (20) (a)}TOTAL 5,892.76 4,694.34

Foot-note:-Secured by hypothecation of vehicles and is repayable in monthly installments. There are no defaults as on 31st March,2012.


Note no. 4 : OTHER LONG TERM LIABILITIES( in Lac)


Trade payable - -Others:Security received against houses 597.92 510.00Security received from others 256.88 252.41Advance received against houses{Note 27(33)} 504.50 504.50Interest payable on term loan 42.73 -Other liabilities 9.76 20.86

TOTAL 1,411.79 1,287.77

Note no. 5 : LONG-TERM PROVISIONS( in Lac)



Sub total (A) 980.18 955.86


Sub total (B) 114.42 117.18

TOTAL (A+B) 1,094.60 1,073.04

Note no. 6 : SHORT TERM BORROWINGS( in Lac)


Secured:-Loans repayable on demand:--from banks-Cash credit (including interest 1,498.19 1,498.19accrued)(see-foot note below)-overdraft from bank againstpledge of FDR’s 30.50 --from others - -Loan and advance from related parties - -Other loans and advances - -

Note no. 6 : (Cont.)


Unsecured:-Loans repayable on demand:--from banks - --from others - 10.27Loan and advance from related parties:--Weld Excel India Limited 350.00 -Deposits - -Other loans and advances - -

TOTAL 1,878.69 1,508.46

Foot-note:-1 Cash credit of 1498.19 Lac ( including interest accrued and

due of 17.61 Lac ) is secured by hypothecation of RawMaterials, Stock in Progress, Finished Goods, Stores andSpares and Book Debts and guaranteed by a ManagingDirector.{ Refer note 27(4)(f)(i)(a)}.

2 Cash credit of 58.12 Lac from Allahabad Bank is in defaultsince 1996 and 1440.03 Lac from PNB is in default since1992. Interest payable on cash credit has not been paid sincethen. {Refer note 27(4)(f)(i)(a)}

Note no. 7: TRADE PAYABLES( in Lac)


Purchase of raw material and store 12,722.83 6,325.96{Note 27 (14)}Customers/ Agents for purchase of goods 991.43 1,037.57

TOTAL 13,714.26 7,363.53

Note no.8 : OTHER CURRENT LIABILITIES( in Lac)


Current maturities oflong-term debts ( unsecured )-From related parties:-- A to Z Holding Pvt. Ltd. 24.89 125.00-From others - -Current maturities of long-term debts ( secured )-From banks 21.38 12.70-From other parties (see foot-note 1) 1,506.85 1,506.85Current maturities of financelease obligations. 155.88 212.44{Note 27 (20) (9)}


Note no.8 : (Cont.)( in Lac)


Deferred credits {Note 27 (6)} 35.11 35.11Interest accrued but not due 61.45 61.45on borrowings (unsecured)Interest accrued but not due 0.20 0.24on borrowings (secured)Interest accrued and due 1,707.46 1,707.46on borrowings ( secured )Interest accrued and dueon borrowings (unsecured)-from banks - - -from others 2.99 799.01Income received in advances 0.11 0.10Unpaid matured deposits andinterest accrued thereon(unsecured):-(see foot-note 2)-Fixed deposits 69.22 95.14-Interest accrued thereon 282.56 289.47Unpaid matured debentures andinterest accrued thereon (secured):-(see foot-note 3)-Debentures (Net calls in arrears) 537.32 537.32-Interest accrued thereon 3,052.50 3,052.50Other Payable:-Employees dues 775.98 629.66Statutory liabilities 2,097.73 2,051.83Security received from others 69.90 71.29Other liabilities 1,319.98 1,120.25

Total 11,721.51 12,307.82

Notes:-

(a) Loans aggregating to 1377.87 Lac (IDBI 627.74 Lac, ICICI 235.00 Lac, IFCI 287.66 Lac, LIC 138.97 Lac, GIC and

its subsidiaries 88.50 Lac) are secured against securities asmentioned in 3(b) below. {Refer Note 27(4)(f)(i)(b) and (f) (ii)}.

(b) Loan of 8.08 Lac from Government of Uttar Pradesh underthe Industrial Subsidised Housing Scheme is secured by1st Mortgage of Land and tenaments constructed under theScheme.Details of default not available.

(c) Loan from IDBI under Technical Development Fund Schemeamounting to 74.70 Lac is secured against Electrolyser andCopper Electrodes Machine.{Refer Note 27(4)(f)(i)(b)(ii)}.

(d) Loan taken under Equipment Finance Scheme amounting to 46.20 Lac is secured against Effluent treatment plant.

{Refer Note 27(4)(f)(i)(b)(ii)} and loan repayment is in defaultprior to year 1996 and interest payable has not been paidsince then.

(2) Fixed deposits:-

(a) Fixed deposits guaranted by managing directors 23.83 Lac(Previous year 37.47 Lac )

(b) Fixed deposits and interest payable on fixed deposits has notbeen paid since 1989-90.

(3) Debentures:-

(a) (i) 2,27,660 12.5% Mortgage Debentures (Non-Convertiblepart of 200/- each) redeemable in three yearlyinstalments of 65.00, 65.00 and 70.00 respectivelycommencing from the expiry of seventh year from the dateof allotment i.e. 29th February, 1988 and due forpayment. Interest not paid since 29th February, 1988.

(ii) 30,000-15% Mortgage Debentures of 100/- eachredeemable at 5% premium on the expiry ofseventh yearfrom the date of allotment i.e. 18th December 1987 anddue for payment. Interest not paid since 1987- 88.

(iii) 5,300-15% Mortgage Debentures of 1000/- eachredeemable upto 20th August, 1990 and due for payment.1,000 Debentures redeemed during the year 1998-99 forwhich discharged debenture certificates not yet received.Interest not paid since 1987- 88.

(b) The above debentures are secured by Joint Mortgage of allfixed assets present and future by hypothecation of the saidassets and by deposit of title deeds relating to company’simmovable properties, f loating charges on all movable/current assets, other than assets.

Note no. 9 SHORT-TERM PROVISIONS( in Lac)



Sub total (A) 242.79 214.58


Sub total (B) 15.38 15.30

Others:-Provision for Incentive:As per last balance sheet 37.33 48.82Add: Provided during the year 11.63 46.08Less: Paid / ( Recovered )during the year 15.60 24.63Excess provision w/back 11.72 32.94

Sub total 21.64 37.33Provision for excise duty 477.79 214.86Provision for income tax 0.53 0.26

Sub total (C) 499.96 252.45

TOTAL (A+B+C) 758.13 482.33


Not

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Note no. 12 : NON CURRENT INVESTMENT( in Lac)


Trade investments - -Other investments(a) Investment in Equity Instruments:-

Others :-Unquoted:-10,50,000 fully paid-up sharesof 10/-each in Indofil OrganicIndustris Limited 437.43 437.431,200 partly paid-up shares of

10/- each in Vital ChemicalsPrivate Limited.(Transfer refusedby the Board-matter in disputebefore the Court). 0.07 0.0786,750 Fully paid-up shares of

10/-each in Modi Spining &weaving Mills Co.Ltd. 8.68 8.6895,000 Fully paid-up shares of

10/-each in Xerox india Limited 9.50 9.5040,000 Fully paid-up shares of

10/-each in Morgard shammerIndia Limited 4.00 4.0048,000 Fully paid-up shares of 10/-each in Win Medicare Private Limited 4.80 4.8010,000 Fully paid-up shares of 100/-each in Modi Garh Chemicals Pvt. Ltd. 1.00 1.0020,000 Fully paid-up shares of 100/-each in Modi Santa Fe India Pvt. Ltd. 2.00 2.004,000 Fully paid-up shares of 100/-each in Bekaert Engg. (India) Pvt. Ltd. 0.40 0.4017,350 Fully paid-up shares of 100/-each in Rajputana Fertilizers Ltd. - -17,350 Fully paid-up shares of 100/-each in Haryana Distillery Ltd. # - -1500 Fully paid-up shares of 100/-eachin Associated Tube Wells (India) Limited 1.50 1.50Quoted:-7,00,000 fully paid-up shares of 10/-each in Modipon limited. 20.00 20.0019,99,960 fully paid-up shares of 10/-each in Bihar sponge iron limited. 200.00 200.008,00,000 fully paid-up shares of 10/-each in Modi Rubber Limited. 80.00 80.0062,755 fully paid-up shares of 10/-each in Lord Chloro Alkali Limited 6.28 6.28Less: Provision for diminution in Value - (6.28)4 fully paid-up shares of 10/-eachin Mukund Limited. 0.01 0.01

(b) Investment in preference shares:-Quoted:-1 fully-paid preference Share inMukund Limited - -Unquoted:-67 Fully paid-up shares of 100/- eachin Modi Spg. & Wvg. Mills Co. Ltd. 0.07 0.07

(c) Investment in Government or trustsecurities:- ( quoted )*75551.226 fully-paid Units in U TI Infrastructre Fund-Growth Plan 25.84 25.84

Total 801.58 795.30

* Corporate lien marked on these infrastructure fund units# The relevent Share certificate for above shares not yet receivedand the company has applied for duplicate share script.

Foot Notes:(1) Carrying amount of quoted

investments 306.29 300.01(2) Market value of quoted investments 412.83 831.98(3) Carrying amount of unquoted

investments 495.29 495.29(4) Aggregate provision for dimunition

in value of investments{ Note 27(31) & 27 (37)} - 6.28

Note no. 13 : LONG TERM LOANS AND ADVANCES( in Lac)


Capital advances ( unsecured ) 1.90 14.45Security Deposits:-- Secured, considered good - -- Unsecured, considered good- Related parties:- Weld Excel India Limited 43.00 39.00- Others 154.28 142.34- Doubtful - -Loans and advances to related parties;-- Secured, considered good - -- UNSECURED CONSIDERED GOOD- Unsecured, considered good- Weld Excel India Limited 371.22 371.22- DOUBTFUL-Doubtful - -Other Loans and Advances:-(Unsecured, considered good)(a) Prepaid expenses 4.49 1.92(b) Amount recoverable 11.46 11.46(c) Loans to employees 1.64 2.98(d) Loans to others 8.00 8.00

TOTAL 595.99 591.37

Note no. 14 : INVENTORIES( in Lac)


(a) Raw materials 456.76 365.20(b) Raw materials (in transit ) 98.17 26.47(c) Work-in-progress 455.32 406.61(d) Finished goods 6,181.99 2,854.98(e) Stock-in-trade 1.81 3.62(f) Stores and spare parts 1,073.45 832.34(g) Loose tools 24.45 24.52

TOTAL 8,291.95 4,513.74


Note no. 15 : TRADE RECEIVABLES( in Lacs)


Trade receivables outstandingfor a period exceeding 6 months:--Secured, considered good 4.85 5.28-Unsecured, considered good 457.61 608.56-Doubtful 511.00 473.91Less:-Allowance for bad and doubtful debts (511.00) (473.91)Other Debts:--Secured, considered good 99.04 101.23-Unsecured, considered good 5,268.43 4,652.72-Doubtful 0.05 0.26Less:-Allowance for bad and doubtful debts (0.05) (0.26)

TOTAL 5,829.93 5,367.79

Note no. 16 : CASH AND BANK BALANCES( in Lac)


(i) Cash and cash equivalents:-(a) Balances with banks:

-In Current Accounts 573.81 603.86-In FDR’s 222.95 1,204.20

(b) Cheques, drafts on hand 82.96 97.02(c) Cash on hand 13.20 58.38(d) Others:-

-Postage imprest &stamps in hand 0.08 0.04

TOTAL 893.00 1,963.50

(ii) Other bank balances:-(a) Earmarked balance with

banks/post office:--Saving account(molasses storage fund) 0.31 0.30-Fixed deposits (molassesstorage fund )* 83.30 68.65

(b) Fixed deposits with banks(Pledged with Excise Authorties) 52.49 41.42

(c) Fixed deposits with banks(Pledged with tender) 47.08 40.22

(d) Fixed Deposits with Banks(Pledged against overdraft) 39.93 38.60

(e) Balance with banks heldas margin money againstguarantees 176.98 175.65

(f) Bank deposits with morethan 12 months maturity 425.00 395.00

(g) Deposits with Allahabadbank in-no lien account 50.00 50.00{Note 27(18) (c) }

TOTAL 875.09 809.84

* These FDR’s are in the joint name of Modi Sugar Mills and SubInspector, Molasses Excise.

Note No. 17 : SHORT-TERM LOANS AND ADVANCES( in Lac)


(a) Loans and advances to related parties:-(i) -Secured considered good - -(ii) -Unsecured considered good

-Bihar Sponge Iron Ltd. 1.36 1.36-Win Medicare Pvt. Ltd. 0.28 0.08-Weld Excel India limited 11.19 54.86-Modipon Limited 7.30 13.02-Ashoka Mercantile Ltd. 0.40 1.59-Managing Director - 6.33

(iii) -Doubtful-Modi senator Pvt. Ltd. 0.85 0.85Less:Allowance for doubtful (0.85) (0.85)

(b) Others (unsecured, consided good):-(i) Unutilized balances of

CENVAT/ VAT 103.87 70.39(ii) Tax deducted at source 1.00 0.13(iii) Loans & Advances to employees 20.09 33.05(iv) Prepaid expenses 82.18 46.68(v) Amount recoverable 263.28 122.48(vi) Deposits with excise /

sale tax authorties 191.94 111.73(vii) Others 223.28 198.15(viii) Unreconciled Inter-unit

balances { Note 27 (4) } 920.59 960.76(c) Others (doubtful):-(i) Loans & Advances to employees 2.29 2.04(ii) Amount recoverable 11.79 13.28(iii) Others 139.44 144.57

Less: Allowance for doubtful (153.52) (159.89)(d) Security Deposits:-

-Secured considered good - --Unsecured considered good-Related parties:-Ashoka Mercantile Ltd. 1,245.00 --Modi Pon Limited 147.63 146.20-Others 183.18 183.91-Doubtful 9.55 10.19Less: Allowance for doubtful (9.55) (10.19)

Total 3,402.57 1,950.72

Note no. 18 : Other current assets( in Lac)


Income Tax refund receviable 72.41 1,118.30Interest accrued on fixeddeposits with banks 47.36 33.42Rent receivables:--Unsecured, considered good 0.87 0.67-Doubtful 22.78 22.67Less:-Allowance for bad and doubtful debts (22.78) (22.67)Deferred revenue expenditure 11.07 11.07Stores and spare parts 10.67 10.67

TOTAL 142.38 1,174.13


Note No. 19 : REVENUE FROM OPERATIONS( in Lac)


31.03.2012 31.03.2011

Sale of products 40,975.67 40,944.50Sales of services 73.19 75.95Dividend received (gross) 61.92 74.88Other operating revenue 88.50 107.00Sale of Export Entitlement 287.08 -

TOTAL 41,486.36 41,202.33

Note no. 20 : OTHER INCOME( in Lac)


31.03.2012 31.03.2011

Interst income 108.23 130.32Dividend received (gross)* 31.50 31.50Rental income 211.36 221.97Profit on sale of fixed assets 3.82 12.76Excess provision written back 30.19 57.62Unclaimed Credit Balances W/Back 47.75 3.24Amounts written back 5.63 7.52Other non-operating income 76.17 119.91

TOTAL 514.65 584.84

Note no. 21 : Change in inventories of finished goods ,work-in-progess and stock-in-trade

( in Lac)Particulars For the For the


(A) Finished goodsOpening stock 2,662.07 8,215.55Less: Closing stock 6,021.45 2,662.07Sub Total (A) (3,359.38) 5,553.48

(B) Stock in tradeOpening stock 3.65 3.99Less: Closing stock 1.81 3.65Sub Total (B) 1.84 0.34

(C) Goods in processOpening stock 406.61 474.48Less: Closing stock 455.32 406.61Sub Total (C) (48.71) 67.87

(D) By ProductOpening stock 192.88 265.80Less: Closing stock 160.54 192.88

Sub Total (D) 32.34 72.92

Net (Increase) / Decreasein Stock (A+B+C+D) (3,373.91) 5,694.61

Note no. 22 : EMPLOYEE BENEFITS EXPENSES

( in Lac)Particulars For the For the


Salary, wages, gratuity &other allowances 2,789.86 2,323.51Contribution to provident andother funds 205.00 178.41Staff welfare expenses 255.30 238.46

TOTAL 3,250.16 2,740.38

Note no. 23 : FINANCE COSTS( in Lac)


31.03.2012 31.03.2011(a) Interest expenses:- {Note 27(4)(f)(i) to (iv) and 27(18)}

(i) On borrowings 847.58 823.57(ii) On statutory dues 17.61 13.03(iii) On trade payable 105.51 281.47(iv) On security 31.32 10.24(v) On Finance Lease 33.68 61.61(vi) On car loans taken by

employees / corporate adviser 2.33 2.52(vii) On others (specify nature) 0.91 0.91

(b) Other borrowing costs - -(c) Net gain/loss on foreign currency - -

transactions and translationTOTAL 1,038.94 1,193.35

Note no. 24 : OTHER EXPENSES( in Lac)


31.03.2012 31.03.2011Consumption of stores & spare parts 414.42 303.28Consumption of packing materials 1,784.03 1,090.60Power & fuel 614.00 522.28Repairs to machinery 921.82 908.63Repairs to building 126.40 138.99Lease rent 162.56 117.47Rates & taxes 160.82 72.13Excise duty on stock 273.18 (128.52)Insurance 35.75 30.13Auditor’s remuneration(see foot-note below) 17.02 17.46Loss on sale of fixed assets 0.72 7.35Loss on sale of stores 6.41 2.26Less: Adjustment of provision forobsolete stores (1.50) -Donations 3.25 3.00Bad debt written-off 2.41 5.44Less : Adjustment of provision fordoubtful debts (2.03) (0.55)Claims / amounts written-off 8.64 0.32


Note no. 24 : (Cont.)( in Lac)


31.03.2012 31.03.2011

Less : Adjustment of provision for doubtful (8.50) (0.19)Fixed assets written-off 0.08 0.16Provision for obsolete spare-parts & stores 2.00 -Provision for doubtful debts and advances 40.55 8.16Freight/ transport & forwarding 752.39 549.75Commission to selling agent 310.77 316.38Discount & sale promotion 262.95 173.08Advertisement expenses 401.02 43.16Travelling expenses 375.22 308.86Legal & professional charges 306.45 352.30Trade mark licensce & marketing fees 168.73 79.06Job work charges 80.31 68.95Retainership Expenses 143.42 79.13Other general expenses 676.16 488.87

TOTAL 8,039.45 5,557.94

Foot Note :Auditor’s remuneration:-(a) As auditor 6.18 6.06(b) For taxation matter 2.54 1.93(c) For company law matter 0.83 1.59(d) For management services 1.72 2.06(e) For other services including

certification work 4.25 4.62(f) For reimbursement of expenses 1.50 1.20

TOTAL 17.02 17.46

Note No.25 BASIS OF PREPARATION(i) The Consolidated Financial Statements are prepared in

accordance with Accounting Standard (AS) 21 onConsolidated Financial Statements notified pursuant tothe Companies (Accounting Standards) Rules, 2006 (asamended). The Consolidated Financial Statementscomprise the financial statements of Modi IndustriesLimited (the Company), and its subsidiaries. The Company,and its subsidiaries constitute the Group. Reference inthese notes to the ‘Company’ or ‘Group’ shall mean toinclude Modi Industries Limited and/or any of itssubsidiaries, consolidated in these financial statementsunless otherwise stated.

(ii) The list of Companies which are included in consolidationand the Parent Company’s holdings therein are as under:

Name of the Company Percentage holding2012 2011

Own Investment (India) Limited 99.89% 99.89%Your Investment (India) Limited 99.93% 99.93%

Each of the above Companies is incorporated in India andfinancials statements are drawn up to the same reporting

date as that of the parent company i.e. 31st March, 2012.(iii) The Consolidated Financial Statements have been

prepared to comply in all material respect with theAccounting Standards notified by Companies (AccountingStandards) Rules, 2006 (as amended) and the relevantprovisions of the Companies Act, 1956.

(iv) The Consolidated Financial Statements have beenprepared under the historical cost convention on an accrualbasis, except where revaluation/ impairment is made.

(v) The Accounting Policies have been consistently appliedby the Company and are consistent with those used in theprevious year.

(vi) The Consolidated Financial Statements of the Companyand its Subsidiary Companies have been consolidated ona line-by-line basis by adding together the book value oflike items of assets, liabilities, income and expenses, afterfully eliminating intra-group balances and intra-grouptransactions resulting in unrealized Profits/Losses.

(vii) The Consolidated Financial Statements have beenprepared using uniform accounting policies for l iketransactions and other events in similar circumstances andare presented, to the extent possible, in the same manneras the Company’s separate financial statements except asstated in notes on accounts.

(viii) Minority Interest in the net assets of consolidated subsidiariesis identified and presented in the consolidated BalanceSheet separately from liabil it ies and equity of theCompany’s shareholders.Minority interest in the net assets of consolidated subsidiariesconsists of:(a) The amount of equity attributable to minority at the

date on which investment in a subsidiary is made;and

(b) The minority share of movements in equity since thedate parent subsidiary relationship came intoexistence.

(ix) Minority Interest’s share of Net Profit/(Loss) for the year ofconsolidated subsidiaries is identified and adjusted againstthe profit/loss after tax of the group.

26 ACCOUNTING POLICIES:(1) INVENTORY VALUATION

(a) Stocks of raw materials and stores and spares arevalued at weighted/moving average cost. (Net ofCenvat benefits/input tax credit of U.P.VAT) or netrealizable value whichever is less.

(b) Loose tools are valued at depreciated cost.(c) Cost of machinery spares, which can be used only

in connection with an item of fixed asset and whoseuse is expected to be irregular, are charged torevenue over useful life of the principal item.

(d) Goods-in-transit are valued at cost.(e) Finished goods/Goods-in-Process are valued at

lower of cost and net realisable value except by-product i.e. molasses which is valued at netrealizable value. Cost inter-alia, includes directcost, depreciation, excise duty, lease rentals andfactory overheads but excludes generaladministration and selling expenses, CorporateOffice administration expenses and Interest. Theclosing stocks out of inter divisional transfer ofgoods, is being treated as finished goods insteadof raw materials/stores and valued accordingly.


(2) FIXED ASSETS( i) Major improvements to fixed assets that increases

the future benefits from the existing assets beyondits previously assessed standard of performance isincluded in the gross block and is depreciatedover the remaining life of the original assets.

(ii) Financing cost (upto the date the assets are readyto be put to use for commercial production)relating to borrowed funds attributable toacquisition of construction of fixed assets areincluded in the gross book value of fixed assets towhich they relate.

(3) DEPRECIATION(a) Depreciation on Plant & Machinery is provided on

Straight Line Method except in Corporate Office.In respect of other assets including OfficeEquipments, depreciation is provided on WrittenDown Value Method in all units except Sugar andSteel Units where it is provided on Straight LineMethod. (Also refer Accounting Policy No. 2(i)above).

(b) Assets for which Straight Line Method basis isadopted and acquired prior to 2nd April, 1987,are depreciated at rates prevailing in the year ofacquisition.

(c) Depreciation on additions/deletions is charged onprorata basis and in accordance with ScheduleXIV of the Companies Act, 1956.

(4) INTANGIBLE ASSETS:Intangible assets are stated at cost of acquisition lessaccumulated amortization. Computer Software isamortized over a period of five years.

(5) REVENUE RECOGNITION:( i) Export incentives under the duty entitlement pass

book scheme is recognized on accrual basis.(ii) Revenue arising by use of company’s properties

by others yielding rent is recognized when nosignificant uncertainty as to measurability orcollectability exists.

(iii) Sale of goods is recognized at the point of dispatchof goods to customers.

(6) INVESTMENTS:Long-term investments are valued at cost less provisionfor diminution, other than temporary, in the value ofinvestments.

(7) RETIREMENT BENEFITS:(a) Contribution to Provident Fund is made at a

predetermined rate to the Provident Fund Trustand charged to the Statement of Profit & Loss onaccrual basis.

(b) Gratuity Liability is accounted for on accrual basis,computed actuarially, except for Steel Unit upto31st March, 2002 which is accounted for on cashbasis.

(c) Leave encashment is accounted for accrual basis,computed actuarially.

(8) OPERATING LEASE:Lease payments under an operating lease arerecognized as an expense in Statement of Profit &Loss on a straight line basis over the lease term.

27. CONTINGENT LIABILITIES AND OTHER NOTES:( in Lac)

As at As at31.03.2012 31.03.2011

1. (a) Claims against the Companynot acknowledged as debts :(i) Workmen (excluding

unascertainable amounts) 168.22 168.58(ii) Others 238.29 438.29

(b) Partly paid-up Equity Shares ofVital Chemicals Private Limited 0.08 0.08

(c) Disputed Liability for Excise-duty,Sales-tax, Entry-tax matters andliquidated damages on ProvidentFund dues {excluding interestunascertainable and undisputedSales Tax/ penalty demands(net of provision made of

62.21 Lac) of 175.24 Lac}. 1190.85 1399.28(d) Wealth Tax 1.81 1.16(e) Bills discounted 1041.06 914.96

2. Estimated amount of contracts remaining to be executedon Capital Account 66.12 Lac (Previous Year 140.77Lac).

3. Guarantees given to Sales-tax/Excise Departments onbehalf of Companies in the same group amountsto 139.42 Lac (Previous year 139.42 Lac). Informationregarding outstanding position is not available. Thisexcludes guarantees of 109.63 Lac (Previousyear 109.63 Lac) vacated by Sales Tax Department forwhich guarantee bonds not yet received back.

4. (a) The Steel Unit is lying closed since 24th January,1993 due to strike/lock-out and thereafter closure wasdeclared with effect from 24th November, 1993, asthe Unit was found to be unviable. The Company hasnot been able to obtain access to the accounting,financial and production records of the unit necessaryfor updating the said books of accounts/compiling thedata to prepare the annual accounts as well as forfinalising the audit for the year ended 31st March,1993. Transactions subsequent to the closure of theunit could not be incorporated in the annual accountsof 1992-93 and onwards in view of pending access tothe earlier accounts viz., 1st April, 1992 to 24th January,1993, the absence of which would leave the booksstill incomplete. However, the Statement of Profit &Loss for the current financial year 2011-12 and from1993-94 to 2010-11 have been incorporated in currentfinancial year and in various previous financial yearsrespectively. As an interim measure 920.59 Lac(Previous year 960.76 Lac) which represents:(i) 1,205.32 Lac (Previous year 1021.52 Lac)being net cumulative inter-unit debit balance onaccount of transactions of other units of the companywith Steel Unit during 1st April, 1992 to 31st March,2012, (ii) payment of unsecured loan of 45.00 Lac[Refer Note (c) below] and (iii) net loss of 240.73Lac for the years 1993-94 to 2011-12 (before inter unitrental income, write-back of 278.95 Lac andprovision for depreciation of 669.37 Lac) have been


clubbed with Current Assets of the company as on 31stMarch, 2012 and 31st March, 2011 respectively as “Inter-Unit Balances” pending incorporation of (i) AnnualAccounts for the period 1st April, 1992 to 31st March,1993 and (ii) assets and liabilities including inter unitbalances arising on account of transactions for theperiod 1st April, 1993 to 31st March, 2012.

(b) The financial results for the year 1992-93 would beincorporated as soon as the company is able to obtainaccess to/reconstruct the financial, accounting andproduction records.

(c) In view of above, as per past practice, the auditedopening balances of Assets and Liabilities, quantitativedetails, contingent liabilities [excluding old electricitydues – Refer Note 4f(vii)] and notes of the Steel Unit ason 1st April, 1992, subject to (i) reduction of unsecuredloans taken by 278.95 Lac in view of write back onaccount of one-time settlement (O.T.S.) of dues withHong Kong and Shanghai Banking Corporation Limited(HSBC) during the year 2004-05, and further reductionof 45.00 Lac on account of payment during 2005-06of O.T.S. to H.S.B.C.; (ii) reduction of fixed assets (net)by 669.37 Lac being depreciation provided during1993-94 to 2011-12 on fixed assets and (iii) decreasein Inter-Unit balance by 285.73 Lac which represents;the sum of net loss of 240.73 Lac for the years 1993-94 to 2011-12 (before inter-unit rental income, write-back of above amount of 278.95 Lac and provisionfor depreciation of 669.37 Lac) and repayment ofunsecured loan of 45.00 Lac. The above inter-unitbalance will actually represent either net increase inassets or net decrease in liabilities as on 31st March,2012 over balances as on 31st March, 1993 of the SteelUnit.

(d) Assets and Liabilities of the Steel Unit incorporated inthe Balance Sheet of the company as on 31.03.2011and 31.03.2012 are as under:

( in Lac)Liabilities As on As on Assets As on As on

31.3.2012 31.3.2011 31.3.2012 31.3.2011Secured Loans 3421.08 3421.08 Fixed Assets (Net) 456.72 463.57Current Liabilities& Provisions 2838.28 2838.28 Investments 0.11 0.11AccumulatedProfits (631.15) (489.33) Current Assets &/(Losses) (net): Advances:

Inventories 1340.14 1340.14(1993-94 to1995-96 (687.81) Sundry Debtors 1199.25 1199.25(1996-97 and1997-98 (58.56) Cash & Bank Balance 150.78 150.78(1998-99 to2000-01 (29.83)2001-02 to Loans and Advances 249.70 249.702003-04 56.532004-05 300.902005-06 (36.67) Miscellaneous 11.07 11.072006-07 (18.94) Expenditure2007-08 (10.86) (to the extent not written2008-09 (24.40) off or adjusted)2009-10 172.482010-11 (152.17)2011-12 (141.82) Inter-unit Balances 1433.22 1568.19

Loss for the year 1991-92 787.22 787.22

Total 5628.21 5770.03 Total 5628.21 5770.03

( e) Statement of Profit and Loss of the Steel Unit for the yearended 31st March, 2012 and 31st March, 2011 (excludinginter-unit rental income of 46.73 Lac) (Previousyear 46.99 Lac).

( in Lac)Particulars 2011-12 2 010-11INCOME :Rental Income 184.41 177.92

184.41 177.92EXPENDITURE :Employees Benefit Expenses 77.53 74.22Finance Cost 166.24 139.05Depreciation 6.85 6.77Legal and Professional Expenses 44.21 53.38Other Expenses 31.40 326.23 56.67 330.09Loss for the year 141.82 152.17(f) The Profit & Loss Account/Statement of Profit & Loss of

Steel Unit for the years 1993-94 to 2011-12 are subject tothe following notes on accounts:-

(i) Shri U.K. Modi stated that:-“(a) During the year 2006-07, an agreement dated 22nd

January, 2007 for One Time Settlement (OTS) of duesof Punjab National Bank (PNB) was entered intobetween the Company, PNB, Shri U.K. Modi (asGuarantor) and SBEC Sugar Limited (SSL), on theterms as contained in the PNB’s Letter dated 28th

September, 2006. Under the said agreement, PNB hasagreed to assign all its claims against Steel Unit of thecompany together with all securities and chargescreated by the company to SSL on payment of fullsettlement amount of 2810.60 Lac together withinterest. SSL made full payment to PNB of thesettlement amount together with interest. PNBthereafter executed a Deed of Assignment on 15th May,2012 in favour of SSL by which PNB assigned all itsclaims together with all securities and charges createdby the Company in its favour to SSL. The Registrar ofCompanies has registered the modification to thecharges in favour of SSL. In view of the above, thesecured debt is now payable by the Company to SSL.The company proposes to enter into revised terms ofpayment of this secured debt with SSL.

(b) (i) With reference to the company’s liabilities to IDBILimited, a settlement agreement was concludedbetween the Company , IDBI Limited and SBEC BioEnergy Limited (SBEL) on 6th October, 2007. Thissettlement agreement was in terms of IDBI’s letter dated9th February, 2007. Under the said agreement IDBIagreed to assign its entire debt due and payable bythe Company to SBEL subject to SBEL paying to IDBIits OTS claim amount of 1232.20 Lac. Acting on thesaid agreement, SBEL made a payment of 1232.20Lac to IDBI together with interest. The said payment toIDBI of 1232.20 Lac along with interest wascompleted on 6th October 2007. IDBI’s claim againstthis company stood assigned to SBEL together withthe securities and charges and the said debt is nowpayable by this company to SBEL.The Hon’ble BIFR vide its orders dated 12th December,2011 and 19th April, 2012 recognized SBEL as this


company’s creditor in place of IDBI and by an orderdated 17th July, 2012 directed IDBI (OA) to executethe Deed of Assignment in favour of SBEL. Thecompany proposes to enter into fresh terms of paymentof the IDBI’s assigned debt with SBEL.

(ii) With reference to this company’s liabilities to IFCILimited, a settlement agreement dated 30th December,2009 was concluded between this company, IFCILimited and SBEC Bio-Energy Limited, (SBEL). Thissettlement agreement was in terms of IFCI’s letter dated30th December, 2009. Under the said settlementagreement, IFCI agreed to assign to SBEL its entiredebt as due and payable by this company to it subjectto SBEL paying to IFCI its OTS claim of 775.00Lac. Acting on the said settlement agreement, SBELmade a payment of 775.00 Lac to IFCI on 30th

December, 2009 and in consideration thereof IFCILimited executed a Deed of Assignment dated 19th

April, 2012, and assigned its all claims against thiscompany together with the securities and charges infavour of SBEL. The Registrar of Companies hasregistered the modification to the charges in favour ofSBEL. The said secured debt is payable by thisCompany to SBEL. The company proposes to enterinto fresh terms of payment of this debt with SBEL.

(iii) At the hearings before the Hon’ble BIFR and with theconsent of Advocates for Shri U.K. Modi and Shri M.K.Modi, the Hon’ble BIFR passed orders and issueddirections in M.A. No. 754/BC/2011 (filed on behalfof Shri U.K. Modi) and clarified that the OA shallconsider the representations from Shri U.K. Modi, ShriM.K. Modi, Shri D.K. Modi and also from SBECBioenergy Ltd. and SBEC Sugar Ltd.

(iv) The Bench directed that, SBEC Bioenergy and SBECSugar be heard and consulted by IDBI (OA) inconnection with the preparation of the DRS.

(v) In the order dated 22nd June, 2012 the Hon’ble BIFRobserved and noted that IFCI and PNB have executeddeeds of assignments in favour of SBEC BioenergyLtd. and SBEC Sugar Ltd. respectively after receivingentire OTS amount along with interest, whereas theIDBI has received the entire OTS amount alongwithinterest and had only entered into an agreement totransfer all the rights, title and interest in the FinancialAssistance / Financial Instruments and the underlyingsecurities in respect thereof to the Applicant (SBECBioenergy) of MA No. 224/BC/2012 but has notexecuted the deed of assignment. The Bench alsoobserved that the IDBI, vide their letter dated 7th May,2012 has approached BIFR regarding the executionof the assignment deed in respect of assignment ofdebt to the applicant (SBEC Bioenergy Ltd.).

(vi) The BIFR by its order dated 22nd June, 2012 allowedMA No. 224/BC/2012 and directed that the name ofApplicant (SBEC Sugar Ltd.) be substituted for PNBand the name of the Applicant (SBEC Bioenergy Ltd.)be substituted, in place of IFCI, as the deed ofassignment has since been executed.

(vii) In the proceedings held on 17th July, 2012, the Hon’bleBIFR directed IDBI to execute the deed of assignmentin favour of the Applicant (SBEC Bioenergy Ltd.), withrespect to the assignment of its claims against this

company together with securities and charges in favourof SBEC Bioenergy Ltd. subject to the various otherdirections stated therein.

(viii) Pursuant to the order passed by AAIFR, Shri U.K. Modiand Shri M.K. Modi have now submitted their separateDraft Rehabilitation proposals to the IDBI.”

(ii) Shri M.K. Modi stated –“(a) That the said settlements based on assignment in

favour of one of the Managing Directors of theCompany are neither legal nor binding and are withoutapproval of the Board. The same are also contrary tothe 1989 Modi Family MOU, the agreement betweenthe two Managing Directors, the Board Resolutionand the “Status Quo” order of Hon’ble Supreme Courtof India.

(b) Without prejudice to what is stated in para (a) above,in view of the orders passed by Hon’ble BIFR,assignments and the terms of payment etc. shall nowbe governed by the directions passed by Hon’ble BIFRin its hearing held on 17.07.2012.

(c) Hon’ble BIFR has, in the proceedings of the hearingheld on 19th April, 2012, already directed IDBI (OA) toassess the liabilities of each unit of the company (Groupwise) and while making an assignment to UKM GroupCompanies, to see that the security charged to Banks/FIs belonging to his own units are assigned and thesecurity belonging to MKM Group is to be freed. It isthus abundantly clear that the security pertaining tohis own units only is to be charged to SBEC BioenergyLtd and SBEC Sugar Ltd.

(d) Hon’ble BIFR has, in the subsequent hearing held on17th July, 2012 authorised IDBI to execute theAssignment Deed in favour of SBEC Bioenergy Ltd.with the following conditions:(a) There wil l be no clause in the deed of

assignment which allows the assignee toconvert the acquired debt of the companyinto equity ti l l company’s rehabil itationscheme is sanctioned by BIFR. Conversion ofloan into equity cannot be allowed until it ismade a part of Rehabil itation Schemesanctioned by the Board.

(b) There will be no change in ownership ormanagement and that no new director willbe inducted in company’s Board till sanctionof company’s rehabilitation scheme.

(c) The benefit of sacrif ice by the securedcreditors will remain with the company andwill not get passed to any private parties inwhose favour assignment deeds are executed.Accordingly, the secured debts shall now bepayable subject to the above conditionsimposed by the BIFR.

(e) In view of the above directions of Hon’ble BIFR, MKMGroup has, without prejudice to their legal contentionsin the matter, already approached both IDBI and IFCIfor making payment of the dues pertaining to the sixunits under management and control of Shri M.K.Modion assignment basis subject to the above conditions.

(f) As reported last year, Shri M.K.Modi had filed aSpecial Leave Petition before the Supreme Court ofIndia on 27th July, 2010 challenging the order dated


19.05.2010 of Hon’ble Delhi High Court. The Hon’bleSupreme Court vide its order dated 27th August, 2010held that “the parties are directed to maintain statusquo with regard to the management of the Company,but we make it clear that this will not in any way affectthe proceedings pending before the Board forIndustrial and Financial Reconstruction and also theAppellate Authority (AAIFR).”Pursuant to the order dated 22nd June, 2011 passedby Hon’ble AAIFR, Shri M.K.Modi and Shri U.K.Modihave submitted their separate Draft Rehabilitationproposals to IDBI (OA).Subsequently, BIFR has heard the matter on 25th July,2011, 08th September, 2011, 13th October, 2011, 12thDecember, 2011, 06th February, 2012, 17thFebruary,2012, 19th April, 2012, 22nd June, 2012 and17th July, 2012 and passed certain directions withregard to the issue of assignment of debts and rights ofthe assignees etc. Accordingly, the assignments ofdebts, if any, shall be governed by such directionsunless directed otherwise by any Court or Tribunal.Shri U.K. Modi disagrees with the above statementsand submissions made by Shri M.K. Modi.As per Shri U.K. Modi, these liabil it ies will now bequantified with the assignees of PNB, IDBI and IFCIdebts.As per Shri M.K. Modi, the above contention of ShriU.K. Modi is incorrect

(iii) In view of non-availability of book balance of liabilitiestowards PNB, IDBI and IFCI in the books of Steel Unit ofthe Company on account of non-incorporation of annualaccounts and balance sheets of Steel Unit {Refer Note27(4) (a to c) of Annual Accounts}, the difference betweenOTS amounts and book balances could not be ascertained.

(iv) No-provision of interest, amount unascertained, is requiredto be made, on loans from other Financial Institutions asthe existing amounts appearing in the books of accountsof the company will be more than sufficient in view of in-principle approval/discussions being held for one timesettlement of dues with the Financial Institutions.

(v) In view of clear cut delineation of responsibilities of thetwo Managing Directors of the Company, the accounts oftwo divisions of six units and three units of the companyare being prepared and finalized independently andaccordingly Shri M.K. Modi and Shri U.K. Modi arecertifying the accounts as relate to the two divisions of thecompany i.e. six units and three units respectively, themanagement whereof is looked after by them.

(vi) The impact, if any, on account of non-availability andconsequently non incorporation of audited openingbalances of assets and liabilities of the Steel Unit as on 1st

April, 2011;(vii) Non-provision of obsolete/damaged stocks and fixed assets,

if any, in view of non-incorporation of earlier year’s accountsand non-physical verification of inventories and fixed assetsas on 31st March, 2012;

(viii) Non-confirmation/reconciliation of balances of debtors,creditors, banks, financial institutions etc. and impact, ifany, on the Statement of Profit & Loss;

(ix) Non-provision of doubtful debts and loans & advances,amount unascertained;

(x) Non-provision of Impairment of Assets, if any, of the fixed

assets as per Accounting Standard (AS 28) i.e. Impairmentof Assets, amount unascertained.

(xi) (a) Uttar Pradesh Electricity Board (now U.P. PowerCorporation Ltd.) raised various demand noticesagainst electricity dues and late payment surchargeamounting to 2435.48 Lac on the Steel unit of theCompany.

(b) In terms of One Time Settlement with U.P. PowerCorporation Limited regarding arrears of electricitydues, the Steel unit paid during the year 2009-10

563.90 lacs against the demand of 1123.99 Lacincluded in (xi)(a) above. Accordingly shortfall inprovision of 243.37 Lac has been charged torevenue during the year 2009-10.

(c) The company filed writ petition in Allahabad HighCourt challenging the said demand notices. TheHon’ble Allahabad High Court dismissed the writpetition filed by the Company. The company filedSpecial Leave Petit ion (SLP) with the Hon’bleSupreme Court of India, who has granted interim stayon 14th March, 2005 for stay of recovery by way of saleof property which is still continuing.In view of the above and pending incorporation ofannual accounts of Steel Unit for 1992-93, no provisionis considered necessary against the balance demandof 1311.49 Lac at this stage.

5. Undertakings given to Financial Institutions on behalf ofLords Chloro Alkali Limited, Modi Rubber Limited andBihar Sponge Iron Limited:

(a) To procure funds jointly/severally with other promotersto meet any shortfall in the resources of the Companyfor completing their projects and/or for working capital.The funds made available/to be made available canonly be withdrawn with the prior approval of FinancialInstitutions and shall not involve any charge or lienon the assets of the said Companies.

(b) That the company shall not transfer, assign, pledge,hypothecate or otherwise dispose of in any mannerit’s holding in their capital without Institutions’ priorapproval in writing.

6. Deferred credit including liability for interest payable forunexpired period have been guaranteed by the Bankers ofthe Company against hypothecation of Gas Cylinders andMachinery purchased under the Scheme in Steel Unit.

7. The Company has disputed the price of levy sugar fixedduring the year 1970-71 to 1974-75 and recovered amountof 37.73 Lac in excess of control price which was paidsubsequently in pursuance of Supreme Court Order dated22nd September, 1993. However, the Company obtainedStay Order from Hon’ble Allahabad High Court againstdemand of interest made by the Food Corporation of India,which is still continuing.However, during the current year, the Food Corporation ofIndia has adjusted a sum of 124.28 Lac towards interestdues from the differential amount recoverable by SugarUnit of the Company on account of price increase in levysugar supplied for season 2009-10. The above adjustmenthas been done without prejudice to the right and contentionof the company.In view of the above, interest on excess realizations for theyear 1970-71 to 1974-75 amounting to 124.28 Lac, asadjusted by the FCI, will be accounted for as expenses in


the year of disposal of the above writ petition.8. Exceptional items in Statement of Profit & Loss represent:

(i) For the year ended 31st March, 2012 the differentialliability paid amounting to 847.77 Lac towardsSugarcane price for the sugar season 2007-08 as perorder dated 17th January, 2012 of Hon’ble SupremeCourt of India.

(ii) For the year ended 31st March, 2011 interest amountreceived of 816.11 Lac on refund from the IncomeTax Department pertaining to the period upto 31st

March, 2011.9. The Company has entered into an agreement with U.P.

Power Corporation Limited for its Residential Feeder SCNo. 2005 on 29th March, 2000. In pursuance of thatagreement, the Company has paid for the existingauthorised occupants only after 1st July, 1998 computedprorata based on covered area of quarters occupied by theemployees. In view of the above, no provision has beenmade for electricity charges of 131.46 Lac upto theperiod of permanent disconnection of residential feederSC No. 2005 i.e. 31st May, 2001 (Previous year 131.46Lac) for the unauthorized occupants and late paymentsurcharge/recovery charges amounting to 302.66 Lacupto 31st May, 2001 (Previous year 302.66 Lac). Inaccordance with the agreement, matter regarding waiverof late payment surcharge and recovery charges after 1stJuly, 1998 will be referred to the Government.

10. ESI authorities had raised a demand on the company for 60.03 Lac (upto previous year 58.86 Lac) (inclusive of

interest) towards company’s l iabil ity for ESI for theyears 1968 to 1986. The demand is disputed by thecompany and no provision has been made against thisliability.

11. Modinagar Municipal Committee had determined thebasis/liability of house tax payable by the Company forthe years 1982-83 to 2006-07 at 213.98 Lac. The saidliability/demand/basis is disputed by the company atvarious levels and has deposited 16.51 Lac on accountupto 31st March, 2011. Pending final decision of theCourt/settlement and after taking into account the provision/payment already made by the Company, there is a netliability of 188.63 Lac (upto the previous year 188.63Lac), which has not been provided for in the accounts.

12. Excise duty on uncleared manufactured finished goodsand custom duty in respect of imported goods lying inbond in respect of Steel Unit amounting to 43.09 Lacand 24.35 Lac respectively is accounted for as and whensuch goods are cleared. However, this has no impact onthe loss of the Company.

13. (a) In respect of Steel Unit, gratuity liability upto 30thSeptember, 1987 amounting to 84.82 Lac has notbeen provided in the books on accrual basis. However,this said l iabil ity has subsequently been paid/deposited.

(b) The Gratuity Liability of continuing employees inSteel Unit was being accounted for on cash basisfrom 1993-94 to 2001-02. During 2002-03, pastGratuity Liability of continuing employees amountingto 14.96 Lac was provided on accrual basiscomputed on actual basis and w.e.f. 2003-04, Gratuityliability is computed on actuarial basis and providedfor in the books of account.

(c) The Company has adopted Accounting Standard 15(Revised) on employees benefits with effect from 1st

April, 2007 in respect of provision for Gratuity liability.Details in respect of Gratuity are as under:

( in Lac)

Liability to be recognized in Balance Sheet As at As at31.03.2012 31.3.2011

Present value of Obligations 1,140.93 1,094.72Fair Value of Plan Assets - -Net Liability (1,140.93) (1,094.72)Reconciliation of Opening andClosing Balances of ObligationObligation as at beginning of the year 1,094.72 1,100.59Current Service Cost 59.80 57.88Interest Cost 93.05 88.05Actuarial Losses/(Gain) (4.21) (35.42)Benefits paid (102.43) (116.38)Obligations as at the end of the year 1,140.93 1,094.72Expenditure to be recognized during the yearCurrent Service Cost 59.80 57.88Interest Cost 93.05 88.05Expected Return on Plan Assets - -Net Actuarial Losses/(Gains)Recognized during the year (4.21) (35.42)Total expenditure included in “Employees’ Emoluments” 148.64 110.51AssumptionsDiscount Rate (per annum) 8.50% 8.00%Expected rate of Return on Assets (per annum) 0% 0%Salary Escalation Rate 9.00% 8.5%

The Company has unfunded scheme for payment ofgratuity to all eligible employees calculated at specifiednumber of days of last drawn salary depending upon tenureof service for each year of completed service subject tominimum five years of service payable at the time ofseparation upon superannuation or on exit otherwise.(d) (i) The Company has adopted Accounting

Standard 15 ( Revised) on employeesbenefits with effect from 1st April, 2008 inrespect of Earned Leave.

(ii) Details in respect of Earned Leave are asunder:

( in Lac)

Liability to be recognized in Balance Sheet As at As at31.03.2012 31.3.2011

Present value of Obligations 132.50 135.15Fair Value of Plan Assets - -Net Liability (132.50) (135.15)Reconciliation of Opening andClosing Balances of Obligation

Obligation as at beginning of the year 135.15 148.02Current Service Cost 14.10 14.33Interest Cost 11.49 11.84Actuarial Losses/(Gain) 11.24 0.95Benefits paid (39.48) (39.99)Obligations as at the end of the year 132.50 135.15


(Cont.) ( in Lacs)

Liability to be recognized in Balance Sheet As on As on31.03.2012 31.3.2011

Expenditure to be recognized during the yearCurrent Service Cost 14.10 14.33Interest Cost 11.49 11.84Expected Return on Plan Assets - -Net Actuarial Losses/(Gains)Recognized during the year 11.24 0.95Total expenditure included in “Employees’ Emoluments” 36.83 27.12AssumptionsDiscount Rate (per annum) 8.50% 8.00%Expected rate of Return on Assets (per annum) 0% 0%Salary Escalation Rate 9.00% 8.5%

14. The company has not received information from vendorsregarding their status under the Micro, Small and MediumEnterprises Development Act, 2006 and hence disclosurerelating to amounts unpaid as at the year end togetherwith interest paid/payable under this act has not beenprovided.

15. Government of India has issued guidelines dated 15thJanuary, 1987 which requires companies raising resourcesthrough issue of Debentures to create a DebentureRedemption Reserve. The Company has not created sucha reserve in view of the accumulated losses.

16. (a) During the previous year, the distillery unit of thecompany (Bottler) has entered into an agreement i.e.a “Bottling Agreement including addendum to bottlingagreement dated 26th April, 2012” with MI Spirit IndiaPrivate Ltd (MISIP) whereby the parties i.e. bottlerand MISIP have agreed to the blending,manufacturing and bottling of the products by thebottler. Bottling agreement inter-alia includes: (i) thebottler shall manufacture the products in accordancewith the quality standards, standard manufacturingprocedures, the process and other specifications laiddown by MISIP from time to time and in suchquantities as may be specified by MISIP from time totime (ii) the bottler shall procure the materials i.e.concentrates, spirit, flavouring agents, de-mineralisedwater, packages and levels from MISIP or from thesuppliers suggested or recommended by MISIP (iii)products manufacturing by the bottler shall besupplied, dispatched or sold by the bottler as per thepurchase orders procured by MISIP and bad-debtsfrom direct indenters supplied on credit upon requestby MISIP are to MISIP’s Account (iv) MISIP will beresponsible for working capital financing. Bottler shallopen a bank account (“ Account” ) which is to beoperated jointly by the bottler and MISIP and all fundsin the account shall belong to MISIP notwithstandingthat the account may be in the name of the bottler (v)MISIP will reimburse the manufacturing expenses andpay manufacturing margin (i.e. 10% of the aggregateof the manufacturing expenses as reduced by statutorycharges, taxes and duties and selling and distributionexpenses) from the above account (vi) all paymentsreceived by the bottler for sale of products shall becredited to the account and manufacturing expenses

incurred by the bottler, manufacturing margin shallbe reimbursed by MISIP to bottler. Any surplusremaining in the account shall therefore be paid tothe company as fee.

(b) In the opinion of the management, since the productsare being manufactured and sold in the name of thebottler, the purchase invoices in respect of raw material,packing material and consumables and sales invoicesfor the finished goods are being issued in the name ofthe bottler, necessary compliances under various taxlaws are also being done by the bottler and specialbank account is also in the name of the bottler, thetransactions of the above business of manufactureand sale of “Vodka and Whisky” have been treated aspart of books of account of the bottler and these havebeen included in sales, expenses, assets and liabilitiesof the bottler as stated in paragraph (c) below.

(c) Balance Sheet and Statement of Profit & Loss of thebottler for the financial year ended 31st March, 2012includes the following items relating to the aboveactivities of manufacture and sale of “Vodka andWhisky”:

Balance Sheet ( in Lac)Particulars As at As at 31st March, 2012 31st March 2011INCOME :Sundry Debtors 556.98 127.08Bank Balances 25.99 41.33Security Deposits 48.80 27.40Closing Stock 428.47 46.83Advance Recoverable 51.37 32.56Total Current Assets 1,111.61 275.20

Less: Current Liabilities 244.15 91.02Credit Balance of MISIP 840.80 1,084.95 172.84 263.86Net Current Assets 26.66 11.34Recognized as net profit for the yearInstead of manufacturing margin 26.66 11.34IMPACT OF NET PROFIT NIL NIL

Statement of Profit & Loss ( in Lac)Particulars As at As at 31st March, 2012 31st March 2011

Turnover (Net of discount) 853.59 210.68Other Income 0.37 853.96 - 210.68Excise duty paid 157.61 13.89Cost of materials consumed 57.16 14.15Change in Inventories (54.30) (11.23)Employees Benefits Expenses 29.35 4.99Finance Costs 0.36 -Other Expenses 637.12 177.54Total Expenses 827.30 199.34Net Profit for the year 26.66 11.34Recognized as net profit for the yearInstead of manufacturing margin 26.66 11.34IMPACT OF NET PROFIT NIL NIL

(d) The Expert Advisory Committee of Institute ofChartered Accountants of India in an almost similarcase do not agree with the above mentioned


accounting treatment. The opinion is governed by thesubstance of the transaction and not by the legal formi.e. sales, purchases, assets and liabilities relating tosuch business controlled by the brand owners should notbe recorded in the books of account of the companyeven though supporting vouchers are in the name ofthe company and the correct accounting treatment ofthe transactions in the books of account of thecompany would be to recognize only the fixed margin/charge received by it rather than to recognize salesand purchases of the business of manufacturing IMFLand also should not recognize any current asset orliabilities of the said business in its books of account.Further, the brand owners entit lement paid by thecompany should be booked as a mere cash outflow.Further the Expert Advisory Committee had clarifiedthat the opinion expressed by the committee is purelyfrom the accounting point of view withoutconsideration of any implication thereof, from thepoint of view of the provisions of TDS/TCS in theIncome Tax Act 1961 or any other legal/ statutoryrequirement.

17. Consequent to the losses, the Company had been declareda Sick Industrial Company on 14th March, 1991 in terms ofSection 3(1)(o) of the Sick Industrial Companies (SpecialProvisions) Act, 1985. Further proceedings before the BIFRare pending. Pending final orders of BIFR, the accountsof the company have been prepared on a going concernbasis.

18. (a) No provision has been made for penal/delayed/simple/compound interest amounting to 19907.96Lac upto 31st March, 2012 (for the year 3157.18Lac) on term borrowings of Financial Institutions anddebentures pending final order of BIFR.

(b) Interest payable by Vanaspati Unit of the Company toFinancial Institutions since the date of disbursementof the loan on simple rate of interest basis amounts to

1242.45 Lac upto 31st March, 2012 and the unitholds total interest provision of 732.41 Lac as on31st March, 2012 resulting in the short provisionof 510.04 Lac on simple interest basis.

(c) The Sugar & Distillery Units of the Company havegiven a proposal for settlement of their dues withAllahabad Bank of 227 Lac against which an upfrontpayment of 50 Lacs has already been made under‘No Lien Account’ and included under ‘Cash and BankBalances’ and to pay the balance amount of 177.00Lac in two equal monthly instalments after the receiptof sanction from the Bank. The shortfall in interestprovision amounting to 168.84 Lac will be providedin the books of account in the year of approval of OTSproposal by the Bank.

(d) The Sugar Unit of the Company has not madeprovision for interest/bank charges amountingto 2003.89 Lac (for the year 286.17 Lac) on cashcredit loan taken from Allahabad Bank in view of para(c) above.

(e) No provision has been made for interest on Cash Creditfrom Allahabad Bank amounting to 201.93 Lac (forthe year 35.88 Lac) in Distillery Unit in view of para(c) above.

(f) Till 31st March, 2000, simple interest on maturedfixed deposits and interest upto date of maturity wasprovided in the books of account. With effect from 1stApril, 2000, no provision has been made for interestof 276.12 Lac upto 31st March, 2012 (for theyear 15.47 Lac), computed as per past practice, onthese fixed deposits in view of a legal opinion receivedby the Company to the effect that as per terms andconditions of Fixed Deposit Scheme, deposits do notcarry any interest beyond due dates unless these arerenewed. Since these deposits were never renewedafter their due dates as such, the question of paymentof interest after due dates does not arise at all.However, as a prudent measure, the provision madeof 282.56 Lac in the past (net of payments) hasbeen retained in the books of account as on 31stMarch, 2012.

19. (a) The Vanaspati Unit had applied for Sales Tax relief/exemption to U.P. Government in terms of Section 4Aof U.P. Sales Tax Act. Consequent to rejection, theCompany has filed a writ petition in Lucknow Benchof Allahabad High Court and Court granted stay.Pending disposal of the case, no provision has beenmade for sales-tax 2455.78 Lac relating to the periodMay, 1991 to July, 1994 (Previous year 2,455.78Lac).

(b) The Vanaspati Unit had preferred an application fordeferment of Sales-tax with effect from July, 1994under Section 38 of the U.P. Sales Tax Act and thesame has been rejected by the State Government.The company has also filed Writ Petition against therejection and consequent to the orders of the Court,the recovery of Sales-tax has been kept in abeyance.Accordingly, Sales-tax amounting to 440.46 Lac(previous year 440.46 Lac) relating to the periodAugust, 1994 to March, 1996 has not been depositedwith the authorities.The above writ petition filed by the company waslisted for hearing on 2nd May, 2008 at High court,Lucknow Bench. The company had filed an affidavitwith the Court that BIFR had passed an order dated26th March, 2008 by virtue of which the Benchpermitted the Commercial Tax Department,Government of U.P. to recover its outstanding dues,due after 30th June, 2007. The company had alsostated in the said affidavit that the Hon’ble SupremeCourt of India had affirmed the order of the BIFR andtherefore in view of the said orders of BIFR as affirmedby the Hon’ble Supreme Court the said Writ Petitionmay be dismissed as infructuous. Accordingly theHigh Court, Lucknow Bench has dismissed the saidwrit petition as infructuous.

(c) In accordance with the scheme announced by U.P.Government regarding Waiver of Interest & Penaltyon Sales Tax, the Distillery Unit of the Company haspaid and provided interest during 2005-06 of 54.77Lac i.e. 10% of the total interest as per the scheme.No Dues Certificate of Sales Tax authorities is awaited.

20. (a) Finance LeaseFixed Assets of Modi Sugar Mills (MSM) as on 31st


March, 2012 includes Turbine acquired under financelease. Details are as under:

( in Lac) Particulars Turbine

PresentValue

Lease Period 5 yrsLease Amount 398.55Interest Amount 170.88Total Lease Rent Payable 569.43Payable as on 31st March, 2012 245.18 212.72Payable during 2012-13 122.59 114.04Payable during 2013-14 to not later than 5 years 122.59 98.68Option of purchase at the end of Lease Yes

(b) Operating Leases :The Company has taken following premises and Plant& Machinery on operating lease basis. Disclosurerequirement as per AS-19 are as under :

( in Lac) Period Year ended Year ended

31.03.2012 31.03.2011 Not later than one year 107.88 73.44 Later than one year but not later than five years 41.03 52.48 Later than five years. Nil Nil

The above includes :(i) During the current year, Gas Unit of the company

has entered into lease agreement, as amended,with Weld Excel India Ltd. (WEIL), a related party,taking Oxygen filing plant under operating leasefor 2 years non cancelable lease period at monthlyrent of 1.00 Lac from Weld Excel India Ltd.(WEIL), a related party. The company has optionfor further renewal of lease for two years at theexpiry of lease period.

(ii) During the year 2010-11, Electrodes unit of thecompany has taken office premises in Delhi onsublease basis from WEIL, a related party, underoperating lease for three years non concelableperiod at monthly rent of 4.37 Lac and allowedspace for two work stations to WEIL.

(iii) Electrodes Unit of the company has taken officecum Guest house premises in Chatarpur and Aman,New Delhi on operating lease basis and havingsharing arrangement with WEIL, related party, andShri M.K. Modi, Managing Diretocr for period oftwo years wef 1st November, 2011 and 1st January,2011 respectively at monthly rent of 1.25 Lac(our share) and per day rent of 0.08 Lac (ourshare) respectively.

21. The Distillery Unit declared cessation and lock-out of theUnit with effect from 19th December, 1991 and 5th January,1992 respectively. The lockout has since been lifted. TheU.P. Government, suo moto, has referred the matter to theIndustrial Tribunal to decide the legality of the lockout.Pending final decision, no provision has been made forwages 27.46 Lac for the lockout period.

22. Provision/payments (including value of perquisites) hasbeen made to Managing Directors for the remuneration of

80.68 Lac in terms of shareholders resolution, which issubject to approval of the Financial Institutions.

23. No provision has been made for Earned Leave for Steel

Unit- upto 1991-92, amount unascertained.24. The Sugar Unit of the Company has discounted sales bills

raised on SBEC Sugar Limited amounting to 3,883.70Lac (Previous year 3,525.31 Lac) from certain persons/limited companies etc. and the same (net of discountingcharges borne by drawee) has been credited to the accountof SBEC Sugar Limited. The above includes 3,304.56Lac (Previous year 2,837.67 Lac) being bills discountedfrom individual persons/HUF/Firms. Balance outstanding ofbil ls discounted as on 31st March, 2012 amountsto 892.47 Lac (Previous Year 766.37 Lac) (which werepaid fully subsequently by the drawees) and has been shownin Note 27{1(e)} of Annual Accounts as Bills Discounting.

25. Allahabad Bank had filed a recovery suit for recoveryof 21.41 Crores against Modi Industries Limited andothers before the Debt Recovery Tribunal (DRT), Lucknowin April, 2005 The Company challenged the recovery suiton the grounds that bank required prior permission undersection 22 (1) of the Sick Industrial Companies (SpecialProvisions) Act, 1985 for filing recovery suit. Debt RecoveryTribunal, Lucknow, allowed continuation of recovery suitagainst which company filed appeal with Debt RecoveryAppellate Tribunal, (DRAT) Allahabad. The DRAT hadstayed further proceedings by DRT in the matter. A writpetition was filed by the Company before the LucknowBench of Allahabad High Court challenging the orders ofthe DRT, Lucknow and DRAT, Allahabad. The LucknowBench of Allahabad High Court noting the contention ofthe Company has disposed off the Writ Petition by its orderdated 18th July, 2008. The Company has filed reviewpetition against the said order seeking the quashing of theAllahabad Bank’s suit before the DRT.

26. Consequent to the notification of Revised Schedule VIunder Companies Act, 1956, the financial statements forthe year ended 31st March, 2012, have been prepared asper Revised Schedule VI. Accordingly, the previous yearfigures have also been reclassified to confirm to this year’sclassification. Further, previous year’s figures have beenregrouped/ rearranged wherever necessary.

27. No confirmation letters were sent to debtors/creditors andto parties who have discounted sale bills. In the absenceof such confirmations, the balances in respect of SundryDebtors/Creditors/Bills discounted (Contingent Liability),Loans taken/given and Advances and other accounts aretaken as shown by the books of accounts and are subject toadjustments and reconciliation, if any.

28. In view of non-viability of the Vanaspati Unit, which was aseparate business segment as per AS-17, SegmentReporting, the company declared closure of the Unit witheffect from 3rd February, 2003 and prior information, asrequired under law, was given to the State Government on4th December, 2002. The closure is consistent with thecompany’s strategy to focus on its other viablemanufacturing activities.

29. Delhi Excise Authorities issued Show Cause Notices andraised demand for 167.43 Lac towards Risk-Purchase ofCountry Liquor in view of non-supply of the same byDistillery Unit of the Company. Company has disputed theabove demand and a Writ Petition was filed before theHon’ble Delhi High Court who ordered case to be referredback to Collector of Excise for taking final decision. TheCollector of Excise vide its order dated 27th June, 2003has confirmed the above demand against which thecompany has filed a writ petition before the Hon’ble Delhi


High Court. On the basis of orders of Hon’ble Delhi HighCourt, the company deposited 50.00 Lac till date againstthe above demand. No provision is considered necessaryat this stage since the matter is sub-judice.

30. As on 31st March, 2012, there were 161 Public Depositsamounting to 7.35 Lac which have remained unclaimedand unpaid for a period of more than seven years andinterest accrued but not paid on these unclaimed depositstill the date of maturity amounts to 2.42 Lac. Details ofunclaimed and unpaid debentures for a period of morethan seven years are presently not available.The Company has filed a return dated 14th June, 2002with the Registrar of Companies duly certified by practicingCompany Secretary stating that the Company is a SickIndustrial Company as per orders of BIFR dated 14th March,1991 and rehabilitation proposal for payment in respect ofdebentures and fixed deposits etc. is pending before theIDBI (as the Operating Agency)/BIFR for consideration.The Company will pay/credit the amount as per final ordersof BIFR. Accordingly, no amount was credited/paid toInvestor’s Education and Protection Fund till date.

31. There has been temporary diminution of 68.00 Lac ason 31st March, 2012 (Previous Year Rs. Nil Lacs) in themarket value of one of its investments in the GroupCompanies. However, being long-term investment, this isvalued at cost with no provision made for fall in the marketvalue. These investments are considered strategicinvestments and also having long-term involvement withthe above companies, no provision is considered necessarysince the decline is also not permanent in nature.

32. Deferred Tax Assets are 2844.92 Lac as on 31st March,2012 (Previous year 1749.84 Lac) constituting mainly ofunabsorbed depreciation, unabsorbed losses, provision fordoubtful debts, provisions disallowed and interest on termloans disallowed in Income Tax. Deferred Tax Liabilitiesis 531.27 Lac as on 31st March, 2012 (Previousyear 601.48 Lac) on account of higher depreciationclaimed in Income Tax. On conservative basis as requiredby the Accounting Standard 22, the net Deferred Tax Assetshave not been recognized and position will be re-assessedat next balance sheet date. However, the estimatedDeferred Tax Assets and Liabilities details are given asunder:

( in Lac)Particulars As at As at 31st March, 2012 31st March 2011(a) Deferred Tax Assets :

(i) Disallowances under theIncome Tax Act. 1377.21 1409.74

(ii) Provision for Doubtful Debts 157.90 153.78(iii) Unabsorbed Depreciation 263.52 186.32(iv) Unabsorbed Loss 1046.28 -

Total 2844.92 1749.84(b) Deferred Tax Liabilities:

Related to Fixed Assets 531.27 601.48(c) Deferred Tax Assets (Net) (a-b) 2313.65 1148.36

33. Till 31st March, 2012, Certain Quarters of the Companyare occupied unauthorisedly by ex-employees/outsiders.The company has entered into “Agreement to Sell” for215 (Previous year 215), such residential quarters withsuch parties. Sale consideration amounting to 504.50

Lac (Previous year 504.50 Lac) has been received asinterest free advance. These “agreements” clearly stipulatesthat final sale of such quarters are subject to approval ofFinancial Institutions to whom these quarters have beenmortgaged and the company proposes to seek the samebefore affecting final sale of such quarters. Accordinglythe sale of such quarters will be accounted for only onreceipt of approval of Financial Institutions. Further thecompany has been legally advised that it can enter intosuch “Agreements to Sell”.

34. (a) The Steel Unit of the company has entered into fewleases, including perpetual leases, agreements forcertain portions of the factory land and building18428.46 Sq. Mtrs (Previous year 18428.46 Sq. Mtr.)for which approval of financial institutions, to whomthe factory land and buildings are mortgaged, is yetto be obtained. However, the company has beenlegally advised that it can enter into such leaseagreements. Further, the lease money has mainlybeen utilized for payment of workers dues.

(b) The company has entered into a perpetual leaseagreement for certain portion of closed Soap factory,land & building (1584 sq. mtrs.) to a related party. Asthe said land and building is mortgaged with thefinancial institutions therefore the company hadsought the approval of IDBI Limited (the lead financialinstitution) to the said transaction vide its letter dated6th September, 2006. Since IDBI Limited did notrespond, therefore the company again wrote a letterto IDBI Limited on 5th April, 2007 requesting for itsapproval to the said transaction. The company in theletter under reference also mentioned that if IDBI doesnot respond to the company’s request, it will bedeemed that the company’s request has beenapproved by IDBI Limited and the company will goahead with the said leasing agreement. The IDBI hasso far not responded to the company’s letter.

35. (a) Recovery Certificate (RC) was issued on 1st May, 2004on account of non payment of cane price/commission/interest due to Co-operative Societies. The Hon’bleHigh Court has stayed the recovery proceedings againstthe company subject to payment of dues upto 31stJuly, 2004. The Company has complied with theconditions regarding payment of cane price andcommission on basic SMP upto 31st July, 2004.However, the company has disputed the paymentof interest of 142.00 Lac and recovery chargesof 236.00 Lac in the Hon’ble Allahabad High Courtwhich is still pending. On consideration of prudence,the company has made provision for interest ofRs.142.00 Lacs during the year 2004-05.

(b) Recovery Certificate (RC) was issued on 18th March,2008 on account of non payment of cane price/commission/interest due to Co-operative Societies forthe sugar season 2007-08. The above RC alsoincludes recovery charges of 413.50 Lac which hasnot been provided for in the books of account.

(c) Recovery Certificate (RC) was issued on 20th April,2011 on account of non-payment of cane price/commission/interest due to Co-operative Societies forthe sugar season 2010-11. The above RC alsoincludes recovery charges of 268.25 Lac which has


not been provided for in the books of account as staygranted by Hon’ble Allahabad High Court. Furtherproceedings are pending.

(d) Recovery Certificate (RC) was issued on 10th August,2007 on account of non payment of cane price/commission/Interest due to Co-operative Societies forthe sugar season 2006-07. The above RC alsoincludes interest of 340.66 Lac upto 7th August,2007 on cane price/ commission payable to societiesand recovery charges of 426.95 Lac which has notbeen provided for in the books of account. As per theInterim Order dated 27th February, 2008 of Hon’bleSupreme Court, there shall not be any recovery chargesor interest for delayed payment at this stage

36. As per past practice, the closing stock of finished goods inSugar Unit has been valued at cost or net realizable value(NRV) whichever is lower.Upto 2008-09, for computing NRV, the closing stock offinished goods, to the extent of levy obligation pending asat the year end, was valued at levy sale price and balancequantity was valued at prevailing free market prices.However, with effect from financial year 2009-10, forcomputing NRV, the closing stock, to the extent of levyquantity quota allotted to the Sugar Unit for the periodfrom April, 2012 to August, 2012, has been valued at levy,sale price and the balance quantity has been valued at

prevailing free market prices. Had the NRV been computedas per past practice followed upto 2008-09 as stated above,the value of closing stock would have been lowerby 605.65 Lac (Previous Year 623.10 Lac).

37. No provision has been made for fall in the market/book valueof the investments in the books of subsidiary companies.

38. Pursuant to directions received from Reserve Bank of India,Main object clauses of both the subsidiary companies wereamended as on 16th September, 2000 that the Companywould not carry on the business of Non-Banking FinancialInstitution within the meaning of Section 45 I A of theReserve Bank of India Act, 1934. Accordingly the companyhas not acquired any fresh investments.

39. Modi Spinning & Weaving Mills Company Limited, one ofinvestee companies, in compliance of BIFR sanctionedscheme has allotted following shares during the currentyear free of cost to the company (one share against 5 (five)Equity Shares held by the Shareholders of MSWM as onrecord date i.e. 12th November, 2009) to both thesubsidiaries as under :

( in Lac)Subsidiaries of the Company Shares received of

Haryana RajputanaDistillery Ltd. Fertilizers Ltd.

Own Investment (India) Ltd. 8233 8233Your investment (India) Ltd. 9117 9117

40. Investments in two associates i.e. Bekaert Engineering (India) Pvt. Ltd. and Modi Santa Fe India Pvt. Ltd. have not beenaccounted for in Consolidated Financial Statements under the Equity method as prescribed in Accounting Standard -23 i.e.Accounting for investment in associates as these associates are operating under severe long term restrictions that significantlyimpair its ability to transfer funds to the investor. Accordingly these investments are accounted for at cost.

41. RELATED PARTIES DISCLOSURE01 Entities under the Control of the Company :

Subsidiaries :Own Investment (India) LimitedYour Investment (India) Limited

02 Key Management Personnel :Shri Mahendra Kumar Modi Managing DirectorShri Umesh Kumar Modi Managing Director

03 Other Related Parties with whom theCompany had transactions etc :Enterprises over which the Key Management Personnel and their relatives are able to exercise significant influence:

Modipon LimitedBihar Sponge Iron LimitedSBEC Sugar LimitedMorgardshammar India LimitedModi Mundipharma Pvt. LimitedWin-Medicare Pvt. LimitedModi Motors Private LimitedModi Line Travel Services Pvt. Ltd.Modi Revlon Private LimitedH.M. Tubes & Containers Pvt. Ltd.Modi Senator (I) Pvt. LimitedJayesh Tradex Pvt. LimitedA to Z Holding Pvt. LimitedAshoka Mercantile LimitedWeld Excel India Limited

04 Disclosure of transactions between the Company and related parties and the status of outstanding balances as at 3lstMarch, 2012:

(A) Transactions with the enterprises over which the Key Management Personnel and their relatives are able toexercise significant influence:


( in Lac)

Year2011-12 2010-11

Sale of GoodsSBEC Sugar Limited 4870.72 7461.19Weld Excel India Limited 202.07 253.78

5072.79 7714.97Sale of Assets

Bihar Sponge Iron Limited 3.01 -Purchase of Goods/Raw Materials

Weld Excel India Limited 202.55 335.71SBEC Sugar Limited 52.93 4.37Jayesh Tradex Pvt. Limited 52.49 -Others 15.04 12.88

323.01 352.96Purchase of Assets 2.00 1.65Rental Income

Win Medicare Private Limited 81.64 58.15Weld Excel India Limited 4.62 4.62Modi Motors Pvt. Ltd. 15.73 12.15Modi Mundipharma Pvt. Ltd. 11.66 7.65Others 14.36 8.01

128.01 90.58Payment of Lease Rent

Weld Excel India Limited (Foot Note No. 6 and 7) 14.42 10.58Expenses reimbursed

Weld Excel India Limited (Foot Note No. 2) 75.57 58.22Others 0.38 0.46

75.95 58.68Job Work Charges Paid 54.35 9.82Expenses realized

Weld Excel India Limited (Foot Note No. 3) 38.87 21.06Modipon Ltd. 0.38 3.09Win Medicare Pvt. Ltd. 3.45 -Others 2.80 3.03

45.50 27.18Job Charges received

Weld Excel India Limited 34.14 -Royalty Fee received

Weld Excel India Limited 19.77 22.14Commission paid for sale promotion

Ashoka Mercantile Ltd. 22.34 15.44Receiving of Services 2.79 1.34Security deposits given

Modipon Limited 1.43 97.95Ashoka Mercantile Ltd. 1245.00 -Weld Excel India Limited 4.00 -

1250.43 97.95Advance received against sale of goods

SBEC Sugar Limited - 450.00Interest paid on above advance - 17.23

Loans and Advances takenWeld Excel India Limited (Foot Note No.4) 350.00 -


( in Lac)

Year2011-12 2010-11

(B) Balances outstanding at the year end:Amount recoverable

Good 27.36 58.58Doubtful 3.78 3.78

Loans and advance recoverableWeld Excel India Limited (Foot Note No. 5) 372.67 399.58

Security deposit to Weld Excel India LimitedAgainst Cylinders (Foot Note No. 6) 39.00 39.00Against Oxygen Filling Plant (Foot Note No. 7) 4.00 -

Security deposit recoverable for quartersAshoka Mercantile Limited (Foot Note No. 8) 1245.00 -Modipon Limited 147.63 146.20

Sundry DebtorsSBEC Sugar Limited 1888.77 1734.48Weld Excel India Limited 67.71 -

Amount payable 10.68 77.63Unsecured Loan taken Outstanding

Weld Excel India Limited 350.00 -A to Z Holding Pvt. Ltd. 24.88 149.88

Lease rent payable - 23.40(C) Disclosure of transaction with subsidiaries :

Loan repaidOwn Investment (India) Ltd. - 1.25Your Investment (India) Ltd. - 6.00

Dividend IncomeOwn Investment (India) Ltd. 24.42 27.72Your Investment (India) Ltd. 24.67 30.03

Interest expense - 0.47

(D) Payment to the Key Management Personnel:( in Lac)

Year2011-12 2010-11

i) Managerial RemunerationShri Mahendra Kumar Modi 18.00 14.38

ii) Amount recoverableShri Mahendra Kumar Modi - 6.33(recovered subsequently)

iii) Amount payable to Managing DirectorShri Mahendra Kumar Modi 0.62 -

iv) Amount payable (for gratuity) 3.35 3.35

Foot Notes :1. This excludes amount of Steel Unit in view of non-incorporation of Balance Sheets for these years on account of non-availability

of opening audited balances as on 01.04.1993.2. During the year 2010-11, Electrode unit of the company has taken office premises in Delhi on sublease basis from Weld Excel India

Limited (WEIL), a related party, under operating lease for three years non cancelable period at monthly rent of 4.37 Lac andallowed space for two work stations to WEIL.

3. During the current year, Electrode unit of the company has taken office cum guest house premises in Chatarpur and Aman, NewDelhi on operating lease basis and having sharing arrangement with WEIL, a related party, and Shri Mahendra Kumar Modi,Managing Director for a period of two years wef 1st November, 2011 and 1st January, 2011 respectively at monthly rent of 1.25 Lac(our share) and per day rent of 0.08 Lac (our share) respectively.

4. Loan taken on 31st March, 2012 and repaid fully on 3rd April, 2012.5. Pursuant to an agreement for commitment to supply electrodes, an unsecured interest free advance of 500 Lac was given during


2009-10 which is being adjusted from supply of goods @ 20% of invoice value. Accordingly, 28.36 Lac (Previous year 62.27Lac) was recovered / adjusted against above advance.

6. 1960 Cylinders taken on operating lease at monthly rent of 45.00 per cylinder.7. Oxygen Filling Plant taken on operating lease for 2 years (non-cancelable) at monthly rent of 1.00 Lac per month for a period of

two years with an option to renew for another two years.8. Security deposits (unsecured interest free) amounting to 1245.00 Lac given ( 1100 Lac during May, 2011 and 145.00 Lac on

30th March, 2012) against temporary possession of 59 houses in Modinagar.42. In the recent past, the Arc Electrode Industry in the country has been facing stiff competition from international players who

entered India market and started aggressive publicity to capture it;. This resulted in adverse impact on domestic companies.To cope with the treat, the electrode unit of the company has also undertaken publicity campaign through advertisement intheaters in different states, Banners, Wall Painting, Hoarding, News Bulletin, Calendars etc. This has enabled the company tosustain the competition and resulted in increase in turnover by almost 30%.Further, we give below figures on advertisement during last three years :

2009-10 39,95,2262010-11 37,28,6692011-12 3,91,77,460

43. SEGMENT REPORTING :( i) The Management has identified six reportable Business Segments for the current year namely :

Sugar comprising of Cane Sugar.Gas comprising of gases.Distillery comprising of liquors and spirit.Paint comprising of Paints & Varnish.Electrodes comprising of Welding ElectrodesInvestment Operations

(ii) The Vanaspati Unit of the Company, which is lying closed since 2003, has not been treated as business segment.(iii) The Steel Unit is lying closed since 24th January, 1993 due to strike/lock-out. In the meanwhile, opening balances (Assets

and Liabilities) of the unit as on 1st April, 1992 subject to certain modifications as per Note 27 {4(c)} have been incorporatedas Assets & Liabilities of Steel Unit. (Refer Note 27(4)).

(iv) Segmentwise information (Primary Segments) for the current year:( in Lac)

Particulars Sugar Gas Distillery Paint Electrode Investment Totaloperations

REVENUE :Total External Sales/Services 15946.42 654.03 2582.33 2461.80 8595.55 61.92 30302.05Inter Segment Sales 412.00 3.41 - 7.04 0.22 - 422.67Total Sales 16358.42 657.44 2582.33 2468.84 8595.77 61.92- 30724.72Less: Inter Segment Sales 412.00 3.41 - 7.04 0.22 - 422.67Total Sales 15946.42 654.03 2582.33 2461.80 8595.55 61.92- 30302.05

30302.05

RESULT :Segment Result (1962.60) 94.61 (9.79) (126.13) 113.01 13.69 (1877.21)Add:i) Profit of Steel Unit # 71.15ii) Interest Income 52.53iii) Exceptional Items $ (847.77)

(2601.30)Less;Interest Expenses 1038.94Unallocable Expenses (Net)** 628.25Profit before Tax (4268.49)Less: Provision for Tax 0.27Fringe Benefit Tax -Profit after Tax (4268.76)

# Including inter-unit rental income of 46.73 Lac.$ Refer Note No. 27(8)(i).** Includes Administrative Offices i.e. MD Office and Corporate Office of the Company.


OTHER INFORMATION( in Lac)


Segment Assets@ 10720.30 241.21 2416.69 812.23 4295.81 8.09 18494.33Steel Unit* 3408.62Investments 751.58FD with Banks & Interest Accrued 99.60 2.14 44.57 5.79 289.72 14.08 455.90Other unallocable assets** 5340.34Total Assets #28450.77Segment Liabilities 11759.69 176.99 1469.71 538.59 1824.63 0.42 15770.03Steel Unit* 2778.14Other unallocable liabilities** 2655.58Total Liabilities 21203.75Secured/Unsecured Loan/DPG 15271.97(Including interest accrued)Capital Expenditure :(Including Under Erection andacquired under finance lease)on Segment Assets 41.01 2.37 83.12 9.39 124.16 - 260.05Depreciation 349.08 12.36 49.42 23.14 175.56 - 609.56NOTES :* Refer Note 27(43)(iii) above.** Includes Administrative Offices i.e. MD Office and Corporate Office of the Company.01 The Business operations are concentrated in India only.02 External Revenue is exclusive of Excise Duty realized.03 Inter segment revenues between operating segments are accounted for at market price.@ Includes revaluation of Fixed Assets also.# This excludes 920.59 Lac being unreconciled debit balance of Steel Unit included in Short Term Loan and Advances i.e.Note 17.

(iv) Segmentwise information (Primary Segments) for the previous year:( in Lac)


REVENUE :Total External Sales/Services 22650.96 655.10 2122.56 2257.77 6716.57 74.88 34477.84Inter Segment Sales 450.88 3.42 - 6.30 0.32 0.46 461.38Total Sales 23101.84 658.52 2122.56 2264.07 6716.89 75.34 34939.22Less: Inter Segment Sales 450.88 3.42 - 6.30 0.32 0.46 461.38Total Sales 22650.96 655.10 2122.56 2257.77 6716.57 74.88 34477.84

34477.84RESULT :Segment Result 360.37 129.19 (87.74) 32.39 797.14 16.96 1248.31Add: .i) Profit of Steel Unit # 33.86ii) Interest Income 91.64iii) Exceptional Items $ 816.11

2189.92Less:Interest Expenses 1193.35Unallocable Expenses (Net)** 511.61Profit before Tax 484.96Less: Provision for Tax 0.09Fringe Benefit Tax -Profit after Tax 484.87


# Including inter-unit rental income of 46.99 Lac.$ Refer Note No. 27(8)(ii).** Includes Administrative Offices i.e. MD Office and Corporate Office of the Company.

OTHER INFORMATION( in Lac)


Segment Assets@ 8087.22 264.35 1276.39 958.75 3712.58 2.39 14301.68Steel Unit* 3414.99Investments 745.30FD with Banks &Interest Accrued 90.80 2.38 32.28 4.77 1287.21 14.07 1431.51Other unallocable assets** 5074.99Total Assets #24968.47

Segment Liabilities 5463.54 204.15 1135.07 666.80 1266.88 0.42 8736.86Steel Unit* 2778.14Other unallocable liabilities** 2564.79Total Liabilities 14079.79

Secured/Unsecured Loan/DPG 14637.49(Including interest accrued)Capital Expenditure :(Including Under Erection andacquired under finance lease)on Segment Assets 63.68 0.12 66.69 17.24 233.80 - 381.53Depreciation 361.72 7.79 43.85 16.34 122.22 - 551.92

NOTES : * Refer Note 27(43)(iii) above.** Includes Administrative Offices i.e. MD Office and Corporate Office of the Company.01 The Business operations are concentrated in India only.02 External Revenue is exclusive of Excise Duty realized.03 Inter segment revenues between operating segments are accounted for at market price.@ Includes revaluation of Fixed Assets also.# This excludes 960.76 Lac being unreconciled debit balance of Steel Unit included in Short Term Loanand Advances i.e. Note 17.

44. Additional information as required by Revised Schedule VI of Companies Act, 1956 :-(i) Prior period items:

( in Lacs)


March, 2012 March, 2011(A) Income

(i) Revenue from operation (2.34) -(ii) Other Income 0.14 -(iii) Reversal of finance costs 2.05 -(iv) Reversal of other expenses 0.40 -

Total 0.25 -

(B) Expenditure(i) Finance costs 1.09 10.68(ii) Employee benefits expenses 1.94 1.41(iii) Other expenses 28.21 18.46

Total 31.24 30.55

ope at o s


(ii) Cost of raw materials consumed:( in Lac)


March, 2012 March, 2011

(a) Sugar cane 17,959.05 13,939.39(b) Molasses 7.54 4.72(c) Extra neutral alcohol (ENA) 43.35 240.37(d) Vatted Malt Scotch Whisky 7.66 -(e) Oils 80.82 90.28(f) Chemical 3,043.92 2,456.51(g) Wire 3,465.36 2,606.33(h) Carbide 199.44 183.87(i) Carbondioxcide (CO2) 52.96 64.07(j) Argon Gas 38.75 -(k) Others 18.00 10.29

Total 24,916.85 19,595.83

(iii) Manufactured goods:( in Lac)

Sl.No. Particulars Sales @ Opening Inventory Closing InventoryFor the year For the year For the year For the year For the year For the year

ended ended ended ended ended ended31 March 2012 31 March 2011 31 March 2012 31 March 2011 31 March 2012 31 March 2011

(a) Sugar 15,744.67 22,488.11 1,014.71 6,550.02 4,151.93 1,014.71(b) Molasses (By product) 502.18 459.38 157.03 265.80 124.07 157.03(c) Bagasse (By product) 452.00 633.59 35.85 - 27.50 35.85(d) Spirit 7.39 302.70 6.59 217.63 57.13 6.59(e) Extra neural alchohol (ENA) - - 7.62 3.03 26.18 7.62(f) Indian made foreign liquor (IMFL) 704.39 210.72 9.89 - 99.07 9.89(g) Country liquor 10,163.80 5,525.81 30.49 - 162.03 30.49(h) Bio-organic manure 19.47 12.02 9.72 3.96 - 9.72(i) Special denatured spirit 552.78 792.66 - - - -(j) Paints & varnish 2,720.79 2,492.08 168.79 135.57 72.11 168.79(k) Disolved Acetylene 317.70 296.66 3.42 2.94 5.91 3.42(l) Carbon di oxide 101.95 124.20 0.38 0.30 0.61 0.38

(m) Argon 84.53 - - - 0.74 -(n) Oxygen 4.18 - - - 0.65 -(o) Welding Electrodes 9,239.53 7,197.23 514.72 406.36 549.35 514.72(p) Flux 154.59 118.67 - - - -(q) Wires* - - 442.63 442.63 442.63 442.63(r) Rods,Flats,Sections* - - 398.25 398.25 398.25 398.25(s) Oxygen Gas* - - 0.05 0.05 0.05 0.05(t) Scrap* - - 54.81 54.81 54.81 54.81

(u) Others - - - - 8.97 -

TOTAL 40,769.95 40,653.83 2,854.95 8,481.35 6,181.99 2,854.95

* This represents figures of steel unit as at 31st March, 1992.{ Refer note 27(4) }.@ Inclusive of Excise-duty but excludes rebates and discounts.


(iv) Traded goods:-( in Lac)

Particulars Sales Purchases Opening Inventory Closing InventoryFor the For the For the For the For the For the For the For the

year year year year year year year yearended ended ended ended ended ended ended ended

31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March2012 2011 2012 2011 2012 2011 2012 2011

Satina Uni.Stainer 18.96 9.16 10.14 5.83 1.70 1.61 0.47 1.70Glowlite putty 1.94 8.77 0.94 4.24 0.23 0.38 0.27 0.23Oxygen Gas 90.16 114.24 53.25 68.85 0.09 0.08 0.02 0.09Nitrogen Gas 23.07 30.17 11.17 14.81 0.17 0.23 0.19 0.17Hydrogen Gas 37.46 26.24 23.34 16.49 0.63 1.03 0.71 0.63N2H2 Mixure 9.55 8.16 2.84 2.88 0.03 0.04 0.06 0.03Carbon di oxide Gas 21.53 16.46 10.79 9.37 0.03 0.05 0.06 0.03Argon Gas 1.41 75.73 0.02 31.10 0.72 0.54 - 0.72Zero Air Gas 1.64 1.74 0.58 0.69 0.05 0.03 0.03 0.05

205.72 290.67 113.07 154.26 3.65 3.99 1.81 3.65

(v) Services rendered:- ( in Lac)

Sl. No. Particulars For the year For the yearended ended

31 march 12 31 march 11(a) Conditioning charges of cylinders 9.57 8.27(b) Job work charges 63.62 67.68

TOTAL 73.19 75.95(vi) Work-in-progress:-

( in Lac)S.l.No. Particulars Opening Inventory Closing Inventory

For the year For the year For the year For the yearended ended ended ended

31 march 12 31 march 11 31 march 12 31 march 11(a) Sugar 124.98 198.83 168.88 124.98(b) Indian made foreign liquor (IMFL) 2.17 - 4.37 2.17(c) Country liquor 5.66 6.33 4.78 5.66(d) Paints & varnish 57.90 46.80 30.11 57.90(e) Welding Electrodes 143.58 133.08 174.87 143.58(f) Flux 32.00 49.12 31.99 32.00(g) steel 40.32 40.32 40.32 40.32

TOTAL 406.61 474.48 455.32 406.6145. Earnings per Share (EPS) basic and diluted, computed in accordance with Accounting Standard-20:

( in Lacs)Particulars 2011-12 2010-11

Profit/(Loss) for the year as per accounts (4262.74) 484.80 Less/Add: Dividend on Preference Shares 6.11 6.11 Total (A) (4268.85) 478.69 Number of Equity Shares issued (B) 33,09,214 33,09,214 Earning per share (in ) (A)/(B) (129.00) 14.47 Face Value of Equity Share in Rupees 10 10





FORM OF PROXYMODI INDUSTRIES LIMITED

REGD. OFFICE: MODINAGAR 201204 (U.P.)

I/We .................................................................................................... of ........................................................................................

in the district of .................................................................................................................................................... being a Member(s)

of MODI INDUSTRIES LIMITED hereby appoint ..................................................... ..............................................................

of.................................................................................. in the district of .......................................................................

or failing him .....................................................................................................................................................................................

of ............................................................................................. in the district of ..............................................................................

as my/our proxy to attend and vote for me/us and on my/our behalf at the 78th Annual General Meeting of the Company

to be held on Wednesday, the 19th December, 2012, at 12.30 P.M. and at any adjournment thereof.

Signed at ..............................................................this .........................................day of November/December, 2012

Signature ......................................................................................................

Ledger Folio No. ..........................................................................................

No. of Equity shares held ..............................................................................

NOTE :

( i) The Proxy need not be a member.

(ii) The Proxy duly signed across Rs.1.00 revenue stamp should reach at the Registered Office of the Company not less than48 hours before the time fixed for the meeting.

.................................................................................TEAR HERE....................................................................................................

MODI INDUSTRIES LIMITEDRegd. Office: Modinagar 201204 (U.P.)

ATTENDANCE SLIP

I hereby record my presnce at the 78th Annual General Meeting held at Modi Industries Transit House (Modi Industries Complex),Modinagar 201204, Distt. Ghaziabad (U.P.) on Wednesday, the 19th, December, 2012, at 12.30 P.M.

1. Full name of the Shareholder ................................................................................................................... (in Block Letters)

2. L.F. No..................................................................................................................................................................................

3. No. of Equity shares held .....................................................................................................................................................

4. Signatures of the Shareholder or proxy attending................................................................................................................

To be used only when First named shareholder is not attending.

Please give full name of the 1st Joint Holder.

Mr./Mrs./Miss.............................................................................................................................................................................

NOTE: Please fill-in this attendance slip and hand it over at the ENTRANCE OF THE TRANSIT HOUSE.

Affix a1.00 RupeeRevenue

Stamp


BOOK POST

ANNUAL REPORT 2011-12

To,

If undelivered please return to :MODI INDUSTRIES LIMITEDREGISTERED OFFICEMODINAGAR-201204 (U.P.)

Documents

MODI INDUSTRIES LIMITED · 2014-11-18 · MODI INDUSTRIES LIMITED (3) NOTICE NOTICE is hereby given that the 78th Annual General Meeting of Modi Industries Limited will be held on