1.  Basis of preparation of Financial Statements
 
 The Financial Statements are prepared in accordance with Generally
 Accepted Accounting Principles (GAAP) in India under the historical
 cost convention on accrual basis except certain fixed assets which are
 carried at revalued amount. GAAP comprises mandatory Companies
 (Accounting Standard) Rules, 2006 notified by the Central Government of
 India under Section 211(3C) of the Companies Act, 1956, other
 pronouncements of the Institute of Chartered Accountants of India, the
 provisions of the Companies Act, 1956 and guidelines issued by the
 Securities and Exchange Board of India (SEBI).
 
 Accounting policies have been consistently applied except where a newly
 issued Accounting Standard is initially adopted or a revision to an
 existing Accounting Standard requires a change in the accounting policy
 hitherto in use.
 
 2.  Use of Estimates
 
 The preparation of the Financial Statements in conformity with GAAP
 requires management to make estimates and assumptions that affect the
 reported balances of assets and liabilities and disclosures relating to
 contingent liabilities as at the date of the financial statements and
 reported amounts of income and expenditure during the period.
 
 3.  Fixed Assets, Intangible Assets and Capital Work-in-Progress
 
 a) Fixed Assets are stated at their original cost (net of accumulated
 depreciation and impairments) adjusted by revaluation of Land,
 Building, Plant & Machinery, Railway Siding and Tube well of the
 Balrampur Unit as at 30th June, 1988; Land, Building and Plant &
 Machinery of Tulsipur Unit as at 31st March, 1999 and Land, Building
 and Plant & Machinery of Maizapur unit as at 30th September, 2008.
 Cost, net of cenvat, includes acquisition price, import duties, other
 non-refundable taxes and levies, attributable expenses and
 pre-operational expenses including finance charges, wherever
 applicable.
 
 b) Intangible assets are recorded at the consideration paid for
 acquisition of such assets and are carried at cost of acquisition less
 accumulated amortisation and impairment, if any.
 
 c) Expenditure during construction period: Expenditure (including
 financing cost relating to borrowed funds for construction or
 acquisition of fixed assets) incurred on projects under implementation
 are treated as Pre-operative expenses pending allocation to the assets
 and are shown under Capital Work-in-Progress. Capital
 Work-in-Progress comprises the cost of fixed assets that are not yet
 ready for their intended use at the reporting date.
 
 4.  Depreciation and Amortization
 
 a) Depreciation on Fixed Assets is provided on Straight Line method in
 accordance with the rates as specified in Schedule XIV to the Companies
 Act, 1956 (as amended) other than on Power Transmission lines and
 Mobile Phones. Power Transmission Lines are depreciated over a period
 of five years and Mobile Phones over a period of three years on
 straight line basis.
 
 b) Depreciation/amortisation on assets added, sold or discarded during
 the year has been provided on pro-rata basis.
 
 c) Lease hold land in the nature of perpetual lease is not amortised.
 Other lease hold land are amortised over the period of the lease.
 
 d) Computer Software (Acquired) are amortised over a period of five
 years. Amortisation is done on straight line basis.
 
 5.  Investments
 
 Trade investments are the investments made for or to enhance the
 Companys business interest. Investments are either classified as
 current or long-term based on Managements intention at the time of
 purchase. Long - term investments are carried at cost less provisions
 for diminution recorded to recognize any decline, other than temporary,
 in the carrying value of each investment. Current investments are
 carried at the lower of cost and fair value, category wise. Cost for
 overseas investments comprises of the Indian Rupee value of the
 consideration paid for the investment translated at the exchange rate
 prevalent at the date of investment. Cost includes acquisition charges
 such as brokerage, fee and duties.
 
 6.  Inventories
 
 a) Inventories (other than By-products, Scrap and Standing crop) are
 valued at lower of cost and net realisable value after providing for
 obsolescence, if any. Cost of inventory comprises of purchase price,
 cost of conversion and other cost that have been incurred in bringing
 the inventories to their respective present location and condition.
 Interest costs are not included in value of inventories. The cost of
 Inventories is computed on weighted average basis.
 
 b) Assets identified and technically evaluated as obsolete and held for
 disposal are valued at their estimated net realisable value.
 
 c) By-products (Molasses, Bagasse & Press mud), Scrap and Standing Crop
 are valued at net realisable value.
 
 d) Inter-unit transfer of By-products include the cost of
 transportation, duties, etc.
 
 7.  Share Issue Expenses
 
 These are equally amortised over a period of five years.
 
 8.  Revenue Recognition
 
 a) Sale of goods is recognised at the time of transfer of substantial
 risk and rewards of ownership to the buyer for a consideration.
 
 b) Gross turnover includes excise duty but excludes sales tax / VAT.
 
 c) Dividend income is accounted for in the year it is declared.
 
 d) All other income are accounted for on accrual basis.
 
 9.  Expenses
 
 All the expenses are accounted for on accrual basis.
 
 10.  Government Grants
 
 a) Government grants related to specific fixed assets are adjusted with
 the value of the fixed asset. If not related to a specific fixed asset,
 it is credited to Capital Reserve.
 
 b) Government grants related to revenue items are adjusted with the
 related expenditure. If not related to a specific expenditure, it is
 taken as income.
 
 11.  Provisions, Contingent Liabilities and Contingent Assets
 
 Provision is recognized in respect of obligations where, based on the
 evidence available, their existence at the Balance Sheet date is
 considered probable.
 
 Contingent Liabilities are shown by way of notes to the Accounts in
 respect of obligations where, based on the evidence available, their
 existence at the Balance Sheet date is considered not probable.
 
 Re-imbursement expected in respect of expenditure to settle a provision
 is recognized only when it is virtually certain that the re-imbursement
 will be received.
 
 A Contingent Asset is not recognized in the Accounts.
 
 12.  Impairment of Assets
 
 An asset is treated as impaired when the carrying cost of assets
 exceeds its recoverable value. An impairment loss is charged to the
 Profit & Loss Account in the year in which an asset is identified as
 impaired. The impairment loss recognized in previous accounting period
 is reversed if there has been a change in the estimate of recoverable
 amount.
 
 13.  Foreign Currency Transactions
 
 a) Transactions in Foreign currency are initially recorded at the
 exchange rate at which the transaction is carried out.
 
 b) Monetary Assets and Liabilities related to foreign currency
 transactions remaining outstanding at the year end are translated at
 the year end rate.
 
 c) In case of items which are covered by forward exchange contracts,
 the difference between the year end rate and the rate on the date of
 the contract is recognized as exchange difference. The premium or
 discount on forward exchange contracts is recognized over the period of
 the respective contract.
 
 d) Any income or expense on account of exchange difference either on
 settlement or on translation at the year end is recognized in the
 Profit & Loss Account.
 
 e) Transactions covered by cross currency swap contracts are marked to
 market at the Balance Sheet date and the gain or loss is taken to
 Profit & Loss Account.
 
 14.  Borrowing Costs
 
 Borrowing costs that are attributable to the acquisition or
 construction of a qualifying asset is capitalized as part of the cost
 of such asset till such time the asset is ready for its intended use. A
 qualifying asset is one that necessarily takes a substantial period of
 time to get ready for its intended use. All other borrowing costs are
 charged to Profit & Loss Account in the period in which they are
 incurred.
 
 15.  Insurance Claims
 
 Accounted for on settlement of claims.
 
 16.  Employee Benefits
 
 a) Short-term employee benefits are recognized as an expense at the
 undiscounted amount in the Profit & Loss Account for the year in which
 the related service is rendered.
 
 b) Long-term employee benefits are recognized as an expense in the
 Profit & Loss Account for the year in which the employees have rendered
 services. The expense is recognized at the present value of the amount
 payable as per actuarial valuations. Actuarial gains and losses in
 respect of such benefits are recognized in the Profit & Loss Account.
 
 17.  Employee Stock Option Scheme
 
 In respect of employee stock options granted pursuant to the companys
 Employee Stock Option Scheme, the intrinsic value of the option (excess
 of market price of the share on the date of grant over the exercise
 price of the option) is treated as discount and amortised for as
 employee compensation cost on a straight line basis over the vesting
 period.
 
 18.  Taxes on Income
 
 Current income tax is measured at the amount expected to be paid to the
 tax authorities in accordance with the Income Tax Act, 1961.
 
 Deferred tax is recognized, subject to the consideration of prudence in
 respect of deferred tax assets, on timing differences, being the
 difference between taxable income and accounting income that originate
 in one period and are capable of reversal in one or more subsequent
 periods.
 
 MAT credit is recognised as an asset only when and to the extent there
 is convincing evidence that the company will pay normal income tax
 during the specified period. In the year in which the Minimum Alternate
 tax (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 & 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.