Annual Report

The Oudh Sugar Mills Limited

LATE DR K.K. BIRLA-CHAIRMAN EMERITUS

(1918-2008)

A TRIBUTE TO DR K.K.BIRLA

Industrialist. Parliamentarian. Educationist. Writer. Philanthropist. Above all, humanist.

Dr K.K. Birla, our Chairman emeritus, was many men in one man.

Born to the legendary industrialist G.D. Birla in Pilani on 11th November 1918, Dr Birla established one of India’s largest business conglomerates, encompassing 40 companies across diverse sectors like sugar, fertilizers, heavy engineering, textiles, media and shipping.

A committed educationist, Dr. Birla was also instrumental behind the growth of the reputed Birla Institute of Technology, an institution of academic excellence. He also served as a guide to Indian industry, while heading institutions of repute like the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian Sugar Mills Association (ISMA) and the International Chambers of Commerce (ICC). Dr Birla’s holistic vision of growth helped establish the K. K. Birla Foundation, which recognizes contributions in many fields, focusing especially on the achievements of the rural population.

A staunch supporter of India’s economic liberalisation, Dr Birla felt that the country’s economic reforms would trigger social empowerment and wellbeing. A keen observer of national and international events, he provided important, though discreet, contributions to public policy. An outstanding social engineer, he believed in industry’s attempt to emerge as a change agent in a country plagued by poverty, illiteracy and disease. A three-time Member of Parliament, Dr Birla enjoyed an excellent rapport with

top leaders across India’s political spectrum.

Dr. Birla’s autobiography, “Brushes with History” is replete with vignettes of Birla family’s close ties with historical personalities like Mahatma Gandhi, Rajendra Prasad, B. C. Roy, Jayaprakash Narayan and Morarji Desai, among others. The autobiography captures a vibrant era in the nation’s existence, which influenced Birla’s personal credo and later achievements. He had also written “Indira Gandhi: Reminiscences and Partners in Progress: Collection of Selected Speeches and Writings”. Besides, he regularly contributed articles on his foreign travels to the Hindustan Times, of which he was the Chairman.

Dr. Birla’s legacy reconciles wealth creation with social engineering and nation-building, an inspiring ideal for the business community. Although he was a deeply religious Hindu and a noted patron of temples in Kolkata and Delhi, he believed deeply in secularism as India’s answer to a world fraught with sectarian violence.

Death can only rob us of his physical presence; his legacy will remain alive and continue to inspire.

“The great men of earth are the shadow men, who, having lived and died, now live again and forever through their undying thoughts. Thus living, though their footfalls are heard no more, their voices are louder than the thunder, and unceasing as the flow of tides or air.”

Henry Ward Beecher

CONTENTSCorporate Information 2Financial Highlights 3

Chairman’s Message 4

Directors’ Report 6Management Discussion and Analysis 10Report on Corporate Governance 18Auditors’ Report 27Balance Sheet 30Profit and Loss Account 31Cash Flow Statement 32Schedules to Accounts 33Auditors’ Report on Consolidated Financial Statements 61Consolidated Financial Statements 62Subsidiary Companies Financial Statements 86

BOARD OF DIRECTORSShri C. S. Nopany, Chairman-cum- Mg. DirectorShri S. V. MuzumdarShri Ashvin C. DalalShri C. B. PatodiaShri Rohit Kumar DhootSmt. Madhu Vadera JayakumarShri Haigreve KhaitanShri J.N. Godbole

COMMITTEES OF DIRECTORSFinance & Corporate Affairs CommitteeShri C.S. NopanyShri S.V. MuzumdarShri Ashvin C. DalalSmt. Madhu Vadera Jayakumar

Audit CommitteeShri Ashvin C. DalalShri C.B. PatodiaShri S.V. MuzumdarShri Rohit Kumar Dhoot

Investors’ Grievance CommitteeShri S.V. MuzumdarShri Rohit Kumar DhootSmt. Madhu Vadera Jayakumar

Remuneration CommitteeShri S.V. MuzumdarShri Ashvin C. DalalShri Rohit Kumar Dhoot

EXECUTIVESShri Sanjay Mukherjee, SecretaryShri V. P. Singh, Executive President, HargaonShri Chandra Mohan Singh, Executive President, NarkatiaganjShri B. K. Malpani, Executive President, RosaShri S. K. Premi, Executive President, AllahabadShri P. K. Saini, Executive President, Hata

AUDITORSS.R. Batliboi & Co.Chartered Accountants

ADVOCATES & SOLICITORSKhaitan & Co.

BANKERSState Bank of IndiaIDBI Bank Ltd.Axis Bank Ltd.State Bank of HyderabadUnion Bank of India

REGISTRAR & SHARE TRANSFER AGENTIntime Spectrum Registry Ltd.(Unit : The Oudh Sugar Mills Limited)C-13, Pannalal Silk Mills CompoundL.B.S. Marg, Bhandup (West)Mumbai - 400 078Tel. No. : 91- 022 – 2596 3838Fax No. : 91- 022 – 2594 6969e-mail : isrl@intimespectrum.com

REGISTERED OFFICEP. O. Hargaon, District – Sitapur, (U. P.)Pin Code – 261 121

CORPORATE OFFICEUnit No. 210/212, Solaris - 1, ‘A’ Wing, 2nd FloorSaki Vihar Road, Opp : L&T Gate No. 6, Andheri (East), Mumbai – 400 072.Tel. No. : 91- 022 – 2847 0249Fax No. : 91- 022 – 2847 0275e-mail : oudhsugar@mtnl.net.in

HEAD OFFICE9/1, R.N. Mukherjee Road, Kolkata – 700 001Tel. No. : 91-033-2243 0497/8 Fax No. : 91-033-2248 6369e-mail : birlasugar@birla-sugar.comWebsite : www.birla-sugar.com/osugar

SUGAR MILLS1. Hargaon, Dist. Sitapur, (U. P.)2. Rosa, Dist. Shahjahanpur, (U. P.)3. Narkatiaganj, Dist. West Champaran, (Bihar)4. Hata, Dist. Kushinagar (U.P.)

DISTILLERIES1. Hargaon, Dist. Sitapur, (U. P.)2. Narkatiaganj, Dist. West Champaran, (Bihar)

CANNING FACTORYP.O. Bamrauli, Allahabad, (U. P.)

CO-GENERATION POWER PLANT1. Hargaon, Dist. Sitapur, (U. P.)2. Narkatiaganj, Dist. West Champaran, (Bihar)3. Hata, Dist. Kushinagar (U.P.)

CORPORATE INFORMATION

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(Rs. in Lacs)PERFORMANCE AT A GLANCE 2003-04 2004-05 2005-06 2006-07 2007-08

Gross Turnover 37925.12 37628.42 52864.92 46812.06 35393.59

Operating Profit 6853.10 8096.94 10297.66 129.80 5280.58

Interest & Finance Charges (net) 3536.87 2786.51 1684.79 2044.23 3677.82

Depreciation 1097.79 1251.28 1558.68 2028.67 2229.68

Profit/(Loss) before Tax 2218.44 1821.70 7054.19 (3943.10) (626.92)

Profit/(Loss) after Tax 1412.47 1116.04 4536.51 (2689.55) (451.27)

Net Worth 5332.77 9756.79 13329.60 10603.02 10083.42

Net Worth per Equity Share (Rs.) 51.35 53.69 73.35 58.34 55.48

Dividend per Equity Share (Rs.) 2.50 2.50 4.50 -- --

Earning per Equity Share (Rs.) 10.07 7.05 24.96 (14.80) (2.48)

Cane Crushed (Season) (In lac Qtls.) 168.96 182.00 233.59 290.04 237.06

FINANCIAL HIGHLIGHTS

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CHAIRMAN’S MESSAGE

Dear ShareholdersThe last six months have witnessed a lifetime of dramatic twists and turns and the next few months also promise more turbulent times. The global economy is in turmoil with commodities taking a huge hit on the face of a looming global slowdown. These are indeed testing times but I am confident that the Indian economy will bounce back and return to its high growth trajectory.

I would like to share with you the highlights of your Company, The Oudh Sugar Mills Limited for the year 2007-08. Let me begin by saying that your Company has come out stronger from its experiences, faced during the down turn of the sugar industry. The industry has weathered a severe recession, and your Company came out better placed, competitively.

WHAT CHALLENGES DID WE FACE, AND HOW DID WE RESPOND ? While the macro economic fundamentals of the sugar industry continue to strengthen with the global sugar surplus slowly disappearing, the Indian economy witnessed a marked change in its growth pattern: GDP growth rate of only 8.7 per cent and falling, was comparatively lesser than projections. That, of course, impacts the whole economy.

The sugar industry was trapped between high sugarcane prices and low sugar prices and the absence of a stable and comprehensive

sugar policy, made things tougher. But we were successful in turning the constraints into enablers. We took advantage of the cyclicality of the industry. Your Company used this downturn to streamline operations, augmented capacities and widened the business base, thus abstaining from any relapse in the long term.

The astronomical rise in the crude prices, marked its presence on every economy and the world woke up to the urgent call, for a substitute fuel. The volatility in the crude prices had a positive impact on the sugar industry. Ethanol from sugarcane, blended with gasoline, helped to soften the impact on fuel costs, while opening up a timely new product line for the sugar industry and consequently weathering its cyclicality.

Brazil, the world’s leading sugar producer, has been diverting its attention to ethanol production. This translates into a cut down on the global sugar output, resulting into attractive sugar prices.

Brazil and USA, have already mastered ethanol technology and economics. The Indian Government too, has taken the initiative to introduce progressive blending of petrol with ethanol. This has boosted the importance of ethanol in an increasingly fuel-peaking scenario. The Government’s push to the ethanol programme is a big help for sugar companies: besides lifting profitability, it will help reduce dependence on the industry’s cyclicality.

Meanwhile, your Company has, as I said earlier, distributed its business, thus minimising risks. Today, your Company’s main

Message from Mr. C. S. Nopany,Chairman and Managing Director

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business focus remains on what it does best, manufacture of sugar and at the same time, it is paying adequate attention to the canes derivatives industrial alcohol to name one. Your Company has built up on its captive power generation capacity, utilising the crushed canes waste product bagasse, as a revenue generating stream.

The global market called for a new protocol as Brazil began to shift focus to ethanol. But the situation had the upside of speeding up the end of the sugar surplus phase and leading to the next one.

WHAT IS THE OUTLOOK FOR OUDH SUGAR ?Your Company has completed an aggressive expansion plan, parts of which are already visible. Putting our strategy into practice, with imagination and sustained effort, it should help us compete effectively in the foreseeable future. With technology upgraded, your Company has made a strategic shift upwards on the value chain.

Our expansion strategy entails both green field and capacity augmentation projects. A new sugar mill will start production in the current season and a Rs. 100 crore expansion of our Hargaon plant with zero effluent discharge technology will facilitate an increase in distillery capacity.

While we were always energy independent, in the sense that we are generating power from bagasse, we have become an exporter of surplus power. This has become an important source of revenue for us which will continue to grow.

Our partner in our progress has always been and will continue to be our large family of farmers. They are the backbone of the sugar industry and with emphasis on Research & Development on better varieties and yields of sugarcane and more efficient farming techniques we will be able to both upgrade and upscale the cane crop. Only that will make a sustainable product portfolio for us, and the sugar industry as a whole.

With warm regards,

C. S. Nopany

The global market called for a new protocol as Brazil began to shift focus to ethanol. But the situation had

the upside of speeding up the end of the sugar surplus phase and leading to the next one.

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FINANCIAL PERFORMANCE & DIVIDEND3. There is a marked improvement in the financial performance

of the Company for the year under review where losses have been substantially reduced. The Allahabad High Court, in a landmark judgment has quashed the State Advised Price of sugarcane and has directed the State Government to reassess the price on the basis of economic criteria. As per the directions of the Supreme Court, all the sugar factories have paid a price of Rs 110/qtl for sugarcane. This has substantially reduced the losses of the sugar industry. A detailed analysis of the Company’s operations, future expectations and business environment has been given in the Management Discussion and Analysis Report, which is attached as a separate annexure and forms a part of this Report.

4. In view of losses, the Board of Directors do not recommend any dividend for the year.

RIGHTS ISSUE5. Your Company has offered 39,98,240 Equity Shares of Rs. 10

each to the Members of the Company as Rights Shares in the

ratio of 22 Equity Shares for every 100 Equity Shares held on 2nd July, 2008 (being record date) at a premium of Rs. 50 per Equity Share aggregating to Rs. 60 per share. For every one Equity Share allotted on Rights basis, the allottee will receive one Detachable Warrant which shall be converted into one Equity Share on such date as your Directors may decide within a period between 6 months and 48 months from the date of allotment of the aforementioned Equity Shares. The Issue was opened on 31st July, 2008 and will be closed on 29th August, 2008.

CAPITAL PROJECTS6. The Company successfully completed the capacity expansion

of its Distillery at Hargaon to 100 klpd during the year under review.

The Construction of Company’s Greenfield Integrated Sugar Project of 7000 TCD with a sugar refinery and Co-Generation plant at Hata, Kushinagar, Uttar Pradesh is progressing satisfactorily and will be commissioned at the beginning of crushing season 2008-09.

To

The Shareholders,Your Directors take pleasure in presenting their Report and the audited Statements of Account of the Company for the year ended 30th June, 2008.

DIRECTORS’ REPORT

(Rs. in Lacs)FINANCIAL RESULTS 2007-08 2006-072. Gross Sales 35,393.59 46,812.06 Profit/(Loss) before Depreciation and Tax 1,602.76 (1,914.43) To which is added/(deducted) : Balance brought forward from the previous year 29.96 1,569.51 Deferred Tax Asset 212.12 1,285.20 Income Tax Provision no longer required written back 0.60 - Transfer from General Reserve 500.00 742.68 1,150.00 4,004.71 Leaving a balance of 2,345.44 2,090.28 Out of this provisions have been made for : Depreciation 2,229.68 2,028.67 Taxation [ including Wealth tax Rs. 3.00 Lacs (Rs. 2.15 Lacs) ] 3.00 29.65 Minimum Alternative Tax (MAT) credit entitlement/ Reversal 3.93 (25.50) Fringe Benefit Tax 30.14 2,266.75 27.50 2,060.32 Balance carried to Balance Sheet 78.69 29.96

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CORPORATE GOVERNANCE7. A separate report on Corporate Governance and a declaration

by all members of the Board and Senior Management Personnel, pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, are attached as separate annexure and forms a part of this Report.

DIRECTORS8. Shri C. S. Nopany was appointed as the Managing Director of

the Company for a period of 3 years with effect from 1st July, 2005 and he has been re-appointed as the Managing Director for a further period of 3 years with effect from 1st July, 2008, subject to approval of the shareholders.

9. Shri Ashvin C. Dalal and Shri C. B. Patodia retire from the Board by rotation and are eligible for re-election.

DIRECTORS’ RESPONSIBILITY STATEMENT10. Your Directors confirm that -

i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) such accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that year;

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts have been prepared on a ‘going concern’ basis.

AUDITORS11. The Notes on Accounts appearing in Schedule 23 and referred

to in the Auditors’ Report are self explanatory and therefore, do not call for any further comments or explanations.

12. The Auditors, Messrs S. R. Batliboi & Co, Chartered Accountants, retire and are eligible for re-appointment.

13. In accordance with the directives of the Central Government

under Section 233 B of the Companies Act, 1956, Messrs D. Radhakrishnan & Co., Cost Accountants, have been appointed as Cost Auditors to audit the cost accounting records relating to Sugar and Industrial Alcohol for the current year.

SUBSIDIARY COMPANIES14. The audited accounts of Champaran Marketing Company

Limited, OSM Investment & Trading Company Limited, Hargaon Investment & Trading Company Limited, subsidiaries of the Company and Hargaon Properties Limited, a subsidiary of Hargaon Investment & Trading Company Limited, for the year ended 31st March, 2008 are attached.

STATUTORY REQUIREMENTS15. As required under the Listing Agreement with Stock

Exchanges, Consolidated Financial Statements conforming to the Accounting Standard 21 are attached.

16. Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 is attached as a separate annexure and forms part of this Report.

17. Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1) (e) of the Companies Act, 1956 is attached as a separate annexure and forms part of this Report.

ACKNOWLEDGEMENTS18. Your Directors take this opportunity of recording their

appreciation of the financial institutions and bankers for extending their support to the Company. Your Directors are also grateful to the various ministries in the Central and State Governments of Uttar Pradesh and Bihar, the Sugar Directorate and the Sugar Development Fund for their continued support to the Company. The Directors also place on record their appreciation of the valuable contribution made by the employees at all levels.

For and on behalf of the BoardC. S. NOPANY Chairman-cum-Managing Director

Place : New Delhi,Dated : 26th August, 2008

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DIRECTORS’ REPORT

Statement showing particulars pursuant to the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report for the year ended 30th June, 2008.

I. CONSERVATION OF ENERGY: a) Installation of various machinery and equipments to increase generation of steam as well as to reduce consumption of steam and fuel.

b) The Company has modernised the boilers by replacing low pressure old boilers with high pressure modern boilers and low pressure power generating units with high pressure power units. New ID and FD fans have been installed on old low pressure boilers to increase the capacity and fuel efficiency of these boilers which has led to substantial savings of bagasse.

c) Automatic drum level controllers on old boilers have been installed to reduce amount of blow down and thus conserve energy.

d) The Company has modified sugar juice heating and pan-boiling system to reduce consumption of steam and fuel.

The above measures are expected to reduce the consumption of fuel and power substantially and consequently the cost of production.

II. RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION: The Company has been carrying out Research & Development in the following specific areas:i) Heat treatment therapy to treat cane seed in order to get better yield of sugarcane per acre of land.ii) In order to control the insect, pest and borer, insecticide and pesticide are being applied in the crop just before indent of pest for its control.

Parasites (Tricogranna Cards) are being applied to biologically control borers.iii) Ratoon management by managing the ratoon crop of cane to increase yield.iv) Establishment of Tissue culture lab to promote new varieties of cane. Owing to the above efforts, the Company expects higher yield of disease free cane resulting in higher return to cane growers also. This will

contribute in higher crushing and better recovery.

The required data with regard to conservation of energy is furnished below:(A) POWER & FUEL CONSUMPTION: Current Year Previous Year Sugar Food Sugar Food Processing Processing 1. Electricity : a) Purchased : Units (in Lacs) 4.60 1.38 3.22 1.38 Total amount (Rs. in Lacs) 21.74 7.73 19.23 6.54 Rate/Unit (Rs.) 4.73 5.61 5.97 4.74 b) Own Generation : i) Through Diesel Generator : Units (in Lacs) 18.89 0.98 32.30 0.67 Units/litre of diesel-oil 4.39 10.23 3.86 14.15 Cost/Unit (Rs.) 7.19 3.57 7.94 3.27 ii) Through Steam Turbine/ Generator : Units (in Lac) (Excluding units sold to and used in other segment 680.55 -- 775.05 -- Units/litre of fuel oil/gas Cost/Unit (Rs.) Not ascertainable as the bagasse which is a by-product is being used as fuel2. Coal : Quantity (Tonnes) -- 861.10 --- 693.00 Total Cost (Rs. in Lacs) -- 45.89 --- 32.77 Average Rate (Rs.) -- 5,329.36 --- 4,728.69(B) CONSUMPTION PER UNIT OF PRODUCTION :

Products (in Lac Qtls) 23.54 0.42 27.81 0.34 Electricity (unit) 29.71 5.61 29.15 5.50 Furnace Oil -- -- --- --- Coal (in kg) -- 0.20 --- 0.20 Others -- -- --- ---

DIRECTORS’ REPORT

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STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956The entire subscribed equity capital of Champaran Marketing Company Limited, Hargaon Investment & Trading Company Limited and OSM Investment & Trading Company Limited as on 31st March, 2008 was held by the Company. As on 31st March, 2008, 55.56% and 44.44% of the subscribed equity capital of Hargaon Properties Limited was held by Hargaon Investment & Trading Company Limited and Champaran Marketing Company Limited respectively, wholly owned subsidiaries of the Company.

(Rs. in Lacs)Name of the Subsidiary Company Net aggregate of Net aggregate of subsidiaries’ profit/(loss) subsidiaries’ profit/(loss) not dealt with in Holding dealt with in Holding Company’s Accounts Company’s Accounts Current year Previous year Current year Previous year since became since became subsidiary subsidiary Champaran Marketing Company Limited 17.24 284.21 -- 43.41OSM Investment & Trading Company Limited 26.69 221.76 -- 26.06Hargaon Investment & Trading Company Limited 62.41 700.98 -- 57.22Hargaon Properties Limited (0.23) 2.83 -- --

Since the close of the accounts of Champaran Marketing Company Limited, Hargaon Investment & Trading Company Limited, OSM Investment & Trading Company Limited and Hargaon Properties Limited on 31st March, 2008, no change has taken place in the holding Company’s interest in the said subsidiary Companies nor has any material change taken place in subsidiary Companies in regard to any of the matters specified in Section 212(5)(b) of the Companies Act, 1956.

C. S. NOPANY Chairman-cum Mg. DirectorA. C. DALAL DirectorSANJAY MUKHERJEE Secretary

Future plans are:i) Continue research of better yielding disease free variety of cane by adopting measures stated above.

ii) Installation of machinery with latest technology at different stations in the factories.

The Company has not imported any technology.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO: a) Activities relating to exports, initiatives taken to increase exports

b) Development of new export markets for products and services and export plan

c) Earnings in Foreign Exchange - Rs. 287.19 Lacs

d) Expenditure in Foreign Currency - Rs. 36.80 Lacs

Sugar is generally exported through Indian Sugar Exim Corporation Ltd. The Government has allowed exports through merchant exporters also.

PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 30th JUNE, 2008

Name Designation Remuneration Nature of Qualification Experience Age Year of Last (Rs.) Duties (years) (years) commencement employment of employment heldEmployed throughout the year :Shri C.S. Nopany Managing 94,09,664 Overall B. Com., 18 42 1995 None Director management A.C.A., of the M.S.I.A. affairs of the Company

Notes : 1. The remuneration includes salary, Company’s contribution to provident fund and perquisite value of rent paid. 2. The appointment is contractual. 3. Other terms and conditions are as per rules of the Company.

For and on behalf of the BoardPlace : New Delhi C.S. NOPANY Dated : 26th August, 2008 Chairman-cum-Mg Director

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The Management of The Oudh Sugar Mills Ltd. (OSM) is pleased to present its report analysing the Company’s

operations in its various business segments, and its future prospects based on the current prevailing market conditions. Its main business segments include manufacture of sugar and its by-products, industrial alcohol, bio-compost and fruits and vegetable products. Sugar, which constitutes 76.50% OSM’s total sales, is produced at three sugar factories situated at Hargaon and Rosa in Uttar Pradesh and Narkatiaganj in Bihar. Industrial Alcohol and Bio-Compost (organic fertilizers) are produced at its distilleries at Hargaon and Narkatiaganj. Fruits and vegetable products are produced at Allahabad Canning Co., Allahabad (U.P.). A segment-wise analysis is presented below:

GLOBAL SUGAR SCENARIOa) Production Estimated world sugar production for 2007-08 stands at 168.734

MT; 3.315 MT above the previous season, according to the ISO report. Production is expected to exceed consumption by up to 7.812 MT, contributing to a build-up of global inventories. Developing countries will be responsible for the bulk of the growth in output, led by Brazil, which could produce 6.6 per cent more than in 2006-07. But about 56 per cent of Brazil’s sugarcane harvest could be processed into ethanol, compared with 50 per cent in the year 2006-07. In Europe sugar output in the EU-27 rose slightly to 17.45 MT in 2007-08, following favourable growing conditions which boosted yields. The EU hopes to cut production by 6 MT over the four years of its

sugar restructuring programme. Production in the Russian Federation and Ukraine is also expected to decline, according to the report.

MAIN PRODUCTION FALLS AND RISES IN 2007-08Falls Changes from Rises Changes from 2006-07 in MT, 2006-07 in MT, raw value raw valueIndia 1.500 Brazil 1.178Ukraine 0.765 China 1.165 Thailand 0.903 Pakistan 0.825 EU 0.422

World Production in 2007-08 - 168.734 MT, raw valueWorld Production in 2006-07 - 165.419 MT, raw value

b) Consumption Global sugar consumption in 2007-08 is estimated to reach

160.92 MT; 3.70 MT more than in 2006-07 reflecting increase in Asia, Latin America and the Caribbean. Rising consumption is being driven partly by rising per capita income and population growth in developing countries. In China, consumption will be boosted by rising per capita income, strong demand from the food and beverage sectors and weaker competition from alternative sweeteners. Consumption in the EU-27 is forecast to remain stable, since markets are saturated and population growth is limited. In the US, there is expected to be a greater use of sugar in food and beverage processing.

GEOGRAPHICAL DISTRIBUTION OF WORLD SUGAR CONSUMPTION 2007-08 2006-07 2005-06 2004-05 2003-04Total consumption (in MT raw value) Western and Central Europe 19.459 19.339 19.249 18.447 19.202Eastern Europe and FSU 12.070 11.959 11.937 11.967 11.914North America 10.775 10.510 10.796 10.677 10.307Central America 8.198 8.078 8.481 8.268 8.336South America 19.748 19.600 19.568 17.637 17.449Middle East and North Africa 16.017 15.555 15.314 14.554 14.094Far east and Oceania 32.215 30.586 29.243 28.984 28.462Indian Subcontinent 29.666 29.056 25.803 25.903 24.565Equatorial and Southern Africa 8.579 8.349 8.129 7.373 6.942World 160.922 157.227 152.715 146.975 144.596

MANAGEMENT DISCUSSION AND ANALYSIS

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c) International Trade World sugar trade is forecast to reach 45.6 MT in 2007-08 (Oct/

Sept) slightly lower than the 2006-07 trade estimates, reflecting lower imports by some countries including China. There were reduced imports following higher production in the traditional importing countries. Overall, imports by the EU-27 could reach 3.2 MT in 2007-08, nearly the same level as in 2006-07 by the EU-27. Export availability is expected to rise slightly in 2007-08 after a strong 16.3 per cent growth in 2006-07. However, Brazil, the world’s largest exporter, may cut shipments by 3.2 per cent, reflecting tighter competition in world markets since the return of India as a net-sugar exporter.

TOP SUGAR EXPORTING COUNTRIESThe sugar export data below refers to the 2006-07 period which has now ended and is therefore complete, though some forecasts for the 2007-08 period are also included. (MT)

Country 2006-07 2007-08Brazil 22.2 20.9Thailand 4.5 5.8Australia 3.9 -SADC 1.1 -Guatemala 1.9 -India 1.34 4Europe 1.2 -

d) World Sugar Balance The ISO has in May, 2008 pegged the surplus at around 7.812 MT. In its quarterly report released in May, 2008, the ISO said global

sugar output is estimated at 168.734 MT as against a consumption demand of 160.922 MT. World consumption is projected to grow by 2.35%. For 2007-08, world export availability is projected to be 48.218 MT as against Import demand of 44.907 MT.

World Sugar Balance (MT, raw value)

2007-08 2006-07 Change in MT Change in %Production 168.734 165.419 3.315 2.00Consumption 160.922 157.227 3.695 2.35Surplus/Deficit 7.812 8.192 -0.380 Import Demand 44.907 46.096 -1.189 -2.58Export Availability 48.218 47.064 1.154 2.45End Stocks 66.693 62.192 4.501 7.24Stocks/Consumption Ratio in % 41.440 39.560

e) Pricing The price outlook for 2007-08 has been bullish despite the

fact that preliminary estimates that indicate world sugar production could surpass consumption by as much as 7.812 MT, for the second consecutive season. Market prices have been on an upswing due to downward revision of production levels and increased diversion of sugarcane crop to ethanol due to the strong crude prices. The development over the next few months will most likely depend on the actual size of the production surplus in major exporting countries and the expected build up of sugar inventories in consuming countries.

The list of factors that drive sugar prices: Oil price volatility Dollar weakness Subsidy cuts Tariff changes Fundamental supply/demand factors Sugarcane to ethanol programs Transport fuel price increases Containerisation Interest rate changes Destination refineries Investment fund speculation

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INDIAN SUGAR OVERVIEWThe Indian sugar industry ranks second among the agro based processing industries in India. Sugar prices are closely monitored by the government and controlled by a set of measures like export restriction, import enhancement and fiscal concession.

a) Production Sugar production is likely to witness negative growth for the first time in 2007-08 and 2008-09 after two years’ robust growth rate. Sugar

production grew at robust 53.6 per cent and 43.2 per cent to 19.2 MT and 27.5 MT in 2005-06 and 2006-07, but in the next two years the sugar production is estimated to drop to 26.5 MT and 21.5 MT respectively. This is mainly due to a drop in area under cultivation for sugarcane (down 15-20 per cent) amidst mounting arrears and alternate rich crop substitute (Wheat, Paddy).

GLOBAL SUGAR PRICE COMPARISON

India 19

Argentina 25

Brazil 27

Malawi 31

Swaziland 34

South Africa 43

USA 51

Australia 55

United Kingdom 60

France 64

Japan 78

prices in India Lowest in the World

15 25 35 45 55 65 75 85

Cents/Pound

MANAGEMENT DISCUSSION AND ANALYSIS

SUGAR PRODUCTION TO WITNESS NEGATIVE GROWTH AFTER TWO YEARS OF BUMPER PRODUCTIONSugar Season 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2001 2002 2003 2004 2005 2006 2007 2008E 2009EArea (Million Hectares) 4.2 4.3 4.4 4.5 3.9 3.7 4.2 4.2 3.6Cane Production (MT) 299.3 296 297.2 287.4 233.9 237.1 281.2 280.9 238.8Yield(Tonnes/Hectare) 70.9 68.5 67.4 63.6 59.5 64.8 66.9 66.9 66.9Production(MT) 18.5 18.5 20.1 14.0 12.5 19.2 27.5 25.3 21.5Recovery Rate(%) 6.2 6.3 6.8 4.9 5.3 8.1 9.8 9 9

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GOVERNMENT POLICIESThe sugar industry in India is subject to numerous controls at various levels starting from procurement of sugarcane to sugar distribution, pricing and the use of end-product sugar. Sugar prices are closely monitored by the government and controlled by a set of measures like the release mechanism and levy allocation. The sugarcane prices are fixed by the Central or State Governments to ensure a remunerative return to the farmers. The Government of India fixes Statutory Minimum Price (SMP) for sugarcane. Moreover, certain State Governments like Uttar Pradesh insist for an even higher payment in the form of State Advised Price (SAP).

In the seasons 2006-07 and 2007-08 sugar production skyrocketed to record levels due to the irrational and unchecked increase in sugarcane prices by the State Government in U.P. due to political considerations. A unique situation existed where the cost component of raw materials was more than the selling price of sugar. The industry challenged the methodology used by the State Government at the High Court in Allahabad and Lucknow Bench of Allahabad High Court for both the seasons. While the Allahabad High Court ruled in favour of the industry by quashing the SAP for the seasons 2006-07 and 2007-08, the Lucknow bench of Allahabad High Court upheld the SAP for the season 2007-08. This matter is now pending at the Supreme Court.

Acknowledging the financial difficulties being faced by the sugar

industry, the Government took a number of initiatives to help the industry tide over the present crisis.

The Government of India extended interest free loans to the sugar mills equivalent to the excise duty payable in the seasons 2006-07 and 2007-08 on sugar for payment of cane arrears and other statutory liabilities.

In order to encourage export of sugar, the Government of India agreed to offset the higher freight costs incurred by the Indian sugar industry by extending subsidy of Rs. 1,350 per tonne to mills located in the coastal areas and Rs. 1,450 per tonne to mills situated in the interiors till September, 2008. As a result, India is exporting about 4.2 MT of sugar in 2007-08 compared with 1.7 MT of the previous year.

The Government of India created a buffer stock of five MT in the year 2007 to ensure availability of sugar in the domestic market. However, with effect from 1st May, 2008, 2 MT has been liquidated and the remaining stock of 3 MT has ceased to exist from 31st July, 2008.

The State Government of Bihar in order to overcome the crisis being faced by the sugar industry announced cane price subsidy @ Rs. 7 per quintal for the sugar seasons 2006-07 and 2007-08. Further, the State Government also reduced the cane commission payable to Zonal Development Council for the season 2006-07 from 1.8% to 0.45% of actual cane price paid.

b) Consumption India’s domestic sugar consumption for the year 2006-07 was 19.5 MT. The consumption in 2007-08 is estimated at 21 MT.

INDIAN DEMAND / SUPPLY SITUATION (MT) (OCT-SEP) 2002 2003 2004 2005 2006 2007 2008E 2009E 2010EOpening Inventory(1Oct) 10.3 10.4 12.0 7.9 3.7 3.8 11.3 13.9 10.5Imports 0.0 0.0 0.6 1.5 1.0 0.0 0.0 0.0 0.0Production 18.9 20.2 13.4 12.7 19.0 28.5 26.9 18.7 17.4Consumption/Sales 17.8 18.6 18.0 18.4 18.9 19.5 20.3 21.0 21.7Exports 1.0 0.0 0.0 0.0 1.0 1.5 4.0 1.0 0.0Closing inventory 10.4 12.0 7.9 3.7 3.8 11.3 13.9 10.5 6.2Min. 3 months inv 4.5 4.7 4.5 4.6 4.7 4.9 5.1 5.3 5.4Excess/ Shortfall 6.0 7.3 3.4 -0.9 -0.9 6.4 8.8 5.3 0.8Stock to use ratio 58% 64% 44% 20% 20% 58% 68% 50% 28%

Season 2007-08 Season 2006-07Hargaon Rosa Narkatiaganj Total Hargaon Rosa Narkatiaganj Total

Sugar cane crushed (Lac quintals) 122.06 45.61 69.39 237.06 145.77 69.53 74.74 290.04Recovery (per cent) 10.59 9.85 8.83 10.40 9.55 8.06Sugar produced (Lac quintals) 12.90 4.49 6.12 23.51 15.15 6.64 6.02 27.68Crushing days 136 116 116 177 173 147

THE COMPARITIVE OPERATIONAL FIGURES OF THE SUGAR FACTORIES FOR THE LAST TWO SEASONS :

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Sugarcane Pricing:In India, the Government announces a minimum support price for sugarcane. The price announced by the Central Government is termed the Statutory Minimum Price (SMP). The Central Government has fixed the SMP for sugarcane at Rs. 80.25 per quintal linked to a recovery of 9.00 per cent for the sugar season 2007-08. Furthermore, factories are required to pay an additional price under Clause 5A of Sugarcane (Control) Order, 1966, which, as calculated by the Government, is based on any additional sugar price realised by the factories.

(Rs. per quintal)

BASIC STATUTORY MINIMUM PRICE 2007-08 2006-07Hargaon 93.78 94.65Rosa 86.58 82.05Narkatiaganj 81.18 82.95

Levy sugar prices:The price of levy sugar for the Company’s sugar factories for the season 2003-04 was fixed and is given in the table below. The Government is yet to fix the levy sugar prices for the season 2004-05, 2005-06, 2006-07 and 2007-08. The industry has represented to the Government to finalize the levy prices urgently.

LEVY PRICE FOR SEASON 2003-04 (Rs. per quintal)Hargaon 1383.41Rosa 1330.77Narkatiaganj 1409.30

Operations: The Company’s gross sales decreased by 24.40% from Rs.

46,812.06 Lacs in 2006-07 to Rs. 35,393.59 Lacs in 2007-08. The Company reported net loss of Rs. 451.27 Lacs in 2007-08

compared to a net loss of Rs. 2689.55 Lacs in 2006-07. 22% decrease in the income from its distilleries from Rs. 1,315.14

Lacs in 2006-07 to Rs. 1025.79 Lacs in 2007-08. The Company was able to achieve significant cost savings due

to its superior technical capabilities and usage of state-of-the-art machineries at the plant level.

Despite huge glut in the industry, the Company was able to contain the losses to a minimum level with proper control on the processes and better management of the resources.

Going forward, the Company wants to make a strategic shift towards the making of higher quality of sugar, and thus invest on the R&D of the crop plantation and creating awareness among the farmers to make a long-term sustainable product portfolio.

The Company crushed a lower quantity of sugarcane at 237.06 Lac quintals in 2007-08 as against 290.04 Lac quintals crushed during the season 2006-07, a decrease of 52.98 Lac quintals. Due

to decreased crushing, the production of sugar was lower, at 23.54 Lac quintals during the season 2007-08 as against 27.81 Lac quintals during the season 2006-07.

Key risks:Current high level of inflation and higher cane costs are the prime issues faced by the sugar industry.

Future outlook :The sugar industry seems to be finally coming out of the worst ever recession that it had seen over the past few decades. After successive years of surplus production and uninhibited capacity addition, the sugar output in India has started declining. While it may be still premature to comment on the production estimates for 2008-09, it is evident that production will not exceed consumption as area under sugarcane plantation has fallen significantly. This development has witnessed a smart rally in sugar prices that have come back to the levels that were prevailing in 2006. There is still uncertainty about the sugarcane prices as the matter is under litigation and will have a significant impact on the profitability of the industry. Furthermore, with the fall in sugarcane production, prices of by-products such as molasses and bagasse have also started strengthening.

The growth of sugar demand by food industries and other non-household users, estimated to account for about 45% of total consumption, could provide additional impetus to longer-term market growth. Although gur and khandsari are still consumed in rural areas, demand for white sugar is expected to continue to increase. Indian sugar industry can be a global leader provided it comes out of the vicious cycle of acute shortages and surplus of sugarcane. A stable long term policy is needed in which the shackles are removed which constrain this industry from growing in a healthy manner. Against the backdrop of skyrocketing crude prices policymakers have become aware of sugarcane as an energy crop and are encouraging mills to go integrated and produce ethanol and power.

The increase in crude prices to $130 per barrel and government support for ethanol blending is expected to speed up the ethanol blending process. The negotiated price of Rs. 21.5 per ltr for ethanol blending is attractive for oil marketing companies, considering the landed cost of petrol Rs. 27 per ltr.

SUGAR ABROAD BrazilNearly 8 million hectares of sugarcane crop is under cultivation, but Unica expects this to increase to 14 million hectares by 2020. Brazil is the world’s top sugar producer and exporter, with the vast bulk of its output grown in the Centre/South region. The C/S Brazilian sugar output has been estimated at 30.8 MT in the current year.

MANAGEMENT DISCUSSION AND ANALYSIS

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However, the amount of sugarcane crushed in Brazil’s C/S region so far in 2008-09 is around 30% lower as against the same period a year ago due to heavy rains.

EU The EU is well on track towards achieving a target of removing 6 MT of sugar production from the market by 2010, with just 3,50,000 tonnes left to be surrendered. Opening sugar stocks are estimated at 3.4 MT for the 2008-09 season starting in October, down from 4.2 MT a year ago as the EU’s structural sugar surplus continued to rebalance. Under the reform, the EU created a restructuring fund financed by sugar producers to offer generous cash payments to producers and farmers for selling back their annual quotas to Brussels so as to reduce overall supply. Meanwhile, EU made quota allotments for 2008-09 to the ACP countries and India on May 6. A quantity of 10,000 tonnes was allotted to India.

USA The proposed 2008 U.S. farm bill approved recently by near veto-proof margins in the House and Senate - includes important provisions for sugar producers. The first is the increase in the loan rate since 1985. The rate for raw sugar will increase ¾ of a cent per pound by 2011. The increase will amount to ¼ of a cent a pound per year. The loan rate tends to set the market price. That is because once the market price falls below the loan rate, companies can forfeit sugar to the government to cover federal operating loans, which are still part of the program. Second, there is the program to send excess imported sugar, which would otherwise depress prices, to U.S. ethanol plants. Third, allotting at least 85% of the U.S. sugar market to American producers, is consistent with their 86% share of the market during the six years of the 2002 Farm Law. Fourth, changing the date to calculate U.S. demand for sugar from 1st Oct. to 1st April, would allow more exact knowledge of demand, rather than estimates of it. So on 1st Oct. , imports will only come in at the minimum rate guaranteed by treaties. That reduces the possibility of depressed prices through a mistaken estimate allowing in too much foreign sugar. Adjustments could be made sooner in case of a crop emergency.

MexicoMexico produced a total of 5.01 MT of sugar upto 10th May, up by 6.3 per cent from 4.72 MT produced by the same time last year.

A total of 48 mills were still operating on 10th May, one less than last year. The recovery of sugar reached 11.48 per cent by 10th May, compared with 10.79 per cent at the same time last season.

ThailandThe country is likely to produce 7.78-7.79 MT of sugar in 2007-08, above the target of 7.3 MT set before the start of crushing season and also up sharply from the 6.7 MT produced in 2006-07. The rise in sugar output was partly due to increase in sugarcane support prices twice this year, from THB 600 a tonne to THB 700 in January and to THB 807 in April. Exports in 2007-08 are estimated at 5.8 MT, up from 4.7 MT a year earlier.

PakistanPakistan has produced about 4.73 MT of sugar to fulfill its domestic consumption for the year 2008-09. This is the first time that the

sugar production in Pakistan crossed the 4 MT mark. Generally, it consumes about 4.2 MT of sugar per annum. Surplus stock of about 0.52 MT would be kept as a food security measure to tackle any unforeseen situation in the country. The government has set the target to cultivate sugarcane crop on 1.39 million hectares during 2008-09 to further increase sugar production for domestic consumption as well as for export. The total area under sugarcane cultivation in 2007-08 was 1.241 million hectares. Last season 3.5 MT of sugar was produced. A record unsold stock of 2.91 MT was available on March 31.

FijiThe Fiji Sugar Corporation Ltd and Tate & Lyle have entered into a long-term agreement on the supply of raw

sugar for preferential import into the EU market. The contract for the supply of up to 3,00,000 tonnes of sugar per year will run until 30th September, 2015. Tate & Lyle and FSC have had long-term supply agreements since 1975, which marked the inception of the ACP-EU Sugar Protocol. The Sugar Protocol will come to an end on 30th September, 2009, and the preferential exports of sugar to the EU will be governed by the provisions of the Economic Partnership Agreement between Fiji and the European Union.

Indonesia The Indonesian government is planning to increase import duty on sugar products by up to 50 per cent. It is indicated that the duty on raw sugar will increase from the current 550 rupiah (6 U.S. cents) per kg, and refined sugar from 790 rupiah (9 U.S. cents). The increase

The sugar industry seems to be finally

coming out of the worst ever recession that it had

seen over the past few decades.

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is set at between 30 per cent and 50 per cent. The higher duty was proposed by the Indonesian Refined Sugar Producers’ Association, which has repeatedly complained about imported refined sugar being sold cheaper than the domestic product.

NigeriaThe Federal Government is said to have imported some 90 per cent of the sugar being consumed in this country. A recent survey by the National Sugar Development Council has shown that about 5,00,000 hectares of low land suitable for sugarcane cultivation existed nationwide. While sugar production had been made easy with the approved sugar policy, the Government has urged the sugar producers to take advantage of the incentives and support provided by it, which include the new tariff structure and reduction in the cost of license of investors.

ZambiaThe Zambian Government has directed Zambia Sugar Company to stop exporting its sugar, as there was still a severe shortage of sugar in the country. The sugar shortage in the country was due to torrential rains, which caused floods, thereby disturbing smooth production. Zambia has been suffering a sugar shortage since early April, as the country’s sole sugar producer was unable to reach the target of 2,65,000 tonnes to meet the local demand.

INDUSTRIAL ALCOHOLWith the crude prices sky rocketing, ethanol blending has come up as a much more economical and environment friendly option. As per the government regulation, 5 per cent ethanol blending is compulsory, and this is intended to increase to 10 per cent from October, 2008. Apart from ethanol, bagasse is also gaining popularity for its use in paper, organic plastic, Medium Density Fibre (MDF) and particle board manufacture in India and Brazil.

WORLD ETHANOL PRODUCTIONCountry % ShareBrazil 36USA 32China 9India 5EU 6Russia 2South Africa 1Saudi Arabia 1Others 8

Demand for Ethanol is expected to rise further on the back of increase in mandatory levels of blending from 5% to 10%

Particulars 5% 10% Blending BlendingPetrol Consumption (Mln Litres) 11200 11200Ethanol Requirement 560 1120Sugar Foregone (Mln Tonnes) 0.8 1.7Production 25.3 21.5% of Production 3.2 7.9

The Company has installed Distilleries at Hargaon and Narkatiaganj with a capacity to produce 30 million litres and 15 million litres of industrial alcohol/ethanol per annum respectively.

COMPANY’S PERFORMANCE The performance of the Company’s Bio Compost Plant at

Hargaon producing organic fertilizers marketed under the brand name “Oudh Shakti Jaivik Khad” was satisfactory.

The production and sales of distilleries at Hargaon and Narkatiaganj were improved significantly during the year under review as the oil companies resumed purchase of ethanol.

The capacity enhancement of both Hargaon and Narkatiaganj distilleries has been completed to 1,00,000 litres/day and 60,000 litres/day. The Hargaon distillery is the first in India to install a zero discharge plant where the entire waste is being used as fuel.

The comparative quantitative figures of production and sales of the Company’s Distilleries are as under:

2007-08 2006-07Industrial Alcohol/Ethanol (Lac litres) Production Hargaon Distillery 165.47 130.36Narkatiaganj Distillery 80.02 74.18Sales Hargaon Distillery 170.04 117.19Narkatiaganj Distillery 69.49 72.89Bio Compost (quintals) Production Hargaon 76,645 75,761Narkatiaganj 1,04,100 54,460Sales Hargaon 35,206 70,261Narkatiaganj 1,05,325 27,642

MANAGEMENT DISCUSSION AND ANALYSIS

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CO-GENERATIONCogeneration of power is a sustainable source of clean green renewable energy. It is a non-cyclical business and has shown robust growth in the past. The business exploits the cost advantage from economy of scope, and has a lot of revenue potential through Clean Development Mechanism (CDM) based carbon credits. The key to this business is establishing long-term power purchase agreements with government and power companies. India’s estimated potential of power from sugar co-generation is assessed to be more than 5000 MW. The Company has supplied 20.16 million units and 4.43 million units of power from its plants at Hargaon and Narkatiaganj, respectively, during the year.

ORGANIC FERTILIZERSpent wash, an effluent generated from processed molasses, is used with press mud for the production of organic fertilizer. The Company has installed a Bio Compost Plant at Hargaon to produce organic fertilizer, which is marketed under the brand name “Oudh Shakti Jaivik Khad”.

CANNINGThe Company has a canning factory at Bamrauli near Allahabad, and markets its processed food products under the brand name “MORTON”. The production and sale of the Company’s canning division was 4,211 Tonnes and 4,054 Tonnes respectively during the year.

CAUTIONARY STATEMENTThe statements in the Management Discussion and Analysis Report, detailing the Company’s objectives, projections, estimates, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. As these statements are based on certain assumptions and expectations of future events, actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include economic conditions affecting global or domestic demand and supplies, political and economic developments in India or other countries, government regulations and taxation policies, prices and availability of raw materials, prices of finished goods, abnormal climatic and geographical conditions etc. The Company assumes no responsibility in respect of forward-looking statements that may be revised or modified in the future on the basis of subsequent developments, information or events.

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1. COMPANY’S PHILOSOPHY The Company believes that good corporate governance

consists of a combination of business practices which result in enhancement of the value of the Company to its shareholders and simultaneously enable the Company to fulfill its obligations to other stakeholders such as customers, employees and financiers, and to the society in general. The Company further believes that such practices are founded upon the core values of transparency, empowerment, accountability, independent monitoring and environmental consciousness. The Company makes its best endeavors to uphold and nurture these core values in all aspects of its operations.

2. BOARD OF DIRECTORS i) The Board is headed by

Shri C. S. Nopany, Chairman-cum-Managing Director and is composed of eminent persons with considerable professional experience in various fields. The present strength of the Board of Directors is eight, of which seven are non-executive Directors and one Managing Director. The Board has more than required number of independent directors. Except Shri S. V. Muzumdar who is holding 1050 (0.01%) Equity Shares, no other non-executive Director is holding any Equity Share of the Company.

ii) None of the Directors on the Board is a Member of more than 10 Committees or Chairman of more than 5 Committees across all the companies in which he or she is a Director.

iii) The Company holds minimum of four Board Meetings in each year. The meetings are generally held at the Company’s Corporate Office at Industry House, 159, Churchgate Reclamation, Mumbai - 400 020.

iv) All divisions/departments in the Company are encouraged to plan their functions well in advance, particularly with regard to matters requiring discussions/approval/ decision in the Board/Committee Meetings. All such matters are communicated to the Company Secretary in advance so that the same could be included in the Agenda for the Board Meetings.

v) The Chairman-cum-Managing Director and the Company Secretary in consultation with other concerned persons in the senior management, finalise the agenda papers for the Board Meetings.

vi) Agenda papers are circulated to the Directors in advance. All material information is incorporated in the Agenda papers for facilitating meaningful and focused discussions at the meeting. Where it is not practicable to attach any document to the Agenda, the same are placed on the table at the meeting with specific reference to this effect in the Agenda.

vii) In special and exceptional circumstances, additional or supplementary item(s) on the agenda

are permitted. Sensitive subject matters may be discussed at the meeting without written material being circulated in advance or at the meeting.

During the year under review eleven Board Meetings were held on 20th August, 2007, 7th September, 2007, 28th September, 2007, 29th October, 2007, 16th November, 2007, 26th December, 2007, 19th February, 2008, 7th May, 2008, 16th May, 2008, 14th June, 2008 and 20th June, 2008 to deliberate on various matters. The composition of the Board of Directors and their attendance at the Board Meetings during the year and at the last Annual General Meeting as also the number of directorships in Indian public limited companies are as follows:

The Company makes its best endeavors to uphold

and nurture these core values in all aspects of its

operations.

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3. AUDIT COMMITTEE The Audit Committee of the Company is constituted in line

with the provisions of Clause 49 of the Listing Agreement with the Stock Exchange read with Section 292A of the Companies Act, 1956.

a) Terms of Reference

The terms of reference of the Audit Committee are broadly as under:

Overview of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statements reflect a true and fair position and that sufficient and credible information is disclosed.

Recommending the appointment and removal of external auditors, fixation of audit fee and also approval for payment for any other services.

Discussion with external auditors before the audit commences, of the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

Reviewing the financial statements and draft audit report, including quarterly/half yearly financial information.

Reviewing with management the annual financial statements before submission to the Board, focusing primarily on :

i. any changes in accounting policies and practices;

ii. major accounting entries based on exercise of judgment by management;

iii. qualifications in draft audit report;

iv. significant adjustments arising out of audit;

v. the going concern assumption;

vi. compliance with accounting standards;

vii. compliance with stock exchange and legal requirements concerning financial statements;

viii. any related party transactions as per Accounting Standard 18.

Reviewing the Company’s financial and risk management policies.

Reviewing with the management, external and internal auditors, the adequacy of internal control systems.

Reviewing the adequacy of internal audit function, including structure of the internal audit department, approval of the audit plan and its execution, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit.

Discussion with internal auditors of any significant findings and follow-up thereon.

Name of Director Attendance No. of Board Category Director- No. of Chairmanship/ at last AGM meetings of ships Membership of attended Director Board Committees Chairman MemberShri C. S. Nopany No 6 MD 15 2 2Shri S. V. Muzumdar No 10 I/NED 5 2 5Shri Ashvin C. Dalal No 11 I/NED 1 1 -Shri C. B. Patodia Yes 1 I/NED 2 - 1Shri Rohit Kumar Dhoot No 9 I/NED 7 - 2Smt. Madhu Vadera Jayakumar No 5 I/NED 1 - 1Shri Haigreve Khaitan No 2 NED 18 - 8Shri J. N. Godbole No 8 I/NED 13 1 9 MD - Managing Director I - Independent NED - Non Executive Director

In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, membership/chairmanship of only the Audit Committee and Shareholders’/Investors’ Grievance Committee of all the public limited companies has been considered.

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Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

Looking into the reasons for substantial defaults in payments to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.

b) Composition

The Audit Committee comprises of four Independent non-executive Directors viz. Shri Ashvin C. Dalal, Shri C. B. Patodia, Shri S. V. Muzumdar and Shri Rohit Kumar Dhoot. The Committee met six times during the year on 27th September, 2007, 27th October, 2007, 11th December, 2007, 29th January, 2008, 22nd April, 2008 and 20th June, 2008 and attendance of the members at the meetings was as under :

Name of the Member Status No. of meetings attendedShri Ashvin C. Dalal Chairman 6Shri C. B. Patodia Member —Shri S. V. Muzumdar Member 6Shri Rohit Kumar Dhoot Member 3

The Secretary of the Company who is also acting as Secretary of the Audit Committee attended the meetings. At the invitation of the Committee, the Internal Auditors, Statutory Auditors and Cost Auditors also attended the Audit Committee Meetings to answer and clarify the queries raised at the Meetings.

4. REMUNERATION COMMITTEE i) Though the constitution of the Remuneration

Committee is not mandatory, the Company has constituted the Remuneration Committee during the year 2002-03.

ii) The broad terms of reference of the Remuneration Committee are as under:

a. To approve the remuneration and commission payable to the Directors.

b. Such other matters as the Board may from time to time request the Remuneration Committee to examine and recommend/approve.

iii) The Committee, presently, comprises of three Independent Non-executive Directors, viz. Shri S.V. Muzumdar, Shri Ashvin C. Dalal and Shri Rohit Kumar Dhoot. The Secretary of the Company is also acting as Secretary of the Remuneration Committee. No meeting of the Remuneration Committee was held during the year 2007-08.

iv) Remuneration Policy Remuneration of employees broadly consists of base

remuneration, perquisites, bonus, exgratia, etc. The components of the total remuneration vary for different cadres and are governed by industry pattern, qualifications and experience of the employee, responsibilities entrusted to and handled by him, individual performance, etc.

The objectives of the remuneration policy are to motivate employees to excel in their performance, recognise their contribution, and retain talent in the organisation and reward merits.

v) Remuneration of Directors Details of remuneration paid to Directors for the year 2007-08.

a) Executive Director Managing Director Salary Perquisites Retirement benefits Rs. Rs. Rs.Shri C. S. Nopany 39,00,000 50,03,098 5,06,566

Shri C. S. Nopany’s remuneration package includes salary, free furnished accommodation with all expenses for upkeep and maintenance thereof, contribution to Provident Fund, reimbursement of medical expenses, leave travel concession, car with driver and telephone.

b) Non-Executive Directors

The Company pays remuneration to its non-executive Directors by way of commission upto 1% of the net profits for all directors put together with the maximum ceiling of Rs. 1,00,000 per director. The Company pays a fee of Rs. 5,000 and Rs. 2,500 per meeting to each Director for attending meetings of the Board of Directors and Committees thereof respectively. The details of sitting fee paid during the year 2007-08 are as follows: Sl. No. Name of the Director Gross Amount (Rs.)1 Shri S. V. Muzumdar 1,02,5002 Shri Ashvin C. Dalal 95,0003 Shri C. B. Patodia 5,0004 Shri Rohit Kumar Dhoot 55,0005 Smt. Madhu Vadera Jayakumar 40,0006 Shri Haigreve Khaitan 10,0007 Shri J. N. Godbole 40,000

5. INVESTORS’ GRIEVANCE COMMITTEE The Committee, presently, comprises of three non-executive

Directors viz. Shri S. V. Muzumdar as Chairman and Shri Rohit Kumar Dhoot and Smt. Madhu Vadera Jayakumar as members. Shri Sanjay Mukherjee, Company Secretary, is the Compliance Officer of the Company for complying with

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the requirements of the Listing Agreement with the Stock Exchanges. Two meetings of the Committee were held during the year on 24th August, 2007 and 5th February, 2008 and the attendance of the Members were as under:

Name of the Member Status No. of meetings attendedShri S. V. Muzumdar Chairman 2Shri Rohit Kumar Dhoot Member 1Smt. Madhu Vadera Jayakumar Member 1

The Board of Directors has authorised the Secretary to approve transfers/transmissions of upto 1000 shares. The transfers/transmissions approved by the Secretary are periodically placed before the committee. The Committee deals with the

applications for transfer/ transmission of shares, subdivision and consolidation of share certificates and issue of duplicate share certificates, etc. The Committee also keeps a close watch on all complaints/grievances of shareholders. During the year under review the Company received 19 complaints/grievances from the shareholders which were duly attended.

The average period of redressal of grievances is 7 days from the date of receipt of letters/complaints. There was no unresolved complaint as on 30th June, 2008. There were no share transfer applications pending for registration on 30th June, 2008.

6. GENERAL BODY MEETINGS The last three Annual General Meetings of the Company were held as under :

Financial Year Date Time Location2006 – 07 17.12.2007 11.00 a.m. Registered Office: Hargaon, Dist. Sitapur, (U. P.), Pin-261 121.2005 – 06 06.11.2006 11.00 a.m. Registered Office: Hargaon, Dist. Sitapur, (U. P.), Pin-261 121.2004 – 05 21.10.2005 11.00 a.m. Registered Office: Hargaon, Dist. Sitapur, (U. P.), Pin-261 121.

Special resolution was passed at the Annual General Meeting held on the 6th November, 2006 for issue of securities through a Public Issue, Rights Issue, Preferential Issue and/or Private Placement, with or without an over-allotment option, equity shares and/or equity shares through Global Depository Receipts (“GDRs”) and/or American Depository Receipts (“ADRs”) and/or Foreign Currency Convertible Bonds (“FCCBs”) and/or equity shares under the Qualified Institutional Placement Guidelines (“QIPs”) and/or any securities convertible into equity shares at the option of the Company and/or holder(s) of the securities and/or securities linked to equity shares and/or securities with warrants for an amount not exceeding Rs. 100 crores inclusive of such premium as may from time to time be decided and on 21st October, 2005 for re-appointment of Shri C. S. Nopany as the Managing Director of the Company for a further period of three years with effect from 1st July, 2005.

There was no occasion to pass special resolution through postal ballot. Further, no such proposal is proposed to be placed for the shareholders’ approval at the forthcoming Annual General Meeting.

The last Annual General Meeting held on 17th December, 2007 was not attended by Shri Ashvin C. Dalal, Chairman of the Audit Committee due to sickness.

7. DISCLOSURES i) There are no materially significant related party transactions of the Company which have potential conflict with the interest of the

Company at large.

ii) No penalties or strictures have been imposed on the Company by Stock Exchanges or SEBI or any statutory authority on any matter related to capital markets for non-compliance by the Company during the last three years.

8. MEANS OF COMMUNICATION a) Since the quarterly and annual audited financial results of the Company are sent to the Stock Exchanges immediately after they

are approved by the Board/Committee and posted on Company’s website and also published in Business Standard, Financial Express, Rashtriya Sahara and Pioneer, the same were not separately sent to each household of shareholders.

b) The results are simultaneously uploaded on the website at http://www.birla-sugar.com/osugar. Distribution of shareholdings is also displayed on the website.

c) The quarterly results, annual financial results, annual report and accounts and shareholding pattern are simultaneously filed on the Electronic Data Information Filing and Retrieval (EDIFAR) Website maintained by National Informatics Centre in association with SEBI. The site can be accessed at http://www.sebiedifar.nic.in.

d) No presentation was made to any Institutional Investor or to any Analysts during the year.

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f) Performance of Company’s Equity Shares in comparison to BSE Sensex and BSE 200 A graphical presentation of Indices vis-a-vis our share prices during July, 2007-June, 2008 is as follows:

9. GENERAL SHAREHOLDERS’ INFORMATION a) 76th Annual General Meeting Date : 18th December, 2008 Time : 11.00 A.M. Venue : Registered Office: Sugar Mills Complex, Hargaon, District – Sitapur Uttar Pradesh – 261 121.

b) Tentative Financial CalendarAudited Annual Results (2007-08) 26th August, 2008Publication of Audited Results 27th/28th August, 2008Mailing of Annual Report November 2008First Quarter Results End October 2008Second Quarter Results End January 2009Third Quarter Results End April 2009Audited Annual Results (2008-09) August/September 2009

c) Book Closure The Register of Members and Share Transfer Books of the

Company shall remain closed from the 15th December, 2008 to the 18th December, 2008 (both days inclusive).

d) Listing on Stock Exchanges and Stock codes The names of the stock exchanges at which the Equity

Shares of the Company are listed and the respective stock codes are as under:Sl. No. Name of the Stock Exchange Stock code1. Bombay Stock Exchange Limited 5072602. The National Stock Exchange of India Limited OUDHSUG

Under the depository system, International Securities Identification Number (ISIN) allotted to the Equity Shares of the Company is INE594A01014.

e) Market Price Data Monthly high/low of market price of the Company’s Equity Shares traded on Bombay Stock Exchange Limited and The National

Stock Exchange of India Limited during the last financial year was as under:

Month Bombay Stock Exchange Limited The National Stock Exchange of India Limited High Low High Low Rs. Rs. Rs. Rs.July, 2007 60.50 51.00 60.95 52.00August, 2007 55.00 43.25 55.30 43.50September, 2007 67.50 48.90 65.25 49.30October, 2007 64.85 48.00 69.00 44.05November, 2007 57.25 48.00 58.30 41.10December, 2007 88.90 55.00 88.90 45.00January, 2008 90.30 55.85 90.20 56.00February, 2008 66.00 52.55 65.00 53.00March, 2008 58.95 36.50 60.00 40.10April, 2008 76.95 45.50 77.50 44.55May, 2008 76.50 59.05 76.45 60.10June, 2008 64.00 50.25 64.00 50.30

months70.00

80.00

90.00

100.00

110.00

120.00

130.00

140.00

150.00

Jul y,07 Aug,07 Sep,07 Oct,07 Nov,07 Dec,07 Jan,08 Feb,08 Mar ,08 Apr ,08 May,08 June,08

OSML

BSE Sen.

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g) Registrar & Share Transfer Agent The Company has appointed Intime Spectrum Registry Ltd. as its Registrar & Share Transfer Agents (RTA) for handling work

related to share registry in terms of both physical and electronic modes. Accordingly, all correspondence, shares for transfer, demat/remat requests and other communication in relation thereto should be mailed/hand delivered to the said RTA directly at the following addresses:

Intime Spectrum Registry Limited Intime Spectrum Registry Limited(Unit: The Oudh Sugar Mills Limited) (Unit: The Oudh Sugar Mills Limited)C-13, Pannalal Silk Mills Compound 203, Daver HouseL.B.S. Marg, Bhandup (West) 197/199, D.N. RoadMumbai 400 078 Mumbai - 400 001Tel. No. : 91 - 022 – 2596 3838 Tel. No.: 91 - 022 – 2269 4127Fax No. : 91 - 022 – 2594 6969e-mail : isrl@intimespectrum.com

h) Share Transfer System After the request for transfer/transmission of shares is approved by the Secretary/Investors’ Grievance Committee, the same is sent to the

Registrar & Share Transfer Agent for completing the necessary procedural formalities and despatch to the shareholder. Shares when received for transfer etc. if found to be in order in all respect, are normally effected within a period of 15 days from the date of receipt. A total of 5359 shares were transferred/ transmitted during the year 2007-08. The dematerialised shares are directly credited to the respective Demat Account of beneficiaries by the Depositories.

i) Distribution of Shareholding i) The distribution of shareholding as on 30th June, 2008 was as follows:

Number of Equity Shares Number of Percentage Number of Percentage of held in the range of Shareholders of total Shares held total Shares Shareholders 1 - 500 13372 87.73 1844872 10.15 501 - 1000 1029 6.75 805005 4.43 1001 - 2000 445 2.92 679169 3.74 2001 - 3000 133 0.87 338153 1.86 3001 - 4000 65 0.43 235439 1.30 4001 - 5000 37 0.24 175098 0.96 5001 - 10000 74 0.49 523629 2.88 10001 & Above 87 0.57 13572455 74.68 Total 15242 100.00 18173820 100.00

ii) Details of Shareholding as on 30th June, 2008 was as follows:Sl. No. Category Number of shares held % of Shareholding1. Promoter and Promoter Group 8693857 47.842. Mutual Funds/ UTI 84125 0.463. Financial Institutions/ Banks 349755 1.924. Insurance Companies 1716013 9.445. Bodies Corporate 2357297 12.976. Public 4972773 27.37 Total 18173820 100.00

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j) Dematerialisation of Shares and Liquidity The Equity Shares of the Company are compulsorily traded in dematerialised form at the stock exchanges viz. Bombay Stock

Exchange Limited and National Stock Exchange of India Ltd. under depository systems at both the Depositories viz. National Securities Depository Limited and Central Depository Services (India) Limited. Over 97.93 % of the share capital of the Company has already been dematerialised.

k) Outstanding GDRs/ADRs/Warrants or Convertible Instrument As on 30th June, 2008, the Company did not have any outstanding GDRs/ ADRs/Warrants or Convertible Instrument.

l) Location of the Plants

Sugar Mills: a. Hargaon, District Sitapur, Uttar Pradesh, Pin - 261 121. b. Rosa, District Shahjahanpur, Uttar Pradesh, Pin - 242 406. c. Narkatiaganj, District West Champaran, Bihar, Pin - 845 455. d. Hata, Dist. Kushinagar, Uttar Pradesh, Pin - 274 203. Distilleries: a. Hargaon, District Sitapur, Uttar Pradesh, Pin - 261 121. b. Narkatiaganj, District West Champaran, Bihar, Pin - 845 455. Canning Factory: P.O. Bamrauli, Allahabad, Uttar Pradesh, Pin - 211 012. Co-Generation Power Plant: a. Hargaon, District Sitapur, Uttar Pradesh, Pin - 261 121. b. Narkatiaganj, District West Champaran, Bihar, Pin - 845 455. c. Hata, Dist. Kushinagar, Uttar Pradesh, Pin - 274 203.

m) Address for CorrespondenceThe SecretaryThe Oudh Sugar Mills Ltd. Unit No. 210/212, Solaris Building, No. 1,A Wing, 2nd floor, Saki Vihar Road, Opp. L&T Gate No.6, Andheri (East), Mumbai – 400 072.Tel. No. : 91 - 022 - 2847 0249Fax No. : 91 - 022 - 2847 0275e-mail : oudhsugar@mtnl.net.in

Intime Spectrum Registry Limited(Unit: The Oudh Sugar Mills Ltd.) C-13, Pannalal Silk Mills CompoundL.B.S. Marg, Bhandup (West) Mumbai 400 078 Tel. No.: 91- 022 – 2596 3838Fax No.: 91- 022 – 2594 6969e-mail : isrl@intimespectrum.com

Intime Spectrum Registry Limited(Unit: The Oudh Sugar Mills Ltd.)203, Daver House197/199, D.N. RoadMumbai - 400 001Tel. No.: 91 - 022 – 2269 4127

10. BRIEF RESUME OF DIRECTORS SEEKING APPOINTMENT / RE-APPOINTMENT Shri C. S. Nopany has been re-appointed as Managing Director of the Company for a period of 3 years and two non-executive

Directors namely Shri Ashivin C. Dalal and Shri C.B. Patodia are due for retirement by rotation at the forthcoming Annual General Meeting and are eligible for re-appointment. Brief particulars of the said Directors are given below:

i) Shri C. S. Nopany, aged about 42 years is a Chartered Accountant and Master of Science in Industrial Administration from Carnegie Mellon University, Pittsburgh, USA. He is an eminent industrialist having vast industrial experience in diverse fields like sugar, tea, shipping, textile, fertilizers and chemicals, etc. He is the past President of Indian Chamber of Commerce. He looks after the overall management and is the driving force of the Company.

Names of Indian Public Limited Companies in which Shri C. S. Nopany is Director or Chairman/Member of Board Committees.

Sl. No. Name of the Company Name of Board Committee Chairman/ Member1. Gobind Sugar Mills Ltd. Investors’ Grievance Committee Member2. Hargaon Investment & Trading Company Limited -- --3. OSM Investment & Trading Company Limited -- --4. SCM Investment & Trading Co. Ltd. -- --5. RTM Investment & Trading Company Limited -- --6. New India Retailing & Investment Ltd. -- --7. SIL Investments Ltd. Investors’ Grievance Committee Chairman

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ii) Shri Ashvin C. Dalal, aged 71 years is a Commerce Graduate and a partner in the firm M/s. Chimanlal J. Dalal & Company, leading Share and Stock Broker. He joined the Board of Directors of the Company in September, 1987. The Company obtains his valuable guidance on Capital Markets areas. He is a member of Finance & Corporate Affairs Committee, Audit Committee and Remuneration Committee of the Company.

Names of Indian public limited companies in which Shri Ashvin C. Dalal is a Director or Chairman/Member of Board Committees.Sl. Name of Name of Board Chairman/No. the Company Committee Member1. The Oudh Audit Sugar Mills Ltd. Committee Chairman

iii) Shri C. B. Patodia, aged 60 years possesses rich experience of over 38 years especially in Cane Marketing, Sugar Manufacturing Process, Administration and Finance. He joined the Board of the Company in July, 1995. The company obtains his valuable guidance in adminstration, audit and finance matters. He is a Member of Audit Committee of the Company.

Names of Indian public limited companies in which Shri C.B. Patodia is a Director or Chairman/Member of Board Committees.Sl. Name of Name of Board Chairman/No. the Company Committee Member1. Indian Sugar Exim Corporation Ltd. -- --2. The Oudh Sugar Mills Ltd. Audit Committee Member

11. INTERNAL CONTROL SYSTEM The Internal Control System of the Company is aimed

at proper utilisation and safeguarding of the Company’s resources and also at promoting operational efficiency. The Internal Audit of the Company is conducted by various firms of Chartered Accountants. The findings of the Internal Audit and consequent corrective actions initiated and implemented from time to time are placed before the Audit Committee. The

Audit Committee reviews such audit findings and the adequacy of Internal Control System.

12. HUMAN RESOURCE DEVELOPMENT/INDUSTRIAL RELATIONS

Continuous learning is the cornerstone of the Company’s human resource policy. The Company’s human resource policy is structured to meet the aspirations of the employees as well as of the organisation. The Company has adopted a progressive policy of continuous development of its human resources by training and motivating its employees to attain greater efficiency and competency.

The current strength of management staff is 95 and non-management staff is 1831.

Industrial relations in all the units were cordial throughout the year under review.

13. RISK MANAGEMENT The Company has in place a Risk Management Policy, which

lays down a robust and dynamic process for identification and mitigation of risks. This Policy has been adopted by the Audit Committee as well as the Board of Directors of the Company. The Audit Committee reviews the risk management and mitigation plan from time to time.

14. INSIDER TRADING The Company has adopted the Code of Internal Procedures

and Conduct framed under the SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended, to, inter alia, prevent insider trading in the shares of the Company.

15. CODE OF CONDUCT & ETHICS The Company has adopted a Code of Conduct and Ethics

(Code) for the members of Board of Directors and Senior Management Personnel of the Company. The essence of the Code is to conduct the business of the Company in an honest and ethical manner, in compliance with applicable laws and in a way that excludes considerations of personal advantage. All Directors and Senior Management Personnel have affirmed compliance with the Code, and a declaration to this effect, signed by the Managing Director, is attached to this report.

Sl. No. Name of the Company Name of Board Committee Chairman/ Member8. Sutlej Textiles & Industries Ltd. Investors’ Grievance Committee Chairman9. Uttar Pradesh Trading Company Ltd. -- --10. Upper Ganges Sugar & Industries Ltd. Investors’ Grievance Committee Member11. Chambal Infrastructure Ventures Ltd. -- --12. Yashovardhan Investment & Trading Co. Ltd. -- --13. Modern DiaGen Services Ltd. -- --14. Chambal Fertilisers and Chemicals Ltd. -- --15. The Oudh Sugar Mills Ltd. -- --

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Declaration by the Managing Director on Code of Conduct

ToThe MembersThe Oudh Sugar Mills LimitedP.O. Hargaon, Dist. Sitapur,(U.P.) - 261 121

Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, I, C.S. Nopany, Chairman-cum-Managing Director of The Oudh Sugar Mills Limited, declare that all the Board Members and Senior Executives of the Company have affirmed their compliance with the Code of Conduct and Ethics during the year 2007-08.

C. S. NOPANYDated : 26th August, 2008 (Chairman-cum-Managing Director)

Auditors’ Certificate on Corporate Governance

ToThe MembersThe Oudh Sugar Mills Limited

We have examined the compliance of conditions of corporate governance by The Oudh Sugar Mills Limited, for the year ended 30th June, 2008, 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 to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

As reported in Clause 6 of the Corporate Governance Report of the Company for the year ended 30th June, 2008, Chairman of the Audit Committee has not attended the Annual General Meeting held on 17th December, 2007 due to reasons mentioned therein. In our opinion and to the best of our information and according to the explanations given to us, subject to above, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

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

For S. R. Batliboi & Co. Chartered AccountantsPlace : Kolkata Per R. K. AGRAWAL Dated : 26th August, 2008 Partner Membership No. 16667

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AUDITORS’ REPORT To the Members of The Oudh Sugar Mills LimitedWe have audited the attached Balance Sheet of THE OUDH SUGAR MILLS LIMITED as at 30th June, 2008 and also the Profi t and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by the management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on thematters specifi ed in paragraphs 4 and 5 of the said Order.Further to our comments in the Annexure referred above, we report that : –(i) We have obtained all the information and explanations, which

to the best of our knowledge and belief were necessary for the purpose of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(iii) The Balance Sheet, Profi t and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account as submitted to us;

(iv) In our opinion, the Balance Sheet, Profi t and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, subject to our comments in para (vii) (b) below.

(v) On the basis of written representations received from the directors as on 30th June, 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualifi ed as on 30th June, 2008 from being appointed as a director in terms of Clause (g) of sub section (1) of Section 274 of the Companies Act, 1956;

(vi) Without qualifying our opinion, we draw attention to Note No. 7 on Schedule 23, regarding accounting of Sugarcane purchases at Hargaon & Rosa Sugar units in U.P @ Rs. 110 per quintal for sugar season 2007-08 in terms of Hon’ble Allahabad High Court’s (Lucknow Bench) interim order dated, 15th November, 2007 as against the State Advised Price (SAP) of Rs. 125 per quintal, upheld by the said High Court vide its fi nal order dated 7th July, 2008 against which the Company along with others through UP Sugar Mills Association, has fi led a Special Leave Petition (SLP) before the Hon’ble Supreme Court.

In the meantime, the Hon’ble Allahabad High Court in its subsequent judgment dated 18th August, 2008 in case of

another sugar Company has quashed the SAP for sugar season 2007-08. Based on the legal advice, the Company has accounted for sugarcane liability for the current season @ Rs. 110 per quintal, as paid in accordance with the earlier interim order of the Hon’ble High Court, although in terms of the order dated 18th August, 2008, as stated above, the Company is only liable to pay the Statutory Minimum Price fi xed by the Central Government (till the fi nalisation of SAP by the State Government as per the Court’s directions) which is lower than the amount of Rs. 110 per quintal accounted for by the Company. Pending fi nal decision by the Hon’ble Supreme Court in this matter, the differential price of Rs. 2,422.74 Lacs between SAP and the amount already provided, as stated above, has not been accounted for.

(vii) Attention is drawn to the following notes on Schedule – 23 : (a) Note Nos. 5 and 6 regarding non-adjustment of certain

realisations in earlier years aggregating to Rs. 131.46 Lacs (Previous Year Rs. 165.51 Lacs) and non-provision of interest payable thereon, if any, in case of refund of such realisations. As the matters are under adjudication / not yet settled, the impact of above non-adjustment on the Company’s loss is not presently ascertainable;

(b) Note Nos. 8 (a) & (b) regarding recognition of Deferred Tax Asset (net) of Rs. 432.24 Lacs and MAT Credit Entitlement of Rs. 717.57 Lacs upto the Balance Sheet date based on the future profi tability projections made by the management. However, we are unable to express any opinion on the above projections and their consequent impact, if any, on such recognition of Deferred Tax Asset and MAT Credit Entitlement. Had the impact of above been considered, there would be a loss of Rs. 1,601.08 Lacs (including Rs. 899.13 Lacs for earlier years) as against the reported loss of Rs. 451.27 Lacs for the year and the fi gures of Reserves & Surplus would be Rs. 7,116.12 Lacs as against the reported fi gures of Rs. 8,265.93 Lacs.

In respect of the above items, the previous year’s audit report was similarly modifi ed.

In our opinion and to the best of our information and according to the explanations given to us, the said Statements of Account, Subject to the matters stated in para (vii) above, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 30th June, 2008;

(b) in the case of the Profi t and Loss Account, of the loss of the Company for the year ended on that date; and

(c) in the case of Cash Flow Statement, of the cash fl ows for the year ended on that date.

For S. R. BATLIBOI & CO. Chartered Accountants Per R. K. AGRAWAL Place : Kolkata Partner Dated : 26th August, 2008 Membership No. 16667

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ANNEXURE TO THE AUDITORS’ REPORT(Referred to in our Report of even date to the Members of The Oudh Sugar Mills Limited as at and for the year ended 30th June, 2008)

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

(b) Fixed Assets have been physically verified by the management during the year based on a phased programme of verifying all the assets over a period of two years, which in our opinion, is reasonable having regard to the size of the Company and the nature and value of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence the requirements of sub clauses (b) to (d) of clause (iii) of the order are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence the requirements of sub clauses (f) and (g) of clause (iii) of the order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls in respect of these areas.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under the above section, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lacs entered into during the financial year, are at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or other relevant provisions of the Companies Act, 1956 and the rules framed thereunder, to the extent applicable, have been complied with by the Company. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any other Tribunal.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of its products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) The Company has been regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other material statutory dues with appropriate authorities though there has been slight delays in few cases.

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

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

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ANNEXURE TO THE AUDITORS’ REPORT (Contd.)Name of the statute Nature of dues Amount Period to Forum where (Rs. in Lacs) which the dispute is pending amount relatesBihar Finance Act,1981 Tax on sale of Alcohol to 26.42 1984-85 to Joint Commissioner country vendors & non 1989-90, 1995- (Appeals) / submission of declaration 96, 1997-98 to Appellate Tribunal / forms 2000-01 & 2003-04 High Court Patna

UP Trade Various Sales 8.81 1977-78 to Appellate Tribunal,Tax Act Tax/Entry tax 1981-82, 2000- Lucknow/Allahabad demands on 01 & 2001-02 High Court assessmentCentral Central Sales Tax 36.10 2004-05, Joint CommissionerSales Tax demand on 2005-06 (Appeals) Act, 1956 interstate sale of Bagasse Demand for Sales 36.53 2002-03, Joint Commissioner Tax/non – 2003-04 (Appeals) / Patna submission of High Court Declaration Forms Central Excise Disallowance of 83.53 2001-02, CommissionerAct,1944 Cenvat Credit on 2004-05 to (Appeals) / Deputy certain 2007-08 Commissioner / inputs/capital items Assistant Commissioner / CESTAT/Allahabad High Court Excise Duty on 44.07 2000-01, 2002- Commissioner burnt / waste and 03, 2004-2006 (Appeals) / Assistant loss on storage of Commissioner / molasses etc. CESTAT Utilisation of 101.00 2000-01 CESTAT, Kolkata Cenvat Credit on Rectifi ed Spirit Service tax 210.43 2004-05 to CESTAT, Kolkata 2007-08 Excise duty on loss 19.08 1988-89 CESTAT, Delhi on reprocessing of brown sugar

(x) The Company has no accumulated losses at the end of the financial year. The Company has not incurred cash loss during the year but it had incurred cash loss in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institutions, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore, the provisions of clause 4(xiii) of the order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments and therefore the provisions of clause 4(xiv) of the order are not applicable.

(xv) According to the information and explanations given to us, the Company has given guarantees for loans taken by others from a bank, the terms and conditions whereof are stated to be not prima-facie prejudicial to the interest of the Company.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that Rs. 12,473 lacs approx. raised on short-term basis have been used for long-term investment (without considering permanent working capital).

(xviii) The Company has not made any preferential allotment of shares during the year to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company had unsecured debentures outstanding during the year on which no security or charge was required to be created and the same have been fully repaid during the year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S. R. BATLIBOI & CO. Chartered Accountants Per R. K. AGRAWAL Place : Kolkata PartnerDated : 26th August, 2008 Membership No. 16667

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SOURCES OF FUNDS A. Shareholders’ Funds

(a) Share Capital 1 1,817.49 1,817.49

(b) Reserves & Surplus 2 8,265.93 8,785.53

10,083.42 10,603.02

B. Loans Funds 3

(a) Secured 54,868.78 27,252.99

(b) Unsecured 20,722.76 13,880.16

75,591.54 41,133.15

85,674.96 51,736.17

APPLICATION OF FUNDS A. Fixed Assets 4 (a) Gross Block 48,601.07 41,687.98

(b) Less : Accumulated Depreciation 15,174.12 13,254.85

(c) Net Block 33,426.95 28,433.13

(d) Capital Work- in- Progress 340.80 256.09

33,767.75 28,689.22

B. Capital Expenditure on New/ Expansion Projects 5 25,677.31 13,224.76

C. Investments 6 1,079.46 1,079.52

D. Deferred Tax Asset (net) 432.24 181.56

E. Current Assets, Loans & Advances (a) Inventories 7 29,039.82 19,473.86

(b) Sundry Debtors 8 648.39 591.95

(c) Cash & Bank Balances 9 422.29 512.27

(d) Other Current Assets 10 4.55 3.54

(e) Loans & Advances 11 5,699.99 3,367.00

35,815.04 23,948.62

F. Less : Current Liabilities & Provisions 12 (a) Current Liabilities 10,937.78 15,282.28

(b) Provisions 159.06 105.23

11,096.84 15,387.51

Net Current Assets 24,718.20 8,561.11

85,674.96 51,736.17

Accounting Policies and Notes to the Accounts 23

BALANCE SHEET as at 30th June, 2008

(Rs. in Lacs)

Schedule 30th June, 2008 30th June, 2007

Schedules referred to above form an integral part of the Balance Sheet.

As per our Report of even date. For S. R. BATLIBOI & CO. Chartered Accountants

Per R. K. AGRAWAL Partner Membership No. 16667 C. S. NOPANY Chairman- cum Place : Kolkata SANJAY MUKHERJEE Mg. Director Dated : 26th August, 2008 Secretary A. C. DALAL Director

The Oudh Sugar M

ills Limited

30

PROFIT & LOSS ACCOUNT for the year ended 30th June, 2008

INCOME Gross Sales 13 35,393.59 46,812.06 Less : Excise Duty 1,926.61 2,234.48 : Cess 311.08 2,237.69 333.13 2,567.61 Net Sales 33,155.90 44,244.45 Other Income 14 1,025.94 112.52 34,181.84 44,356.97

EXPENDITURE Decrease/(Increase) in Stocks 15 (9,630.41) (4,164.17) Excise Duty & Cess on Stocks 574.12 455.56 (Refer note no. 4 on Schedule 23) Agricultural Loss 16 25.99 16.45 Purchase of Semi-Finished Goods 145.74 34.73 Raw Materials Consumed 17 28,301.83 38,765.85 Stores, Spares & Packing Materials Consumed 18 2,970.39 2,980.25 Fuel & Electricity 536.86 695.84 Payments to and Provisions for Employees 19 2,887.82 2,748.37 Manufacturing, Selling and Other Expenses 20 3,040.49 2,644.27 Directors’ Remuneration 21 48.43 50.02 28,901.26 44,227.17Profit before Interest, Depreciation & Taxation 5,280.58 129.80Less : Interest & Finance Charges (net) 22 3,677.82 2,044.23 Depreciation 2,229.68 2,028.67 5,907.50 4,072.90Profit/ (Loss) before Taxation (626.92) (3,943.10)Provision for Taxation [including wealth tax Rs. 3.00 Lacs (Rs. 2.15 Lacs)] 3.00 29.65Deferred Tax Asset 212.12 1,285.20Minimum Alternative Tax (MAT) Credit Entitlement/ Reversal 3.93 (25.50)Income Tax Provision no longer required written back 0.60 -Provision for Fringe Benefit Tax 30.14 27.50Profit/ (Loss) after Taxation (451.27) (2,689.55)Surplus brought forward from previous year 29.96 1,569.51Transfer from General Reserve 500.00 1,150.00Balance carried to Balance Sheet 78.69 29.96Earning per Share of Rs. 10 each (Basic and Diluted) (Rs.) (2.48) (14.80)(Refer note no. 14 on Schedule 23) Accounting Policies and Notes to the Accounts 23

(Rs. in Lacs)

Schedule 2007-2008 2006-2007

Schedules referred to above form an integral part of the Profit & Loss Account

As per our Report of even date. For S. R. BATLIBOI & CO. Chartered Accountants

Per R. K. AGRAWAL Partner Membership No. 16667 C. S. NOPANY Chairman- cum Place : Kolkata SANJAY MUKHERJEE Mg. Director Dated : 26th August, 2008 Secretary A. C. DALAL Director

Ann

ual R

epor

t 200

7-08

31

A. CASH FLOW FROM OPERATING ACTIVITIES :

Profit/ (Loss) before Tax (626.92) (3,943.10) Adjustments for : Depreciation 2,232.02 2,030.09 Interest & Finance Charges (net of capitalisation & Subsidy) 3,717.39 2,128.96 Molasses Storage and Maintenance Reserve 6.55 7.97 (Profit)/ Loss on Fixed Assets sold/ discarded (66.42) 41.40 (Profit) on sale of Long Term Investments (15.31) - Interest & Dividend Income (39.86) (85.94) Bad Debts, irrecoverable claims & advances written off 11.97 0.84 Provision for Warranties & Claims 6.86 5.75 Provision for diminution in the value of investments Written Back (0.25) - Provision for bad and doubtful debts/advances (net) 52.50 36.81 5,278.53 222.78 Operating Profit before Working Capital Changes : Adjustments for : Decrease in Trade Payables (4,274.67) 9,401.43 Increase in Trade & Other Receivables (2,310.36) (1,202.04) Increase in Inventories (9,565.96) (4,330.49) (16,150.99) 3,868.90 Cash Generated from Operations : (10,872.46) 4,091.68 Direct Taxes Paid 41.02 321.45 Net Cash from Operating Activities (10,913.48) 3,770.23

B. CASH FLOW FROM INVESTING ACTIVITIES : Sale of Fixed Assets 201.77 116.27 Capital Subsidy 200.83 - Sale of Investments 16.62 10.00 Loans Given 1.44 (22.80) Interest Received 38.57 84.92 Dividend Received 0.28 (10.99) Purchase of Investments (1.00) - Purchase of Fixed Assets (17,747.44) (18,517.49) Net Cash used in Investing Activities (17,288.93) (18,340.09)

C. CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from Borrowings 45,791.39 40,729.74 Repayment of Loans (11,320.13) (22,244.26) Interest & Finance Charges Paid (net of Subsidy) (6,358.51) (2,814.63) Dividend Paid (including dividend tax) (0.32) (927.42) Net Cash from Financing Activities 28,112.43 14,743.43 NET CHANGES IN CASH & CASH EQUIVALENTS (A+B+C) (89.98) 173.57 Cash & Cash equivalents - Opening Balance 512.27 338.70 * Cash & Cash equivalents - Closing Balance 422.29 512.27 Restricted Cash & Cash equivalents 67.33 66.35 *Represents Cash and Bank balances as indicated in Schedule - 9

CASH FLOW STATEMENT for the year ended 30th June, 2008

(Rs. in Lacs)

2007-2008 2006-2007

As per our Report of even date. For S. R. BATLIBOI & CO. Chartered Accountants

Per R. K. AGRAWAL Partner Membership No. 16667 C. S. NOPANY Chairman- cum Place : Kolkata SANJAY MUKHERJEE Mg. Director Dated : 26th August, 2008 Secretary A. C. DALAL Director

The Oudh Sugar M

ills Limited

32

SCHEDULES to the Balance Sheet

SCHEDULE – 1 : SHARE CAPITAL Authorised :

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

Issued :

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

1,883 1/2 Equity Shares of Rs.100 each 1.89 1.89

1,819.27 1,819.27

Subscribed & Paid-up :

1,81,73,820 (1,81,73,820) Equity Shares of Rs. 10 each fully paid 1,817.38 1,817.38

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

Bearer Equity Share Coupons of Rs. 25 and Rs. 12.50 each fully paid 0.06 0.06

1,817.45 1,817.45

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

1,817.49 1,817.49

Note : Out of the above 6,11,550 (6,11,550) Equity Shares have been issued for consideration other than cash and 11,55,575 (11,55,575) Equity Shares have been allotted as Bonus Shares by capitalisation of Securities Premium and General Reserve.

SCHEDULE – 2 : RESERVES & SURPLUS Capital Reserve : As per last account 195.88 195.88

Capital Redemption Reserve :

As per last account 37.69 37.69

Securities Premium :

As per last account 6,247.67 6,247.67

General Reserve :

As per last account 2,200.00 3,350.00

Less : Impact of Revised AS-15 as on 1st July 1, 2007 (Net of Tax)

(Refer Note No. 11 on Schedule 23) 74.88 -

Transfer to Profit & Loss Account 500.00 1,150.00

1,625.12 2,200.00

Molasses & Alcohol Storage and Maintenance Reserve : As per last account 71.49 108.52

Add : Provided during the year 6.55 7.97

78.04 116.49

Less : Utilised during the year - 45.00

78.04 71.49

Effluent Disposal Reserve :

As per last account 2.84 2.84

Surplus as per Profit & Loss Account 78.69 29.96

8,265.93 8,785.53

(Rs. in Lacs)

30th June, 2008 30th June, 2007

Ann

ual R

epor

t 200

7-08

33

SCHEDULE – 3 : LOAN FUNDSA. SECURED LOANS : Term Loans

Long Term

From Scheduled Bank(s) :

Under Project Finance/ Corporate Loan Scheme 24,572.42 9,673.70

Under Financial Assistance Scheme (Excise Duty Loan) 3,985.00 -

Interest accrued & due 254.50 38.88

From Sugar Development Fund 5,207.86 2,861.23

From Others 2,400.00 3,600.00

Short Term

From a Scheduled Bank 1,000.00 -

From a Company 1,000.00 -

Other Loans

From a Scheduled Bank on Cash Credit Account 16,449.00 11,079.18

54,868.78 27,252.99

B. UNSECURED LOANS :

25 - 10.35% Short Term Non-Convertible Debentures - 2,500.00

of Rs. 100 Lacs each (Redeemed on 6th July, 2007)

Short Term Loan from Scheduled Bank (s) 1,000.00 5,440.00

From State Bank of India against Crop Loan to Canegrowers 2,215.21 354.15

From Subsidiary Companies (not bearing interest) 165.00 99.50

Inter Corporate Loans 16,919.00 4,945.00

Fixed Deposits from Staff and Others 324.40 449.73

Trade and other Deposits (partly not bearing interest) 99.15 91.78

20,722.76 13,880.16

75,591.54 41,133.15

NOTES :

1 Term loans from Scheduled Bank(s) and Others (except Excise Duty Loan) are secured / to be secured by first mortgage/ charge on all the immovable and movable assets (save and except book debts), present and future, of the Company’s Sugar Units at Hargaon, Rosa, Narkatiaganj and Dhadha Bujurg (Hata) and Distillery Unit at Hargaon, ranking pari-passu amongst the various lenders, subject to prior charges created on movables for working capital borrowings from the Company’s bankers.

Term loans under Financial Assistance Scheme (Excise Duty Loan) are to be secured by a residual charge on the entire Fixed Assets (movable and immovable) of the Company’s Sugar Units at Hargaon, Rosa and Narkatiaganj.

2 Term loans from the Sugar Development Fund are secured by a second charge on all the immovable/ movable assets (save and except book debts) present and future of the Company’s Sugar Units at Hargaon and Narkatiaganj and include Rs. 824.51 Lacs (Rs. 1053.00 Lacs) towards interest which, as per stipulated terms, is payable on a long term basis.

3 Short term loan from a Company of Rs. 1,000 Lacs (Rs. Nil) is secured by pledge of part of shares held as investments by the Subsidiary Companies.

4 Cash Credit borrowings are secured by hypothecation of entire current assets of the Company and further secured by a charge on the immovable assets of the company as follows :

a. Canning factory at Allahabad - First Charge

b. Sugar Unit at Rosa - Second Charge

c. Sugar Units at Hargaon and Narkatiaganj - Third Charge

5 Unsecured loans, as stated above, include Rs. 20,280.68 Lacs (Rs. 13,473.44 Lacs) falling due for payment within one year.

SCHEDULES to the Balance Sheet (Contd.)

(Rs. in Lacs)

30th June, 2008 30th June, 2007

The Oudh Sugar M

ills Limited

34

SCHEDULES to the Balance Sheet (Contd.)

O

peni

ng

Addi

tions

D

educ

tions

/

As a

t

Ope

ning

Fo

r the

Le

ss :

On

Upt

oPA

RTIC

ULA

RS

Bala

nce

as a

t

Adju

stm

ents

30th

June

,

Bala

nce

as a

t ye

ar

Ded

uctio

ns/

30th

June

, 30

th Ju

ne,

30

th Ju

ne,

1s

t Jul

y, 20

07

20

08

1st J

uly,

2007

Adju

stm

ents

20

08

2008

20

07Fr

ee H

old

Land

1

40.31

1

86.54

0

.12

32

6.73

(a)

-

- -

-

326.7

3

140

.31

Build

ings

2

,653.5

8

609

.18

8.99

3,253

.77

428.8

1

61.5

3

1.36

4

88.98

2

,764.7

9

2,224

.77

Plan

t & M

achi

nery

3

8,184

.02

6,84

7.41

75

8.25

(c)

44,2

73.18

(b)

12

,452.9

6

2,11

3.75

3

00.36

1

4,266

.35

30,0

06.83

25

,731.0

6

Railw

ay S

idin

gs

1.48

-

-

1.48

1

.40

0.01

-

1

.41

0.07

0.0

8

Ove

rbrid

ge

0.38

-

-

0.38

0.1

2

0.01

-

0

.13

0.25

0.2

6

Coun

try B

oats

0.47

-

0

.47

-

0

.29

-

0.29

-

-

0.1

8

Mot

or C

ars,

Lorri

es &

Oth

er C

onve

yanc

e 2

90.76

1

6.66

2

2.68

284.7

4

121.7

9

22.9

3

10.4

2

134

.30

150

.44

168.9

7

Furn

iture

& F

ixtur

es

414

.48

44.2

3

0.60

458.1

1

246.9

8

33.6

1

0.32

2

80.27

1

77.84

16

7.50

Live

Sto

ck

2.50

0

.18

-

2.6

8

2.50

0.1

8

-

2.68

-

-

4

1,687

.98

7

,704

.20

79

1.11

48

,601

.07

13

,254

.85

2

,232

.02

3

12.7

5

15,17

4.12

3

3,42

6.95

28

,433

.13

Capi

tal W

ork-

in-P

rogr

ess

256

.09

271

.91

187.2

0 (f)

3

40.80

(e)

-

-

-

-

3

40.80

25

6.09

Tota

l 4

1,944

.07

7

,976

.11

978

.31

48

,941

.87

(b) &

(d)

13,2

54.8

5

2,2

32.0

2

312

.75

15

,174.

12

33,

767.

75 (

b)

28,

689.

22

Total

-Pre

vious

Yea

r 3

0,524

.03

12,2

38.80

8

18.76

41,94

4.07

11

,780.4

0

2,03

0.09

5

55.64

1

3,254

.85

28,6

89.22

G

ROSS

BLO

CK

ACCU

MU

LATE

D D

EPR

ECI

ATIO

N

NE

T BL

OCK

AS

AT

SCH

ED

UL

E –

4 :

FIX

ED

ASS

ETS

NO

TE

S :

(a)

Incl

udes

Rs.

3.46

Lac

s bei

ng th

e va

lue

of a

gric

ultu

ral l

and

mea

surin

g ab

out 3

839

acre

s tog

ethe

r with

est

imat

ed w

ritte

n do

wn

valu

e of

imm

ovab

le a

sset

s the

reon

, tak

en o

ver

by

the

Gov

ernm

ent o

f U

ttar P

rade

sh u

nder

the

U.P.

Impo

sitio

n of

Cei

ling

of L

and

Hol

ding

Act

, 196

0, a

cas

e w

here

of is

pen

ding

in th

e co

urt.

(b)

Incl

udes

Fix

ed A

sset

s aw

aitin

g di

spos

al, G

ross

valu

e Rs

. 285

.97

Lacs

(Rs.

233.

71 L

acs)

, Net

Valu

e Rs

. 80.

29 L

acs (

Rs. 1

13.3

7 La

cs)

(c)

Incl

udes

Rs.

343.

01 L

acs b

eing

cap

ital s

ubsid

y fr

om S

tate

Gov

ernm

ent o

f Bi

har a

gain

st e

xpan

sion

proj

ect a

t Nar

katia

ganj

.

(d)

Incl

udes

ass

ets h

eld

in jo

int o

wne

rshi

p w

ith o

ther

Rs.

110.

49 L

acs (

Rs. 1

10.1

3 La

cs).

(e)

Incl

udes

adv

ance

aga

inst

pur

chas

e of

Fix

ed A

sset

s Rs.

112.

65 L

acs (

Rs. 9

6.65

Lac

s).

(f)

Repr

esen

ts a

mou

nt a

lloca

ted

to v

ario

us h

eads

of

Fixe

d A

sset

s.

(Rs.

in L

acs)

Ann

ual R

epor

t 200

7-08

35

SCHEDULE – 5 : CAPITAL EXPENDITURE ON NEW/ EXPANSION PROJECTS A. Freehold Land 1,089.65 1,044.17

B. Fixed Assets

(1) Buildings 37.10 19.32

(2) Plant & Machinery 14.08 12.77 (3) Motor Cars, Lorries & Other Conveyance 1.17 - (4) Furniture & Fixtures 49.39 36.58

101.74 68.67

Less : Depreciation (charged to Pre-operative expenses as below) 59.05 42.69 13.36 55.31

C. Machinery and Building under erection 24,194.44 16,965.02

D. Materials at site including goods in transit (net of sales Rs. 161.46 Lacs) 1,277.06 1,012.59

E. Advances against purchase of fixed assets 2,336.15 4,065.73

28,939.99 23,142.82

F. Incidental Expenditure pending allocation to Fixed Assets : Salary & Wages 259.72 140.65

Contribution to Provident & Other Funds 8.02 4.94

Gratuity 0.53 -

Fuel & Electricity 222.78 196.08

Project Consultancy/ Supervision Charges 284.20 150.93

Insurance Charges 46.81 11.75

Miscellaneous Expenses 348.73 266.13

Interest & Finance Charge 2,785.33 784.83

Depreciation 59.05 13.36

4,015.17 1,568.67

32,955.16 24,711.49

Less : Capitalised/ Allocated to Fixed Assets during the year 7,277.85 11,486.73

25,677.31 13,224.76

(Rs. in Lacs) 30th June, 30th June, 2008 2007

SCHEDULES to the Balance Sheet (Contd.)

The Oudh Sugar M

ills Limited

36

(Rs. in Lacs) No. of Face Value 30th June, 30th June, Shares per Shares 2008 2007 (Rs.)

SCHEDULES to the Balance Sheet (Contd.)

SCHEDULE – 6 : INVESTMENTSLONG TERM (At Cost) GOVERNMENT SECURITIES : Quoted : 5 1/2 % U. P. State Development Loan, 1977 - (c) - 5 1/2 % U. P. State Development Loan, 1981 0.60 (d) 0.60 11 % Bihar State Development Loan, 2001 0.53 0.53 1.13 1.13 Unquoted : 12 Years National Savings Certificates 0.08 (d) 0.08 7 Years National Savings Certificates 0.02 (d) 0.02 6 Years National Savings Certificates 1.35 0.35 12 Years National Defence Certificates 0.04 (d) 0.04 12 Years National Plan Savings Certificates - (c) - 10 Years National Savings Certificates 0.01 (d) 0.01 7 Years National Defence Certificates - (c) - 1.50 0.50EQUITY SHARES (FULLY PAID) Quoted : Upper Ganges Sugar & Industries Ltd. 18,562 10 13.23 13.23 13.23 13.23 Unquoted :In Subsidiary Companies Champaran Marketing Company Ltd. 43,49,000 2.50 192.96 192.96 Hargaon Investment & Trading Co.Ltd. 30,45,727 10 609.14 609.14 OSM Investment & Trading Co.Ltd. 17,40,418 10 261.06 261.06 1,063.16 1,063.16 In Other Companies Bihar State Financial Corporation Ltd. 70 100 0.07 0.07 Industry House Ltd. - 100 - 1.06 (1,593) Moon Corporation Ltd.(‘A’ Class) 745 100 0.77 0.77 Moon Corporation Ltd.(‘B’ Class) 2,502 5 0.13 0.13 Birla Buildings Ltd. 1,920 10 0.19 0.19 e-Commodities Ltd. - 10 - 25.00 (250,000) * Oudh Trading Co. Pvt.Ltd. 25 100 0.03 0.03 A.P.V.Texmaco Ltd.(in liquidation) 28,750 10 0.86 (d) 0.86 Jai Hind Publishing Co.Ltd.(in liquidation) 80 25 - - Akhil Bharat Printers Ltd.(in liquidation) 150 100 - - Indo International Distillers Association Pvt.Ltd. 54,000 * 10 5.40 (d) 5.40 7.45 33.51 Share Application Money : Indo International Distillers Association Pvt.Ltd. 46,000 * 10 4.60 (d) 4.60 1,091.07 1,116.13 Less : Provision for diminution in the value of Investments 11.61 36.61 1,079.46 (b) 1,079.52

Ann

ual R

epor

t 200

7-08

37

SCHEDULE – 6 : INVESTMENTS (CONTD.) (Rs. in Lacs)

SCHEDULES to the Balance Sheet (Contd.)

30th June, 2008 30th June, 2007 Book Value Market Value Book Value Market ValueAGGREGATE VALUE OF INVESTMENTS : Book Value Quoted 13.76 13.17 13.76 15.08 Unquoted 1,065.70 1,065.76 1,079.46 1,079.52

NOTES :

(a) All the above investments are Non-Trade, except those marked with an Asterisk.

(b) Includes Government Securities of the face value of Rs.. 1.99 Lac (Rs. 0.99 Lac) and Rs. 0.60 Lac (Rs. 0.60 Lac) deposited/ pledged with various Government authorities and Hon’ble Allahabad High Court respectively

(including Rs. 0.71 Lac (Rs. 0.71 Lac) matured, but pending encashment).

(c) The fi gures, being less than Rs. 500, have not been shown above.

(d) Indicates securities where provision for diminution in the value of investments has been made.

SCHEDULE – 7 : INVENTORIES At lower of cost and net realisable value Raw Materials 235.44 337.35

Stores, Chemicals, Spare Parts, etc. 1,204.74 1,170.32

[including in transit Rs. 12.19 Lacs (Rs. 7.33 Lacs)]

Finished Goods 25,744.12 16,732.27

Power - Banked 30.75 24.72

Goods under Process 262.20 317.73

Standing Crop 30.60 28.24

27,507.85 18,610.63

At estimated net realisable value

By Products 1,509.43 840.80

Scrap 20.89 21.46

Country Crop 1.65 0.97

1,531.97 863.23

29,039.82 19,473.86

SCHEDULE – 8 : SUNDRY DEBTORS (a) Debts due for a period exceeding six months (Unsecured) : Considered Good 31.81 13.39

Considered Doubtful 118.87 113.76

150.68 127.15

Less : Provision 118.87 113.76

31.81 13.39

(b) Other Debts Considered Good [includes secured Rs. 6.06 Lacs (Rs. 6.11 Lacs)] 616.58 578.56

648.39 591.95

(Rs. in Lacs)

30th June, 2008 30th June, 2007

The Oudh Sugar M

ills Limited

38

SCHEDULES to the Balance Sheet (Contd.)

SCHEDULE – 9 : CASH & BANK BALANCES Cash in hand 19.66 42.89

Cheques/ Drafts in hand 130.39 151.09

150.05 193.98

With Scheduled Banks on :

Current Account 176.51 129.32

Unpaid Dividend Account 10.83 11.15

Fixed Deposit Account (Receipts for Rs. 30.70 Lacs (Rs. 15.70 Lacs)

pledged with various Govt.authoritities as security) 56.50 55.20

243.84 195.67

With Non-Scheduled Banks on Current Account :

Maximum Name of the Bank amount outstanding during the year

Lucknow Kshetriya Gramin Bank 1,554.31 (1,313.40) 15.67 88.26

Zila Sahkari Bank Ltd., Sitapur 169.56 (170.55) 4.74 24.85

District Co-operative Bank Ltd.,Lakhimpur Kheri 547.04 (577.81) 4.71 5.06

Urban Co-operative Bank Ltd.,Lakhimpur Kheri 26.09 (29.37) 0.62 0.75

Avadh Gramin Bank, Hardoi 0.69 (4.42) 0.34 0.33

Baroda Uttar Pradesh Gramin Bank 376.99 (322.31) 1.74 2.79

27.82 122.04

With Post office on : Savings Account (Pass Book lodged 0.58 0.58

with various Govt.Authorities) 422.29 512.27

SCHEDULE – 10 : OTHER CURRENT ASSETS Interest accrued on Investments 3.68 1.62

Accrued interest on loans,debts,deposits etc. Considered Good 0.87 1.92

Considered Doubtful 0.58 0.58

1.45 2.50

Less : Provision 0.58 0.58

0.87 1.92

4.55 * 3.54

* including Rs. 0.91 Lac (Rs. 0.30 Lac) due for more than six months

(Rs. in Lacs)

30th June, 2008 30th June, 2007

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SCHEDULE – 11 : LOANS AND ADVANCES

Loans : (Unsecured, Considered good)

Not bearing interest :

To a Subsidiary Company 32.50 39.50

Bearing interest : To Employees 29.61 18.80

To Others 15.07 20.32

77.18 78.62

Advances (Unsecured, Considered good) Advances recoverable in cash or in kind or for value to be received or pending adjustments 1,052.35 661.26

Sales tax, Excise duty etc. paid under appeal and / or under dispute 105.79 87.01

Balance with Excise & other Govt. Authorities 2,775.34 1,490.67

Claims and Refunds receivable 768.98 148.19

Advance payment of Tax, Refunds receivable and Tax deducted at source (after adjusting provisions) 872.31 869.51

Sundry Deposits 48.04 31.74

5,622.81 3,288.38

5,699.99 3,367.00

Considered doubtful : Advances & Claims 280.74 235.70

Less : Provisions 280.74 235.70

- -

5,699.99 3,367.00

NOTES : Amount due from Officers of the Company Loans - -

Advances 0.41 0.63

0.41 0.63

Maximum amount due at any time during the year Loans 6.00 -

Advances 7.27 10.45

13.27 10.45

Amount due from the Managing Director of the Company - 6.09

Maximum amount due at any time during the year 6.09 6.09

SCHEDULES to the Balance Sheet (Contd.)

(Rs. in Lacs)

30th June, 2008 30th June, 2007

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40

Amount Due Maximum amount due at any time during the year

Loans to Subsidiary Companies : OSM Investment & Trading Company Ltd. - 1.00

(-) (-)

Hargaon Properties Limited - -

(-) (7.36)

Champaran Marketing Company Limited 32.50 44.00

(39.50) (40.00)

SCHEDULES to the Balance Sheet (Contd.)

SCHEDULE – 12 : CURRENT LIABILITIES & PROVISIONS

A. Current Liabilities :

Sundry Creditors for goods, services, expenses etc.

Due to Micro, Medium and Small Enterprises 415.97 216.77

Due to Others 7,959.92 14,182.96

For Other Finance 682.31 530.00

Excess price of sugar including excise duty 79.41 113.46

Advance against sale of goods etc. 1,748.71 72.92

Interest accrued but not due on loans,deposits etc. 40.51 154.90

Investor Education & Protection Fund : (not yet due)

Unpaid & Unclaimed Dividends 10.83 11.15

Preference Shares Redemption Account 0.05 0.05

Unclaimed Scrip Dividend 0.04 0.04

Less : Shares held for distribution 0.04 - 0.04 -

Fractional entitlements for Bonus Shares and

Bearer Coupons 0.07 0.07

10,937.78 15,282.28

B. Provisions :

For Leave 80.13 64.84

For Gratuity 70.81 29.37

For Warranties 8.12 9.27

For Fringe Benefit Tax (net of advance tax) - 1.75

159.06 105.23

11,096.84 15,387.51

(Rs. in Lacs) 30th June, 30th June, 2008 2007

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SCHEDULE – 13 : GROSS SALES Finished Goods 32,971.58 44,257.43

Power 725.56 775.65

By-Products [including items capitalised Rs. 37.41Lacs (Rs.14.70 Lacs)] 1,529.74 1,772.77

Sugar Hedging Transactions (net) 135.24 -

Others 39.03 31.62

35,401.15 46,837.47

Less :Claims, Rebates etc. 7.56 25.41

35,393.59 46,812.06

SCHEDULE – 14 : OTHER INCOME Income from Long Term Investments (Non-Trade) Dividend 0.28 1.21 Interest 0.01 -

Insurance & Other Claims 23.81 11.85

Rent & Hire Charges 18.94 19.95

Profit on sale of Long Term Investments 15.31 -

Export Incentives 22.42 14.11

Unspent liabilities,excess provisions and unclaimed balances written back (net) 212.69 48.80

Provision for diminution in the value of investments

no longer required written back 0.25 -

Cane Price Subsidy for earlier years 573.58 -

Buffer Stock subsidy towards Insurance & storage charges 83.50 6.28

Profit on Fixed assets sold / discarded (net) 66.42 -

Items Pertaining to previous years (net) 0.12 -

Miscellaneous Receipts 8.61 10.32

1,025.94 112.52

SCHEDULE – 15 : DECREASE/ (INCREASE) IN STOCKS Opening Stocks : Finished Goods 16,732.27 13,059.36

Power - Banked 24.72 -

By-Products 840.80 560.93

Goods under Process 317.73 141.00

Scrap 21.46 11.52

17,936.98 13,772.81

Less : Closing Stocks : Finished Goods 25,744.12 16,732.27

Power - Banked 30.75 24.72

By products 1,509.43 840.80

Goods under Process 262.20 317.73

Scrap 20.89 21.46

27,567.39 17,936.98

(9,630.41) (4,164.17)

SCHEDULES to the Profi t & Loss Account

(Rs. in Lacs)

2007-2008 2006-2007

The Oudh Sugar M

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42

SCHEDULES to the Profi t & Loss Account (Contd.)

SCHEDULE – 16 : AGRICULTURAL LOSS

INCOME Sales including inter- transfers Rs. 24.78 Lacs (Rs. 37.25 Lacs) 34.89 42.54

Other Income :

Rent & Hire Charges 25.23 29.26

Unspent Liabilities & excess provision written back - 0.07

Miscellaneous Receipts 3.24 28.47 0.07 29.40

Increase in Stocks :

Closing Stock 32.25 29.21

Less :Opening Stock 29.21 3.04 21.45 7.76

66.40 79.70

EXPENDITURE

Seeds, Manures and Fodder Consumed 22.15 27.61

Stores & Spares Consumed 0.27 0.20

Tractor Expenses 32.29 32.22

Repairs to :

Machinery 0.72 0.10

Building 0.06 0.10

Others 0.30 0.34

Rates & Taxes 0.15 0.12

Payments to and Provisions for Employees : Salaries, Wages & Bonus 26.79 28.23

Contribution to Provident and Other Funds 1.54 1.79

Gratuity 0.10 28.43 - 30.02

Insurance 0.15 0.08

Cartage & Transportation charges 1.09 1.45

Irrigation Expenses 0.82 0.68

Harvesting Expenses 1.06 0.65

Miscellaneous Expenses 2.56 1.16

Depreciation 2.34 1.42

92.39 96.15

Loss transferred to Profit & Loss Account 25.99 16.45

(Rs. in Lacs)

2007-2008 2006-2007

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SCHEDULE – 20 : MANUFACTURING, SELLING AND OTHER EXPENSES

Repairs to and Maintenance of :

Buildings 105.23 166.51

Machinery 1,276.57 870.64

Others 21.00 24.18

Rent 76.04 49.00

Rates & Taxes (net) 38.27 35.18

Insurance 78.01 106.65

Job Processing Charges - 7.48

Auditors’ Remuneration : For Audit Fees 12.25 7.50

For Limited Reviews & Tax Audit Fees 8.25 8.25

In other capacity for Certificates & other services 5.62 4.36

For Expenses 1.96 2.92

Cost Auditors’ Remuneration :

For Audit Fees 0.60 0.60

For Expenses 0.15 0.17

Carry forward 1623.95 1283.44

SCHEDULE – 17 : RAW MATERIALS CONSUMED Opening Stock 337.35 120.95 Add : Purchase & Procurement Expenses [including transfer of

sugarcane from own farms Rs. 24.78 Lacs (Rs. 37.25 Lacs)] 27,864.24 38,567.95

Purchase Tax & Cess (net) 335.73 431.23

28,537.32 39,120.13 Less : Sales 0.05 16.93 Closing Stock 235.44 337.35

28,301.83 38,765.85

SCHEDULE – 18 : STORES, SPARES & PACKING MATERIALS CONSUMED

Stores, Spare Parts, Chemicals etc. [after adjusting Sales & Claims Rs. 122.20 Lacs (Rs. 163.15 Lacs)] 1,495.77 1,360.16 Packing Materials 1,474.62 1,620.09

2,970.39 2,980.25

SCHEDULE – 19 : PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

Salaries,Wages,Bonus,etc. 2,527.77 2,346.93 Contribution to Provident & Other Funds 208.16 199.29 Gratuity 68.15 116.08

Workmen Compensation 1.62 7.35

Employees’ Welfare Expenses 82.12 78.72

2,887.82 2,748.37

SCHEDULES to the Profi t & Loss Account (Contd.)

(Rs. in Lacs)

2007-2008 2006-2007

(Rs. in Lacs)

2007-2008 2006-2007

The Oudh Sugar M

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44

SCHEDULES to the Profi t & Loss Account (Contd.)

SCHEDULE – 20 : MANUFACTURING, SELLING AND OTHER EXPENSES (CONTD.)

Brought forward 1623.95 1283.44

Selling Commission & Expenses : Commission on sales 159.60 189.66

Other Selling Expenses 400.28 354.24

Charity & Donations 4.97 5.88

Provision for bad and doubtful debts/ advances 52.50 36.81

Provision for Warranties & Claims 6.86 5.75

Bad Debts,irrecoverable claims & advances written off 14.32 0.84

Less : Adjusted against provisions 2.35 11.97 - 0.84

Loss on sale of long term Investments 24.75 -

Less : Adjusted against provisions 24.75 - - -

Items pertaining to previous years (net) - 2.32

Loss on Fixed Assets sold/ discarded (net) - 41.40

Exchange rate fluctuations (net) 2.13 -

Molasses Storage & Maintenance Reserve 6.55 7.97

Miscellaneous Expenses

[including Directors’ travelling Rs. 12.46 Lacs (Rs. 17.11 Lacs)] 771.68 715.96

3,040.49 2,644.27

SCHEDULE – 21 : DIRECTORS’ REMUNERATION

Profit/ (Loss) before Taxation as per Profit & Loss Account (626.92) ` (3,943.10)

Add : Depreciation (as per Accounts) 2,232.02 2,030.09

Provision for bad & doubtful debts/advances 52.50 36.81

Net Loss/ (Profit) on fixed assets sold and/ or

discarded (as per Accounts) (66.42) 41.40

Directors’ Fees & Remuneration 97.57 103.09

2,315.67 2,211.39

1,688.75 (1,731.71)

Less/ (Add) :

Depreciation

(under Section 350 of the Companies Act, 1956) 2,232.02 2,030.09

Bad debts/advances adjusted against provision 2.35 -

Provision for Diminution in the value of Investments

no longer required written back 0.25 -

Net Loss/ (Profit) on fixed assets sold/ discarded

(as per Section 349 of the Companies Act,1956) 32.30 (33.52)

Managing Director’s Remuneration 94.10 100.31

Directors’ Fees 3.47 2.78

2,364.49 (2,099.66)

(Rs. in Lacs)

2007-2008 2006-2007

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* Excludes Rs. 49.14 Lacs (Rs. 53.07 Lacs) paid towards rent and maintenance of the accommodation provided to the Managing Director and the same has been included under the head “Rent” and “Miscellaneous Expenses” in Schedule 20.

Note : In view of the loss under section 349, as stated above, no provision for Directors’ Commission has been made.

SCHEDULES to the Profi t & Loss Account (Contd.)

SCHEDULE – 21 : DIRECTORS’ REMUNERATION (CONTD.)

Profit/ (Loss) for the year (675.74) (3,831.37)

Add : Loss brought forward from the previous year (3,831.37) -

Net Profit/ (Loss) under Section 349 of the Companies Act, 1956 (4,507.11) (3,831.37)

(A) Managing Director’s Remuneration : Salary 39.00 39.00

Contribution to Provident Fund 4.68 4.68

Gratuity 0.39 0.70

Provision for Leave 0.89 44.96 2.86 47.24

(B) Directors’ Fees 3.47 2.78

48.43 * 50.02

SCHEDULE – 22 : INTEREST & FINANCE CHARGES (NET)

On Fixed Loans , Debentures & Deposits 3,368.46 1,912.24

To Banks and Others 3,473.73 906.99

To Income tax Departments - -

6,842.19 * 2,819.23

Less : At Credit : Amount Capitalised 2,513.86 641.63

Buffer Stock Subsidy towards interest 610.94 48.64

On Unsecured Loans, Deposits etc. (Gross) : [Tax deducted at source Rs. 1.04 Lac (Rs. 9.37 Lacs)] 39.57 84.73

3,164.37 775.00

3,677.82 2,044.23

* excludes Rs. 165.57 Lacs being interest on excise duty loan from a Bank which is recoverable as subsidy from the Government.

(Rs. in Lacs)

2007-2008 2006-2007

(Rs. in Lacs)

2007-2008 2006-2007

The Oudh Sugar M

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SCHEDULE to the Balance Sheet and Profi t & Loss AccountSCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS

1. STATEMENT OF SIGNIFIACANT ACCOUNTING POLICIES :

(i) Basis of Preparation :

The financial statements have been prepared to comply in all material aspects with the Accounting Standards notified by the Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. Except otherwise mentioned, the accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

(ii) Revenue Recognition :

(a) Revenue from the sale of goods is recognised upon passage of title to the customers which generally coincides with delivery thereof.

(b) Dividend Income is recognised when the shareholders’ right to receive the payment is established by the balance sheet date.

(c) Due to uncertainty in realisation, following incomes are accounted for on acceptance/ actual receipt basis :

(i) Insurance and other claims

(ii) Interest on doubtful loans and advances to cane growers.

(iii) Compensation receivable in respect of land surrendered to/ acquired by the Government.

(iii) Fixed Assets :

Fixed assets are stated at cost less accumulated depreciation and impairment, if any. Cost comprises the purchase price

inclusive of duties (net of cenvat credit), taxes, incidental expenses and erection/commissioning expenses etc. upto the date the asset is ready for its intended use.

Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular, are capitalised and depreciated over the residual life of the respective assets.

Assets awaiting disposal are valued at the lower of written down value and net realisable value.

(iv) Impairment of Assets :

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment based on external/internal factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount which represents the greater of the net selling price and ‘Value in use’ of the assets. The estimated future cash flows considered for determining the value in use, are discounted to their present value at the weighted average cost of capital.

(v) Depreciation :

(a) The classification of plant and machinery into continuous and non continuous process is done as per technical certification and depreciation thereon is provided accordingly.

(b) Depreciation on fixed assets is provided as under :

a) On assets valuing Rs. 8.15 Lacs (Rs. 3.22 Lacs), as per straight line method, at the rate applicable under the Bihar Agricultural Income Tax Act, 1949.

b) On gross assets valuing Rs. 43.28 Lacs (Rs. 43.11 Lacs), on written-down value method, at the rates prescribed in schedule XIV of the Companies Act, 1956.

c) On other assets, as per straight line method, at the rates prescribed in schedule XIV of the Companies Act, 1956.

(c) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis, with reference to the date of addition / disposal.

(d) In case of impairment, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

(vi) Government Grants and subsidies :

Government Grants and subsidies are recognised when there is reasonable assurance that the same will be received. Revenue grants/ subsidies are recognised in the Profit & Loss Account. Capital grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets. Other capital grants are credited to capital reserve.

(vii) Borrowing Costs :

Borrowing costs relating to acquisition/ construction of qualifying assets are capitalised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

(viii) Investments : Investments that are readily realisable and intended to be held for not more than a year are classified as Current Investments. All other Investments are classified as Long term Investments. Current Investments are stated at lower of cost and market rate on individual investment basis. Long term investments are considered “at cost” on individual investment basis, unless there is a decline other than temporary in the value, in which case adequate provision is made against such diminution in the value of investments.

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(ix) Inventories :

(a) Raw Materials, stores and spares are valued at lower of cost and net realisable value. However, these items are considered to be realisable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. Goods under process and finished goods (including Power Banked) are valued at lower of cost and net realisable value. Finished goods and Goods under process include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is computed on annual weighted average basis. By products, Country crop and Saleable scraps, whose cost is not identifiable, are valued at estimated net realisable value.

(b) In case of inter-transferred materials, the transfer price is considered as cost for the purpose of valuation of closing stock.

(x) Foreign Currency Transactions :

(a) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction, and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

(c) Exchange Differences

Exchange differences arising on the settlement/conversion of monetary items are recognised as income or expenses in the year in which they arise.

The premium or discount arising at the inception of forward exchange contracts is amortised as expenses or income over the life of the respective contracts. Exchange differences on such contracts are recognised in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contracts is recognised as income or expense for the year.

(xi) Retirement Benefits :

(a) Retirement benefits in the form of Provident Fund and Pension Fund are defined contribution schemes and are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. The Company has no obligations other than the contribution payable to the respective trusts/ funds.

(b) Gratuity liability being a defined benefit obligation is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each year.

(c) Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method at the end of each year.

(d) Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

(xii) Taxation :

Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax are measured at the amount expected to be paid to tax authorities in accordance with Income Tax Act, 1961. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

The deferred tax for timing differences between the book and tax profit for the year is accounted for using the tax rates and laws that have been substantively enacted as of the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. If the Company has carry forward unabsorbed depreciation and tax losses, deferred tax asset is recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient taxable income will be available in future against which such deferred tax asset can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes

SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)

The Oudh Sugar M

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SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)

eligible to be recognised as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.

(xiii) Segment Reporting :

(a) Identification of Segments :

The Company has identified that its operating segments are the primary segments. The Company’s operating businesses are organised and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which the customers of the Company are located.

(b) Inter Segment Transfers :

The Company accounts for inter segment transfers at mutually agreed transfer prices.

(c) Allocation of Common Costs :

Common allocable costs are allocated to each segment on case to case basis applying the ratio, appropriate to each relevant case. Revenue and expenses which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis, are included under the head “Unallocated – Common”.

The accounting policies adopted for segment reporting are in line with those of the Company.

(xiv) Share Issue Expenses :

Share issue expenses are adjusted against Securities Premium Account.

(xv) Earning per Share :

Basic Earning per Share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted number of equity shares outstanding during the year.

For the purpose of calculating diluted earning per share, net

profit or loss for the year attributable to equity share holders and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.

(xvi) Excise Duty :

Excise Duty is accounted for at the point of manufacture of goods and accordingly, is considered for valuation of stocks as on the Balance Sheet date.

(xvii) Hedging :

The Company has adopted a policy to minimise risks associated with foreign exchange fluctuations with respect to its borrowings.

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract.

(xviii) Research Costs :

Research costs of revenue nature are expensed as and when they are incurred, while capital expenditure is added to the cost of the respective fixed assets.

(xix) Provisions :

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in terms of Accounting Standard 29 are not discounted to its present value and are determined based on management estimate required to settle the obligation, at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

(xx) Derivative Instruments :

As per the announcement made by the Institute of Chartered Accountants of India, Derivative contracts, other than those covered under AS-11, are marked to market on a portfolio basis, and the net loss after considering the offsetting effect on the underlying hedge item, and are charged to the income statement. Net gains are ignored as a matter of prudence.

(xxi) Contingencies :

Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of notes to the accounts.

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(Rs. in Lacs) As at 30th As at 30th June, 2008 June, 2007

2. Estimated amount of contracts remaining to be executed on Capital Account

(net of advances) and not provided for 8186.52 18672.67

3. Contingent Liabilities not provided for in respect of :–

(a) Demands / Claims by various Government Authorities

and others not acknowledged as debts :

(i) Excise Duty & Service Tax 773.85 405.00

(ii) Sales & Entry Tax 241.52 90.28

(iii) Duty under State Acts 155.05 155.05

(iv) Others 36.12 7.81

Total 1206.54 658.14

(b) (i) Guarantees given to a bank against loans to cane growers 3000.00 1500.00

(ii) Against the above, the loan facilities actually availed as on the Balance Sheet date 2350.22 1074.37

(c) Unredeemed bank guarantees 0.96 0.96

(d) Bills discounted with banks [since realised Rs. 49.26 Lacs (Rs. 66.65 Lacs)] 66.54 66.65

4. Excise Duty & Cess on stocks represents differential excise duty and cess on opening and closing stock of finished goods/ by products.

5. Pending disposal of writs/appeals by the court with regard to levy sugar prices for some years, Rs. 79.41 Lacs (Rs. 113.46 Lacs) (net) received as excess levy sugar price, against which bank guarantees furnished by the Company for Rs. 84.88 Lacs, are in force in terms of the Court Orders, is included under the head ‘Current Liabilities’. Necessary adjustment for the above amount together with interest, if any, in this regard will be made in the accounts as and when the matter will be finally settled.

6. Pending decisions of various courts on writ petitions filed by/ against the Company, no credit has been taken in the Profit and Loss Account in respect of certain realisations aggregating to Rs. 52.05 Lacs in earlier years, which continue to be shown under the head “Liabilities for other Finance” in Schedule – 12. Against the above, fixed deposit receipts/ bank guarantees for similar amount have been furnished by the Company.

7. The Company at its Hargaon & Rosa sugar units in U.P. has accounted for sugarcane purchases @ Rs. 110 per quintal for sugar season 2007-2008 in terms of Hon’ble Allahabad High Court’s (Lucknow Bench) interim order dated 15th November, 2007 as against the State Advised Price (SAP) of Rs. 125 per quintal, upheld by the said High Court vide its final order

dated 7th July, 2008 against which the Company along with others through UP Sugar Mills Association has filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court.

In the meantime, the Hon’ble Allahabad High Court in its subsequent judgment dated 18th August, 2008 in case of another sugar Company has quashed the SAP for sugar season 2007-2008. In view of two different judgments from the two benches of the same court and also based on the legal advice, the Company has accounted for sugarcane liability for the current season @ Rs. 110 per quintal, as paid in accordance with the earlier interim order of the Hon’ble High Court, although in terms of the order dated 18th August, 2008 as stated above, the Company is only liable to pay the Statutory Minimum Price fixed by the Central Government (till the finalisation of SAP by the State Government as per the court’s directions), which is lower than the amount of Rs. 110 per quintal accounted for by the Company. Pending final decision by the Hon’ble Supreme Court in this matter, the differential price of Rs. 2422.74 Lacs between SAP and the amount already provided, as stated above, has not been accounted for.

8. a) In terms of Accounting Standard 22, net Deferred Tax Asset (DTA) of Rs. 432.24 Lacs (including Rs. 212.12 Lacs for the year) has been recognised in accounts upto 30th June, 2008 and the break-up of the above net Deferred Tax Asset is as under :

SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)

The Oudh Sugar M

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50

(Rs. in Lacs) As at 30th As at 30th June, 2008 June, 2007

(A) Deferred Tax Asset (i) Carry forward unabsorbed depreciation 4659.60 4310.24

(ii) Expenses allowable against taxable income in future years 1117.42 573.85

5777.02 4884.09

(B) Deferred Tax Liability

(i) Timing difference in depreciable assets 5344.78 4702.53

5344.78 4702.53

Net Deferred Tax Asset ( A – B ) 432.24 181.56

SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)

2007-2008 2006-2007

(i) Principal amount remaining unpaid to any supplier at the end of accounting year (including retention money against performance). 408.06 216.77

(ii) Interest due on above. 2.99 -

Total of (i) & (ii) 411.05 216.77

(iii) Amount of interest paid by the Company to the suppliers in terms of section 16 of the Act. - -

(iv) Amounts paid to the suppliers beyond the respective due date. 105.52 -

(v) Amount of interest due and payable for the period of delay in payments (which have been paid but beyond the due date during the year) but without adding the interest specified under the Act. 4.92 -

(vi) Amount of interest accrued and remaining unpaid at the end of accounting year. 7.91 -

(vii) Amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of this Act. - -

b) Advance payment of tax in schedule – 11 includes Rs. 717.57 Lacs (Rs. 721.50 Lacs), being Minimum Alternate Tax (MAT) which being available as tax credit for set off in future years as per the Income Tax Act, 1961, is carried forward as ‘MAT Credit Entitlement’.

9. a) Pending execution of the conveyance deed, no adjustment has been made in respect of 0.75 acre of land sold by the Company in earlier years.

b) An application filed by the Company for exemption of 3785.19 sq. mtrs. of land at Bamrauli under the Urban Land (Ceiling and Regulation) Act, 1976, is pending with the concerned authority.

10. Based on the information / documents available with the Company, information as per the requirement of Section 22 of The Micro, Small and Medium Enterprises Development Act, 2006 are as under :

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(i) Net Employee Expense/(benefit)

Current service cost 47.16

Interest cost on benefit obligation 51.17

Expected return on plan assets (45.70)

Net Actuarial loss recognised in the year 16.54

Total employer expense 69.17

(ii) Actual return on plan assets 47.45

(iii) Benefit Asset/ (Liability)

Fair Value of Plan Assets 628.78

Defined benefit obligation 699.59

Benefit Asset/ (Liability) (70.81)

(iv) Movement in benefit liability

Opening defined benefit obligation 665.13

Interest cost 51.17

Current service cost 47.16

Benefits paid (82.16)

Actuarial (gains)/ losses on obligation 18.29

Closing benefit obligation 699.59

(v) Movement in fair value of plan assets

Opening fair value of plan assets 533.36

Expected Return on plan assets 45.70

Contribution by employer 130.13

Benefits paid (82.16)

Actuarial gains/ (losses) on obligation 1.75

Closing fair value of plan assets 628.78

(vi) The major categories of plan assets as a percentage of the fair value of total plan assets

Funded with insurer 100%

(vii) The Principal actuarial assumptions are as follows :

Discount rate 8.1%

Expected Return on plan assets 8.5%

Salary Increase 5%

Withdrawal rates : Varying between 1% to 8% per annum depending upon the duration and age of the employees

(Rs. in Lacs) Gratuity

11. In the current year, the Company has adopted Accounting Standard 15 (revised) - Employee Benefits, which is mandatory from accounting periods commencing on or after 7th December, 2006. Accordingly, the Company has provided for gratuity and compensated leave encashment based on actuarial valuation done as per projected unit credit method. This change does not have any material impact on the loss for the current year. Further, in accordance with the transitional provisions allowed in the Accounting Standard, a sum of Rs. 74.88 Lacs (net of deferred tax asset of Rs. 38.56 Lacs) being the impact of such change on the respective liabilities

up to 30th June, 2007, has been adjusted against the General Reserve as on 1st July, 2007.

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms as per provisions of The Payment of Gratuity Act, 1972. The scheme is funded with an insurance Company.

The following tables summarise the components of net benefit expenses recognised in the Profit & Loss Account and the funded status and amounts recognised in the balance sheet for gratuity.

SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)

(viii) Amount incurred as expense for defined contribution to Provident/ Pension fund plan Rs. 214.62 Lacs (including Rs. 6.19 Lacs capitalised as pre-operative expenses in Schedule-5).

(ix) The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

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(x) The Company expects to contribute Rs. 130 Lacs to Gratuity fund in 2008-09.

(xi) The details for the current period are as follows :

Defined Benefit Obligation 699.59

Plan Assets 628.78

Surplus / (Deficit) (70.81)

Experience adjustments on plan liabilities Not Available *

Experience adjustments on plan assets Not Available *

* The management has relied on the overall actuarial valuation conducted by the actuary. However, experience adjustments on plan liabilities and assets are not readily available and hence not disclosed.

(xii) Since AS-15 (revised) on employee benefits is applicable from 1st July, 2007, the disclosures above are given only for the current year.

14. Earning per Share (EPS) :

In terms of Accounting Standard - 20, the calculation of EPS is given below : -

2007-2008 2006-2007Profit / (Loss) as per Profit & Loss Account (Rs. in Lacs) (451.27) (2689.55)

Weighted average number of Equity Shares outstanding during the year (Rs. 10 each) 18,173,820 18,173,820

Basic and Diluted earnings per share (Rs.) (2.48) (14.80)

SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)

Salaries & Wages 580.49 480.52

Stores and Spares, etc. 1171.85 771.45

Insurance 0.42 0.65

(Rs. in Lacs) 2007-2008 2006-2007

15. The movements in provision for warranties during the year are as follows : -

(Rs. in Lacs) Balance as at Additions during Amount used Balance as at 01.07.2007 the year during the year 30.06.2008Warranties 9.27 6.86 8.01 8.12

12. Advances include Rs. 66.58 Lacs incurred towards Rights Issue expenses, which will be adjusted against the Securities Premium, as per the Accounting policy followed by the Company, after the close of the Rights Issue. Further, the above amount includes Rs. 22.00 Lacs paid to the Statutory Auditors.

13. (a) Salaries and Wages relating to various repairs have not been charged separately to the repairs, as the amount thereof has not been demarcated.

(b) Consumption of raw materials, stores, spare parts and packing materials includes profit/loss on sale thereof.

(c) The following items are included under other heads of expenses in the Profit & Loss Account :–

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SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.) 16. The Company’s segment information as at and for the Year ended 30th June, 2008 are as below : - (Rs. in Lacs) Co- Canning Sugar Spirits generation Products Others Total

(a) Revenue (net of excise duty and cess) External Sales 25839.51 4677.10 725.57 1913.72 - 33155.90

(37817.54) (3919.33) (766.43) (1741.15) (-) (44244.45)

Inter-segment Sales 3388.80 18.10 1661.37 - - 5068.27

(2777.18) (4.00) (1425.95) (-) (-) (4207.13)

Total Revenue 29228.31 4695.20 2386.94 1913.72 - 38224.17

(40594.72) (3923.33) (2192.38) (1741.15) (-) (48451.58)

(b) Results Segment Results 1761.34 1025.79 553.10 79.64 -0.56 3419.31

(-3694.58) (1315.14) (746.21) (81.24) (-0.25) (-1552.24)

Unallocated expenses net

of unallocated Income 368.41

(346.63)

Operating Profit / (-) Loss 3050.90

(-1898.87)

Interest & Finance Charges (net) 3677.82

(2044.23)

Income, Wealth & Fringe Benefit Tax (net) 32.54

(57.15)

MAT Credit Entitlement / (-) Reversal -3.93

(25.50)

Deferred Tax Asset (net) 212.12

(1285.20)

Net Profit / (-) Loss -451.27

(-2689.55)

(c) Total Assets Segment Assets 73144.09 12827.55 6488.18 1070.87 1.45 93532.14

(52178.54) (5127.94) (6501.35) (880.79) (1.48) (64690.10)

Unallocated Assets 3239.66

(2433.58)

96771.80

(67123.68)

(d) Total Liabilities Segment Liabilities 9406.70 862.24 41.03 735.26 0.15 11045.38

(14352.99) (185.35) (0.30) (680.88) (0.06) (15219.58)

Unallocated Liabilities 75643.00

(41301.08)

86688.38

(56520.66)

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SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)

16. The Company’s segment information as at and for the Year ended 30th June, 2008 are as below : (Contd.)

(e) Other Information (i) Non cash expenses 6.55 - - - - 6.55

(7.97) (-) (-) (-) (-) (7.97)

(ii) Capital Expenditure 11898.40 8013.00 310.51 19.55 - 20241.46

(12520.28) (2374.08) (6035.84) (6.60) (-) (20936.80)

(iii) Depreciation for the year 1731.03 181.52 314.39 5.05 0.03 2232.02

(1728.79) (109.34) (187.41) (4.52) (0.03) (2030.09)

(f) Geographical Segments

Revenue Domestic 32851.00

(43127.64) Overseas (Including through third party) 304.90

(1116.81)

33155.90

(44244.45)

(Rs. in Lacs) Co- Canning Sugar Spirits generation Products Others Total

Notes :

(i) Business Segment: The business segments have been identified on the basis of the products of the Company. Accordingly, theCompany has identified “Sugar”, “Spirits”, “Co-generation” and “Canning Products” as the operating segments : Sugar - Consists of manufacture and sale of Sugar, Molasses & Bagasse

Spirits - Consists of manufacture and sale of Industrial Spirits (including Denaturants), Fusel Oil & Bio-Compost

Co-generation - Consists of generation and transmission of Power

Canning Products - Consists of Canned Fruits & Vegetables, Jams, Jellies, Squashes & Juices

Others - Consist of Miscellaneous business comprising of less than 10% revenues.

(ii) Geographical Segment: The Company primarily operates in India and therefore the analysis of geographical segment is demarcated into its Indian and Overseas Operations

(iii) The Company has common fixed assets located in India for producing goods for domestic and overseas markets. Hence, separate figures for fixed assets / additions to fixed assets thereof cannot be furnished.

17. Related Party Disclosure :

a) Names of the related parties:

Subsidiary Companies: Champaran Marketing Company Ltd.

OSM Investment & Trading Company Ltd. Hargaon Investment & Trading Company Ltd. Hargaon Properties Ltd.

Key Management Personnel Shri C. S. Nopany – Chairman-cum-Managing Director Shri V. P. Singh – Executive President, Hargaon Unit

Shri Chandra Mohan – Executive President, Narkatiaganj Unit

Shri P. K. Saini – Executive President, Rosa Unit

Shri S. K. Premi – Executive President, Allahabad Unit

Shri S. D. Shukla – Sr. Executive Vice President, Hata Unit

Shri Sanjay Mukherjee – Secretary (From 1st November, 2007)

Shri D. J. Darji – Secretary (upto 31st October, 2007)

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SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)a) Names of the related parties : (Contd.)

Relatives of Key Management Personnel Smt. Nandini Nopany – Mother of Shri C.S. Nopany

Enterprises owned or significantly Upper Ganges Sugar & Industries Ltd.

influenced by Key Management Sutlej Textiles & Industries Ltd.

Personnel and their relatives SIL Investments Ltd. (formerly Sutlej Industries Ltd.)

SCM Investment & Trading Co. Ltd.

RTM Investment & Trading Co. Ltd.

Uttar Pradesh Trading Co. Ltd.

b) Aggregated Related Party Disclosures as at and for the year ended 30th June, 2008

Key Relatives of Enterprises owned by Management Key Management Key Management Subsidiaries Personnel Personnel Personnel or their relatives Total

Transaction Balance Transaction Balance Transaction Balance Transaction Balance Transaction Balance Value Outstanding Value Outstanding Value Outstanding Value Outstanding Value Outstanding as on 30.06. as on 30.06. as on 30.06. as on 30.06. as on 30.06. 2008 2008 2008 2008 2008 Sale of Goods & Services

Upper Ganges Sugar & Industries Ltd. - - - - - - 206.66 - 206.66 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (109.01) ( - ) (109.01) ( - ) Purchase of Goods & Services

Upper Ganges Sugar & Industries Ltd. - - - - - - 37.17 - 37.17 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (19.17) ( - ) (19.17) ( - ) Sale of Fixed Assets

Upper Ganges Sugar & Industries Ltd. - - - - - - 130.66 - 130.66 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (115.13) ( - ) (115.13) ( - ) Purchase of Fixed Assets

Upper Ganges Sugar & Industries Ltd. - - - - - - 96.11 - 96.11 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (951.78) ( - ) (951.78) ( - ) Dividend Paid

Shri C.S. Nopany - - - - - - - - - - ( - ) ( - ) (2.01) ( - ) ( - ) ( - ) ( - ) ( - ) (2.01) ( - ) SCM Investment & Trading Co. Ltd. - - - - - - - - - - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (87.42) ( - ) (87.42) ( - ) RTM Investment & Trading Co. Ltd. - - - - - - - - - - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (73.32) ( - ) (73.32) ( - ) Uttar Pradesh Trading Co. Ltd. - - - - - - - - - - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (88.34) ( - ) (88.34) ( - ) Interest Paid

Sutlej Textiles & Industries Limited - - - - - - 340.24 - 340.24 - ( - ) ( - ) ( - ) (62.43) ( - ) (62.43) ( - ) SIL Investments Ltd. - - - - - - 184.91 - 184.91 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (8.26) ( - ) (8.26) ( - ) SCM Investment & Trading Co. Ltd. - - - - - - 172.05 - 172.05 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) RTM Investment & Trading Co. Ltd. - - - - - - 186.85 - 186.85 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) Loans/Intercorporate Repaid / Given

Champaran Marketing Company Ltd. 10.50 32.50 - - - - - - 10.50 32.50 (168.00) (39.50) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (168.00) (39.50) OSM Investment & Trading Company Ltd. 12.00 - - - - - - - 12.00 - (55.50) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (55.50) ( - ) Hargaon Investment & Trading Company Ltd. 63.50 - - - - - - - 63.50 - (122.50) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (122.50) ( - )

(Rs. in Lacs)

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SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)

Sutlej Textiles & Industries Limited - - - - - - 3,000.00 - 3,000.00 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (1,500.00) ( - ) (1,500.00) ( - ) SIL Investments Limited - - - - - - 250.00 - 250.00 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) SCM Investment & Trading Co. Ltd. - - - - - - 300.00 - 300.00 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) RTM Investment & Trading Co. Ltd. - - - - - - 2,150.00 - 2,150.00 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) Loans/Intercorporate Loans Taken

Champaran Marketing Company Ltd. 17.50 - - - - - - - 17.50 - (30.00) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (30.00) ( - ) OSM Investment & Trading Company Ltd. 26.00 24.50 - - - - - - 26.00 24.50 (37.50) (10.50) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (37.50) (10.50) Hargaon Investment & Trading Company Ltd. 115.00 140.50 - - - - - - 115.00 140.50 (94.00) (89.00) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (94.00) (89.00) Hargaon Properties Ltd. - - - - - - - - - - (7.36) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (7.36) ( - ) Sutlej Textiles & Industries Limited - - - - - - 4,000.00 3,000.00 4,000.00 3,000.00 ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (3,500.00) (2,000.00) (3,500.00) (2,000.00) SIL Investments Limited - - - - - - 1,300.00 1,575.00 1,300.00 1,575.00 ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (525.00) (525.00) (525.00) (525.00) SCM Investment & Trading Co. Ltd. - - - - - - 3,200.00 2,900.00 3,200.00 2,900.00 ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) RTM Investment & Trading Co. Ltd. - - - - - - 6,600.00 4,450.00 6,600.00 4,450.00 ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) Balance Outstanding (net)

Credit : Upper Ganges Sugar & Industries Ltd. - - - - - - - 48.47 - 48.47 ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (58.02) ( - ) (58.02) Debit : - - - - - - - - - - Shri C. S. Nopany ( - ) ( - ) ( - ) (6.09) ( - ) ( - ) ( - ) ( - ) ( - ) (6.09)Dividend Received

Upper Ganges Sugar & Industries Ltd. - - - - - - - - - - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (0.93) ( - ) (0.93) ( - ) Remuneration

Shri V. P. Singh - - 19.06 1.18 - - - - 19.06 - ( - ) ( - ) (18.97) (4.00) ( - ) ( - ) ( - ) ( - ) (18.97) (4.00) Shri Chandra Mohan - - 17.41 0.90 - - - - 17.41 - ( - ) ( - ) (1.47) (1.47) ( - ) ( - ) ( - ) ( - ) (1.47) (1.47) Shri P. K. Saini - - 9.61 0.08 - - - - 9.61 - ( - ) ( - ) (8.95) ( - ) ( - ) ( - ) ( - ) ( - ) (8.95) ( - ) Shri S. K. Premi - - 12.43 0.11 - - - - 12.43 - ( - ) ( - ) (10.36) ( - ) ( - ) ( - ) ( - ) ( - ) (10.36) ( - ) Shri S. D. Shukla - - 8.96 0.61 - - - - 8.96 - ( - ) ( - ) (4.74) (1.42) ( - ) ( - ) ( - ) ( - ) (4.74) (1.42) Shri Sanjay Mukherjee - - 5.58 0.18 - - - - 5.58 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) Shri D. J. Darji - - 2.80 - - - - - 2.80 - ( - ) ( - ) (4.62) (0.10) ( - ) ( - ) ( - ) ( - ) (4.62) (0.10)

NOTE : Remuneration paid to Shri C. S. Nopany, Chairman-cum-Managing Director, is disclosed in Schedule 21 to the Accounts.

b) Aggregated Related Party Disclosure as at and for the year ended 30th June, 2008 : (Contd.) Key Relatives of Enterprises owned by Management Key Management Key Management Subsidiaries Personnel Personnel Personnel or their relatives Total Transaction Balance Transaction Balance Transaction Balance Transaction Balance Transaction Balance Value Outstanding Value Outstanding Value Outstanding Value Outstanding Value Outstanding as on 30.06. as on 30.06. as on 30.06. as on 30.06. as on 30.06. 2008 2008 2008 2008 2008

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SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)

Opening Stock Closing Stock (b) Sales (b) Purchase of Semi- Finished Goods

Class of Licensed Installed Unit Production Quantity Amount Quantity Amount Quantity Amount Quantity Amount Goods Capacity Capacity

Sugar (Bagged) Not Applicable 21700 Qtls 2350576 1150827 (c) 15815.90 1723521 24586.64 1775979 (d) 25819.58 - - (21700) (2761568) (811249) (12310.83) (1150827) (15815.90) (2419637) (38215.71) (–) (–) Tonnes Crushing per day Power (-do-) 25 Units 52686105 1525879 24.72 1569000 30.75 24592277 (e) 725.56 - - (25) (57736228) (–) (–) (1525879) (24.72) (26253204) (766.43) (–) (–) M.W. Molasses (sent out) – – Qtls 1155055 480684 (g) 787.82 499652 (g) 1380.39 1142792 (d) 584.84 - - (–) (–) (1440922) (358018) (544.42) (480684) (787.82) (1326255) (1125.87) (–) (–) Spirit 45.00 45.00 Ltrs. 24548914 3113781 489.45 3621292 506.60 23953502 5184.66 - - (45.00) (22.50) (20453732) (1719398) (259.07) (3113781) (489.45) (19007939) (4214.81) (–) (–) Million Ltrs. Million Ltrs. Bio Compost Not Applicable 335000 Qtls. 180745 62923 26.38 82636 41.72 140531 (d) 46.45 - - (-do-) (335000) (130221) (33648) (15.87) (62923) (26.38) (97903) (73.21) (–) (–)Fusel Oil – – Ltrs. - 3,600 - 3,600 - - - (–) (–) (–) (3600) (–) (3600) (–) (–) (–) (–) (–)Canned Fruits & Vegetables Not Specified 10 Tonnes Tonnes 3134 861 339.58 1428 562.39 2929 1452.15 362 145.74 per day (-do-) (-do-) (2410) (1334) (417.12) (861) (339.58) (2957) (1300.59) (74) (34.73)Jams, Jellies, Squashes & Juices Not Specified 10 Tonnes Tonnes 1077 176 60.96 128 46.77 1125 461.18 - - per day (-do-) (-do-) (1,017) (156) (56.47) (176) (60.96) (997) (439.45) (–) (–)Bagasse – – Qtls. 3926557 (f) 119215 52.98 195622 129.04 3850150 (d) 944.90 - - (–) (–) (4466643) (92489) (16.51) (119215) (52.98) (4439917) (644.37) (–) (–)Sugar Hedging Rs. - - 135.24 Transactions (net) (–) (–) (–) Others Rs. 21.46 20.89 39.03 (11.52) (21.46) (31.62) 17619.25 27305.19 35393.59 145.74 (13631.81) (17619.25) (46812.06) (34.73)Farm Produce Sugarcane Qtls. 27422 - - - - 27422 27.92 (33944) (–) (–) (–) (–) (33944) (40.78) Cereals etc. Qtls. 208 114 0.97 120 1.65 202 1.88 (189) (–) (–) (114) (0.97) (75) (0.74) Gardens & Dairy Products Qtls. 5.09 (1.02) * excludes standing crop 0.97 1.65 34.89 (–) (0.97) (42.54)

18. Additional Information Pursuant to the Provisions of Clause 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956 (to the extent aplicable) : (i) Licensed and Installed capacity, production, stock & sales of goods produced/ traded during the year : (Rs. in Lacs)

NOTES :

(a) Licensed and installed capacities are as certified by the management and accepted as correct by the Auditors.

(b) Quantitative figures of closing stock are shown after adjusting shortage / excess evaporation, destruction, samples etc. Sales figures are inclusive of excise duty.

(c) Includes 1901 quintals (2353 quintals) lost due to reprocessing during the period.

(d) Includes 21196 quintals (16758 quintals) of Sugar, 955181 quintals (952672 quintals) of Molasses, 2737557 quintals (3394309 quintals) of Bagasse and 90510 quintals (8000 quintals) of Bio-compost transferred / consumed departmentally.

(e) After adjusting inter-transfer to other units 22540653 units (21654670 units), transmission loss 1136366 units (955709 units) and captive consumption 4373688 units (7346766 units).

(f) Includes Bagasse used in Co-generation but excludes the quantum used for other own consumption.

(g) Includes 76355 quintals of Sub-standard materials pending destruction, for which permission from excise authorities is awaited.

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SCHEDULE to the Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (CONTD.)

(ii) Raw Materials Consumed (after adjusting sales and claims): Class of Goods Quantity (in quintals) Rs. In Lacs

Sugarcane (crushed) 2,37,05,967 27,005.85 (2,90,03,324) (37,956.20)Molasses 10,90,459 654.11 (8,92,916) (399.84)Bagasse 22,61,070 21.19 (30,32,369) (43.82)Fresh Fruits & Vegetables 39,757 484.26 (30,182) (326.77)Sugar 1,031 76.91 (7,423) (23.19)Press Mud 9,33,367 59.51 (5,52,378) (16.03) 28,301.83 (38,765.85)

NOTE :The above figures are after adjusting transit losses / shortages and exclude the value of materials acquired during the process of manufacturing and consumed departmentally. However, the value of such inter unit transfers are eliminated for the purpose of consolidation.

(Rs. in Lacs) 2007-2008 2006-2007

(iii) C.I.F. Value of Imports during the year (including through canalising agencies on invoice value) :

Stores, Chemicals and Spares etc. 461.77 164.93

(iv) Expenditure in Foreign Currency during the year (On Cash Basis) :

(a) Travelling 0.20 1.62

(b) Others 36.60 20.07

(v) Earning in Foreign Exchange during the year (On Cash Basis) :

F O B value of Exports (including through third party) 287.19 1,116.81

(vi) Break-up of consumption of Raw Materials and Stores, Spare parts and Packing Material etc. (including debits to other heads of account and after adjusting sales and claims) :

Raw Materials Stores, Chemicals, Spare Parts etc.* Rs. In Lacs % Rs. In Lacs %Imported (as certified by the management) — — 438.04 10.57 (—) (—) (220.63) (5.88)

Indigenous 28,301.83 100 3,704.47 89.43 (38,765.85) (100) (3,531.27) (94.12)

28,301.83 100 4142.51 100.00 (38,765.85) (100) (3,751.90) (100.00)

* Includes shortages and exclude semi-finished goods consumed.

19. Figures given in brackets are for the previous year and the previous year’s figures have been regrouped and/ or rearranged, wherever necessary.

Signatories to Schedules - 1 to 23

For S. R. BATLIBOI & CO. Chartered Accountants

Per R. K. AGRAWAL Partner Membership No. 16667 C. S. NOPANY Chairman- cum Place : Kolkata SANJAY MUKHERJEE Mg. Director Dated : 26th August, 2008 Secretary A. C. DALAL Director

Ann

ual R

epor

t 200

7-08

59

I. Registration Details

CIN L15432UP1932PLC025186 State Code 20

Balance Sheet Date 30.06.2008

II. Capital Raised during the year (Amount in Rs. thousands)

Public Issue Nil Rights Issue Nil

Bonus Issue Nil Private Placement Nil

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. thousands)

Total Liabilities 8567496 Total Assets 8567496

Sources of Funds

Paid-up Capital 181749 Secured Loans 5486878

Reserves & Surplus 826593 Unsecured Loans 2072276

Application of Funds

Net Fixed Assets 3376775 Net Current Assets 2471820

Capital Expenditure on

Expansion Projects 2567731 Deferred Tax Asset (net) 43224

Investments 107946 Miscellaneous Expenditure Nil

IV. Performance of Company (Amount in Rs. thousands)

Turnover (including other income) 3418184 Total Expenditure 3480876

Profit/(Loss) before Tax (62692) Profit/(Loss) after Tax (45127)

Earning Per Share (in Rs.) (2.48) Dividend Rate (%) Nil

V. Generic Names of three Principal Products/Services of the Company :

(as per monetary terms)

Item Code. No. 17011000 Item Code. No. 220710

Description Sugar Description Industrial Alcohol

Item Code. No. 200600

Description Canning Products

C. S. NOPANY Chairman- cum

SANJAY MUKHERJEE Mg. Director

Secretary A. C. DALAL Director

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEThe Oudh Sugar M

ills Limited

60

AUDITORS’ REPORT on Consolidated Financial Statements TO THE BOARD OF DIRECTORS OFTHE OUDH SUGAR MILLS LIMITED

1. We have audited the attached Consolidated Balance Sheet of THE OUDH SUGAR MILLS LIMITED and its subsidiaries as at 30th June, 2008 and also the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We have not audited the financial statements of the subsidiary companies consolidated herein, whose financial statements reflect total assets of Rs. 2,458.26 Lacs (Previous Year Rs. 2,362.38 Lacs) as at 31st March, 2008 and total revenues of Rs. 108.14 Lacs (Previous Year Rs. 176.40 Lacs) and net cash flow of Rs. – 0.29 lac (Previous Year Rs. - 7.02 Lacs) for the year then ended. These financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on the reports of other auditors as well as management certificate in respect of certain adjustments for the reasons as mentioned in Note No. 1(c) of Schedule-23.

4. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) 21,”Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India.

5. Without qualifying our opinion, we draw attention to Note No. 8 on Schedule 23, regarding accounting of Sugarcane purchases at Hargaon & Rosa Sugar units in U.P @ Rs. 110 per quintal for sugar season 2007-08 in terms of Hon’ble Allahabad High Court’s (Lucknow Bench) interim order dated 15th November, 2007 as against the State Advised Price (SAP) of Rs. 125 per quintal, upheld by the said High Court vide its final order dated 7th July, 2008 against which the Company along with others through UP Sugar Mills Association has filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court.

In the meantime, the Hon’ble Allahabad High Court in its subsequent judgment dated 18th August, 2008 in case of another sugar company has quashed the SAP for sugar season 2007-08. Based on the legal advice, the Company has accounted for sugarcane liability for the current season @ Rs. 110 per quintal, as paid in accordance with the earlier interim order of the Hon’ble High Court, although in terms of the order dated 18th August, 2008, as stated above, the Company is only liable to pay the Statutory Minimum Price fixed by the

Central Government (till the finalisation of SAP by the State Government as per the Court’s directions) which is lower than the amount of Rs. 110 per quintal accounted for by the Company. Pending final decision by the Hon’ble Supreme Court in this matter, the differential price of Rs. 2,422.74 Lacs between SAP and the amount already provided, as stated above, has not been accounted for.

6. Attention is drawn to the following notes on Schedule – 23 :

(a) Note Nos. 6 and 7 regarding non-adjustment of certain realisations in earlier years aggregating to Rs. 131.46 Lacs (Previous Year Rs. 165.51 Lacs) and non-provision of interest payable thereon, if any, in case of refund of such realisations. As the matters are under adjudication/ not yet settled, the impact of above non-adjustment on the Company’s loss is not presently ascertainable;

(b) Note Nos.10 (a) & (b) regarding recognition of Deferred Tax Asset (net) of Rs. 432.24 Lacs and MAT Credit Entitlement of Rs. 717.57 Lacs upto the Balance Sheet date based on the future profitability projections made by the management. However, we are unable to express any opinion on the above projections and their consequent impact, if any, on such recognition of Deferred Tax Asset and MAT Credit Entitlement. Had the impact of above been considered, there would be a loss of Rs. 1495.97 Lacs (including Rs. 899.13 Lacs for earlier years) as against the reported loss of Rs. 346.16 Lacs for the year and the figures of Reserves & Surplus would be Rs. 8,433.71 Lacs as against the reported figures of Rs. 9,583.52 Lacs.

In respect of the above items, the previous year’s audit report was similarly modified.

In our opinion, and on the basis of the information and explanations given to us, and also based on the consideration of separate audit reports on individual financial statements of The Oudh Sugar Mills Limited and its subsidiaries, the consolidated statements of account, subject to the matters stated in para 6 above, give a true and fair view :

(a) in the case of Consolidated Balance Sheet, of the consolidated state of affairs of The Oudh Sugar Mills Limited and its subsidiaries as at 30th June, 2008,

(b) in the case of Consolidated Profit & Loss Account, of the consolidated loss of The Oudh Sugar Mills Limited and its subsidiaries for the year then ended and,

(c) in the case of Consolidated Cash Flow Statement, of the consolidated cash flows of The Oudh Sugar Mills Limited and its subsidiaries for the year then ended.

For S. R. BATLIBOI & CO. Chartered Accountants Per R. K. AGRAWAL Place : Kolkata Partner Dated : 26th August, 2008 Membership No. 16667

A

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61

The

Oud

h Su

gar M

ills L

imite

d ( C

onso

lidat

ed) I

I

SOURCES OF FUNDS

A. Shareholders’ Funds

(a) Share Capital 1 1,817.49 1,817.49

(b) Reserves & Surplus 2 9,583.52 9,998.01

11,401.01 11,815.50

B. Loan Funds 3 (a) Secured 54,868.78 27,252.99

(b) Unsecured 20,557.76 13,780.66

75,426.54 41,033.65

86,827.55 52,849.15

APPLICATION OF FUNDS

A. Fixed Assets 4 (a) Gross Block 48,709.12 41,796.03

(b) Less : Accumulated Depreciation 15,174.12 13,254.85

(c) Net Block 33,535.00 28,541.18

(d) Capital Work- in- Progress 340.80 256.09

33,875.80 28,797.27

B. Capital Expenditure on New/ Expansion Projects 5 25,677.31 13,224.76

C. Investments 6 2,154.44 2,123.60

D. Deferred Tax Asset (net) 432.24 181.56

E. Current Assets, Loans & Advances

(a) Inventories 7 29,039.82 19,473.86

(b) Sundry Debtors 8 648.39 591.95

(c) Cash & Bank Balances 9 423.92 513.61

(d) Other Current Assets 10 4.55 3.54

(e) Loans & Advances 11 5,667.99 3,328.15

35,784.67 23,911.11

F. Less : Current Liabilities & Provisions 12 (a) Current Liabilities 10,937.98 15,282.54

(b) Provisions 159.06 106.87

11,097.04 15,389.41

Net Current Assets 24,687.63 8,521.70

G. Miscellaneous Expenditure

(to the extent not written off or adjusted) 0.13 0.26

86,827.55 52,849.15

Accounting Policies and Notes to the Accounts 23

Schedules referred to above form an integral part of the Consolidated Balance Sheet.

As per our Report of even date. For S. R. BATLIBOI & CO. Chartered Accountants

Per R. K. AGRAWAL Partner Membership No. 16667 C. S. NOPANY Chairman- cum Place : Kolkata SANJAY MUKHERJEE Mg. Director Dated : 26th August, 2008 Secretary A. C. DALAL Director

CONSOLIDATED BALANCE SHEET of The Oudh Sugar Mills Limited and its Subsidiary Companies as at 30th June, 2008 (Rs. in Lacs)

Schedule 30th June, 2008 30th June, 2007

The Oudh Sugar M

ills Limited ( C

onsolidated)

62

CONSOLIDATED PROFIT & LOSS ACCOUNT of The Oudh Sugar Mills Limited and its Subsidiary Companies for the year ended 30th June, 2008 (Rs. in Lacs)

Schedule 2007-2008 2006-2007

INCOME Gross Sales 13 35,393.59 46,812.06 Less : Excise Duty 1,926.61 2,234.48 : Cess 311.08 2,237.69 333.13 2,567.61 Net Sales 33,155.90 44,244.45 Other Income 14 1,134.08 278.25 34,289.98 44,522.70EXPENDITURE Decrease/ (Increase) in Stocks 15 (9,630.41) (4,164.17) Excise Duty & Cess on Stocks 574.12 455.56 (Refer Note no. 5 on schedule 23) Agricultural Loss 16 25.99 16.45 Purchase of Semi - Finished Goods 145.74 34.73 Raw Materials Consumed 17 28,301.83 38,765.85 Stores, Spares & Packing Materials Consumed 18 2,970.39 2,980.25 Fuel & Electricity 536.86 695.84 Payments to and Provisions for Employees 19 2,887.82 2,748.37 Manufacturing, Selling and Other Expenses 20 3,043.27 2,646.64 Directors’ Remuneration 21 48.57 50.16 28,904.18 44,229.68 Profit before Interest, Depreciation & Taxation 5,385.80 293.02 Less: Interest & Finance Charges (net) 22 3,677.81 2,042.10 Depreciation 2,229.68 2,028.67 5,907.49 4,070.77 Profit/ (Loss) before Taxation (521.69) (3,777.75)Provision for Taxation [including wealth tax Rs. 3.00 Lacs (Rs. 2.15 Lacs)] 3.12 33.32 Deferred Tax Asset 212.12 1,285.20 Minimum Alternative Tax (MAT) Credit Entitlement / Reversal 3.93 (25.50)Income Tax Provision no longer required written back 0.60 - Provision for Fringe Benefit Tax 30.14 27.50 Profit/ (Loss) after Taxation (346.16) (2,527.87)Surplus brought forward from previous year 610.69 2,071.67 Transfer from General Reserve 500.00 1,150.00 Balance Available for Appropriation 764.53 693.80APPROPRIATIONSTransfer to Reserve fund 21.15 35.16 Transfer to Capital Redemption Reserve - 45.00 Proposed Dividend - 2.52 Provision for Dividend Tax - 0.43 Balance carried to Balance Sheet 743.38 610.69 764.53 693.80

Earning per Share of Rs. 10 each (Basic and Diluted) (Rs.) (1.90) (13.92) (Refer Note No. 17 on Schedule-23) Accounting Policies and Notes to the Accounts 23

Schedules referred to above form an integral part of the Consolidated Profit & Loss Account.

As per our Report of even date. For S. R. BATLIBOI & CO. Chartered Accountants

Per R. K. AGRAWAL Partner Membership No. 16667 C. S. NOPANY Chairman- cum Place : Kolkata SANJAY MUKHERJEE Mg. Director Dated : 26th August, 2008 Secretary A. C. DALAL Director

A

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63

CONSOLIDATED CASH FLOW STATEMENT of The Oudh Sugar Mills Limited and its Subsidiary Companies for the year ended 30th June, 2008

A. CASH FLOW FROM OPERATING ACTIVITIES : Profit/ (Loss) before Tax (521.69) (3,777.75) Adjustments for : Depreciation 2,232.02 2,030.09 Interest & Finance Charges (net of capitalisation & Subsidy) 3,717.39 2,177.62 Molasses Storage and Maintenance Reserve 6.55 7.97 (Profit) / Loss on Fixed Assets sold / discarded (66.42) 41.40 (Profit) on sale of Long Term Investments (15.31) - Interest & Dividend Income (148.01) (250.28) Preliminary Expenses 0.13 0.14 Bad Debts, irrecoverable claims & advances written off 11.97 0.84 Provision for Warranties & Claims 6.86 5.75 Provision for diminution in the value of investments Written Back (0.25) (3.54) Provision for bad and doubtful debts/advances (net) 52.50 36.81 5,275.74 269.05 Operating Profit before Working Capital Changes : Adjustments for : Decrease in Trade Payables (4,274.73) 9,401.41 Increase in Trade & Other Receivables (2,310.34) (1,202.02) Increase in Inventories (9,565.96) (4,330.49) (16,151.03) 3,868.90 Cash Generated from Operations : (10,875.29) 4,137.95 Direct Taxes Paid 41.01 323.33 Net Cash from Operating Activities (10,916.30) 3,814.62

B. CASH FLOW FROM INVESTING ACTIVITIES : Sale of Fixed Assets 201.77 116.27 Capital Subsidy 200.83 - Sale of Investments 16.62 61.21 Loans Given (5.56) 464.34 Interest Received 38.58 85.86 Dividend Received 108.42 163.40 Purchase of Investments (31.90) (815.12) Purchase of Fixed Assets (17,747.44) (18,517.49) Net Cash used in Investing Activities (17,218.68) (18,441.53)C. CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from Borrowings 45,725.89 40,568.24 Repayment of Loans (11,320.13) (21,937.76) Redemption of Preference Shares - (45.00) Interest & Finance charges Paid (net of subsidy) (6,358.51) (2,863.29) Dividend Paid (including dividend tax) (1.96) (928.73) Net Cash from Financing Activities 28,045.29 14,793.46 NET CHANGES IN CASH & CASH EQUIVALENTS (A+B+C) (89.69) 166.55 Cash & Cash equivalents - Opening Balance 513.61 347.06 * Cash & Cash equivalents - Closing Balance 423.92 513.61 Restricted Cash & Cash equivalents 67.33 66.35 * Represents Cash and Bank balances as indicated in Schedule - 9

As per our Report of even date. For S. R. BATLIBOI & CO. Chartered Accountants

Per R. K. AGRAWAL Partner Membership No. 16667 C. S. NOPANY Chairman- cum Place : Kolkata SANJAY MUKHERJEE Mg. Director Dated : 26th August, 2008 Secretary A. C. DALAL Director

(Rs. in Lacs)

2007-2008 2006-2007

The Oudh Sugar M

ills Limited ( C

onsolidated)

64

SCHEDULES forming part of the Consolidated Balance Sheet

SCHEDULE – 1 : SHARE CAPITAL Authorised : 4,00,00,000 Equity Shares of Rs. 10 each 4,000.00 4,000.00 Issued : 1,81,73,820 Equity Shares of Rs. 10 each 1,817.38 1,817.38 1,883 1/2 Equity Shares of Rs. 100 each 1.89 1.89 1,819.27 1,819.27Subscribed & Paid-up : 1,81,73,820 (1,81,73,820) Equity Shares of Rs. 10 each fully paid 1,817.38 1,817.38 44 (44) Quarter Equity Shares of Rs. 25 each fully paid 0.01 0.01 Bearer Equity Share Coupons of Rs. 25 and Rs. 12.50 each fully paid 0.06 0.06 1,817.45 1,817.45 Add: Forfeited Shares (amount originally paid-up) 0.04 0.04 1,817.49 1,817.49

Note : Out of the above 6,11,550 (6,11,550) Equity Shares have been issued for consideration other than cash and 11,55,575 (11,55,575) Equity Shares have been allotted as Bonus Shares by capitalisation of Securities Premium and General Reserve.

SCHEDULE – 2 : RESERVES & SURPLUSCapital Reserve : As per last Account 198.59 * 198.59* *includes Rs. 2.71 Lacs arisen on consolidation Capital Redemption Reserve : As per last Account 82.69 37.69 Add : Transfer from Profit & Loss Account - 45.00 82.69 82.69 Securities Premium : As per last Account 6,247.67 6,247.67 Reserve Fund : As per last Account 259.54 224.38 Add : Transfer from Profit & Loss Account 21.15 35.16 280.69 259.54 General Reserve : As per last Account 2,524.50 3,674.50 Less : Impact of Revised AS-15 as on 1st July, 2007 (Net of Tax) (Refer Note No. 13 on Schedule 23) 74.88 - Less : Transfer to Profit and Loss Account 500.00 1,150.00 1,949.62 2,524.50 Molasses & Alcohol Storage and Maintenance Reserve : As per last Account 71.49 108.52 Add : Provided during the year 6.55 7.97 78.04 116.49 Less : Utilised during the year - 45.00 78.04 71.49 Effluent Disposal Reserve : As per last Account 2.84 2.84 Surplus as per Profit & Loss Account 743.38 610.69 9,583.52 9,998.01

(Rs. in Lacs)

30th June, 2008 30th June, 2007

A

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65

SCHEDULE – 3 : LOAN FUNDS

A. SECURED LOANS : Term Loans

Long Term

From Scheduled Bank(s) :

Under Project Finance/ Corporate Loan Scheme 24,572.42 9,673.70

Under Financial Assistance Scheme (Excise Duty Loan) 3,985.00 -

Interest accrued & due 254.50 38.88

From Sugar Development Fund 5,207.86 2,861.23

From Others 2,400.00 3,600.00

Short Term

From a Scheduled Bank 1,000.00 -

From a Company 1,000.00 -

Other Loans

From a Scheduled Bank on Cash Credit Account 16,449.00 11,079.18

54,868.78 27,252.99

B. UNSECURED LOANS :

25 - 10.35% Short Term Non-Convertible Debentures

of Rs. 100 Lacs each (Redeemed on 6th July, 2007) - 2,500.00 Short Term Loan from Scheduled Bank (s) 1,000.00 5,440.00

From State Bank of India against Crop Loan to Cane growers 2,215.21 354.15

Inter Corporate Loans 16,919.00 4,945.00

Fixed Deposits from Staff and Others 324.40 449.73

Trade and other Deposits (partly not bearing interest) 99.15 91.78

20,557.76 13,780.66

75,426.54 41,033.65

NOTES :

1 Term loans from Scheduled Bank(s) and Others (except Excise Duty Loan) are secured / to be secured by first mortgage/charge on all the immovable and movable assets (save and except book debts), present and future, of the Company’s Sugar Units at Hargaon, Rosa, Narkatiaganj and Dhadha Bujurg (Hata) and Distillery Unit at Hargaon , ranking pari-passu amongst the various lenders, subject to prior charges created on movables for working capital borrowings from the Company’s bankers.

Term loans under Financial Assistance Scheme (Excise Duty Loan) are to be secured by a residual charge on the entire Fixed Assets (movable and immovable) of the Company’s Sugar Units at Hargaon, Rosa and Narkatiaganj.

2 Term loans from the Sugar Development Fund are secured by second charge on all the immovable / movable assets (save and except book debts) present and future of the Company’s Sugar Units at Hargaon and Narkatiaganj and include Rs. 824.51 Lacs (Rs. 1,053.00 Lacs) towards interest which, as per stipulated terms,is payable on a long term basis.

3 Short term loan from a Company of Rs. 1,000 Lacs (Rs. Nil) is secured by pledge of part of shares held as investments by the Subsidiary Company.

4 Cash Credit borrowings are secured by hypothecation of entire current assets of the Company and further secured by a charge on the immovable assets of the Company as follows :-

a. Canning factory at Allahabad - First Charge b. Sugar Unit at Rosa - Second Charge

c. Sugar Units at Hargaon and Narkatiaganj - Third Charge

5 Unsecured loans, as stated above, include Rs. 20,280.68 Lacs (Rs. 13,473.44 Lacs) falling due for payment within one year.

SCHEDULES forming part of the Consolidated Balance Sheet (Contd.)

(Rs. in Lacs)

30th June, 2008 30th June, 2007

The Oudh Sugar M

ills Limited ( C

onsolidated)

66

SCHEDULES forming part of the Consolidated Balance Sheet (Contd.)

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ess

256

.09

271

.91

187.2

0 (f)

3

40.80

(e

) -

-

-

-

340

.80

25

6.09

Total

4

2,05

2.12

7

,976

.11

978

.31

4

9,04

9.92

(b

)&(d

) 13

,254

.85

2

,232

.02

3

12.7

5

15

,174.

12

33,

875.

80

(b)

28,

797.

27

Total

-Pre

vious

Yea

r 3

0,632

.08

12,2

38.80

81

8.76

4

2,052

.12

1

1,780

.40

2,03

0.09

5

55.64

13,2

54.85

2

8,797

.27

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SCHEDULE – 5 : CAPITAL EXPENDITURE ON NEW/ EXPANSION PROJECTS

A. Freehold Land 1,089.65 1,044.17

B. Fixed Assets

(1) Buildings 37.10 19.32

(2) Plant & Machinery 14.08 12.77 (3) Motor Cars, Lorries & Other Conveyance 1.17 - (4) Furniture & Fixtures 49.39 36.58

101.74 68.67

Less : Depreciation

(charged to Pre-operative expenses as below) 59.05 42.69 13.36 55.31

C. Machinery and Building under erection 24,194.44 16,965.02

D. Materials at site including goods in transit (net of sales Rs. 161.46 Lacs) 1,277.06 1,012.59

E. Advances against purchase of fixed assets 2,336.15 4,065.73

28,939.99 23,142.82

F. Incidental Expenditure pending allocation to Fixed Assets : Salary & Wages 259.72 140.65

Contribution to Provident & Other Funds 8.02 4.94

Gratuity 0.53 -

Fuel & Electricity 222.78 196.08

Project Consultancy/ Supervision Charges 284.20 150.93

Insurance Charges 46.81 11.75

Miscellaneous Expenses 348.73 266.13

Interest & Finance Charge 2,785.33 784.83

Depreciation 59.05 13.36

4,015.17 1,568.67

32,955.16 24,711.49

Less : Capitalised/ Allocated to Fixed Assets during the year 7,277.85 11,486.73

25,677.31 13,224.76

(Rs. in Lacs) 30th June, 30th June, 2008 2007

SCHEDULES forming part of the Consolidated Balance Sheet (Contd.)

(Rs. in Lacs) No. of Face Value 30th June, 30th June, Shares per Shares 2008 2007 (Rs.)

SCHEDULE – 6 : INVESTMENTS

LONG TERM (At Cost)

GOVERNMENT SECURITIES :

Quoted :

5 1/2 % U.P.State Development Loan, 1977 - (c) -

5 1/2 % U.P.State Development Loan, 1981 0.60 (d) 0.60

11 % Bihar State Development Loan, 2001 0.53 0.53

1.13 1.13

The Oudh Sugar M

ills Limited ( C

onsolidated)

68

(Rs. in Lacs) No. of Face Value 30th June, 30th June, Shares per Shares 2008 2007 (Rs.)

SCHEDULES forming part of the Consolidated Balance Sheet (Contd.)

SCHEDULE – 6 : INVESTMENTS (CONTD.)

Unquoted :

12 Years National Savings Certificates 0.08 (d) 0.08

7 Years National Savings Certificates 0.02 (d) 0.02

6 Years National Savings Certificates 1.35 0.35

12 Years National Defence Certificates 0.04 (d) 0.04

12 Years National Plan Savings Certificates - (c) -

10 Years National Savings Certificates 0.01 (d) 0.01

7 Years National Defence Certificates - (c) -

1.50 0.50

EQUITY SHARES (Fully Paid)

Quoted :

SIL Investments Ltd. 17,58,125 10.00 396.04 396.04

Sutlej Textiles & Industries Ltd. 17,73,351 10.00 514.72 514.72

Upper Ganges Sugar & Industries Ltd. 11,72,260 10.00 867.44 867.44

New India Retailing & Investment Ltd. 2,66,874 10.00 212.63 212.63

Chambal Fertilizers & Chemicals Ltd. 3,02,500 10.00 55.00 55.00

Manavta Holdings Ltd. 72,000 10.00 3.53 3.53

Manbhawani Investment Ltd. 67,500 10.00 2.07 2.07

2,051.43 2,051.43

Unquoted : Bihar State Financial Corporation Ltd. 70 100.00 0.07 0.07

Modern DiaGen Services Ltd. 23,752 10.00 2.38 2.38

Taparia Ltd. 3,500 10.00 0.40 0.40

Shree Vihar Properties Ltd. 7,47,692 10.00 65.77 65.77

India Educational & Research Inst. Pvt. Ltd. 4,900 10.00 0.49 0.49

Industry House Ltd. - 100.00 - 1.06 (1,593) Moon Corporation Ltd.(‘A’ Class) 745 100.00 0.77 0.77

Moon Corporation Ltd.(‘B’ Class) 2,502 5.00 0.13 0.13

Birla Buildings Ltd. 1,920 10.00 0.19 0.19

e-commodities Ltd. - 10.00 - 25.00

(2,50,000) * -

Oudh Trading Co. Pvt. Ltd. 25 100.00 0.03 0.03

A.P.V.Texmaco Ltd. (in liquidation) 28,750 10.00 0.86 (d) 0.86

Leas Communication Ltd. 21,000 10.00 - -

Chandausi Rice Mills Ltd. 1,000 10.00 - -

Swadeshi Jute Machinery Corporation Ltd. 15,000 10.00 - -

Maruti Ltd. (in liquidation) 10,000 10.00 - -

Jai Hind Publishing Co. Ltd. (in liquidation) 80 25.00 - -

Carry forward 71.09 97.15

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(Rs. in Lacs) No. of Face Value 30th June, 30th June, Shares per Shares 2008 2007 (Rs.)

SCHEDULES forming part of the Consolidated Balance Sheet (Contd.)

SCHEDULE – 7 : INVENTORIES

At lower of cost and net realisable value

Raw Materials 235.44 337.35

Stores, Chemicals, Spare Parts, etc. 1,204.74 1,170.32

[(including in transit Rs. 12.19 Lacs (Rs. 7.33 Lacs)]

Finished Goods 25,744.12 16,732.27

Power - Banked 30.75 24.72

Goods under Process 262.20 317.73

Standing Crop 30.60 28.24

27,507.85 18,610.63

SCHEDULE – 6 : INVESTMENTS (CONTD.)

Brought forward 71.09 97.15

Akhil Bharat Printers Ltd. (in liquidation) 150 100.00 - -

Indo International Distillers Association Pvt. Ltd. 54,000 * 10.00 5.40 (d) 5.40

76.49 102.55

EQUITY SHARES (Partly Paid)

Unquoted :

Modern DiaGen Services Ltd. (Rs. 2 paid up) 15,45,044 10.00 30.90 -

(-)

OTHER INVESTMENTS

Share Application Money :

Indo International Distillers Association Pvt. Ltd. 46,000* 10.00 4.60 (d) 4.60

2,166.05 2,160.21

Less : Provision for diminution in the value of Investments 11.61 36.61

2,154.44 (b) 2,123.60

AGGREGATE VALUE OF INVESTMENTS :

Quoted 2,051.96 3,754.53 2,051.96 4,950.81

Unquoted 102.48 71.64

2,154.44 2,123.60

Notes :

(a) All the above investments are Non-Trade, except those marked with an asterisk.

(b) Includes Government Securities of the face value of Rs. 1.99 Lacs (Rs. 0.99 Lac) and Rs. 0.60 Lac (Rs. 0.60 Lac) deposited/ pledged with various Government authorities and Hon’ble Allahabad High Court respectively (including Rs. 0.71 Lac (Rs. 0.71 Lac) matured, but pending encashment).

(c) The figures, being less than Rs. 500 have not been shown above.

(d) Indicates the Securities where provision for diminution in the value of investments has been made.

30th June, 2008 30th June, 2007 Book Value Market Value Book Value Market Value

(Rs. in Lacs)

30th June, 2008 30th June, 2007

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ills Limited ( C

onsolidated)

70

SCHEDULES forming part of the Consolidated Balance Sheet (Contd.)

SCHEDULE – 7 : INVENTORIES (Contd.)

At estimated net realisable value

By Products 1,509.43 840.80

Scrap 20.89 21.46

Country Crop 1.65 0.97

1,531.97 863.23

29,039.82 19,473.86

SCHEDULE – 8 : SUNDRY DEBTORS

(a) Debts due for a period exceeding six months (Unsecured) : Considered Good 31.81 13.39

Considered Doubtful 118.87 113.76

150.68 127.15

Less : Provision 118.87 113.76

31.81 13.39

(b) Other Debts Considered Good [includes secured Rs. 6.06 Lacs (Rs. 6.11 Lacs)] 616.58 578.56

648.39 591.95

SCHEDULE – 9 : CASH & BANK BALANCES

Cash in hand 19.70 42.94

Cheques/ Drafts in hand 130.39 151.09

150.09 194.03

With Scheduled Banks on :

Current Account 178.10 130.61

Unpaid Dividend Account 10.83 11.15

Fixed Deposit Account (Receipts for Rs. 30.70 Lacs (Rs. 15.70 Lacs)

pledged with various Govt.authoritities as security) 56.50 55.20

245.43 196.96 Maximum amount outstanding during the year

With Non-Scheduled Banks on Current Account :Name of the Bank

Lucknow Kshetriya Gramin Bank 1,554.31 (1,313.40) 15.67 88.26

Zila Sahkari Bank Ltd., Sitapur 169.56 (170.55) 4.74 24.85

District Co-operative Bank Ltd.,Lakhimpur Kheri 547.04 (577.81) 4.71 5.06

Urban Co-operative Bank Ltd.,Lakhimpur Kheri 26.09 (29.37) 0.62 0.75

Avadh Gramin Bank, Hardoi 0.69 (4.42) 0.34 0.33

Baroda Uttar Pradesh Gramin Bank 376.99 (322.31) 1.74 2.79

27.82 122.04

With Post office on : Savings Account (Pass Book lodged

with various Govt.Authorities) 0.58 0.58

423.29 513.61

(Rs. in Lacs)

30th June, 2008 30th June, 2007

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SCHEDULES forming part of the Consolidated Balance Sheet (Contd.)

(Rs. in Lacs) 30th June, 30th June, 2008 2007 SCHEDULE – 10 : OTHER CURRENT ASSETS Interest accrued on Investments 3.68 1.62

Accrued interest on loans,debts,deposits etc. Considered Good 0.87 1.92

Considered Doubtful 0.58 0.58

1.45 2.50

Less : Provision 0.58 0.58

0.87 1.92

4.55 * 3.54

* including Rs. 0.91 Lac (Rs. 0.30 Lac) due for more than six months

SCHEDULE – 11 : LOANS AND ADVANCES

Loans : (Unsecured, Considered good) Bearing interest : To Employees 29.61 18.80 To Others 15.07 20.32 44.68 39.12 Advances (Unsecured, Considered good) Advances recoverable in cash or in kind or for value to be received or pending adjustments 1,052.85 661.78 Sales tax, Excise duty etc. paid under appeal and/ or under dispute 105.79 87.01 Balance with Excise & other Govt. Authorities 2,775.34 1,490.67 Claims and Refunds receivable 768.98 148.19 Advance payment of Tax, Refunds receivable and Tax deducted at source (after adjusting provisions) 872.31 869.64 Sundry Deposits 48.04 31.74 5,623.31 3,289.03 5,667.99 3,328.15 Considered doubtful : Advances & Claims 280.74 235.70 Less : Provisions 280.74 235.70 - - 5,667.99 3,328.15

NOTES :

Amount due from Officers of the Company Loans - - Advances 0.41 0.63 0.41 0.63 Maximum amount due at any time during the year Loans 6.00 - Advances 7.27 10.45 13.27 10.45 Amount due from the Managing Director of the Company - 6.09 Maximum amount due at any time during the year 6.09 6.09

The Oudh Sugar M

ills Limited ( C

onsolidated)

72

(Rs. in Lacs) 30th June, 30th June, 2008 2007

SCHEDULES forming part of the Consolidated Balance Sheet (Contd.)

SCHEDULE – 12 : CURRENT LIABILITIES & PROVISIONS

A. Current Liabilities : Sundry Creditors for goods, services, expenses etc. Due to Micro, Medium and Small Enterprises 415.97 216.77 Due to Others 7,960.12 14,183.22 For Other Finance 682.31 530.00 Excess price of sugar including excise duty 79.41 113.46 Advance against sale of goods etc. 1,748.71 72.92 Interest accrued but not due on loans,deposits etc. 40.51 154.90 Directors’ Commission Payable - - Investor Education & Protection Fund : (not yet due) Unpaid & Unclaimed Dividends 10.83 11.15 Preference Shares Redemption Account 0.05 0.05 Unclaimed Scrip Dividend 0.04 0.04 Less : Shares held for distribution 0.04 - 0.04 - Fractional entitlements for Bonus Shares and Bearer Coupons 0.07 0.07 10,937.98 15,282.54B. Provisions : For Leave 80.13 64.84 For Gratuity 70.81 29.37 For Warranties 8.12 9.27 For Fringe Benefit Tax (net of advance) - 1.75 For Proposed Dividend - 1.40 For Dividend Tax - 0.24 159.06 106.87 11,097.04 15,389.41

SCHEDULES forming part of the Consolidated Profi t & Loss Account

SCHEDULE – 13 : GROSS SALES Finished Goods 32,971.58 44,257.43

Power 725.56 775.65

By-Products [including items capitalised Rs. 37.41 Lacs (Rs. 14.70 Lacs)] 1,529.74 1,772.77

Sugar Hedging Transactions (net) 135.24 -

Others 39.03 31.62

35,401.15 46,837.47

Less : Claims, Rebates, etc. 7.56 25.41

35,393.59 46,812.06

SCHEDULE – 14 : OTHER INCOME

Income from Long Term Investments (Non-Trade)

Dividend 108.42 163.40

Interest 0.01 -

Insurance & Other claims 23.81 11.85

Rent & Hire charges 18.94 19.95

Carry forward 151.18 195.20

(Rs. in Lacs)

2007-2008 2006-2007

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SCHEDULES forming part of the Consolidated Profi t & Loss Account

SCHEDULE – 16 : AGRICULTURAL LOSS

INCOME Sales including inter-transfers Rs. 24.78 Lacs (Rs. 37.25 Lacs) 34.89 42.54 Other Income : Rent & Hire Charges 25.23 29.26 Unspent Liabilities & excess provisions written back - 0.07 Miscellaneous Receipts 3.24 28.47 0.07 29.40 Increase in Stocks : Closing Stock 32.25 29.21 Less : Opening Stock 29.21 3.04 21.45 7.76 66.40 79.70

SCHEDULE – 14 : OTHER INCOME (CONTD.) Brought forward 151.18 195.20

Profit on sale of Long Term Investments 15.31 3.54

Export Incentives 22.42 14.11

Unspent liabilities,excess provisions and unclaimed

balances written back (net) 212.69 48.80

Provision for diminution in value of investments

no longer required written back 0.25 -

Cane Price Subsidy for earlier years 573.58 -

Buffer Stock subsidy towards Insurance & storage charges 83.50 6.28

Profit on Fixed Assets sold/ discarded (net) 66.42 -

Items pertaining to previous years (net) 0.12 -

Miscellaneous Receipts 8.61 10.32

1,134.08 278.25

SCHEDULE – 15 : DECREASE/ (INCREASE) IN STOCKS

Opening Stocks :

Finished Goods 16,732.27 13,059.36 Power - Banked 24.72 - By-Products 840.80 560.93 Goods under Process 317.73 141.00 Scrap 21.46 11.52

17,936.98 13,772.81

Less : Closing Stocks :

Finished goods 25,744.12 16,732.27 Power - Banked 30.75 24.72 By products 1,509.43 840.80 Goods under Process 262.20 317.73 Scrap 20.89 21.46

27,567.39 17,936.98

(9,630.41) (4,164.17)

(Rs. in Lacs)

2007-2008 2006-2007

(Rs. in Lacs)

2007-2008 2006-2007

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ills Limited ( C

onsolidated)

74

SCHEDULES forming part of the Consolidated Profi t & Loss Account (Contd.)

SCHEDULE – 17 : RAW MATERIALS CONSUMED Opening Stock 337.35 120.95 Add: Purchase & Procurement Expenses [including transfer of sugarcane from own farms Rs. 24.78 Lacs (Rs. 37.25 Lacs)] 27,864.24 38,567.95 Purchase Tax & Cess (net) 335.73 431.23 28,537.32 39,120.13 Less: Sales 0.05 16.93 Closing Stock 235.44 337.35 28,301.83 38,765.85

SCHEDULE – 18 : STORES, SPARES & PACKING MATERIALS CONSUMEDStores, Spare Parts, Chemicals, etc. [after adjusting Sales & Claims Rs. 122.20 Lacs (Rs. 163.15 Lacs)] 1,495.77 1,360.16 Packing Materials 1,474.62 1,620.09 2,970.39 2,980.25

SCHEDULE – 19 : PAYMENTS TO AND PROVISIONS FOR EMPLOYEESSalaries, Wages, Bonus, etc. 2,527.77 2,346.93 Contribution to Provident & Other Funds 208.16 199.29 Gratuity 68.15 116.08 Workmen Compensation 1.62 7.35 Employees’ Welfare Expenses 82.12 78.72 2,887.82 2,748.37

SCHEDULE – 16 : AGRICULTURAL LOSS (Contd.)EXPENDITURE Seeds, Manures and Fodder Consumed 22.15 27.61 Stores & Spares Consumed 0.27 0.20 Tractor Expenses 32.29 32.22 Repairs to : Machinery 0.72 0.10 Building 0.06 0.10 Others 0.30 0.34 Rates & Taxes 0.15 0.12 Payments to and Provisions for Employees : Salaries, Wages & Bonus 26.79 28.23 Contribution to Provident and Other Funds 1.54 1.79 Gratuity 0.10 28.43 - 30.02 Insurance 0.15 0.08 Cartage & Transportation charges 1.09 1.45 Irrigation Expenses 0.82 0.68 Harvesting Expenses 1.06 0.65 Miscellaneous Expenses 2.56 1.16 Depreciation 2.34 1.42 92.39 96.15 Loss transferred to Profit & Loss Account 25.99 16.45

(Rs. in Lacs)

2007-2008 2006-2007

(Rs. in Lacs)

2007-2008 2006-2007

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SCHEDULE – 20 : MANUFACTURING, SELLING AND OTHER EXPENSESRepairs to and Maintenance of : Buildings 105.23 166.51 Machinery 1,276.57 870.64 Others 21.00 24.18 Rent 76.05 49.00 Rates & Taxes (net) 38.54 35.51 Insurance 78.01 106.65 Job Processing Charges - 7.48 Auditors’ Remuneration : For Audit Fees 12.52 7.69 For Limited Reviews & Tax Audit Fees 8.25 8.25 In other capacity for Certificates & other services 5.66 4.41 For Expenses 1.96 2.92 Cost Auditors’ Remuneration : For Audit Fees 0.60 0.60 For Expenses 0.15 0.17 Selling Commission & Expenses : Commission on sales 159.60 189.66 Other selling expenses 400.28 354.24 Charity & Donations 4.97 5.88 Provision for bad and doubtful debts/ advances 52.50 36.81 Provision for Warranties & Claims 6.86 5.75 Bad Debts, irrecoverable claims & advances written off 14.32 0.84 Less : Adjusted against provisions 2.35 11.97 - 0.84 Loss on sale of Investments 24.75 - Less : Adjusted against provisions 24.75 - - - Loss on Exchange Rate Fluctuations (net) 2.13 - Items pertaining to previous years (net) - 2.32 Loss on Fixed Assets sold/ discarded (net) - 41.40 Molasses Storage & Maintenance Reserve 6.55 7.97 Preliminary Expenses written off 0.13 0.13 Miscellaneous Expenses [including Directors’ travelling Rs. 12.46 Lacs (Rs. 17.11 Lacs)] 773.74 717.63 3,043.27 2,646.64

SCHEDULES forming part of the Consolidated Profi t & Loss Account (Contd.)

SCHEDULE – 21 : DIRECTORS’ REMUNERATION

Directors’ Remuneration

(a) Managing Director’s Remuneration : Salary 39.00 39.00

Contribution to Provident Fund 4.68 4.68

Gratuity 0.39 0.70

Provision for Leave 0.89 2.86

44.96 47.24

(b) Directors’ Fees 3.61 2.92

48.57 * 50.16

* Excludes Rs. 49.14 Lacs (Rs. 53.07 Lacs) paid towards rent and maintenance of the accommodation provided to the Managing Director and the same has been included under the head “Rent” and “Miscellaneous Expenses” in Schedule 20.

(Rs. in Lacs)

2007-2008 2006-2007

(Rs. in Lacs)

2007-2008 2006-2007

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ills Limited ( C

onsolidated)

76

SCHEDULES forming part of the Consolidated Profi t & Loss Account (Contd.)

SCHEDULE – 22 : INTEREST & FINANCE CHARGE (NET)

On Fixed Loans , Debentures & Deposits 3,368.46 1,912.24

To Banks and others 3,473.73 907.01

6,842.19 * 2,819.25

Less : At Credit :

Amount Capitalised 2,513.86 641.63

Buffer Stock Subsidy towards interest 610.94 48.64

On Unsecured Loans, Deposits etc. (Gross) : Tax deducted at source Rs. 1.04 Lacs (Rs. 11.76 Lacs) 39.58 86.88

3,164.38 777.15

3,677.81 2,042.10

* excludes Rs. 165.57 Lacs being interest on excise duty loan from a Bank which is recoverable as subsidy from the Government.

Notes annexed to and forming part of the Company’s Consolidated Balance Sheet and Profit & Loss Account as at and for the year ended 30th June, 2008.

1. PRINCIPLES OF CONSOLIDATED FINANCIAL STATEMENTS :

The consolidated financial statements which relate to The Oudh Sugar Mills Ltd. and its subsidiary companies have been prepared on the following basis :

a) The financial statements of the Company and its subsidiaries are combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenditure, after fully eliminating intra group balances, intra group transactions and any unrealised profit/ loss included therein.

b) The consolidated financial statements have been prepared using uniform accounting policies, except

stated otherwise, for like transactions and are prepared, to the extent possible, in the same manner as the Company’s separate financial statements.

(c) As the financial year of all the subsidiaries closes on 31st March, their audited accounts as at and for the year ended 31st March, 2008 have been incorporated in these accounts. However, in order to eliminate the intra group balances, certain adjustments pertaining to the period from 1st April, 2008 to 30th June, 2008 have been made in the accounts.

d) The difference between the cost of the Company’s investments in the subsidiaries and their respective equity as on the date of investment is treated as Goodwill/ Capital Reserve, as the case may be, in the financial statements.

e) The Subsidiary Companies considered in the financial statements are as follows:

SCHEDULE to the Consolidated Balance Sheet and Profi t & Loss Account SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS

Name Country of Incorporation % of voting power as on 30th June, 2008

Hargaon Investment & Trading Company Ltd. India 100

OSM Investment & Trading Company Ltd. India 100

Champaran Marketing Company Ltd. India 100

Hargaon Properties Ltd India 100

2. STATMENT OF SIGNIFIACANT ACCOUNTING POLICIES :

(i) Basis of Preparation : The financial statements have been prepared to comply

with all material aspects with the Accounting Standards notified by the Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. Except otherwise mentioned, the accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

(ii) Revenue Recognition : (a) Revenue from the sale of goods is recognised upon

passage of title to the customers which generally coincides with delivery thereof.

(b) Dividend Income is recognised when the shareholders’ right to receive the payment is established by the Balance Sheet date.

(c) Due to uncertainty in realisation, following incomes are accounted for on acceptance/ actual receipt basis:-

(Rs. in Lacs)

2007-2008 2006-2007

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SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.)

SCHEDULE to the Consolidated Balance Sheet and Profi t & Loss Account (Contd.)

(i) Insurance and other claims (ii) Interest on doubtful loans and advances to cane

growers. (iii) Compensation receivable in respect of land

surrendered to/ acquired by the Government.(iii) Fixed Assets :

Fixed assets are stated at cost less accumulated depreciation and impairment, if any. Cost comprises the purchase price inclusive of duties (net of cenvat credit), taxes, incidental expenses and erection/commissioning expenses, etc. upto the date the asset is ready for its intended use.

Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular, are capitalised and depreciated over the residual life of the respective assets.

Assets awaiting disposal are valued at the lower of written down value and net realisable value.

(iv) Impairment of Assets : The carrying amounts of assets are reviewed at each balance

sheet date to determine whether there is any indication of impairment based on external/internal factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount which represents the greater of the net selling price and ‘Value in use’ of the assets. The estimated future cash flows considered for determining the value in use, are discounted to their present value at the weighted average cost of capital.

(v) Depreciation : (a) The classification of plant and machinery into

continuous and non continuous process is done as per technical certification and depreciation thereon is provided accordingly.

(b) Depreciation on fixed assets is provided as under: A) On assets valuing Rs. 8.15 Lacs (Rs. 3.22 Lacs),

as per straight line method, at the rate applicable under the Bihar Agricultural Income Tax Act, 1949.

B) On gross assets valuing Rs. 43.28 Lacs (Rs. 43.11 Lacs), on written-down value method, at the rates prescribed in schedule XIV of the Companies Act, 1956.

C) On other assets, as per straight line method, at the rates prescribed in schedule XIV of the Companies Act, 1956.

(c) Depreciation on fixed assets added/ disposed off during the year is provided on pro-rata basis, with reference to the date of addition/ disposal.

(d) In case of impairment, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

(vi) Government Grants and subsidies : Government Grants and subsidies are recognised when

there is reasonable assurance that the same will be received. Revenue grants/ subsidies are recognised in the Profit & Loss Account. Capital grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets. Other capital grants are credited to capital reserve.

(vii) Borrowing Costs : Borrowing costs relating to acquisition/ construction of

qualifying assets are capitalised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

(viii) Investments : Investments that are readily realisable and intended to be held

for not more than a year are classified as Current Investments. All other Investments are classified as Long term Investments. Current Investments are stated at lower of cost and market rate on individual investment basis. Long term investments are considered “at cost” on individual investment basis, unless there is a decline other than temporary in the value, in which case adequate provision is made against such diminution in the value of investments.

(ix) Inventories : (a) Raw Materials, stores and spares are valued at lower

of cost and net realisable value. However, these items are considered to be realisable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. Goods under process and finished goods (including Power Banked) are valued at lower of cost and net realisable value. Finished goods and Goods under process include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is computed on annual weighted average basis. By products, Country crop and Saleable scraps, whose cost is not identifiable, are valued at estimated net realisable value.

(b) In case of inter-transferred materials, the transfer price is considered as cost for the purpose of valuation of closing stock.

(x) Foreign Currency Transactions : (a) Initial Recognition Foreign currency transactions are recorded in the

reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion Foreign currency monetary items are reported using

the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction, and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

(c) Exchange Differences Exchange differences arising on the settlement/

conversion of monetary items are recognised as income or expenses in the year in which they arise.

The premium or discount arising at the inception of forward exchange contracts is amortised as expenses or income over the life of the respective contracts. Exchange differences on such contracts are recognised in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contracts is recognised as income or expense for the year.

(xi) Retirement Benefits : (a) Retirement benefits in the form of Provident Fund

and Pension Fund are defined contribution schemes and are charged to the Profit and Loss Account of the year when the contributions to the respective funds are

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due. The Company has no obligations other than the contribution payable to the respective trusts/ funds.

(b) Gratuity liability being a defined benefit obligation is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each year.

(c) Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method at the end of each year.

(d) Actuarial gains/ losses are immediately taken to profit and loss account and are not deferred.

(xii) Taxation : Tax expense comprises of current, deferred and fringe

benefit tax. Current income tax and fringe benefit tax are measured at the amount expected to be paid to tax authorities in accordance with Income Tax Act, 1961. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

The deferred tax for timing differences between the book and tax profit for the year is accounted for using the tax rates and laws that have been substantively enacted as of the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. If the Company has carry forward unabsorbed depreciation and tax losses, deferred tax asset is recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient taxable income will be available in future against which such deferred tax asset can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.

(xiii) Segment Reporting : (a) Identification of Segments : The Company has identified that its operating

segments are the primary segments. The Company’s operating businesses are organised and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which the customers of the Company are located.

(b) Inter Segment Transfers : The Company accounts for inter segment transfers at

mutually agreed transfer prices. (c) Allocation of Common Costs : Common allocable costs are allocated to each segment

on case to case basis applying the ratio, appropriate to each relevant case. Revenue and expenses which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis, are included under the head “Unallocated – Common”.

The accounting policies adopted for segment reporting are in line with those of the Company.

(xiv) Share Issue Expenses : Share issue expenses are adjusted against Securities Premium

Account.(xv) Earning per Share : Basic Earning per Share is calculated by dividing the net profit

or loss for the year attributable to equity shareholders by the weighted number of equity shares outstanding during the year.

For the purpose of calculating diluted earning per share, net profit or loss for the year attributable to equity share holders and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.

(xvi) Excise Duty : Excise Duty is accounted for at the point of manufacture of

goods and accordingly, is considered for valuation of stocks as on the Balance Sheet date.

(xvii) Hedging : The Company has adopted a policy to minimise risks

associated with foreign exchange fluctuations with respect to its borrowings.

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract.

(xviii) Research Costs : Research costs of revenue nature are expensed as and when

they are incurred, while capital expenditure is added to the cost of the respective fixed assets.

(xix) Provisions : A provision is recognised when an enterprise has a present

obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in terms of Accounting Standard 29 are not discounted to its present value and are determined based on management estimate required to settle the obligation, at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

(xx) Derivative Instruments : As per the announcement made by the Institute of Chartered

Accountants of India, Derivative contracts, other than those covered under AS-11, are marked to market on a portfolio basis, and the net loss after considering the offsetting effect on the underlying hedge item, and is charged to the income statement. Net gains are ignored as a matter of prudence.

(xxi) Contingencies : Liabilities which are material and whose future outcome

cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of notes to the accounts.

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As at 30th As at 30th

June, 2008 June, 2007

3. Estimated amount of contracts

remaining to be executed on

Capital Account (net of advances)

and not provided for 8186.52 18672.67

4. Contingent Liabilities not

provided for in respect of :–

(a) Demands / Claims by various

Government Authorities

and others not

acknowledged as debts:

(i) Excise Duty & Service Tax 773.85 405.00

(ii) Sales & Entry Tax 241.52 90.28

(iii) Duty under State Acts 155.05 155.05

(iv) Others 36.12 7.81

Total 1206.54 658.14

(b) (i) Guarantees

given to a bank

against loans to cane

growers 3000.00 1500.00

(ii) Against the above, the

loan facilities

actually availed as

on the Balance

Sheet date 2350.22 1074.37

(c) Unredeemed bank guarantees 0.96 0.96

(d) Uncalled capital on partly paid

shares held as Investments 123.60 -

(e) Bills discounted from banks

[since realised Rs. 49.26 Lacs

(Rs. 66.65 Lacs)] 66.54 66.65

5. Excise Duty & Cess on stocks represents differential excise duty and cess on opening and closing stock of finished goods/ by products.

6. Pending disposal of writs/ appeals by the court with regard to levy sugar prices for some years, Rs. 79.41 Lacs (Rs. 113.46 Lacs) (net) received as excess levy sugar price, against which bank guarantees furnished by the Company for Rs. 84.88 Lacs, are in force in terms of the Court Orders, is included under the head ‘Current Liabilities’. Necessary adjustment for

(Rs. in Lacs) the above amount together with interest, if any, in this regard will be made in the accounts as and when the matter will be finally settled.

7. Pending decisions of various courts on writ petitions filed by/ against the Company, no credit has been taken in the Profit and Loss Account in respect of certain realisations aggregating to Rs. 52.05 Lacs in earlier years, which continue to be shown under the head “Liabilities for other Finance” in Schedule – 12. Against the above, fixed deposit receipts/ bank guarantees for similar amount have been furnished by the Company.

8. The Company at its Hargaon & Rosa sugar units in U.P. has accounted for sugarcane purchases @ Rs. 110 per quintal for sugar season 2007-08 in terms of Hon’ble Allahabad High Court’s (Lucknow Bench) interim order dated 15th November, 2007 as against the State Advised Price (SAP) of Rs. 125 per quintal, upheld by the said High Court vide its final order dated 7th July, 2008 against which the Company along with others through UP Sugar Mills Association has filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court.

In the meantime, the Hon’ble Allahabad High Court in its subsequent judgment dated 18th August, 2008 in case of another sugar Company has quashed the SAP for sugar season 2007-08. In view of two different judgments from the two benches of the same court and also based on the legal advice, the Company has accounted for sugarcane liability for the current season @ Rs. 110 per quintal, as paid in accordance with the earlier interim order of the Hon’ble High Court, although in terms of the order dated 18th August, 2008 as stated above, the Company is only liable to pay the Statutory Minimum Price fixed by the Central Government (till the finalisation of SAP by the State Government as per the court’s directions), which is lower than the amount of Rs. 110 per quintal accounted for by the Company. Pending final decision by the Hon’ble Supreme Court in this matter, the differential price of Rs. 2,422.74 Lacs between SAP and the amount already provided, as stated above, has not been accounted for.

9. Diminution of Rs. 203.13 Lacs (Rs. 132.57 Lacs) in the value of certain quoted investments based on the last quoted price has not been provided, as the breakup value of the said Company supplemented by the market value as on 30th June, 2008, of the quoted investments held by the investee Company is much higher than the corresponding book value.

10. a) In terms of Accounting Standard 22, net Deferred Tax Asset (DTA) of Rs. 432.24 Lacs (including Rs. 212.12 Lacs for the year) has been recognised in accounts upto 30th June, 2008 and the break-up of the above net Deferred Tax Asset is as under:

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(A) Deferred Tax Asset

(i) Carry forward

unabsorbed depreciation 4659.60 4310.24

(ii) Expenses allowable against

taxable income in future years 1117.42 573.85

5777.02 4884.09

(B) Deferred Tax Liability

(i) Timing difference

in depreciable assets 5344.78 4702.53

5344.78 4702.53

Net Deferred Tax Asset ( A – B ) 432.24 181.56

(Rs. in Lacs) As at 30th As at 30th June, 2008 June, 2007

b) Advance payment of tax in schedule – 11 includes Rs. 717.57 Lacs (Rs. 721.50 Lacs), being Minimum Alternate Tax (MAT) which being available as tax credit for set off in future years as per the Income Tax Act, 1961, is carried forward as ‘MAT Credit Entitlement’.

11. a) Pending execution of the conveyance deed, no adjustment has been made in respect of 0.75 acre of land sold by the Company in earlier years.

b) An application filed by the Company for exemption of 3785.19 sq. mtrs. of land at Bamrauli under the Urban Land (Ceiling and Regulation) Act, 1976, is pending with the concerned authority.

12. Based on the information/ documents available with the Company, information as per the requirement of Section 22 of The Micro, Small and Medium Enterprises Development Act, 2006 are as under:

(i) Principal amount remaining

unpaid to any supplier at the

end of accounting year 408.06 216.77

(including retention money

against performance).

(ii) Interest due on above. 2.99 -

Total of (i) & (ii) 411.05 216.77

(iii) Amount of interest paid by

the Company to the suppliers

in terms of section 16 of the Act. - -

(iv) Amounts paid to the suppliers

beyond the respective due date. 105.52 -

(Rs. in Lacs) 2007-2008 2006-2007

(Rs. in Lacs) 2007-2008 2006-2007

(v) Amount of interest due and payable

for the period of delay in payments

(which have been paid but beyond

the due date during the year)

but without adding the interest

specified under the Act. 4.92 -

(vi) Amount of interest accrued and

remaining unpaid at the

end of accounting year. 7.91 -

(vii) Amount of further interest

remaining due and payable even

in the succeeding years,

until such date when the interest

dues as above are actually paid to

the small enterprise, for the purpose

of disallowance as a deductible

expenditure under

section 23 of this Act. - -

13. In the current year, the Company has adopted Accounting Standard 15 (revised) - Employee Benefits, which is mandatory from accounting periods commencing on or after 7th December, 2006. Accordingly, the Company has provided for gratuity and compensated leave encashment based on actuarial valuation done as per projected unit credit method. This change does not have any material impact on the loss for the current year. Further, in accordance with the transitional provisions allowed in the Accounting Standard, a sum of Rs. 74.88 Lacs (net of deferred tax asset of Rs. 38.56 Lacs) being the impact of such change on the respective liabilities up to 30th June, 2007, has been adjusted against the General Reserve as on 1st July, 2007.

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms as per provisions of The Payment of Gratuity Act, 1972. The scheme is funded with an insurance Company.

The following tables summarise the components of net benefit expenses recognised in the Profit & Loss Account and the funded status and amounts recognised in the balance sheet for gratuity.

(Rs. in Lacs) Gratuity(i) Net Employee Expense/(benefit) Current service cost 47.16 Interest cost on benefit obligation 51.17 Expected return on plan assets (45.70) Net Actuarial loss recognised in the year 16.54 Total employer expense 69.17

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(Rs. in Lacs)

Gratuity

(ii) Actual return on plan assets 47.45(iii) Benefit Asset/ (Liability) Fair Value of Plan Assets 628.78 Defined benefit obligation 699.59 Benefit Asset/ (Liability) (70.81) (iv) Movement in benefit liability Opening defined benefit obligation 665.13 Interest cost 51.17 Current service cost 47.16 Benefits paid (82.16) Actuarial (gains)/ losses on obligation 18.29 Closing benefit obligation 699.59(v) Movement in fair value of plan assets Opening fair value of plan assets 533.36 Expected Return on plan assets 45.70 Contribution by employer 130.13 Benefits paid (82.16) Actuarial gains/ (losses) on obligation 1.75 Closing fair value of plan assets 628.78(vi) The major categories of plan assets as a percentage of the fair value of total plan assets funded with insurer 100%(vii) The Principal actuarial assumptions are as follows: Discount rate 8.1% Expected return on plan assets 8.5% Salary Increase 5% Withdrawal rates Varying between 1% to 8% per annum depending upon the duration and age of the employees

(viii) Amount incurred as expense for defined contribution to Provident/ Pension fund plan Rs. 214.62 Lacs (including Rs. 6.19 Lacs capitalised as pre-operative expenses in Schedule-5).

(ix) The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

(x) The Company expects to contribute Rs. 130 Lacs to Gratuity fund in 2008-09.

(xi) The details for the current period are as follows:

Defined Benefit Obligation 699.59

Plan Assets 628.78

Surplus/ (Deficit) (70.81)

Experience adjustments on plan liabilities Not Available *

Experience adjustments on plan assets Not Available *

* The management has relied on the overall actuarial valuation conducted by the actuary. However, experience adjustments on

plan liabilities and assets are not readily available and hence not disclosed.

(xii) Since AS-15 (revised) on employee benefits is applicable from 1st July, 2007, the disclosures above are given only for the current year.

14. The subsidiary companies have given undertakings to a bank/ financial institution not to transfer, assign, pledge, hypothecate or otherwise dispose of their shareholding in Sutlej Textiles & Industries Ltd. and Modern DiaGen Services Ltd. without their prior approval in writing till the loans granted by them to these Companies remain outstanding.

15. Advances include Rs. 66.58 Lacs incurred towards Rights Issue expenses, which will be adjusted against the Securities Premium, as per the Accounting policy followed by the Company, after the close of the Rights Issue. Further, the above amount includes Rs. 22.00 Lacs paid to the Statutory Auditors.

16. (a) Salaries and Wages relating to various repairs have not been charged separately to the repairs, as the amount thereof has not been demarcated.

(b) Consumption of raw materials, stores, spare parts and packing materials includes profit/loss on sale thereof.

(c) The following items are included under other heads of expenses in the Profit & Loss Account :

(Rs. in Lacs)

2007-2008 2006-2007

Salaries & Wages 580.49 480.52

Stores and Spares, etc. 1171.85 771.45

Insurance 0.42 0.65

17. Earning per Share (EPS) :

In terms of Accounting Standard - 20, the calculation of EPS is given below : (Rs. in Lacs)

2007-2008 2006-2007

Profit/ (Loss) as per

Profit & Loss

Account (Rs. in Lacs) (346.16) (2527.87)

Proposed Dividend

on Preference Shares - 2.52

Profit/ (Loss) as per

Profit & Loss

Account attributable

to Equity Shareholders (346.16) (2530.39)

Weighted average number

of Equity Shares

outstanding during the

year (Rs. 10 each) 18173820 18173820

Basic and Diluted

earnings per share (Rs.) (1.90) (13.92)

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SCHEDULE to the Consolidated Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.) 18. The movements in provision for warranties during the year are as

follows : (Rs. in Lacs)

Balance Additions Amount Balance as at during used as at 01.07.2007 the year during the 30.06.2008 year

Warranties 9.27 6.86 8.01 8.12

19. The Company’s segment information as at and for the Year ended 30th June, 2008 are as below :-

(Rs. in Lacs)

Sugar Spirits Co- Canning

generation Products Others Total

(a) Revenue (net of excise

duty and cess)

External Sales 25839.51 4677.10 725.57 1913.72 - 33155.90

(37817.54) (3919.33) (766.43) (1741.15) (-) (44244.45)

Inter- segment Sales 3388.80 18.10 1661.37 - - 5068.27

(2777.18) (4.00) (1425.95) (-) (-) (4207.13)

Total Revenue 29228.31 4695.20 2386.94 1913.72 - 38224.17

(40594.72) (3923.33) (2192.38) (1741.15) (-) (48451.58)

(b) Results

Segment Result 1761.34 1025.79 553.10 79.64 -0.56 3419.31

(-3694.58) (1315.14) (746.21) (81.24) (-0.25) (-1552.24)

Unallocated expenses net 263.19

of unallocated Income (183.41)

Operating Profit/ (-) Loss 3156.12

(-1735.65)

Interest & Finance

Charges (net) 3677.81

(2,042.10)

Income, Wealth & Fringe

Benefit Tax (net) 32.66

(60.82)

MAT Credit Entitlement/

(-) Reversal -3.93

(25.50)

Deferred Tax Asset (net) 212.12

(1285.20)

Net Profit/ (-) Loss -346.16

(-2527.87)

(c) Total Assets

Segment Assets 73144.09 12827.55 6488.18 1070.87 3.08 93533.77

(52178.54) (5127.94) (6501.35) (880.79) (2.83) (64691.45)

Unallocated Assets 4390.69

(3546.85)

97924.46

(68238.30)

(d) Total Liabilities

Segment Liabilities 9406.70 862.24 41.03 735.26 0.15 11045.38

(14352.99) (185.35) (0.30) (680.88) (0.06) (15219.58)

Unallocated Liabilities 75478.20

(41203.48)

86523.58

(56423.06)

(e) Other Information

(i) Non cach

expenses 6.55 - - - - 6.55

(7.97) (-) (-) (-) (-) (7.97)

(ii) Capital

Expenditure 11898.40 8013.00 310.51 19.55 - 20241.46

(12520.28) (2374.08) (6035.84) (6.60) (-) (20936.80)

Notes :

(i) Business Segment : The business segments have been identified on the basis of the products of the Company. Accordingly, the Company has identified “Sugar”, “Spirits”, “Co-generation” and “Canning Products” as the operating segments.

Sugar - Consists of manufacture and sale of Sugar, Molasses & Bagasse.

Spirits - Consists of manufacture and sale of Industrial Spirits (including Denaturants), Fusel Oil & Bio-Compost.

Co-generation - Consists of generation and transmission of Power.

Canning Products - Consists of Canned Fruits & Vegetables, Jams, Jellies, Squashes & Juices.

Others - Consist of Miscellaneous business comprising of less than 10% revenues.

(ii) Geographical Segment : The Company primarily operates in India and therefore the analysis of geographical segment is demarcated into its Indian and Overseas Operations.

(iii) The Company has common fixed assets located in India for producing goods for domestic and overseas markets. Hence, separate figures for fixed assets/ additions to fixed assets thereof cannot be furnished.

20. Related Party Disclosure :

a. Names of

the related parties :

Key Management Shri C. S. Nopany – Chairman-cum-Managing Director

Personnel Shri V. P. Singh – Executive President, Hargaon Unit

Shri Chandra Mohan – Executive President, Narkatiaganj Unit

Shri P. K. Saini – Executive President, Rosa Unit

Shri S. K. Premi – Executive President, Allahabad Unit

Shri S. D. Shukla – Sr. Executive Vice President, Hata Unit

Shri Sanjay Mukherjee – Secretary (From 1st November, 2007

Shri D. J. Darji – Secretary (upto 31st October, 2007)

Relatives of Key Smt. Nandini Nopany – Mother of Shri C. S. Nopany

Management Personnel

Enterprises owned or Upper Ganges Sugar

significantly influenced by & Industries Ltd.

Key Management Sutlej Textiles &

Personnel Industries Ltd.

and their relatives SIL Investments Ltd.

(formerly Sutlej

Industries Ltd.)

SCM Investment &

Trading Co. Ltd.

RTM Investment &

Trading Co. Ltd.

Uttar Pradesh

Trading Co. Ltd.

(iii) Depreciation

for the year 1731.03 181.52 314.39 5.05 0.03 2232.02

(1728.79) (109.34) (187.41) (4.52) (0.03) (2030.09)

(f) Geographical Segments

Revenue

Domestic 32851.00

(43127.64)

Overseas

(Including through

third party) 304.90

(1116.81)

33155.90

(44244.45)

(Rs. in Lacs)

Sugar Spirits Co- Canning

generation Products Others Total

19. The Company’s segment information as at and for the Year ended 30th June, 2008 are as below (Contd.):-

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Transaction Balance Transaction Balance Transaction Balance Transaction Balance Value Outstanding Value Outstanding Value Outstanding Value Outstanding as on. as on. as on as on 30.06. 2008 30.06. 2008 30.06. 2008 30.06. 2008

Sale of Goods & Services Upper Ganges Sugar & Industries Ltd. - - - - 206.66 - 206.66 - ( - ) ( - ) ( - ) ( - ) (109.01) ( - ) (109.01) ( - )

Purchase of Goods & Services Upper Ganges Sugar & Industries Ltd. - - - - 37.17 - 37.17 - ( - ) ( - ) ( - ) ( - ) (19.17) ( - ) (19.17) ( - )

Sale of Fixed Assets Upper Ganges Sugar & Industries Ltd. - - - - 130.66 - 130.66 -

( - ) ( - ) ( - ) ( - ) (115.13) ( - ) (115.13) ( - )

Purchase of Fixed Assets Upper Ganges Sugar & Industries Ltd. - - - - 96.11 - 96.11 - ( - ) ( - ) ( - ) ( - ) (951.78) ( - ) (951.78) ( - )

Dividend Paid Shri C.S. Nopany - - - - - - - - (2.01) ( - ) ( - ) ( - ) ( - ) ( - ) (2.01) ( - )

SCM Investment & Trading Co. Ltd. - - - - - - - - ( - ) ( - ) ( - ) ( - ) (87.42) ( - ) (87.42) ( - ) RTM Investment & Trading Co. Ltd. - - - - - - - - ( - ) ( - ) ( - ) ( - ) (73.32) ( - ) (73.32) ( - ) Uttar Pradesh Trading Co. Ltd. - - - - - - - - ( - ) ( - ) ( - ) ( - ) (88.34) ( - ) (88.34) ( - )

Interest Paid Sutlej Textiles & Industries Ltd. - - - - 340.24 - 340.24 -

- ( - ) - ( - ) (62.43) ( - ) (62.43) ( - ) SIL Investments Ltd. - - - - 184.91 - 184.91 - ( - ) ( - ) ( - ) ( - ) (8.26) ( - ) (8.26) ( - ) SCM Investment & Trading Co. Ltd. - - - - 172.05 - 172.05 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) RTM Investment & Trading Co. Ltd. - - - - 186.85 - 186.85 - - ( - ) - ( - ) ( - ) ( - ) ( - ) ( - )

Loans/Intercorporate Repaid/ Given Sutlej Textiles & Industries Ltd. - - - - 3,000.00 - 3,000.00 - ( - ) ( - ) ( - ) ( - ) (1,500.00) ( - ) (1,500.00) ( - ) SIL Investments Ltd. - - - - 250.00 - 250.00 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) SCM Investment & Trading Co. Ltd. - - - - 300.00 - 300.00 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) RTM Investment & Trading Co. Ltd. - - - - 2,150.00 - 2,150.00 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - )

Loans/Intercorporate Loans Taken Upper Ganges Sugar & Industries Ltd. - - - - - - - - ( - ) ( - ) ( - ) ( - ) (455.00) ( - ) (455.00) ( - ) Sutlej Textiles & Industries Ltd. - - - - 4,000.00 3,000.00 4,000.00 3,000.00 ( - ) ( - ) ( - ) ( - ) (3,500.00) (2,000.00) (3,500.00) (2,000.00)SIL Investments Ltd. - - - - 1,300.00 1,575.00 1,300.00 1,575.00 ( - ) ( - ) ( - ) ( - ) (525.00) (525.00) (525.00) (525.00)SCM Investment & Trading Co. Ltd. - - - - 3,200.00 2,900.00 3,200.00 2,900.00 ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) RTM Investment & Trading Co. Ltd. - - - - 6,600.00 4,450.00 6,600.00 4,450.00 ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - )

(b) Aggregated Related Party Disclosures as at and for the Year ended 30th June, 2008 (Rs. in Lacs.)

Key Management Relatives of Key Enterprises owned by Key Management Total Personnel Management Personnel Personnel or their relatives

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SCHEDULE to the Consolidated Balance Sheet and Profi t & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.) (b) Aggregated Related Party Disclosures as at and for the Year ended 30th June, 2008 (Contd.) (Rs. in Lacs.)

Key Management Relatives of Key Enterprises owned by Key Management Total Personnel Management Personnel Personnel or their relatives Transaction Balance Transaction Balance Transaction Balance Transaction Balance Value Outstanding as Value Outstanding as Value Outstanding as Value Outstanding as on 30.06.2008 on 30.06.2008 on 30.06.2008 on 30.06.2008

Balance Outstanding (net) Credit : Upper Ganges Sugar & Industries Ltd. - - - - - 48.47 - 48.47 ( - ) ( - ) ( - ) ( - ) ( - ) (58.02) ( - ) (58.02)Debit : Shri C. S. Nopany - - - - - - - - ( - ) (6.09) ( - ) ( - ) ( - ) ( - ) ( - ) (6.09)

Interest Received Upper Ganges Sugar & Industries Ltd. - - - - - - - - ( - ) ( - ) ( - ) ( - ) (2.15) ( - ) (2.15) ( - )

Dividend Received Upper Ganges Sugar & Industries Ltd. - - - - - - - - ( - ) ( - ) ( - ) ( - ) (58.61) ( - ) (58.61) ( - ) Sutlej Textiles & Industries Ltd. - - - - 79.80 - 79.80 - ( - ) ( - ) ( - ) ( - ) (70.93) ( - ) (70.93) ( - ) SIL Investments Ltd. - - - - 17.58 - 17.58 - ( - ) ( - ) ( - ) ( - ) (17.58) ( - ) (17.58) ( - )

Remuneration Shri V. P. Singh 19.06 1.18 - - - - 19.06 - (18.97) (4.00) ( - ) ( - ) ( - ) ( - ) (18.97) (4.00)Shri Chandra Mohan 17.41 0.90 - - - - 17.41 - (1.47) (1.47) ( - ) ( - ) ( - ) ( - ) (1.47) (1.47)Shri P. K. Saini 9.61 0.08 - - - - 9.61 - (8.95) ( - ) ( - ) ( - ) ( - ) ( - ) (8.95) ( - ) Shri S. K. Premi 12.43 0.11 - - - - 12.43 - (10.36) ( - ) ( - ) ( - ) ( - ) ( - ) (10.36) ( - ) Shri S. D. Shukla 8.96 0.61 - - - - 8.96 - (4.74) (1.42) ( - ) ( - ) ( - ) ( - ) (4.74) (1.42)Shri Sanjay Mukherjee 5.58 0.18 - - - - 5.58 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) Shri D. J. Darji 2.80 - - - - - 2.80 - (4.62) (0.10) ( - ) ( - ) ( - ) ( - ) (4.62) (0.10)

NOTE : Remuneration paid to Shri C. S. Nopany, Chairman-cum-Managing Director, is disclosed in Schedule 21 to the Accounts.

21. Figures given in brackets are for the previous year and the previous year’s figures have been regrouped and/ or rearranged, wherever necessary.

Signatories to Schedules – 1 to 23

For S. R. BATLIBOI & CO. Chartered Accountants

Per R. K. AGRAWAL Partner Membership No. 16667 C. S. NOPANY Chairman- cum Place : Kolkata SANJAY MUKHERJEE Mg. Director Dated : 26th August, 2008 Secretary A. C. DALAL Director

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DIRECTORS’ REPORTTo

The Shareholders,

Your Directors have pleasure in presenting their Report and the audited Accounts of the Company for the year ended 31st March, 2008.

2. Financial Results :

Rs. Rs.

The Profit & Loss Account shows a profit of 17,32,175

To which is added the balance brought forward from the previous year 57,21,316

Making a total of 74,53,491

Out of this provisions have been made for -

Reserve Fund 3,50,000

Taxation (including Rs. 8,399 short provision in respect of an earlier year ) 8,399 3,58,399

Balance to be carried forward 70,95,092

3. Dividend :

Your Directors have not recommended any dividend.

4. Directors :

Shri T.R. Chachan retires from the Board by rotation and is eligible for re-appointment.

5. Auditors :

The Auditors, Messrs K.P. Gutgutia & Co., Chartered Accountants, retire and are eligible for re-appointment.

6. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo :

As the Company has no manufacturing activity, it is not required to furnish any information with regard to conservation of energy. There is no information to furnish with regard to technology absorption. During the year, no foreign exchange was earned or used by the Company.

7. Particulars of Employees :

The provisions of Section 217 (2A) of the Companies Act, 1956 are not applicable to the Company as there is no employee.

8. Directors’ Responsibility Statement :

Your Directors confirm that -

i) in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that year;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a going concern basis.

9. Compliance Certificate :

A copy of the Compliance Certificate from Messrs A.M. Bubna & Associates, Company Secretaries, as required under Section 383A of the Companies Act, 1956 is attached and forms a part of this Report.

R. N. JHUNJHUNWALA

9/1, R.N. Mukherjee Road, SANJAY MUKHERJEE

Kolkata - 700 001 T. R. CHACHAN Dated : 16th April, 2008 SUNIL LOHIA

}Directors

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COMPLIANCE CERTIFICATEToThe Members,We have examined the registers, records, books and papers of Champaran Marketing Company Limited (the Company) as required to be maintained under the Companies Act, 1956, (the Act) and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on 31st March, 2008 (Financial year). In our opinion and to the best of our information and according to the examinations carried out by us and explanations furnished to us by the Company, its officers and agents, we certify that in respect of the aforesaid financial year :1. The Company has kept and maintained all registers as stated

in Annexure ‘A’ to this certificate, as per the provisions of the Act and the rules made thereunder and all entries therein have been duly recorded.

2. The Company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies within the time prescribed under the Act and the rules made thereunder.

3. The Company, being a public limited company; clause 3 is not applicable.

4. The Board of Directors duly met 5 (Five) times respectively on 16th April, 2007, 30th July, 2007, 11th September, 2007, 26th December, 2007 & 24th March, 2008 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose.

5. The Company was not required to close its Register of Members during the financial year since it is not listed with any stock exchange.

6. The Annual General Meeting for the financial year ended on 31st March, 2007 was held on 4th June, 2007 after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose.

7. No Extra Ordinary General Meeting was held during the financial year.

8. The Company has not advanced any loans to its directors or persons or firms or companies referred to under Section 295 of the Act.

9. The Company has not entered into any contracts falling within the purview of Section 297 of the Act.

10. The Company was not required to make any 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 was not required to obtain any approvals from the Board of Directors, members or Central Government.

12. The Company has not issued any duplicate share certificates during the financial year.

13. The Company has : a) Not allotted/ transferred/ transmitted securities during

the financial year. b)& c) Not deposited any amount in a separate Bank Account

as the dividend declared was paid within five days. d) No amount in unpaid dividend account, application money due

for refund, matured deposits, matured debentures and the interest accrued thereon and as such it was not required to transfer any amount to Investor Education and Protection Fund.

e) Duly complied with the requirements of Section 217 of the Act.

14. The Board of Directors of the Company is duly constituted and the appointment of a director was duly made.

15. The Company has not appointed any Managing Director/ Whole-time Director/ Manager during the financial year as there was no need to do so.

16. The Company has not appointed any sole-selling agents during the financial year.

17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar of Companies or such other authorities as may be prescribed under the various provisions of the Act during the financial year.

18. The Directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder.

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. The Company has not redeemed any Preference shares during the financial year.

22. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer of shares.

23. The Company has not invited/ accepted any deposits under Section 58A of the Act during the financial year.

24. The Company has not made any borrowings during the financial year ended 31st March, 2008.

25. The provisions of Section 372 A are not applicable to the Company as its principal business is acquisition of shares, stocks, debentures or other securities.

26. The Company has not altered the provisions of the Memorandum with respect to the situation of the Company’s registered office from one state to another during the year under scrutiny.

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. The Company has not altered the provisions of the Memorandum with respect to share capital of the Company during the year under scrutiny.

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, for offences under the Act.

32. Since the Company has no employees, it didn’t receive any money as security from its employees during the financial year.

33. Since the Company has no employees, the provisions of EPF & Miscellaneous Provisions Act, 1952 are not applicable, consequently it was not required to deduct any contribution towards Provident Fund during the financial year.

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COMPLIANCE CERTIFICATE (Contd.)ANNEXURE - BForms and Returns as filed by the Company with Registrar ofCompanies (ROC), Regional Director, Central Government or other authorities during the financial year ended 31st March, 2008.1. Form No.1AA Filed u/s 5(g) on 25.04.2007 for filing

particulars of the person charged with complying with the various provi sions of the Act

2. Balance Sheet in Form No. 23AC along with Profit and Loss Account in Form 23ACA Filed u/s 220 on 11.06.2007 for the financial year ended on 31.03.2007 with ROC

3. Compliance Certificate in Form No. 66 filed u/s 383A on 11.06.2007 for the financial year ended on 31.03.2007 with ROC

4. Form No. 32 Filed u/s 303(2) on 11.06.2007 for the appointment of a director at the Annual General Meeting.

5. Annual Return in Form No.20B Filed u/s 159 on 2.07.2007 made upto 04.06.2007 with ROC.

For A. M. BUBNA & ASSOCIATES (Company Secretaries) Name of the Company Secretary: ASHISH BUBNA (Partner)C. P. No Membership No. 3569 105, Cotton Street, Kolkata – 700 007 Dated : 16th April, 2008

ANNEXURE - A Registers/ Records as maintained by the Company1. Register of Investment u/s 49(7)2. Register of Transfers u/s 108/1113. Register of Members u/s 1504. Minutes Book of Board Meetings u/s 1935. Minutes Book of General Meetings u/s 193 6. Books of Accounts u/s 2097. Register of Notice of Interest given by the Directors u/s 2998. Register of Contracts, Companies and firms in which direc tors are interested u/s 3019. Register of Directors, Managing Director, Manager and Secretary u/s 30310. Register of Directors’ Shareholding u/s 30711. Register of Loans & Investments u/s 372A12. Register of Charges u/s 14313. Application for and allotment of shares14. Copies of Annual Return u/s 163

AUDITORS’ REPORT To The Members,1. We have audited the attached Balance Sheet of Champaran

Marketing Company Limited as at 31st March, 2008 and also the Profit & Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003, (as amended) issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the annexure, a statement on the matters specified in paragraphs 4 & 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that :-

(i) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by he Company, so far as appears from our examination of those books;

(iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account as submitted to us;

(iv) In our opinion, the Balance Sheet and the Profit & Loss Account dealt with by this report comply with the Accounting Standards referred to in Sub-section 3(C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March, 2008 and taken on record by the Board Of Directors, we report that none of the directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India.

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; and,

b) In the case of the Profit and Loss Account, of the profit for the year ended on that date.

For K. P. GUTGUTIA & CO. Chartered Accountants 2, Princep Street, K. P. GUTGUTIA Kolkata – 700 072. Proprietor Dated : 16th April, 2008 Membership No. 7250

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ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE1. The Company has no fixed assets, as such the question of

maintenance of fixed assets records and physical verification thereof does not arise.

2. The Company has no manufacturing and/ or trading activities and as such the question of having any stock and maintenance of records in respect thereof and physical verification of inventory does not arise.

3. The Company has not taken/ granted any loans secured or unsecured from/ to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4. The Company has not purchased any goods and fixed assets and also there is no sale of goods and services during the year and as such the question of having any internal control system with regard to purchase of inventory, fixed assets and sale of goods does not arise.

5. There were no transaction which required to be entered in the register in pursuance of Section 301 of the Companies Act, 1956.

6. The Company has not accepted any deposits from the public.

7. The Internal Audit was conducted by a service Company and in our opinion the internal audit system is commensurate with the size of the Company and the nature of its business.

8. The Company is not required to maintain any cost records under Section 209 (1) (d) of the Companies Act, 1956.

9. The Company has been regular in depositing undisputed statutory dues with the appropriate authorities, as applicable. As the Company has no employee and no manufacturing and/ or trading activities are carried on by the Company, the question of payment of Provident Fund, Employees State Insurance, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess etc. does not arise. According to the information and explanations given to us no undisputed amounts payable in respect of statutory dues were outstanding as on 31st March, 2008 for a period of more than six months from the date they became payable. There are no dues outstanding in respect of statutory dues on account of any dispute.

10. The Company has no accumulated loss at the end of the financial year and it has not incurred any cash losses in the current and immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not taken any loan from financial institutions, bank or debentureholders, as such, the question of any default in repayment does not arise.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and Nidhi/ mutual benefit fund/ societies.

14. In respect of dealing in shares, securities, debentures and other investments, in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares, securities, debentures and other investments have been held by the Company in its own name.

15. The Company has not given any guarantee for loans taken by others from bank and financial institutions.

16. The Company has not taken any term loan from any financial institution or bank. The Company does not have any borrowing by way of debentures.

17. We have been informed by the management that no funds were raised either on short term basis or on long term basis.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures during this year.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For K. P. GUTGUTIA & CO.2, Princep Street, Chartered Accountants Kolkata – 700 072. K. P. GUTGUTIADated : 16th April, 2008 Proprietor Membership No. 7250

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SOURCES OF FUNDS : Shareholders’ Funds : Share Capital 1 1,08,72,500 1,08,72,500 Reserves & Surplus 2 3,88,40,092 3,71,16,316 4,97,12,592 4,79,88,816 Loan : Unsecured Loan : The Oudh Sugar Mills Ltd., the holding Company (not bearing interest) 32,50,000 38,50,000 32,50,000 38,50,000 5,29,62,592 5,18,38,816

APPLICATION OF FUNDS :

Investments : 3 5,29,15,352 5,19,15,352 Current Assets, Loans & Advances : Current Assets 4 53,240 59,536 Loans & Advances 5 – 31,706 53,240 91,242 Less : Current Liabilities & Provisions 6 Current Liabilities 6,000 6,000 Provisions – 1,61,778 6,000 1,67,778 Net Current Assets 47,240 (76,536) 5,29,62,592 5,18,38,816

Accounting Policies and Notes on Accounts 8

In terms of our attached report of even date.

For K.P. GUTGUTIA & CO. R. N . JHUNJHUNWALA Chartered Accountants SANJAY MUKHERJEE Directors2, Princep Street, K. P. GUTGUTIA T.R. CHACHANKolkata - 700 072. Proprietor SUNIL LOHIA Dated : 16th April, 2008 Membership No. 7250

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BALANCE SHEET as at 31st March, 2008

Schedule 31st March, 2008 31st March, 2007 Rs. Rs.

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PROFIT & LOSS ACCOUNT for the year ended 31st March, 2008

SCHEDULES to the Balance Sheet

SCHEDULE – 1 : SHARE CAPITAL Authorised : 6,406 Ordinary Shares of Rs. 10 each 64,060 64,060 59,74,376 Ordinary Shares of Rs. 2.50 each 1,49,35,940 1,49,35,940 2,50,000 Peference Shares of Rs. 10 each 25,00,000 25,00,000 1,75,00,000 1,75,00,000Issued : 43,50,000 Ordinary Shares of Rs. 2.50 each 1,08,75,000 1,08,75,000 2,00,000 10% Cumulative Redeemable Preference Shares of Rs. 10 each 20,00,000 20,00,000 1,28,75,000 1,28,75,000Subscribed & Paid-up : 43,49,000 Ordinary Shares of Rs. 2.50 each fully paid up 1,08,72,500 1,08,72,500 1,08,72,500 1,08,72,500

Notes :1. Out of 43,49,000 Ordinary Shares 1,08,750 Shares have been allotted as fully paid Bonus shares by capitalisation of General Reserve.2. The entire Subscribed Ordinary Share Capital is held by The Oudh Sugar Mills Ltd., the holding Company.

INCOME : Dividend 18,14,342 31,99,574 Interest on Loan (including tax deducted at source Rs. NIL; previous year Rs. 21,026) – 93,699 Profit on sale of Investments – 2,48,827 Miscellaneous Receipt – 87 18,14,342 35,42,187

EXPENDITURE : Directors’ Fees 4,000 5,000 Other Expenses 7 78,167 69,777 82,167 74,777 Profit before Taxation 17,32,175 34,67,410 Less : Provision for Taxation (including short provision in respect of an earlier year Rs. 8,399) 8,399 30,384 Profit after Taxation 17,23,776 34,37,026 Add : Balance brought forward from last year 57,21,316 51,65,068 Profit available for Appropriation 74,45,092 86,02,094

APPROPRIATIONS : Transfer to Reserve Fund 3,50,000 7,50,000 Transfer to Capital Redemption Reserve – 20,00,000 Proposed Dividend on 2,00,000 Cumulative Redeemable Preference Shares of Rs. 10 each @ 10% per annum – 1,11,781 Provision for Dividend Tax – 18,997 Balance carried to Balance Sheet 70,95,092 57,21,316 74,45,092 86,02,094

In terms of our attached report of even date.

For K. P. GUTGUTIA & CO. R. N . JHUNJHUNWALA Chartered Accountants SANJAY MUKHERJEE Directors2, Princep Street, K. P. GUTGUTIA T. R. CHACHANKolkata - 700 072. Proprietor SUNIL LOHIA Dated : 16th April, 2008 Membership No. 7250

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Schedule 2007 - 2008 2006 - 2007 Rs. Rs.

31st March, 2008 31st March, 2007 Rs. Rs.

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SCHEDULE – 2 : RESERVES AND SURPLUS

Share Premium Account As per last Account 86,95,000 86,95,000Reserve Fund As per last Account 57,00,000 49,50,000 Add : Transfer from Profit & Loss Account 3,50,000 7,50,000 60,50,000 57,00,000General Reserve As per last Account 1,50,00,000 1,50,00,000Capital Redemption Reserve As per last Account 20,00,000 – Add : Transfer from Profit & Loss Account – 20,00,000 20,00,000 20,00,000Surplus as per Profit & Loss Account 70,95,092 57,21,316 3,88,40,092 3,71,16,316

No. of Face Value Shares Rs.

SCHEDULE – 3 : INVESTMENTS (AT COST)Long TermQuotedEquity Shares (Fully Paid) Chambal Fertilisers & Chemicals Ltd. 3,02,500 10 55,00,000 55,00,000 New India Retailing & Investment Ltd. 94,077 10 75,23,560 75,23,560

(Formerly Known as New India Sugar Mills Ltd.) Upper Ganges Sugar & Industries Ltd. 2,60,841 10 1,95,59,479 1,95,59,479 SIL Investments Ltd. 1,99,773 10 38,14,988 38,14,988 (Formerly known as Sutlej Industries Ltd.) Sutlej Textiles & Industries Ltd. 2,06,540 10 64,41,985 64,41,985 Manavta Holdings Ltd. 72,000 10 3,52,755 3,52,755 4,31,92,767 4,31,92,767UnquotedEquity Shares (Fully Paid) Taparia Ltd. 3,500 10 40,105 40,105 Shree Vihar Properties Ltd. 7,47,692 10 65,76,920 65,76,920 Modern DiaGen Services Ltd. 10,556 10 1,05,560 1,05,560 (Formerly known as Damanganga Processors Ltd.) Hargaon Properties Ltd. 2,00,000 10 20,00,000 20,00,000 Leas Communications Ltd. (Value written off) 21,000 10 – – Chandausi Rice Mills Ltd. (Value written off) 1,000 10 – – Swadeshi Jute Machinery Corporation Ltd. (In liquidation) (Value written off) 15,000 10 – – Maruti Ltd. (In liquidation) (value written off) 10,000 10 – – 87,22,585 87,22,585Equity Shares (Partly Paid) Modern DiaGen Services Ltd. 5,00,000 2 10,00,000 – 97,22,585 87,22,585 5,29,15,352 5,19,15,352Aggregate Book Value of Quoted Investments 4,31,92,767 4,31,92,767Aggregate Book Value of Unquoted Investments 97,22,585 87,22,585 5,29,15,352 5,19,15,352Market Value of Quoted Investments 7,21,74,630 8,07,69,182

SCHEDULES to the Balance Sheet (Contd.)

31st March, 2008 31st March, 2007 Rs. Rs.

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SCHEDULES to the Balance Sheet (Contd.)

SCHEDULE – 4 : CURRENT ASSETS Cash & Bank Balances With a Scheduled Bank on Current Account 53,240 59,536 53,240 59,536SCHEDULE – 5 : LOANS & ADVANCES (Unsecured, Considered Good) Advance payment of Income-tax & tax deducted at source – 31,026 Income Tax Refund Receivable – 680 – 31,706SCHEDULE – 6 : CURRENT LIABILITIES & PROVISIONS

Current Liabilities Sundry Creditors for Expenses 6,000 6,000 6,000 6,000Provisions For Taxation – 31,000 For Proposed Dividend – 1,11,781 For Dividend Tax – 18,997 – 1,61,778 6,000 1,67,778

SCHEDULE – 7 : OTHER EXPENSES Rates & Taxes 7,300 6,600 Service Charges 44,944 40,406 General Charges 19,423 15,771 Auditors’ Remuneration : As Audit Fees 6,000 6,000 For Certificate etc. 500 1,000 78,167 69,777

SCHEDULE – 8 : ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

1. Accounting Policies a) Recognition of Income & Expenditure :

Income & Expenditure are recognised on accrual basis. b) Investments :

Long-term Investments are considered at cost on individual basis, unless there is permanent decline in value thereof, in which case adequate provision is made against the diminution in the value of Investments.

2. No provision has been made in respect of diminution in the value of certain quoted investments aggregating Rs. 55,77,806 as the same, in the opinion of management, is not permanent in nature. However, there is no diminution in the overall market value of the quoted investments.

3. The Company has given undertaking to financial institution/ bank not to transfer, assign, pledge, charge or create any lien or otherwise dispose of its shareholdings present or future in Damanganga Processors Ltd., without their prior approval in writing till the financial assistance provided by them to the said companies remain outstanding.

Signatories to Schedules 1 to 8

For K.P. GUTGUTIA & CO. R. N . JHUNJHUNWALA Chartered Accountants SANJAY MUKHERJEE Directors2, Princep Street, K. P. GUTGUTIA T.R. CHACHANKolkata - 700 072. Proprietor SUNIL LOHIA Dated : 16th April, 2008 Membership No. 7250

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SCHEDULES to the Profi t & Loss Account 2007-2008 2006-2007 Rs. Rs.

31st March, 2008 31st Marh, 2007 Rs. Rs. A

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BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I. Registration Details

Registration No. U15424WB1951PLC019451 State Code 21

Balance Sheet Date 31.03.2008

II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Nil Rights Issue Nil

Bonus Issue Nil Private Placement Nil

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities 52,963 Total Assets 52,963

Sources of Funds Application of Funds

Paid-up Capital 10,873 Net Fixed Assets Nil

Reserves & Surplus 38,840 Investments 52,916

Secured Loans Nil Net Current Assets 47

Unsecured Loans 3,250 Miscellaneous Expenditure Nil

Accumulated Losses Nil

IV. Performance of Company (Amount in Rs. Thousands)

Turnover 1,814 Total Expenditure 82

Profit before tax 1,732 Profit after Tax 1,724

Earning per share (Rs.) 0.40 Dividend Rate Nil

V. Generic Names of Principal Products/Services of the Company

(As per monetary terms) Item Code No.(ITC Code)

Product Description

R. N . JHUNJHUNWALA

SANJAY MUKHERJEE Directors

T.R. CHACHAN

SUNIL LOHIA

Not Applicable

Cham

paran Marketing C

ompany Lim

ited

94

SCHEDULES to the Balance Sheet of a Non-Banking Financial Company

Amount outstandingAssets Side :2. Break-up of Loans and Advances including Bills receivables (other than those included in (4) below) a) Secrued Nil b) Unsecured Nil3. Break-up of Leased Assets and Stock on Hire and other assets counting towards AFC activities (i) Lease Assets including lease rentals under sundry debtors : (a) Financial Lease Nil (b) Operating Lease Nil (ii) Stock on hire including hire charges under sundry debtors : (a) Assets on Hire Nil (b) Repossessed Assets Nil (iii) Other Loans counting towards AFC activities : (a) Loans where assets have been repossessed Nil (b) Loans other than (a) above Nil4. Break-up of Investments : Current Investments : 1. Quoted : i) Shares : (a) Equity Nil (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil 2. Unquoted : i) Shares : (a) Equity Nil (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil

(As required in terms of paragraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998)

(Rs. in Lacs) Amount Amount PARTICULARS outstanding overdue (As on (As on 31.03.2008) 31.03.2008)

Liabilities Side : 1. Loans and Advances availed by the NBFC’S inclusive of interest accrued thereon but not paid : a) Debentures : Secured Nil Nil Unsecured Nil Nil (Other than falling within the meaning of Public Deposits) b) Deferred Credits Nil Nil c) Term Loans Nil Nil d) Inter-Corporate Loans and Borrowings Nil Nil e) Commercial Paper Nil Nil f) Other Loans (specify nature) 32.50 32.50

Long Term Investments : 1. Quoted : i) Shares : (a) Equity 431.93 (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil 2. Unquoted : i) Shares : (a) Equity 97.22 (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil

5. Borrower group-wise classification of Assets financed as in (2) and (3) above : (Rs. in Lacs)

Secured Unsecured Total 1. Related Parties (a) Subsidiaries Nil Nil Nil (b) Companies in the same group Nil Nil Nil (c) Other related parties Nil Nil Nil 2. Other than related parties Nil Nil Nil Total Nil Nil Nil

Category Amount net of provisions

6. Investor group-wise classification of all Investments (current and long term) in shares and securities (both

quoted and unquoted) :

Market Value/ Break-up or Book Value Category Fair value or NAV (Net of Provisions)1. Related Parties (a) Subsidiaries Nil Nil (b) Companies in the same group Nil Nil (c) Other related parties Nil Nil 2. Other than related parties 836.42 529.15 Total 836.42 529.15

Particulars Amount (i) Gross Non-Performing Assets (a) Related parties Nil (b) Other than related parties Nil (ii) Net Non-Performing Assets (a) Related parties Nil (b) Other than related parties Nil (iii) Assets acquired in satisfaction of debt Nil

R. N . JHUNJHUNWALA SANJAY MUKHERJEE Directors T.R. CHACHAN SUNIL LOHIA

7. Other Information :

}

Ann

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t 200

7-08

95

DIRECTORS’ REPORTToThe Shareholders,Your Directors have pleasure in presenting their Report and the audited Accounts of the Company for the year ended 31st March, 2008.

2. Financial Results : Rs. Rs. The Profit & Loss Account shows a profit of 25,67,580 To which is added : Balance brought forward from the previous year 95,33,595 Excess provision for taxation in respect of an earlier year written back. 1,240 95,34,835 Making a total of 1,21,02,415 Out of this provisions have been made for - Taxation ( including Rs. 286 in respect of an earlier year) 286 Reserve Fund 5,15,000 5,15,286 Balance to be carried forward 1,15,87,129

3. Dividend :

Your Directors have not recommended any dividend.

4. Directors :

Shri A.L.Tulsian retires from the Board by rotation and is eligible for re-appointment.

5. Auditors :

The Auditors, Messrs R.L. Agarwalla & Co., Chartered Accountants, retire and are eligible for re-appointment.

6. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo :

As the Company has no manufacturing activity, it is not required to furnish any information with regard to conservation of energy. There is no information to furnish with regard to technology absorption. During the year, no foreign exchange was earned or used by the Company.

7. Particulars of Employees :

The provisions of Section 217(2A) of the Companies Act, 1956 are not applicable to the Company as there is no employee.

8. Directors’ Responsibility Statement :

Your Directors confirm that -

i) in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that year ;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a going concern basis.

9. Compliance Certificate :

A copy of the Compliance Certificate from Messrs S.M. Gupta & Co., Company Secretaries, as required under Section 383A of the Companies Act, 1956 is attached and forms a part of this Report.

C.S. NOPANY Chairman

9/1, R.N. Mukherjee Road, T. R. CHACHAN

Kolkata - 700 001 A.L.TULSIAN Directors

Dated : 2nd June, 2008 C.K. VYAS }

OSM

Investment &

Trading Com

pany Limited

96

ToThe Members,We have examined the registers, records, books and papers of OSM Investment & Trading Company Limited (the Company) as required to be maintained under the Companies Act, 1956 (the Act) and the Rules made thereunder including the Report of the Statutory Auditors under the Companies (Auditor’s Report) Order, 2003 as amended and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on 31st March, 2008. In our opinion and to the best of our knowledge, belief and information and according to the examinations carried out by us and explanations furnished to us by the Company, its officers and agents, we certify that in respect of the aforesaid financial year :1. The Company has kept and maintained registers as stated in

Annexure A to this certificate, as per the provisions of the Act and the Rules made thereunder and all entries therein have been recorded.

2. The Company has filed the forms and returns as stated in Annexure B to this certificate, with the Registrar of Companies as required under the Act and the Rules made thereunder.

3 The Company being a Public Limited Company, Clause No. 3 is not applicable.

4. The Board of Directors met 6 times on 26.04.2007, 18.05.2007, 28.06.2007, 11.09.2007, 24.12.2007 and 26.03.2008 in respect of which meetings proceedings were recorded and signed in the Minutes Book maintained for the purpose. As informed to us, no circular resolution was passed during the financial year.

5. The Company was not required to close its Register of Members during the financial year since it is not listed with any Stock Exchange.

6. The Annual General Meeting for the financial year ended on 31.03.2007 was held on 09.07.2007 after giving notice to themembers of the Company and the resolutions passed thereat were recorded in Minutes Book maintained for the purpose.

7. No Extra Ordinary General Meeting was held during the financial year.

8. The Company during the financial year has not advanced any loan to its Directors and/or persons or Firms or Companies referred to in Section 295 of the Act.

9. The Company has not entered into any contract falling within the purview of Section 297 of the Act, as informed to us by the Management.

10. The Company is making necessary entries in the register maintained under Section 301 of the Act as and when required.

11. As there were no instances falling within the purview of Section 314 of the Act, the Company was not required to obtain any approvals under the said Section.

12. No duplicate share certificates were issued during the financial year, as per the records of the Company.

13. The Company : (i) has been delivering the certificates on lodgment thereof

for transfer/ transmission or any other purpose as and when it receives the same;

(ii) has paid the dividend on preference shares declared & (iii) at the Annual General Meeting held on 09.07.2007

on 10.07.2007, which is within thirty days

from the date of declaration of such dividend; no dividend was declared on equity shares ;

(iv) has no amount lying in unpaid/unclaimed dividend account; and

(v) has generally complied with the requirements of Section 217 of the Act.

14. The Board of Directors of the Company is duly constituted. 15. The Company is not required to appoint a Managing Director,

Whole-time Director or Manager under Section 269 of the Act as its paid up Capital is less than Rs. 5 crores.

16. The Company did not appoint any sole selling agent during the financial year.

17. We have been informed by the Management that the Company, during the financial year, was not required to obtain the approval of any authority under the provisions of the Act.

18. The Directors have disclosed their interest in other Firms/ Companies to the Board of Directors pursuant to the provisions of the Act and the Rules made thereunder.

19. The Company has not issued any security during the financial year.

20. The Company has not bought back any shares during the financial year.

21. Since the Company has not issued Preference Shares/ Debentures, there was no redemption during the year under review.

22. As informed to us, the Company during the financial year, was not required to keep in abeyance rights to any benefits on shares pending completion of formalities under the provisions of the Act.

23. The Company has not accepted any deposits from the public. (Refer Auditors’ Report)

24. The Company did not borrow any money during the financial year.

25. The Company being a Non – Banking Financial Company registered under Section 45 IA of the Reserve Bank of India Act, 1934 is exempt from the provisions of Section 372A of the Act.

26. The Company, during the financial year, has not altered the to provisions of the Memorandum with respect to:29. (a) situation of registered office of the Company (b) the objects of the Company (c) name of the Company (d) share capital of the Company30. The Company has not altered its Articles of Association

during the financial year.31. As informed to us, during the financial year, no prosecution

was initiated against or show cause notice received by the Company for any alleged offence under the provisions of the Act.

32. Since the Company has no employee, it has not received any money as security during the financial year.

33. The provisions of Provident Fund Act are not applicable to the Company, as it has no employee. (Refer Auditors’ Report)

COMPLIANCE CERTIFICATE

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COMPLIANCE CERTIFICATE (Contd.)

ANNEXURE - A

Sl. Registers/Records as maintained by the Company Under Section No. Statutory Registers/Records

1. Register of Investments 49(7)

2. Register of Charges 143

3. Register of Members 150

4. Copies of Annual Returns etc. 163

5. Minutes of Board Meetings 193

6. Minutes of General Meetings 193

7. Books of Accounts 209

8. Register of Contracts 301

9. Particulars of Directors etc. 303

10. Register of Directors’ shareholding 307

11. Register of Loans and Investments etc. 372A Other Registers

12. Register of Share Transfers 108/111

13. Register of Notices received from Directors 299

14. Register of Fixed Assets

ANNEXURE - B

Forms and Returns as filed by the Company with the Registrar of Companies during the financial year ended 31st March, 2008 filed with the Registrar of Companies, West Bengal

Sl. No. Form No. Under Section For Date of filing

1. Form 23AC 220 Form for filing Balance Sheet and Profit & Loss 12.07.2007

& 23ACA Account for Financial year ended on 31.03.2007

2. Form 66 383A Form for filing of Compliance Certificate for 12.07.2007

Financial year ended 31.03.2007

3. Form 20B 159 Form for filing of Annual Return made upto 19.07.2007

09.07.2007

P – 15, Bentinck Street, Signature : Sd/- S. M. GUPTA Kolkata – 700 001 Name of the Company Secretary : S. M. GUPTADated : 2nd June, 2008 C. P. No. : 2053

OSM

Investment &

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pany Limited

98

AUDITORS’ REPORT To

The Members,

1. We have audited the attached balance sheet of OSM Investment & Trading Company Limited as at 31st March, 2008 and also the Profit & Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003,(as amended) issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the annexure, a statement on the matters specified in paragraphs 4 & 5 of the said Order.

4. Further we report that :-

(i) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by the laws have been kept by the Company, so far as appears from our examination of those books;

(iii) The Balance Sheet and the Profit and Loss Account dealt with by this report are in agreement with the books of account as submitted to us;

(iv) In our opinion, the Balance Sheet and Profit And Loss Account dealt with by this report comply with the Accounting Standards referred to in Sub-section 3(C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representation received from the directors, as on 31st March, 2008 and taken on record by the Board Of Directors, we report that none of the directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of Sub-section 1 of Section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Notes thereon and attached thereto give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India.

a) In case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; and,

b) In the case of the Profit and Loss Account, of the profit for the year ended on that date.

For R. L. AGARWALLA & CO.

7, Rabindra Sarani, Chartered Accountants

Kolkata – 700 001. R. L. AGARWALLA

Dated : 2nd June, 2008 Proprietor Membership No. 50516

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ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE(i) The Company has maintained proper records of fixed assets

showing full particulars, including quantitative details and situation thereof. Fixed Assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. There was no substantial disposal of fixed assets during the year.

(ii) The Company has no manufacturing and/or trading activities and as such the question of having any stock and maintenance of records in respect thereof and physical verification of inventory does not arise.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured, to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence the requirement of sub clauses (b) to (d) of clause (iii) of the Companies (Auditors’ Report) Order, 2003 (as amended) are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured, from Companies, Firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence the requirement of sub clauses (f) & (g) of clause (iii) of the Companies (Auditors’ Report) Order, 2003 (as amended) are not applicable.

(iv) The Company ahs not purchased any goods and fixed assets and also there is no sale of goods and services during the year and as such the question of having any internal control system with regard to purchase of inventory, fixed assets and sale of goods does not arise.

(v) There was no transaction which was required to be entered in the register maintained under Section 301 of the Companies Act, 1956.

(vi) The Company has not accepted any deposits from the public.

(vii) The Internal Audit was conducted by a service Company and in our opinion the internal audit system was commensurate with the size of the Company and nature of its business.

(viii) The Company is not required to maintain any cost records under Section 209 (1)(d) of the Companies Act, 1956.

(ix) The Company is regular in depositing undisputed statutory dues with the appropriate authorities, as applicable. As the Company has no employee and no manufacturing and/ or trading activities are carried on by the Company, the question of payment of Provident Fund, Employees State Insurance, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess etc. does not arise. According to the information and explanations given to us no undisputed amounts payable in respect of statutory dues were outstanding as on 31st March, 2008 for the period of more than six months from the date they become payable. There are no dues outstanding in respect of statutory dues on account of any dispute.

(x) The Company has no accumulated loss at the end of the financial year and it has not incurred any cash loss in the current and immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not taken any loan from financial institutions, bank or debenture holders, as such, the question of any default do not arise.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, hence maintenance of records in respect thereof does not arise.

(xiii) In our opinion, and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and Nidhi/ mutual benefit fund/ societies.

(xiv) In respect of dealing in shares, securities, debentures and other investments, in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares, securities, debentures and other investments have been held by the Company in its own name.

(xv) As informed the Company has not given any guarantee for loans taken by others from bank and financial institutions.

(xvi) The Company has not taken any term loan from any financial institution or bank. The Company does not have any borrowing by way of debentures.

(xvii) We have been informed by the management that funds raised on short term basis were not utilised for long term purpose.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures during this year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of the audit.

For R. L. AGARWALLA & CO.

Chartered Accountants

7, Rabindra Sarani, R. L. AGARWALLA

Kolkata – 700 001. Proprietor Dated : 2nd June, 2008 Membership No. 50516

OSM

Investment &

Trading Com

pany Limited

100

Schedule 31st March, 2008 31st March, 2007 Rs. Rs.

BALANCE SHEET as at 31st March, 2008

SOURCES OF FUNDS

Shareholders’ Funds :

Share Capital 1 1,74,04,180 1,74,04,180

Reserves & Surplus 2 3,34,46,189 3,08,77,655

5,08,50,369 4,82,81,835

APPLICATION OF FUNDS

Fixed Assets : Land

As per last Account 31,45,415 31,45,415

Investments 3 4,52,07,627 4,42,07,627

Current Assets, Loans & Advances :

Current Assets : 4 53,327 57,222

Loans & Advances :

Loans

To The Oudh Sugar Mills Ltd., the

holding Company (not bearing Interest) 24,50,000 10,50,000

Advance payment of Income Tax &

tax deducted at source – 2,88,210

25,03,327 13,95,432

Less : Current Liabilities & Provisions : 5 Current Liabilities 6,000 13,167

Provisions – 4,53,472

6,000 4,66,639

Net Current Assets 24,97,327 9,28,793

5,08,50,369 4,82,81,835

Accounting Policies & Notes on Accounts 6

Schedules referred to above form an integral part of the Balance Sheet.

In terms of our attached report of even date.

For R. L. AGARWALLA & CO. C. S. NOPANY Chairman Chartered Accountants T. R. CHACHAN 7, Rabindra Sarani, R. L. AGARWALLA A. L . TULSIAN DirectorsKolkata - 700 001 Proprietor C. K. VYAS Dated : 2nd June, 2008 Membership No. 50516

}

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2007-2008 2006-2007 Rs. Rs.

PROFIT & LOSS ACCOUNT for the year ended 31st March, 2008

INCOME :

Dividend from Long Term Investments 26,56,805 37,16,710 Interest on Loan (Tax deducted at source Rs. NIL; previous year Rs. 60,450) – 2,69,383

Miscellaneous Receipts – 157

26,56,805 39,86,250

EXPENDITURE :

Rates & Taxes 8,950 6,600 Auditors’ Remuneration :

Audit Fees 10,000 6,000

For Certificates & Others 2,000 1,903

Directors’ Fees 4,600 3,800

Miscellaneous Expenses 63,675 52,366

(including Service Charges Rs. 44,944; previous year Rs. 40,406)

89,225 70,669

Profit before Taxation 25,67,580 39,15,581

Less : Provision for Taxation (including Rs. 286

in respect of an earlier year - Previous year Rs. Nil) 286 90,000

25,67,294 38,25,581

Add : Excess Provision for Taxation in respect of an

earlier year written back 1,240 –

Profit after Taxation 25,68,534 38,25,581

Add : Balance brought forward from last year 95,33,595 91,37,486

Profit available for Appropriation 1,21,02,129 1,29,63,067

APPROPRIATIONS : Transfer to Reserve Fund 5,15,000 7,66,000

Transfer to Capital Redemption Reserve – 25,00,000

Proposed Dividend on Cumulative Redeemable

Preference Shares – 1,39,726

Provision for Dividend Tax – 23,746

Balance carried to Balance Sheet 1,15,87,129 95,33,595

1,21,02,129 1,29,63,067

In terms of our attached report of even date.

For R. L. AGARWALLA & CO. C. S. NOPANY Chairman Chartered Accountants T. R. CHACHAN 7, Rabindra Sarani, R. L. AGARWALLA A. L . TULSIAN DirectorsKolkata - 700 001 Proprietor C. K. VYAS Dated : 2nd June, 2008 Membership No. 50516

}

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102

SCHEDULE – 1 : SHARE CAPITAL Authorised : 24,90,000 Equity Shares of Rs. 10 each 2,49,00,000 2,49,00,000 2,60,000 Preference Shares of Rs. 10 each 26,00,000 26,00,000 2,75,00,000 2,75,00,000Issued : 17,40,420 Equity Shares of Rs. 10 each 1,74,04,200 1,74,04,200 1,74,04,200 1,74,04,200Subscribed & Paid-Up : 17,40,418 Equity Shares of Rs. 10 each fully paid up in cash 1,74,04,180 1,74,04,180 1,74,04,180 1,74,04,180Note :1. The entire Subscribed Equity Share Capital is held by

The Oudh Sugar Mills Ltd., the holding Company.

SCHEDULE – 2 : RESERVES AND SURPLUS Share Premium Account : As per last Account 87,02,060 87,02,060General Reserve : As per last Account 50,00,000 50,00,000Reserve Fund : As per last Account 51,42,000 43,76,000 Transfer from Profit & Loss Account 5,15,000 7,66,000 56,57,000 51,42,000Capital Redemption Reserve : As per last Account 25,00,000 – Transfer from Profit & Loss Account – 25,00,000 25,00,000 25,00,000Surplus as per Profit & Loss Account 1,15,87,129 95,33,595 3,34,46,189 3,08,77,655

No. of Shares Face Value 31st March, 2008 31st March, 2007 Rs. Rs. Rs.

SCHEDULE – 3 : INVESTMENTS (AT COST)Long Term Investments (Non-Trade)Quoted (Fully Paid)Equity Shares : Upper Ganges Sugar & Industries Ltd. 2,34,891 10 1,70,29,956 1,70,29,956 SIL Investments Ltd. 4,17,421 10 97,63,978 97,63,978

(Formerly Sutlej Industries Ltd.) Sutlej Textiles & Industries Ltd. 4,25,880 10 1,40,06,908 1,40,06,908 Manbhawani Investment Ltd. 67,500 10 2,06,905 2,06,905 New India Retailing & Investment Ltd. 38,349 10 30,67,920 30,67,920 (Formerly New India Sugar Mills Ltd.) 4,40,75,667 4,40,75,667Unquoted (Fully Paid)Equity Shares : Modern DiaGen Services Ltd. 13,196 10 1,31,960 1,31,960 (Formerly Damanganga Processors Ltd.)

Unquoted (Partly Paid)Equity Shares : Modern DiaGen Services Ltd. (Rs. 2 Paid Up) 5,00,000 10 10,00,000 – 4,52,07,627 4,42,07,627

31st March, 2008 31st March, 2007 Rs. Rs.

SCHEDULES to the Balance Sheet

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SCHEDULES to the Balance Sheet (Contd.)

SCHEDULE – 3 : INVESTMENTS (AT COST) (Contd.)Aggregate Book Value of Investments : Quoted 4,40,75,667 4,40,75,667 Unquoted 11,31,960 1,31,960 4,52,07,627 4,42,07,627Market Value of Quoted Investments 9,27,94,733 11,85,94,611

SCHEDULE – 4 : CURRENT ASSETS

Cash & Bank Balances : Cash in hand 1,162 1,442 With a Scheduled Bank on Current Account 52,165 55,780 53,327 57,222

SCHEDULE – 5 : CURRENT LIABILITIES & PROVISIONS Current Liabilities :Sundry Creditors For Expenses 6,000 13,167 6,000 13,167Provisions : For Proposed Dividend – 1,39,726 For Dividend Tax – 23,746 For Taxation – 2,90,000 – 4,53,472 6,000 4,66,639

SCHEDULE – 6 : ACCOUNTING POLICIES & NOTES ON ACCOUNTS

1. Accounting Policies :i) Fixed Assets are stated at cost.ii) Long Term Investments are considered at cost on individual basis, unless there is permanent decline in value thereof, in which case

adequate provision is made against the diminution in the value of investments.iii) Items of Income and Expenditure are recognised on accrual basis.

2. Contingent Liability not provided for in respect of uncalled capital on partly paid shares held as investments of Rs. 40,00,000 (Previous year- Rs. Nil)

3. No provision has been made in respect of diminution in the value of certain quoted investments aggregating Rs. 21,68,849 as the same, in the opinion of the management, is not permanent in nature. However, there is no diminution in the overall market value of the quoted investments.

4. The Company has pledged 2,34,891 Equity Shares of Upper Ganges Sugar & Industries Ltd., 4,17,421 Equity Shares of Sutlej Textiles & Industries Ltd. and 4,17,421 Equity Shares of SIL Investments Ltd. against loan of Rs. 1,000 Lacs granted by ECL Finance Ltd. to The Oudh Sugar Mills Ltd., the holding Company.

Signatories to Schedules 1 to 6

For R. L. AGARWALLA & CO. C. S. NOPANY Chairman Chartered Accountants T. R. CHACHAN 7, Rabindra Sarani, R. L. AGARWALLA A. L . TULSIAN DirectorsKolkata - 700 001 Proprietor C. K. VYAS Dated : 2nd June, 2008 Membership No. 50516

No. of Face Value 31st March, 2008 31st March, 2007 Shares Rs. Rs. Rs.

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104

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I Registration Details :

Registration No. U67120WB1986PLC041677 State Code 21

Balance Sheet Date 31.03.2008

II Capital raised during the year (Amount in Rs. Thousands)

Public Issue Nil Rights Issue Nil

Bonus Issue Nil Private Placement Nil

III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities 50850 Total Assets 50850

Sources of Funds : Application of Funds :

Paid-up Capital 17404 Net Fixed Assets 3145

Reserves & Surplus 33446 Investments 45208

Secured Loans Nil Net Current Assets 2497

Unsecured Loans Nil Miscellaneous Expenditure Nil

Accumulated Losses Nil IV Performance of Company (Amount in Rs. Thousands)

Turnover 2657 Total Expenditure 89

Profit before Tax 2568 Profit after Tax 2569

Earning per Share (Rs.) 1.48 Dividend Rate Nil

V Generic Names of Principal Products/Services of the Company

(as per monetary terms)

Item Code No. (ITC Code)

Product Description

C. S. NOPANY Chairman T. R. CHACHAN A. L . TULSIAN Directors C. K. VYAS

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Not Applicable

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Amount outstandingAssets Side :2. Break-up of Loans and Advances including Bills receivables (other than those included in (3) below) a) Secrued Nil b) Unsecured 24.503. Break-up of Leased Assets and Stock on Hire and other assets counting towards AFC activities (i) Lease Assets including lease rentals under sundry debtors : (a) Financial Lease Nil (b) Operating Lease Nil (ii) Stock on hire including hire charges under sundry debtors : (a) Assets on Hire Nil (b) Repossessed Assets Nil (iii) Other Loans counting towards AFC activities : (a) Loans where assets have been repossessed Nil (b) Loans other than (a) above Nil4. Break-up of Investments : Current Investments : 1. Quoted : i) Shares : (a) Equity Nil (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil 2. Unquoted : i) Shares : (a) Equity Nil (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil

SCHEDULES to the Balance Sheet of a Non-Banking Financial Company(As required in terms of paragraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998)

(Rs. in Lacs) Amount Amount PARTICULARS outstanding overdue (As on (As on 31.03. 2008) 31. 03.2008)

Liabilities Side : 1. Loans and Advances availed by the NBFC’S inclusive of interest accrued thereon but not paid : a) Debentures : Secured Nil Nil Unsecured Nil Nil (Other than falling within the meaning of Public Deposits) b) Deferred Credits Nil Nil c) Term Loans Nil Nil d) Inter-Corporate Loans and Borrowings Nil Nil e) Commercial Paper Nil Nil f) Other Loans (specify nature) Nil Nil

Long Term Investments : 1. Quoted : i) Shares : (a) Equity 440.76 (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil 2. Unquoted : i) Shares : (a) Equity 11.32 (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil

5. Borrower group-wise classification of Assets Financed as in (2) and (3) above : (Rs. in Lacs)

Secured Unsecured Total 1. Related Parties (a) Subsidiaries Nil Nil Nil (b) Companies in the same group Nil 24.50 24.50 (c) Other related parties Nil Nil Nil 2. Other than related parties Nil Nil Nil Total Nil 24.50 24.50

Category Amount net of provisions

6. Investor group-wise classification of all Investments (current and long term) in shares and securities (both

quoted and unquoted) :

Market Value/ Break-up or Book Value Category Fair value or NAV (Net of Provisions)1. Related Parties (a) Subsidiaries Nil Nil (b) Companies in the same group Nil Nil (c) Other related parties Nil Nil 2. Other than related parties 931.00 452.08 Total 931.00 452.08

Particulars Amount (i) Gross Non-Performing Assets Nil (a) Related parties Nil (b) Other than related parties

(ii) Net Non-Performing Assets Nil (a) Related parties Nil (b) Other than related parties (iii) Assets acquired in satisfaction of debt Nil

C. S. NOPANY Chairman T. R. CHACHAN A. L. TULSIAN Directors C. K. VYAS

7. Other Information :

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DIRECTORS’ REPORT

AUDITORS’ REPORT

ToThe Shareholders,Your Directors have pleasure in presenting their Report and the audited Accounts of the Company for the year ended 31st March, 2008.2. Financial Results :

Rs. Rs.

The Profi t & Loss Account shows a profi t of 62,46,104 To which is added balance brought forward from the previous year 4,25,36,211 Making a total of 4,87,82,315 Out of this provisions have been made for : Taxation (including Rs. 5,125 in respect of earlier years) 5,125 Reserve Fund 12,50,000 12,55,125 Balance to be carried forward 4,75,27,190

ToThe Members,1. We have audited the attached balance sheet of Hargaon

Investment & Trading Company Limited as at 31st March, 2008 and also Profi t & Loss Account for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by the management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, (as amended) issued by the Central Government of India in

terms of Sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure, a statement on the matters specifi ed in paragraphs 4 & 5 of the said Order.

4. Further we report that : (i) We have obtained all the information and explanations

which, to the best of our knowledge and belief, were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by he Company, so far as appears from our examination of those books;

(iii) The Balance Sheet and Profi t and Loss Account dealt with by this report are in agreement with the books of account as submitted to us;

(iv) In our opinion, the Balance Sheet and Profi t & Loss Account dealt with by this report comply with the Accounting Standards referred to in Sub-section 3(C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representation received from the directors, as on 31st March, 2008 and taken on record by the Board Of Directors, we report that none of the directors is disqualifi ed as on 31st March, 2008 from being appointed as a director in terms of clause

3. Dividend : Your Directors have not recommended any dividend.4. Directors : Shri K.C.Gupta and Shri S.K. Jhunjhunwala retire from the

Board by rotation and are eligible for re-appointment.5. Auditors : The Auditors, Messrs R.L. Agarwalla & Co., Chartered

Accountants, retire and are eligible for re-appointment.6. Conservation of Energy, Technology Absorption,

Foreign Exchange Earnings and Outgo : As the Company has no manufacturing activity, it is

not required to furnish any information with regard to conservation of energy. There is no information to furnish

with regard to technology absorption. During the year, no foreign exchange was earned or used by the Company

7. Particulars of Employees : The provisions of Section 217 (2A) of the Companies

Act, 1956 are not applicable to the Company as there is no employee.

8. Directors’ Responsibility Statement : Your Directors confi rm that - i) in preparation of the annual accounts, the applicable

accounting standards have been followed along with proper explanation relating to material departures;

ii) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profi t of the Company for that year ;

iii) they have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a going concern basis.

9. Subsidiary Company : The audited accounts of Hargaon Properties Ltd., a subsidiary

of the Company, for the year ended 31st March, 2008 are attached as required under Section 212 of the Companies Act, 1956.

C. S. NOPANY Chairman9/1, R.N. Mukherjee Road, SANJAY MUKHERJEE Kolkata - 700 001 S. K. JHUNJHUNWALA Directors Dated : 2nd June, 2008 K. C. GUPTA

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AUDITORS’ REPORT (Contd.)(g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with Notes thereon and attached thereto give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India.

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; and,

b) In the case of the Profi t & Loss Account, of the profi t for the year ended on that date.

For R. L. AGARWALLA & CO. Chartered Accountants 7, Rabindra Sarani R. L. AGARWALLAKolkata – 700 001 Proprietor Dated : 2nd June, 2008 Membership No.50516

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE1 The Company has maintained proper record of fi xed assets

showing full particulars, including quantitative details and situation thereof. Fixed Assets have been physically verifi ed by the management during the year and no material discrepancies were noticed on such verifi cation. There was no substantial disposal of fi xed assets during the year.

2. The Company has no manufacturing and/ or trading activities and as such the question of having any stock and maintenance of records in respect thereof and physical verifi cation of inventory does not arise.

3. (a) As informed, the Company has not granted any loans, secured or unsecured, to the Companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence the requirement of sub clauses (b) to (d) of clause (iii) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured, to the Companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence the requirement of sub clauses (f) to (g) of clause (iii) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable.

4. The Company ahs not purchased any goods and fi xed assets and also there is no sale of goods and services during the year and as such the question of having any internal control system with regard to purchase of inventory, fi xed assets and sale of goods does not arise.

5. There was no transaction which was required to be entered in the register maintained under Section 301 of the Companies Act, 1956.

6. The Company has not accepted any deposits from the public.

7. The Internal Audit was conducted by a service Company and in our opinion the internal audit system was commensurate with the size of the Company and nature of its business.

8. The Company is not required to maintain any cost records under Section 209 (1)(d) of the Companies Act, 1956.

9. The Company is regular in depositing undisputed statutory dues with the appropriate authorities, as applicable. As the Company has no employee and no manufacturing and/ or trading activities are carried on by the Company, the question of payment of Provident Fund, Employees State Insurance, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess etc. does not arise. According to the information and explanations given to us no undisputed amounts payable in respect of statutory dues were outstanding as on 31st March, 2008 for the period of more than six months from the date they become payable. There are no dues outstanding in respect of

statutory dues on account of any dispute.

10. The Company has no accumulated loss at the end of the fi nancial year and it has not incurred any cash loss in the current and immediately preceding fi nancial year.

11. In our opinion and according to the information and explanations given to us, the Company has not taken any loan from fi nancial institutions, bank or debenture holders, as such, the question of any default do not arise.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debenture and other securities hence maintenance of records in respect thereof does not arise.

13. In our opinion, and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and Nidhi/ mutual benefi t fund/ societies.

14. In respect of dealing in shares, securities, debentures and other investments, in our opinion and accordingly to the information given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares, securities, debentures and other investments have been held by the Company in its own name.

15. As informed the Company has not given any guarantee for loans taken by others from bank and fi nancial institutions.

16. The Company has not taken any term loan from any fi nancial institution or bank. The Company does not have any borrowing by way of debentures.

17. We have been informed by the management that funds raised on short term basis were not utilised for long term purpose.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. The Company has not issued any debenture during this year.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and information and explanations given to us by the management, we report no fraud on or by the Company has been noticed or reported during the course of the audit.

For R. L. AGARWALLA & CO.

Chartered Accountants 7, Rabindra Sarani, R. L. AGARWALLAKolkata – 700 001. Proprietor Dated : 2nd June, 2008 Membership No.50516

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BALANCE SHEET as at 31st March, 2008

SOURCES OF FUNDS

Shareholders’ Funds

Share Capital 1 3,04,57,270 3,04,57,270

Reserves & Surplus 2 10,67,96,400 10,05,55,421

13,72,53,670 13,10,12,691

APPLICATION OF FUNDS

Fixed Assets : Land

As per last Account 29,35,653 29,35,653

Investments 3 12,01,91,208 11,91,01,120

Current Assets, Loans & Advances

Current Assets 4 32,809 26,076

Loans & Advances :

Loans

To The Oudh Sugar Mills Ltd.,

the holding Company (not bearing interest) 1,40,50,000 89,00,000

Advances recoverable in cash or in kind

or for value to be received or pending

adjustments 50,000 53,085

Advance payment of Income Tax & tax deducted at source – 7,62,757

1,41,32,809 97,41,918

Less : Current Liabilities & Provisions 5 Current Liabilities 6,000 6,000

Provisions – 7,60,000

6,000 7,66,000

Net Current Assets 1,41,26,809 89,75,918

13,72,53,670 13,10,12,691

Accounting Policies & Notes on Accounts 7

Schedules referred to above form an integral part of the Balance Sheet.

In terms of our attached report of even date.

For R.L. AGARWALLA & CO. C. S. NOPANY Chairman Chartered Accountants SANJAY MUKHERJEE 7, Rabindra Sarani, R. L. AGARWALLA S. K. JHUNJHUNWALA DirectorsKolkata - 700 001 Proprietor K. C. GUPTA Dated : 2nd June, 2008 Membership No. 50516

}

Schedule 31st March, 2008 31st March, 2007 Rs. Rs.

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Schedule 2007-2008 2006-2007 Rs. Rs.

PROFIT & LOSS ACCOUNT for the year ended 31st March, 2008

INCOME :

Dividend from Long Term Investments 63,42,344 93,03,156 Interest 6 – 7,02,740

Miscellaneous Receipts – 154

63,42,344 1,00,06,050

EXPENDITURE :

Rates & Taxes 7,300 6,600 Auditors’ Remuneration :

Audit Fees 10,000 6,000

For Certificates 2,000 1,903

Directors’ Fees 4,400 4,200

Miscellaneous Expenses

(including service charges Rs. 44,944 previous year Rs. 40,406) 72,540 51,045

96,240 69,748

Profit before Taxation 62,46,104 99,36,302

Less : Provision for Taxation (including Rs. 5125 in

respect of earlier years - Previous year Rs. Nil) 5,125 2,35,000

Profit after Taxation 62,40,979 97,01,302

Add : Balance brought forward from last year 4,25,36,211 3,48,34,909

Profit available for Appropriation 4,87,77,190 4,45,36,211

APPROPRIATIONS : Transfer to Reserve Fund 12,50,000 20,00,000

Balance carried to Balance Sheet 4,75,27,190 4,25,36,211

4,87,77,190 4,45,36,211

Schedules referred to above form an integral part of the Profit and Loss Account.

In terms of our attached report of even date.

For R.L. AGARWALLA & CO. C. S. NOPANY Chairman Chartered Accountants SANJAY MUKHERJEE 7, Rabindra Sarani, R. L. AGARWALLA S. K. JHUNJHUNWALA DirectorsKolkata - 700 001 Proprietor K. C. GUPTA Dated : 2nd June, 2008 Membership No. 50516

}

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SCHEDULE – 1 : SHARE CAPITAL Authorised : 49,90,000 Equity Shares of Rs. 10 each 4,99,00,000 4,99,00,000 10,000 Preference Shares of Rs. 10 each 1,00,000 1,00,000 5,00,00,000 5,00,00,000Issued : 30,45,733 Equity Shares of Rs. 10 each 3,04,57,330 3,04,57,330Subscribed & Paid-Up : 30,45,727 Equity Shares of Rs. 10 each fully paid up in cash 3,04,57,270 3,04,57,270 (The entire Subscribed Capital is held by The Oudh Sugar Mills Ltd., the holding Company)

SCHEDULE – 2 : RESERVES AND SURPLUS

Share Premium Account : As per last Account 3,04,57,210 3,04,57,210Reserve Fund : As per last Account 1,51,12,000 1,31,12,000 Transfer from Profit & Loss Account 12,50,000 20,00,000 1,63,62,000 1,51,12,000General Reserve : As per last Account 1,24,50,000 1,24,50,000

Surplus as per Profit & Loss Account 4,75,27,190 4,25,36,211 10,67,96,400 10,05,55,421

No. of Face Value 31st March, 2008 31st March, Shares Rs. Rs. Rs.

SCHEDULE – 3 : INVESTMENTS (AT COST)Long Term Investments (Non-Trade)Quoted (Fully Paid)Equity Shares : Upper Ganges Sugar & Industries Ltd. 6,57,966 10 4,88,31,540 4,88,31,540 New India Retailing & Investment Ltd. 1,34,448 10 1,06,72,988 1,06,72,988 (Formerly New India Sugar Mills Ltd.) SIL Investments Ltd. 11,40,931 10 2,60,25,111 2,60,25,111 (Formerly Sutlej Industries Ltd.) Sutlej Textiles & Industries Ltd 11,40,931 10 3,10,22,481 3,10,22,481 11,65,52,120 11,65,52,120Unquoted (Fully Paid)Equity Shares : India Educational and Research Institutions Pvt. Ltd. 4,900 10 49,000 49,000 49,000 49,000Unquoted (Partly Paid)Equity Shares : Modern DiaGen Services Ltd. (Rs. 2 paid up) 5,45,044 10 10,90,088 – 10,90,088 –Shares in Subsidiary CompanyUnquoted (Fully Paid)Equity Shares Hargaon Properties Ltd 2,50,000 10 25,00,000 25,00,000 12,01,91,208 11,91,01,120Aggregate Book Value of Investments Quoted 11,65,52,120 11,65,52,120 Unquoted 36,39,088 25,49,000 12,01,91,208 11,91,01,120Market Value of Quoted Investments 25,31,61,038 32,18,97,631

31st March, 2008 31st March, 2007 Rs. Rs.

SCHEDULES to the Balance Sheet

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31st March, 2008 31st March, 2007 Rs. Rs.

SCHEDULE – 4 : CURRENT ASSETS Cash & Bank Balances : Cash in hand 746 1,526 With a Scheduled Bank on Current Account 32,063 24,550 32,809 26,076SCHEDULE – 5 : CURRENT LIABILITIES & PROVISIONS Current Liabilities :Sundry Creditors : For Expenses 6,000 6,000Provision : For Taxation – 760,000 6,000 766,000

SCHEDULES to the Balance Sheet and Profi t & Loss Account

SCHEDULE – 6 : INTEREST

On Inter-Corporate Loan (Gross-tax deducted at source Rs. Nil; previous year Rs. 1,57,715) – 7,02,740 – 7,02,740

SCHEDULE – 7 : ACCOUNTING POLICIES & NOTES ON ACCOUNTS

1. Accounting Policiesi) Fixed Assets are stated at cost.ii) Long Term Investments are considered at cost on individual basis, unless there is permanent decline in value thereof, in which case

adequate provision is made against the diminution in the value of investments.iii) Items of Income and Expenditure are recognised on accrual basis.

2. Contingent Liability not provided for in respect of uncalled capital on partly paid shares held as investments of Rs. 43,60,352 (Previous Year - Rs. Nil)

3. No provision has been made in respect of diminution in the value of certain quoted investments aggregating Rs. 84,59,417 as the same, in the opinion of the management, is not permanent in nature. However, there is no diminution in the overall market value of the quoted investments.

4. The Company has given an undertaking to Punjab National Bank not to transfer, assign, dispose of, pledge, charge or create any lien or in any way encumber its shareholding, present or future in Sutlej Textiles & Industries Ltd without their approval in writing till the financial assistance provided by them to the said Company remains unpaid.

5. The Company has pledged 6,57,966 Equity Shares of Upper Ganges Sugar & Industries Ltd. and 11,40,931 Equity Shares of SIL Investments Ltd. against loan of Rs. 1,000 Lacs granted by ECL Finance Ltd. to The Oudh Sugar Mills Ltd., the holding Company.

2007-2008 2006-2007 Rs. Rs.

Signatories to Schedules 1 to 7

For R.L. AGARWALLA & CO. C. S. NOPANY Chairman Chartered Accountants SANJAY MUKHERJEE 7, Rabindra Sarani, R. L. AGARWALLA S. K. JHUNJHUNWALA DirectorsKolkata - 700 001 Proprietor K. C. GUPTA Dated : 2nd June, 2008 Membership No. 50516

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BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I Registration Details :

Registration No. U67120WB1986PLC041679 State Code 21

Balance Sheet Date 31.03.2008

II Capital raised during the year (Amount in Rs. Thousands)

Public Issue Nil Rights Issue Nil

Bonus Issue Nil Private Placement Nil

III Position of Mobilisation and Deployment of Funds : (Amount in Rs. Thousands) Total Liabilities 1,37,253 Total Assets 1,37,253 Sources of Funds : Application of Funds : Paid-up Capital 30,457 Net Fixed Assets 2936

Reserves & Surplus 1,06,796 Investments 1,20,191

Secured Loans Nil Net Current Assets 14,126

Unsecured Loans Nil Misc. Expenditure Nil

Accumulated Losses Nil

IV Performance of Company : (Amount in Rs. Thousands)

Turnover 6,342 Total Expenditure 96

Profit before Tax 6,246 Profit after Tax 6,241

Earning per Share (Rs.) 2.05 Dividend Rate Nil

V Generic Names of Principal Products/Services of the Company :

(as per monetary terms)

Item Code No.(ITC Code) Description Not Applicable

C. S. NOPANY Chairman

SANJAY MUKHERJEE

S. K. JHUNJHUNWALA Directors

K. C. GUPTA }

}

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956As on 31st March, 2008, 55.56% of the subscribed share capital of Hargaon Properties Ltd. was held by the Company. The net amount of the Profi t/(Loss) of the subsidiary Company for the last as well as the previous period, which concerns the members of the Company but have not been dealt with in or for the purposes of the accounts of the Company amounts to (Rs. 12,963) and (Rs. 1,57,013).

C. S. NOPANY Chairman 9/1, R.N. Mukherjee Road, SANJAY MUKHERJEE Kolkata - 700 001 S. K. JHUNJHUNWALA DirectorsDated : 2nd June, 2008 K. C. GUPTA }

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Amount outstandingAssets Side :2. Break-up of Loans and Advances including Bills receivables (other than those included in (4) below) a) Secrued Nil b) Unsecured 141.003. Break-up of Leased Assets and Stock on Hire and other assets counting towards AFC activities (i) Lease Assets including lease rentals under sundry debtors : (a) Financial Lease Nil (b) Operating Lease Nil (ii) Stock on hire including hire charges under sundry debtors : (a) Assets on Hire Nil (b) Repossessed Assets Nil (iii) Other Loans counting towards AFC activities : (a) Loans where assets have been repossessed Nil (b) Loans other than (a) above Nil4. Break-up of Investments : Current Investments : 1. Quoted : i) Shares : (a) Equity Nil (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil 2. Unquoted : i) Shares : (a) Equity Nil (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil

SCHEDULES to the Balance Sheet of a Non-Banking Financial Company(As required in terms of paragraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998

(Rs. in Lacs) Amount Amount PARTICULARS outstanding overdue (As on (As on 31.03. 2008) 31. 03.2008)

Liabilities Side : 1. Loans and Advances availed by the NBFC’S inclusive of interest accrued thereon but not paid : a) Debentures : Secured Nil Nil Unsecured Nil Nil (Other than falling within the meaning of Public Deposits) b) Deferred Credits Nil Nil c) Term Loans Nil Nil d) Inter-Corporate Loans and Borrowings Nil Nil e) Commercial Paper Nil Nil f) Other Loans (specify nature) Nil Nil

Long Term Investments : 1. Quoted : i) Shares : (a) Equity 1165.52 (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil 2. Unquoted : i) Shares : (a) Equity 36.39 (b) Preference Nil ii) Debentures and Bonds Nil iii) Units of Mutual Funds Nil iv) Government Securities Nil v) Others (please specify) Nil

5. Borrower group-wise classification of Assets Financed as in (2) and (3) above : (Rs. in Lacs)Category Amount net of provisions Secured Unsecured Total 1. Related Parties (a) Subsidiaries Nil Nil Nil (b) Companies in the same group Nil 140.50 140.50 (c) Other related parties Nil Nil Nil 2. Other than related parties Nil Nil Nil Total Nil 141.00 141.00

6. Investor group-wise classification of all Investments (current and long term) in shares and securities (both

quoted and unquoted) :

Market Value/ Break-up or Book Value Category Fair value or NAV (Net of Provisions)1. Related Parties (a) Subsidiaries 26.38 25.00 (b) Companies in the same group Nil Nil (c) Other related parties Nil Nil 2. Other than related parties 2534.55 1176.91 Total 2560.93 1201.93

Particulars Amount (i) Gross Non-Performing Assets Nil (a) Related parties Nil (b) Other than related parties

(ii) Net Non-Performing Assets Nil (a) Related parties Nil (b) Other than related parties (iii) Assets acquired in satisfaction of debt Nil

C. S. NOPANY Chairman SANJAY MUKHERJEE S. K. JHUNJHUNWALA Directors K. C. GUPTA

7. Other Information :

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DIRECTORS’ REPORT

COMPLIANCE CERTIFICATETo

The Members,

We have examined the registers, records, books and papers of Hargaon Properties Limited (the Company) as required to be maintained under the Companies Act, 1956, (the Act) and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on 31st March, 2008. In our opinion and to the best of our information and according to the examinations carried out by us and explanations furnished to us by the Company, its officers and agents, we certify that in respect of the period under scrutiny :

1. The Company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per the provisions of the Act and the rules made thereunder and all entries therein have been duly recorded.

2. The Company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies within the time prescribed under the Act and the rules made thereunder.

3. The Company, being a public limited Company; clause 3 is not applicable.

4. The Board of Directors duly met 4 (Four) times respectively on 17th May, 2007, 28th August, 2007, 23rd November , 2007 & 27th February, 2008 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose.

5. The Company was not required to close its Register of Members during the financial year since it is not listed with any stock exchange.

To

The Shareholders,

Your Directors have pleasure in presenting their Report and the audited Accounts of the Company for the year ended 31st March, 2008.

2. Financial Results :

The Profit & Loss Account for the year under review after writing off preliminary expenses Rs. 13,115 and providing Rs. 492 for taxation shows a loss of Rs. 23,331 which has been deducted from the credit balance of Rs. 2,82,600 brought forward from the previous year leaving a credit balance of

Rs. 2,59,269 which is to be carried forward.

3. Dividend :

Your Directors have not recommended any dividend.

4. Directors :

Shri K. C. Gupta retires from the Board by rotation and is eligible for re-appointment.

5. Auditors :

The Auditors, Messrs S. N. Roy & Co., Chartered Accountants, retire and are eligible for re-appointment.

6. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo :

As the Company has no manufacturing activity, it is not required to furnish any information with regard to conservation of energy. There is no information to furnish with regard to technology absorption. During the year, no foreign exchange was earned or used by the Company.

7. Particulars of Employees :

The provisions of Section 217 (2A) of the Companies Act, 1956 are not applicable to the Company as there is no employee.

8. Directors’ Responsibility Statement :Your Directors confirm that -

i) in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) they have selected such accounting policies and applied them consistently and

made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that year ;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a going concern basis.

9. Compliance Certificate :

A copy of the Compliance Certificate from Messrs D. Raut & Associates, Company Secretaries, as required under Section 383A of the Companies Act, 1956 is attached and forms a part of this Report.

9/1, R.N. Mukherjee Road, U. S. BERIA

Kolkata - 700 001 SANJAY MUKHERJEE Directors

Dated : 28th May, 2008 K. C. GUPTA}

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COMPLIANCE CERTIFICATE (Contd.)6. The Annual General Meeting for the financial year ended

on 31st March, 2007 was held on 22nd June, 2007 after giving due notices to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose.

7. No Extra Ordinary General Meeting was held during the financial year.

8. The Company has not advanced any loans to its directors or persons or firms or companies referred to under Section 295 of the Act.

9. The Company has not entered into any contracts falling within the purview of Section 297 of the Act.

10. The Company was not required to make any entries in the register maintained under Section 301 of the Act.

11. As there was no instance falling within the purview of Section 314 of the Act the Company was not required to obtain any approvals from the Board of Directors, members or Central Government.

12. The Company has not issued any duplicate share certificates during the financial year.

13. The Company has :

a) not made any transfer/ transmission or allotment of shares during the financial year.

b) not deposited any amount in a separate Bank Account as no dividend was declared was during the financial year.

c) was not required to post warrants to members of the Company as no dividend was declared during the financial year.

d) no amount in unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued thereon and as such it was not required to transfer any amount to Investor Education and Protection Fund.

e) has duly complied with the requirements of section 217 of the Act.

14. The Board of Directors of the Company is duly constituted.

15. The Company has not appointed any Managing Director Whole-time Director/ Manager during the financial year as there was no need to do so.

16. The Company has not appointed any sole-selling agents during the financial year.

17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar of Companies or such other authorities as may be prescribed under the various provisions of the Act during the financial year.

18. The Directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder.

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, as the Company has not issued any Prefernce Shares or Debentures.

22. There were no transaction necessitating the Company to keep in abeyance the rights to dividend, rights 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 of the Act during the financial year.

24. The Company has not borrowed any amount during the financial year.

25. The Company has not made any loans/ advances or made investments or provided guarantee to other body corporate during the financial year and hence no entries are required to be made in the registers for the purpose. .

26. The Company has not altered the provisions of the Memorandum with respect to the situation of the Company’s registered office from one state to another during the year under scrutiny.

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 Memorandum with respect to name of the Company during the year under scrutiny.

29. The Company has not altered the provisions of Memorandum with respect to share capital of the Company during the year under scrutiny.

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, for offences under the Act.

32. Since the Company has no employees, it has not received any money as security from its employees during the financial year.

33. Since the Company has no employees, the provisions of EPF & Miscellaneous Provisions Act, 1952 are not applicable, consequently it was not required to deduct any contribution towards Provident Fund during the financial year.

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ANNEXURE-A Sl. No. Registers/ Records as maintained by the Company1. Register of Investment u/s 49(7)2. Register of Transfer u/s 108/1113. Register of Members u/s 1504. Minutes Book of Board Meetings u/s 1935. Minutes Book of General Meetings u/s 193 6. Books of Accounts u/s 2097. Register of Notice of Interest given by the Directors u/s 2998. Register of contracts, Companies and firms in which directors are interested u/s 3019. Register of Directors, Managing Director, Manager and Secretary u/s 30310. Register of Directors’ Shareholding u/s 30711. Register of Loans & Investments u/s 372A12. Register of Charges u/s 14313. Application for and allotment of shares14. Copies of Annual Return u/s 163

ANNEXURE-BForms as filed by the Company with Registrar of Companies (ROC), Regional Director, Central Government or other authorities during the financial year ended on 31-03-2008.1. Form 23AC along with Balance Sheet and Form 23ACA along

with Profit & Loss Account for the Financial Year ended 31st March, 2007 filed u/s 220 on 26th June, 2007 with ROC.

2. Form 66 along with Compliace Certificate for the Financial Year ended on 31st March, 2007 filed u/s 383A on 26th June, 2007 with ROC.

3. Form 20B along with Annual Return for the Financial Year ended on 31st March, 2007 made on 22nd June, 2007 filed u/s 159 on 6th July, 2007 with ROC.

4. Form 32 for change in designation of Director made on 26th June, 2007 filed u/s 302 on 10th July , 2007 with ROC.

For D. RAUT & ASSOCIATES (Company Secretaries) Name of the Comapany Secretary : DEBENDRA RAUT (Proprietor) C. P. No. : 523242/1, B. B. Ganguly Street2nd Floor,Kolkata – 700 012Dated : 28th May, 2008

COMPLIANCE CERTIFICATE (Contd.)

AUDITORS’ REPORTTo The Members,We have audited the attached Balance Sheet of Hargaon Properties Limited, Kolkata as at 31st March, 2008 and also the Profit & Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.As required by the Companies (Auditor’s Report) Order, 2003, (as amended) issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the annexure, a statement on the matters specified in paragraphs 4 & 5 of the said Order.Further we report that :(i) We have obtained all the information and explanations which,

to the best of our knowledge and belief, were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by he Company, so far as appears from our examination of those books;

(iii) The Balance Sheet and the Profit and Loss Account, dealt with by this report, are in agreement with the books of account as submitted to us;

(iv) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in Sub-section 3(C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March, 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India.

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; and

b) In the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date.

For S. N. ROY & CO. Chartered Accountants 29A, Madan Mohan Tala Street S. N. ROY Kolkata – 700 005 ProprietorDated : 18th May, 2008 Membership No. 51056

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ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE1. a) The Company has maintained proper records to

show full particulars, including quantitative details and situation of fixed assets.

b) The Fixed Assets of the Company have been physically verified during the year by the management, which has revealed no discrepancies between the book records and the physical inventory.

c) During the year, none of the fixed assets have been disposed of/by the Company.

2. The Company has no manufacturing and/or trading activities and as such the question of having any stock and maintenance of records in respect thereof and physical verification of inventory does not arise. Hence clauses ii(a), ii(b) & ii(c) of paragraph 4 of the aforesaid order are not applicable.

3. The Company has neither granted nor taken any loans, secured/ unsecured, to/ from Companies, firms or other parties covered in the register maintained under Section 301 of the Act and hence the clauses iii(a), iii(b), iii(c), iii(d), iii(e), iii(f) & iii(g) of paragraph 4 of the aforesaid order are not applicable.

4. There is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets made during the year. There is no continuing failure to correct major weaknesses in internal control system.

5. There was no transaction needed to be entered in the register in pursuance of Section 301 of the Companies Act, 1956 and hence clauses v (a) and v (b) of paragraph 4 of the aforesaid order are not applicable.

6. The Company has not accepted deposits from the public during the year.

7. The Company is not a listed Company and paid up capital and reserves are less than Rs. 50 Lacs at the commencement of the financial year and also the average annual turnover is less than Rs. 5 crores for a period of three financial years immediately preceding the financial year concern, hence clause vii of paragraph 4 is not applicable.

8. The Company is not required to maintain any cost records.

9. a) The Company is regular in depositing undisputed statutory dues with the appropriate authorities, as applicable. As the Company has no employee and no manufacturing and/or trading activities are carried on by the Company, the question of payment of Provident Fund, Employees State Insurance, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess etc. does not arise. According to the information and explanations given to us no undisputed amounts payable in respect of statutory dues were outstanding as on 31st March, 2008 for a period of more than six months from the date they became payable.

b) As at 31st March, 2008 there are no disputed dues in

respect of Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess etc.

10. The Company has been registered for a period of less than five years and hence clause X of paragraph 4 is not applicable.

11. The Company has not taken any term loan from any financial institution or bank. The Company does not have any borrowing by way of debentures.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. a) The Company is not a chit fund, Nnidhi or Mutual Benefit fund/ society.

b) In view of our comment in paragraphs xiii (a) above, clauses xiii (b) xiii(c) & xiii(d) of paragraph 4 of the aforesaid order are not applicable

14. The Company is not dealing or trading in shares, securities, debentures etc.

15. The Company has not given any guarantee for the loans taken by other parties from any bank or financial institutions.

16. The Company has not raised any funds on short term basis or on long term basis. Hence clauses xvi & xvii of the aforesaid order is not applicable.

17. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. The Company has not raised any money through a public issue during the year.

18. The Company has not issued any debentures. Hence clauses xix & xx of the aforesaid order is not applicable

19. During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the Company nor we have been informed of such case by the management.

For S. N ROY & CO.

Chartered Accountants

29A, Madan Mohan Tala Street, S. N. ROY

Kolkata - 700 005. Proprietor

Dated : 28 May, 2008 Membership No. 51056

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BALANCE SHEET as at 31st March, 2008

Schedule 31st March, 2008 31st March, 2007 Rs. Rs.

SOURCES OF FUNDS

Shareholders’ Funds

Share Capital 1 45,00,000 45,00,000

Reserves & Surplus 2 2,59,269 2,82,600

47,59,269 47,82,600

APPLICATION OF FUNDS

Fixed Assets Land 47,23,634 47,23,634

Current Assets, Loans & Advances

Current Assets 3 23,520 22,736

Loans & Advances

Advance payment of Income Tax & tax deducted at source – 60,000

23,520 82,736

Less : Current Liabilities & Provisions 4 Current Liabilities 1,000 1,000

Provisions – 49,000

1,000 50,000

Net Current Assets 22,520 32,736

Miscellaneous Expenditure (to the extent not written off or adjusted)

Preliminary Expenses 13,115 26,230

47,59,269 47,82,600

Accounting Policies & Notes on Accounts 5

Schedules referred to above form an integral part of the Balance Sheet.

In terms of our attached report of even date.

For S. N. ROY & CO. Chartered Accountants U. S. BERIA 29A, Madan Mohan Tala Street, S. N. ROY SANJAY MUKHERJEE DirectorsKolkata - 700 005. Proprietor K. C. GUPTA Dated : 28th May, 2008 Membership No. 51056

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PROFIT & LOSS ACCOUNT for the year ended 31st March, 2008

2007-2008 2006-2007 Rs. Rs.

INCOME

Interest from Income Tax Department 1,192 – Profit on sale of Investments – 105,108

1,192 105,108

EXPENDITURE

Rates & Taxes 3,400 13,400 Interest – 2,000

Land Rent 288 –

Auditors’ Remuneration

Audit Fees 1,000 1,000

Miscellaneous Expenses 6,228 7,679

Preliminary Expenses Written Off 13,115 13,115

24,031 37,194

Profit/(Loss) before Taxation (22,839) 67,914

Less : Provision for Taxation

(including Rs. 492 in respect of an earlier year) 492 12,000

Profit/(Loss) after Taxation (23,331) 55,914

Add : Profit brought forward from last year 2,82,600 2,26,686

Credit balance carried to Balance Sheet 2,59,269 2,82,600

In terms of our attached report of even date.

For S. N. ROY & CO. Chartered Accountants U. S. BERIA 29A, Madan Mohan Tala Street, S. N. ROY SANJAY MUKHERJEE DirectorsKolkata - 700 005. Proprietor K. C. GUPTA Dated : 28th May, 2008 Membership No. 51056

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SCHEDULES to the Balance Sheet

31st March, 2008 31st March, 2007 Rs. Rs.

SCHEDULE – 1 : SHARE CAPITAL Authorised : 5,00,000 Equity Shares of Rs. 10 each 50,00,000 50,00,000Issued, Suscribed & Paid-up : 4,50,000 Equity Shares of Rs. 10 each fully paid up in cash 45,00,000 45,00,000 (Out of the above, 2,50,000 Equity Shares are held by Hargaon Investment & Trading Co. Ltd., the holding Company)

SCHEDULE – 2 : RESERVES AND SURPLUS Surplus as per Profit & Loss Account 2,59,269 2,82,600

SCHEDULE – 3 : CURRENT ASSETS Cash & Bank Balances Cash in hand 1,856 1,856 Balance with a Scheduled Bank on Current Account 21,664 20,880 23,520 22,736

SCHEDULE – 4 : CURRENT LIABILITIES & PROVISIONS Current Liabilities Sundry Creditors : For Expenses 1,000 1,000Provisions : For Taxation – 49,000 1,000 50,000

SCHEDULE – 5 : ACCOUNTING POLICIES & NOTES ON ACCOUNTS Accounting Policies

Basis of Accounting The Company prepares its accounts on accrual basis in acordance with normally accepted accounting principles. Fixed Assets Fixed Assets are stated at cost. Preliminary Expenses Preliminary Expenses are being written off over a period of five years in equal instalments.

Signatories to Schedules 1 to 5 For S. N. ROY & CO. Chartered Accountants U. S. BERIA 29A, Madan Mohan Tala Street, S. N. ROY SANJAY MUKHERJEE DirectorsKolkata - 700 005. Proprietor K. C. GUPTA Dated : 28th May, 2008 Membership No. 51056

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BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I Registration Details

Registration No. U70101WB2003PLC097280 State Code 21

Balance Sheet Date 31.03.2008

II Capital raised during the year (Amount in Rs. Thousands)

Public Issue Nil Rights Issue Nil

Bonus Issue Nil Private Placement Nil

III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities 4,759 Total Assets 4,759

Sources of Funds Application of Funds

Paid-up Capital 4,500 Net Fixed Assets 4,724

Reserves & Surplus 259 Investments Nil

Secured Loans Nil Net Current Assets 22

Unsecured Loans Nil Miscellaneous Expenditure 13

Accumulated Losses Nil

IV Performance of Company (Amount in Rs. Thousands)

Turnover 1 Total Expenditure 24

Profit/ (Loss) before Tax (23) Profit/ (Loss) after Tax (23)

Earning per Share (Rs.) (0.05) Dividend Rate Nil

V Generic Names of Principal Products/ Services of the Company (as per monetary terms)

Item Code No.(ITC Code)

Product Description

U. S. BERIA SANJAY MUKHERJEE Directors K. C. GUPTA

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}Not Applicable

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Annual Report 2007-08 II The O

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The Oudh Sugar Mills Limitedwww.birla-sugar.com/osugar