Dwarikesh Sugar Industries

1.a) Term Loans from IDBI Bank Limited (IDBI) of Rs. 12,826 lacs
 (including term loan in foreign currency equivalent to Rs 2,500 Lacs)
 are secured as under:
 
 - Term Loan of Rs 231 Lacs is secured by (i) pari passu first charge on
 movable fixed assets including movable plant & machineries, machinery
 spares, tools and accessories, both present and future (save and except
 book debts),situated at Dwarikesh Nagar, village Bundki and Rajupura,
 Post office Medhpurasultan, Tehsil Nagina, District Bijnor, Uttar
 Pradesh, (ii) pari passu first charge by way of equitable mortgage on
 immovable properties situated at Dwarikesh Nagar, village Bundki and
 Rajupura, Post office Medhpurasultan, Tehsil Nagina, District Bijnor,
 Uttar Pradesh and (iii) pari passu second charge by way of equitable
 mortgage on immovable properties situated at Dwarikesh Puram, village
 Bahadarpur, Tehsil Dhampur, District Bijnor, Uttar Pradesh.
 
 - Term Loan of Rs 5,000 Lacs (including term loan in foreign currency
 equivalent to Rs 2,500 Lacs) is secured by (i) pari passu first charge
 on movable and immovable fixed assets (both present and future) of unit
 situated at Dwarikesh Dham, village Bhagwanpur Phulwa, Tehsil Faridpur,
 District Bareilly, Uttar Pradesh (ii) pari passu second charge on the
 movable and immovable fixed assets of unit situated at Dwarikesh Nagar,
 village Bundki and Rajupura, Post office Medhpurasultan, Tehsil Nagina,
 District Bijnor, Uttar Pradesh and (iii) pari passu third charge on the
 movable and immovable fixed assets of unit situated at Dwarikesh Puram,
 village Bahadarpur, Tehsil Dhampur, District Bijnor, Uttar Pradesh.
 
 - Term Loan of Rs 1,600 Lacs is secured by (i) pari passu first charge
 on movable and immovable fixed assets (both present and future) of unit
 situated at Dwarikesh Dham, village Bhagwanpur Phulwa, Tehsil Faridpur,
 District Bareilly, Uttar Pradesh (ii) pari passu second charge on the
 movable and immovable fixed assets of unit situated at Dwarikesh Nagar,
 village Bundki and Rajupura, Post office Medhpurasultan, Tehsil Nagina,
 District Bijnor, Uttar Pradesh and (iii) pari passu third charge on the
 movable and immovable fixed assets of unit situated at Dwarikesh Puram,
 village Bahadarpur, Tehsil Dhampur, District Bijnor, Uttar Pradesh.
 
 - Term loan of Rs. 595 Lacs is secured by residual pari-passu charges
 on movable & immovable fixed assets of (i) unit -I Dwarikesh Nagar,
 Village Bundki and Rajupura, Post office Medhpurasultan, Tehsil Nagina,
 District Bijnor, Uttar Pradesh, (ii) Unit-ll Dwarikesh Puram, village
 Bahadarpur, Tehsil Dhampur, District Bijnor, Uttar Pradesh, (iii)
 Dwarikesh Dham, village Bhagwanpur Phulwa, Tehsil Faridpur, District
 Bareilly, Uttar Pradesh.
 
 b) Term Loans from Punjab National Bank (PNB) of Rs. 30,237 lacs
 (including term loan in foreign currency equivalent to Rs 1, 196.10
 Lacs) are secured as under:
 
 - Term loan of Rs. 7,650 lacs is secured by (i) First charge on block
 assets of unit situated at Dwarikesh Puram, village Bahadarpur, Tehsil
 Dhampur, District Bijnor, Uttar Pradesh (present & future) by way of
 hypothecation of machinery & equipment and other fixed assets and
 equitable mortgage of land and building situated at Dwarikesh Puram,
 village Bahadarpur, Tehsil Dhampur, District Bijnor, Uttar Pradesh and
 (ii) Second pari passu charge on block assets of the unit situated at
 Dwarikesh Nagar, village Bundki and Rajupura, Post office
 Medhpurasultan, Tehsil Nagina, District Bijnor, Uttar Pradesh.
 
 - Term loan of 9,400 lacs (including term loan in foreign currency
 equivalent to Rs 1, 196.10 Lacs) is secured by (i) Pari passu first
 charge on block of assets, (both present and future ) by way of
 hypothecation of machinery, equipment & other fixed assets and
 equitable mortgage of Land and Building of unit situated at Dwarikesh
 Dham, village Bhagwanpur Phulwa, Tehsil Faridpur, District Bareilly,
 Uttar Pradesh, ii) second pari passu charge on entire block assets of
 Dwarikesh Nagar, village Bundki & Rajupura, Tehsil Nagina, District
 Bijnor, Uttar Pradesh and (iii) third pari passu charge on entire block
 assets of Dwarikesh Puram, village Bahadarpur, Tehsil Dhampur, District
 Bijnor, Uttar Pradesh.
 
 - Term loan of Rs.5,600 lacs is secured by (i) pari passu first charge
 on specific immovable & movable fixed assets by way of hypothecation of
 machinery, equipment & other fixed assets and equitable mortgage of
 Land & Building of unit situated at Dwarikesh Puram, village
 Bahadarpur, Tehsil Dhampur, District Bijnor, Uttar Pradesh pertaining
 to 24 MW Co-generation plant, and (ii) second pari passu charge on
 entire block assets of Dwarikesh Nagar, village Bundki & Rajupura,
 Tehsil Nagina, District Bijnor, Uttar Pradesh.
 
 - Term loans of Rs 210 lacs are secured by (i) pari passu first charge
 on movable fixed assets including movable plant & machineries,
 machinery spares, tools and accessories, both present and future (save
 and except book debts) on entire block assets of Dwarikesh Nagar,
 village Bundki & Rajupura, Tehsil Nagina, District Bijnor, Uttar
 Pradesh and (ii) equitable mortgage on immovable properties situated at
 Dwarikesh Nagar, Village Bundki and Rajupura, Post office
 Medhpurasultan, Tehsil Nagina, District Bijnor, Uttar Pradesh
 
 All the term loans of PNB mentioned above are also secured by second
 pari passu charge on current assets of the company.
 
 - Term loans of Rs. 2,377 Lacs are secured by residual pari-passu
 charges on movable & immovable fixed assets of (i) Unit -I Dwarikesh
 Nagar, Village Bundki and Rajupura, Post office Medhpurasultan, Tehsil
 Nagina, District Bijnor, Uttar Pradesh, (ii) Unit-ll Dwarikesh Puram,
 village Bahadarpur, Tehsil Dhampur, District Bijnor, Uttar Pradesh,
 (iii) Dwarikesh Dham, village Bhagwanpur Phulwa, Tehsil Faridpur,
 District Bareilly, Uttar Pradesh of the Company.
 
 - Term loan of 5,000 lacs is secured by (i) Pari passu first charge on
 immovable and movable fixed assets, (both present and future) by way of
 hypothecation of machinery, equipment & other fixed assets and
 equitable mortgage of Land and Building of unit situated at Dwarikesh
 Dham, village Bhagwanpur Phulwa, Tehsil Faridpur, District Bareilly,
 Uttar Pradesh, and ii) pari passu first charge on specific immovable &
 movable fixed assets by way of hypothecation of machinery, equipment &
 other fixed assets and equitable mortgage of Land & Building of unit
 situated at Dwarikesh Puram, village Bahadarpur, Tehsil Dhampur,
 District Bijnor, Uttar Pradesh pertaining to 24 MW Co-generation plant
 
 c) Interest free trade tax loan of Rs. 105.77 lacs (including Rs. 19.12
 lacs added during the year) from Pradeshiya Industrial & Investment
 Corporation of UP Limited is secured by (i) second pari-passu charge on
 Companys immovable properties situated at Villages Bundki and
 Rajupura, Post Office Medhpurasultan, Tehsil Nagina, District Bijnor,
 Uttar Pradesh and movable fixed assets including plant & machineries,
 machinery spares, tools and accessories, both present and future (save
 and except book debts) and (ii) second pari passu charge by way of
 equitable mortgage on immovable properties situated at Dwarikesh Puram,
 village Bahadarpur, Tehsil Dhampur, District Bijnor, Uttar Pradesh. The
 loan amount is repayable at the end of 5 years from the respective year
 of collection.
 
 d) Loan from Sugar Development Fund of Rs. 236.50 lacs is secured by
 (i) first pari passu charge on whole of movable properties of the unit
 & equitable mortage on immovable properties situated at Villages
 Bundki, and Rajupura, Post Office Medhpurasultan, Tehsil Nagina,
 District Bijnor, Uttar Pradesh including its moveable plant and
 machinery, machinery spares, tools and accessories and other movables,
 both present and future and (ii) second pari passu charge by way of
 equitable mortgage on immovable properties situated at Dwarikesh Puram,
 village Bahadarpur, Tehsil Dhampur, District Bijnor, Uttar Pradesh.
 
 All the term loans mentioned at above (a to c) are also personally
 guaranteed by the Chairman & Managing Director of the Company.
 
 e) Cash credit balances of Rs. 14,268.20 lacs from Punjab National Bank
 and IDBI Bank Limited are secured by (i) hypothecation of current
 assets of the Company viz. stock of sugar, molasses, chemicals, stores
 & spares, (ii) second charge on block assets immovable and movable ,
 both present and future, of Dwarikesh Nagar, Village Bundki and
 Rajupura, Post office Medhpurasultan, Tehsil Nagina, District Bijnor,
 Uttar Pradesh, (iii) second charges on block assets immovable &
 movable, both present & future, of Dwarikesh Puram, village Bahadarpur,
 Tehsil Dhampur, District Bijnor, Uttar Pradesh and (iv) second charges
 on block assets immovable & movable, both present & future, of
 Dwarikesh Dham, village Bhagwanpur Phulwa, Tehsil Faridpur, District
 Bareilly, Uttar Pradesh.
 
 The cash credit facilities are also personally guaranteed by the
 Chairman & Managing Director of the Company.
 
                                                   As at         As at
                                             30th Sep 08  30th Sep07
                                                Rupees        Rupees
 
 2.  Contingent liability not provided for
 
 (a) In respect of show cause notices from 
 Central Excise department                     10,503,596    4,383,005
 in various cases against which the company 
 has preferred appeals.
 (b) In respect of Trade Tax and Entry Tax 
 demand received from                           3,212,316      885,760
 Uttar Pradesh trade tax authorities in 
 various cases, in respect of which the 
 company has preferred appeals (net of amount
 deposited under appeal Rs.2,499,584/-, 
 previous year Rs. 2,847,404/-).
 (c) Bank Guarantees given to Pollution 
 Control Board and Petroleum                    3,560,000    3,400,000
 Companies.
 
 3.  Dividend not provided for on cumulative preference shares- Rs
 13,320,000/- (previous year-nil)
 
 4.  Estimated amount of contracts remaining to be executed on capital
 account, net of advance of Rs. Nil (previous year Rs. 215.87 lacs) and
 not provided for is Rs. 140.50 lacs (previous year Rs. 3,883.72 lacs).
 
 5. Loans and Advances include Rs. 2,330,519/- representing sales tax
 and interest thereon paid as a matter of abundant caution under protest
 under applicable Trade & Sales tax Act, based on the enquiry made on
 the company by Uttar Pradesh Trade tax authorities in respect of
 diesel, steel and cement provided to contractors/ sugar cane
 transporters during the years 1997-98 to 2000-2001.
 
 However, the company is confident of the non-applicability of any sales
 tax levy on this score as these items have been provided strictly for
 the activities directly related to the manufacturing process. The issue
 of diesel and other items has also not been classified as revenue
 income and has always been treated as store consumption. The company
 has paid the amount purely to establish its bona fide intentions and is
 confident of settling the issue in its favour and does not consider it
 necessary for making any provision.
 
 6.  The company has not taken any assets on finance/ operating lease.
 Accordingly, Accounting Standard AS-19 on leases is not applicable. The
 company has taken various office/ residential premises and Office
 Equipments on cancelable leases which are renewable on expiry of the
 lease period.
 
 7.  In view of losses during the year, no provision for income tax has
 been considered.
 
 Provision for wealth tax of Rs. 337,480/- represents provision
 applicable for the Assessment year 2008- 09 as per the provisions of
 Wealth Tax Act, 1957.
 
 8.  15 Lac Equity Share warrants convertible into 15 lac equity shares
 were allotted to promoters on 30th July, 2007 on receipt of deposit @
 10% of the amount calculated at the time of allotment of warrants as
 per pricing formula contained in the SEBI guidelines on preferential
 allotment. The warrants are convertible into equity shares at the
 option of warrants holders at any time after 31st January, 2008 but
 before the expiry of 18 months from the date of allotment considering
 the relevant date as 1st January, 2008 for the purpose of determining
 the price of the equity shares arising out of the conversion. Out of 15
 lacs warrants, 7.50 Lac warrants have been converted into 7.50 Lacs
 Equity Shares in February, 2008 and balance 7.50 Lac warrants are
 pending for conversion as on 30th September, 2008. The funds raised by
 the company through preferential allotment have been utilized for
 augmenting long term resources.
 
 9.  The Company, in compliance of the interim order passed by the
 Honble High Court of Allahabad (Lucknow Bench) on the 15th November,
 2007, has paid a price of Rs. 110/- per quintal for sugar cane
 purchased and accordingly accounted for the liability for sugar season
 2007-08. However, The High Court of Allahabad, by a subsequent order
 dated 7th July, 2008, upheld the validity of SAP of Rs 125 per quintal
 announced by the State Government. Aggrieved by the said order, the
 UPSMA filed SLP with Honble Supreme Court of India. Honble Supreme
 Court, in the interim, upheld that the sugar cane purchased by the
 sugar mills would continue to be paid for @ Rs 110/- per quintal. In
 view of the above, differential liability, if any, will be accounted as
 and when the matter is finally settled.
 
 10.  a) 12% Redeemable Preference Shares of Rs. 100/- each are
 redeemable at par in September, 2011.
 
 b) 8% Redeemable Cumulative Preference Shares of Rs. 100/-each are
 redeemable at par in August 2012.
 
 11.  Capital Redemption Reserve represents reserve created on account
 of:
 
 a) Buy-back of Equity Shares in the year 2000-2001 in terms of
 provisions of section 77A of the Companies Act, 1956.
 
 b) Redemption of 500,000 11 % preference shares of Rs. 100/- each
 amounting to Rs. 50,000,000/- in terms of section 80 of the Companies
 Act, 1956.
 
 12.  There are no amounts outstanding in respect of unpaid dividend
 /fixed deposits for more than seven years to be transferred to Investor
 Education and Protection Fund.
 
 13.  Capital raising expenditure written off during the year Rs.3,01
 1,120/- (previous year Rs.3,011,120/-) represents proportionate
 expenses incurred in placement of GDR (net of GDR income).
 
 14.  Sundry Debtors/Creditors and Loans and Advances balances are
 subject to confirmation and reconciliation.
 
 15. a) There are no dues to Micro, Small and Medium enterprises/ Small
 scale industrial undertaking (SSI) outstanding for more than 30 days.
 
 b) The company has not made any delays in settlement of balances due to
 small-scale undertakings and hence no provision for interest on delayed
 payment is required. Further there are no outstanding amount payable
 beyond the agreed period to Micro, Small and Medium enterprises as
 required by MSMED Act, 2006 as on the Balance Sheet date to the extent
 such enterprises have been identified based on information available
 with the company.
 
 16.  As per the Accounting Standard AS-28 Impairment of Assets, the
 company has tested impairment of fixed assets to identify the
 impairment loss, if any. Based on the assessment of the existing
 assets, the realizable amount for all the units is higher than the
 carrying values of such units. Accordingly no impairment is required to
 be recognized during the year.
 
 17.  During the year Rupee term loans of Rs. 3,696.10 Lacs were
 converted into foreign currency loan of USD 9,333,924.50. The above
 loans are hedged by forward contract. There are no other foreign
 currency exposures.
 
 18.  Figures for the previous year have been regrouped / reclassified,
 wherever necessary.