To The Shareholders, Kesar Enterprises Ltd.
 
 Dear Members,
 
 The Directors present to you the 78th Annual Report and audited
 Statement of Accounts for the year ended 30th June, 2012.
 
 FINANCIAL RESULTS
 
                                                       (Rs. in Lac)
                                             2011-12      2010-11
 
 Profit before interest, 
 depreciation, exceptional item & tax        1498.51      2623.71
 
 Less: Interest and Finance Charges          1876.35      1997.88
 
 Profit/ (Loss) before depreciation, 
 exceptional item &                          (377.84)      625.83
 
 Less: Depreciation                           558.29       583.10
 
 Profit / (Loss) before exceptional 
 item & tax                                  (936.13)       42.73
 
 Less: Exceptional Ltem                      1281.54 
 
 Profit / (Loss) before tax                 (2217.67)       42.73
 
 Add /(Less): Provision for Tax
 
 (i) Income Tax- Deferred Tax Assets          403.68       320.99
 
 (ii) Current Tax (consists of wealth 
 tax & MAT adjustment                        (184.51)       (1.98)
 
 Profit / (Loss) after tax                  (1998.50)      361.74
 
 For the year 2011-12, after considering Deferred Tax Assets, there is a
 loss of Rs. 1,998.50 lac, which includes a one time Exceptional Item
 relating to the payment of differential cane price of Rs. 1,281.54 lac
 for the Sugar Season 2007-08 as per the Hon''ble Supreme Court Order
 dated 17.1.2012. This is applicable to all sugar mills in U. P.  only.
 This is as against profit after tax of Rs. 361.74 lac in the previous
 year.
 
 In view of the above, your Directors have not recommended any dividend
 on Cumulative Redeemable Preference Shares and Equity Shares for the
 year 2011-12.
 
 WORKING OF THE DIVISIONS
 
 Sugar Division
 
 The crushing for the season 2011-12 started on 22.11.2011 i.e. 10 days
 earlier as compared to 2.12.2010 in the previous season and ended on
 15.4.2012 as against 30.3.2011, 15 days later than the previous season.
 During the season, the plant crushed 93.18 lac quintals of sugarcane as
 against 73.80 lac quintals in the previous season. The crushing was
 higher by 1 9.39 lac quintals during this season. The sugar recovery
 overall was slightly lower at 9.48% as against 9.68% in the previous
 season. The production of sugar was higher at 8.88 lac quintals due to
 higher availability of sugarcane, as against 7.18 lac quintals in the
 previous season.
 
 The Levy sugar price for the season 2011-12 was announced by the
 Central Government on 3.3.2012, increasing it from Rs. 1,900.88 to
 Rs.1,959.41 per quintal. The levy ratio is 10 %.
 
 On 14.3.2011, the Central Government had hiked the ''Fair and
 Remunerative Price'' (FRP) of sugarcane from Rs. 139.12 per quintal to Rs.
 145.00 per quintal at a base recovery of 9.5% for the season 2011-12.
 
 For the season 2011-12, the U. P. Government had announced a hike of Rs.
 35.00 a quintal in the State Advised Price (SAP) of sugarcane fixing
 SAP at Rs. 240.00 a quintal as against Rs. 205.00 a quintal in the previous
 year. During the season, Molasses produced was 4.36 lac quintals as
 against 3.56 lac quintals. Bagasse produced was 31.43 lac quintals as
 against 22.79 lac quintals in the previous season due to higher
 crushing. The Company had stored the
 
 ire surplus bagasse for its use in Cogeneration Power Plant, whereas in
 the previous season, the Company had sold 7.75 lac quintals of bagasse.
 The Company has implemented major energy efficient measures in the
 boiling house of the sugar factory at Baheri, thereby reducing steam
 and power consumption significantly, resulting in large savings in
 bagasse. Over and above that, there is lower power and steam
 consumption, resulting in reduced load on the boilers and turbines.
 
 Spirits Division
 
 During the year under review, the production of Rectified Spirit (RS)
 was 112.23 lac bulk litres as against 131.42 lac bulk litres in the
 previous year. The production of Extra Neutral Alcohol (ENA) was 52.44
 lac bulk litres as against 39.42 lac bulk litres in the previous year.
 The quantity of Country Liquor supplied was 11.25 lac cases as against
 8.82 lac cases in the previous year. The sale of IMFL was 1.98 lac
 cases as against 3.58 lac cases in the previous year. The Company has
 contract bottling arrangements with reputed parties, which ensures a
 higher capacity utilisation and reduction in operating overheads. The
 Company also has tie-up arrangements to get its own brands manufactured
 in other States.
 
 Agrotech Division:
 
 Crops
 
 The Company has undertaken cultivation of high valued crops and is
 developing Bio-pesticides and Bio-fungicides for sugarcane cultivation
 such as Trichoderma Verdi and Trichocards. Initial trials of these new
 products have been successful and are now being replicated on a larger
 scale. The Company has also undertaken the development of floriculture
 like rose, gladiolus and gerbera in greenhouses. The Division has been
 producing sugarcane, rice, wheat, mustard and sunflower for seed
 purpose and carries on cane development activities. The Company has a
 tissue culture laboratory for rapid multiplication of different
 sugarcane varieties.
 
 Seed Division
 
 Open Pollinated Seeds produced by the Company for wheat, paddy,
 mustard, toria, urad and peas have been very well received by the
 farmers. The Company has undertaken production & marketing of Hybrid
 Seeds of paddy, maize, sorghum sudan grass & pearl millet. The Company
 has registered Vegetable Seeds, which are sold under the brand name of
 ''Kesar Seeds''. The Company is getting the open pollinated seeds
 produced and processed in Madhya Pradesh, Uttar Pradesh and
 Uttarakhand. The Company has obtained Seed Licenses in the States of
 Chattisgarh, Rajasthan, Uttar Pradesh, Uttarakhand, Bihar, Madhya
 Pradesh, Punjab and Haryana. The Research and Development (R&D)
 facility for hybrid crop seeds is fully functional near Hyderabad.
 Simultaneously, the R&D facility for development of vegetable seeds at
 Kichha, Uttarakhand has been operationalised. Enhanced seed processing
 capacity of 6 mt/ hr is operational at Kichcha, Uttarakhand. The R&D
 department has undertaken field trials of hybrid paddy at various
 locations and the results have been excellent.
 
 SUBSEQUENT FINANCIAL YEAR 2012-13
 
 Sugar Division
 
 For the season 2012 -13, the Sugar Factory is expected to start by last
 week of November, 2012. The sugar season is expected to be better than
 the previous season. The Levy sugar price for the season 2012-13 is yet
 to be announced by the Central Government.
 
 The Central Government has not revised the levy sugar price for the
 years 2003-04 to 2008-09. In May 2004, in one sugar mill case, the
 Supreme Court had mentioned that the SAP fixed by the State Government
 needs to be taken into account in the computation of the levy sugar
 price. On 31.3.2008, in another sugar mill case, the Supreme Court
 directed the Central Government to refix the price of levy sugar taking
 into account the SAP as against Statutory Minimum Price (SMP).
 
 For the season 2012-13, the U. P. Government has not yet announced the
 State Advised Price (SAP) of sugarcane.
 
 Spirits Division
 
 The sugar cane crushing is expected to be higher than the previous
 season. Therefore, the total molasses availability will also be higher.
 The prices of molasses may drop. The production of Rectified Spirit /
 Special Denatured Spirit and ENA should be higher during this year. The
 sale of Country Liquor will be higher. IMFL is expected to be the same
 as in the previous year. The contract bottling arrangements continue.
 The overall performance of the Spirits Division for the current year is
 likely to be better as compared to the previous year.
 
 Seed Division
 
 The Company plans to expand operations in the eastern part of the
 country by entering Odisha and West Bengal, which hold enormous
 business potential for paddy and other kharif crops. In the north,
 operations are being reinforced with the induction of additional
 marketing force in Punjab and Jammu that will become operational for
 ensuing kharif season.
 
 EXPANSION / MODERNISATION
 
 Cogeneration Power Plant
 
 With stupendous efforts of the employees of the Company and full
 co-operation of manufacturers of various equipments & contractors, the
 44 mw Bagasse based Cogeneration Power Plant at Baheri, U.P. was
 completed in July 2012 in a record time of about 18 months. The trial
 run of the Plant was made on 17.7.2012. It is the most efficient and
 largest capacity single plant in the sugar Cogeneration Sector in U.P.
 and perhaps in the country, having the state-of-the-art Process Control
 systems with performance monitoring software. The Plant started
 commercial operations in October, 2012. The Company will substantially
 export power to the grid and will benefit from the well established
 government policies related to renewable energy and also get benefit of
 carbon trading rights / renewable energy certificate. The Sugar
 Development Fund, Allahabad Bank, UCO Bank and Yes Bank Ltd.  have
 financed the said Power Project.
 
 Spirits Division
 
 The Company is eligible to expand 25% capacity of the Distillery under
 U. P. Excise policy. Considering the current market scenario and in
 order to reduce overall production cost, the Company is planning to
 expand & modernise the production capacity of the Distillery from
 50,000 BL per day to 62,500 BL per day.
 
 Seed Division
 
 It is proposed to set up two seed processing plants, one in East Uttar
 Pradesh, which will service East U.P., Bihar, Jharkhand, Chattishgarh &
 Odisha and second one in Madhya Pradesh. With these plants, processing
 capacity is going to be doubled. Hybrid production is being increased
 as it will result in improved profitability.
 
 JOINT PROJECT IN MADHYA PRADESH
 
 A Consortium of Kesar Terminals & Infrastructure Limited (KTIL), the
 Lead Member, and the Company had received a Letter of Award [LOA] from
 The Madhya Pradesh State Agricultural Marketing Board (the Mandi Board)
 confirming the Consortium as a successful bidder for setting up of a
 Composite Logistics Hub at Pawarkheda, District Hoshangabad, Madhya
 Pradesh on a Design, Build, Finance, Operate and Transfer (DBFOT) basis
 through Public Private Participation (PPP). The project includes
 development of an entire range of logistics infrastructure including
 rail sidings for cargo and container movement, rail side warehouses,
 Inland Container Depot (ICD), Cold Storage, food grains warehouse,
 development of common facilities, marketing of the same to potential
 customers along with operation and maintenance thereof. The estimated
 Project cost is Rs. 150 crore. The said Project is being executed through
 a Special Purpose Vehicle named Kesar Multimodal Logistics Limited
 (KMLL) incorporated by KTIL & the Company in which the Company has
 invested Rs. 2,50,000/- towards its equity share capital. KMLL has
 executed a Concession Agreement with the Mandi Board on 24.10.2011 in
 the matter. The Project is in progress as per schedule.
 
 REDEMPTION OF PREFERENCE SHARES
 
 In 2004, the Company had allotted 20,00,000 - 1% Cumulative Redeemable
 Preference Shares (CRPS) of Rs.10/- each fully paid-up aggregating to Rs.
 2,00,00,000 to Industrial Development Bank of India (IDBI), as per the
 Consent Terms dated 17.10.2003 signed under the Negotiated Settlement.
 The said CRPS are to be redeemed in three annual installments
 respectively on 10.8.2011, 10.8.2012 and 10.8.2013. Accordingly, the
 Company had paid the 1st instalment of Rs. 67,00,000/- on 10.8.2011 and
 the 2nd instalment of Rs. 67,00,000/- on 10.8.2012. The balance amount of
 Rs. 66,00,000/- will be payable on 10.8.2013.
 
 RAISING FUNDS THROUGH RIGHTS ISSUE
 
 The Board has approved raising funds up to an amount not exceeding
 Rs.15 crore inclusive of premium, if any, by issue of further equity
 share capital on Rights basis to the existing shareholders, subject to
 the approval of SEBI & Stock Exchanges (BSE & NSE) on the terms and
 conditions like offer ratio, quantum of shares, offer price etc. as may
 be determined in consultation with the Lead Manager / Advisor to the
 Rights Issue and such other authorities and agencies as may be required
 to be consulted by the Company. The Shareholders have already passed a
 Special Resolution under section 81(1A) of the Companies Act through
 Postal Ballot process on 3.10.2012 to raise the funds through issue of
 securities upto an amount not exceeding Rs. 50 Crore. To decide various
 matters concerning the Rights Issue at the earliest and also for
 administrative convenience, the Board has constituted a Rights Issue
 Committee comprising of 4 Directors viz. Shri H R Kilachand, Chairman &
 Managing Director, Shri A S Ruia, Shri K Kannan and Shri Ajeet Prasad.
 
 DIRECTORS
 
 Shri K Kannan and Shri A S Ruia, Directors of the Company retire by
 rotation at the ensuing Annual General Meeting and being eligible,
 offer themselves for reappointment. The brief profile, pursuant to
 Clause 49 of the Listing Agreement of the Directors retiring by
 rotation at the ensuing Annual General Meeting and being eligible, for
 reappointment, forms part of the Corporate Governance Report.
 
 Shri N ] Vakil resigned as Director of the Company from 14.2.2012. Shri
 Prakash Dubey was appointed as Additional Director from 18.4.2012. Shri
 S Sethuraman, General Manager, The New India Assurance Co. Ltd., Mumbai
 was appointed as Nominee Director of the Company in place of Shri I S
 Phukela as requested by The General Insurers'' (Public Sector)
 Association of India (GIPSA), New Delhi from 13.8.2012.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT:
 
 Pursuant to Section 217(2AA) of the Companies (Amendment) Act 2000, the
 Directors state as under:
 
 i) that in preparation of the annual accounts for the financial year
 ended on 30th June, 2012, the applicable accounting standards have been
 followed along with proper explanation relating to material departures;
 
 ii) that the Directors have selected such accounting policies and
 applied them consistently and made judgments 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 for that year;
 
 iii) that the Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the Assets of the Company and
 for preventing and detecting fraud and other irregularities;
 
 iv) that the Directors have prepared the Annual Accounts for the
 financial year ended on 30th June, 2012 on a going concern basis.
 
 CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
 
 Particulars with respect to conservation of energy, technology
 absorption and foreign exchange earnings and outgo pursuant to Section
 217(1)(e) of the Companies Act, 1956 are given in the Appendix ''A''
 forming part of this Report.
 
 MANAGEMENT DISCUSSION & ANALYSIS REPORT AND CORPORATE GOVERNANCE REPORT
 
 As per Clause 49 of the Listing Agreement, the Management Discussion &
 Analysis Report and the Corporate Governance Report are annexed, which
 forms part of this report.
 
 INSURANCE
 
 The Company has taken adequate insurance for all its properties.
 
 FIXED DEPOSITS
 
 Out of the total Fixed Deposits amount of Rs. 395 lac, the Fixed Deposit
 of Rs. 1.82 lac due for repayment on or before 30th June, 2012 were not
 claimed by 4 depositors as on that date.
 
 AUDITORS'' REPORT
 
 With respect to paras (x) & (xvii) of the annexure to Auditors'' Report,
 the Directors would like to clarify as under:
 
 (a) Para (x); that the current year''s cash loss is mainly due to an
 Exceptional item of a one time payment for differential sugarcane price
 for the season 2007-08 as per the Supreme Court Order dated 1 7.1.2012.
 However, the
 
 Cogeneration Power Plant has started supplying power to the grid from
 October, 2012, which will result into high earnings during the current
 year;
 
 (b) Para (xvii): that necessary steps will be taken to raise long term
 funds partially inter-alia through Rights Issue.
 
 AUDITORS
 
 M/s. Haribhakti & Co., Chartered Accountants, the Auditors of the
 Company, hold office until the conclusion of the ensuing Annual General
 Meeting and being eligible, offers themselves for appointment.
 
 INSIDER TRADING
 
 In compliance with the SEBI regulation on prevention of Insider
 Trading, your Company has framed a comprehensive code which lays down
 guidelines and advises the Directors and employees of the Company on
 procedures to be followed and disclosures to be made, while dealing in
 securities of the Company.
 
 INTERNAL CONTROL SYSTEM & INTERNAL AUDITORS
 
 The Company has an adequate Internal Control System. All transactions
 are properly authorized, recorded and reported to the Management. The
 Company has Independent Auditors M/s. Ashok jayesh & Co., Chartered
 Accountants to review critical areas of operations. The Audit Reports
 are reviewed periodically by the management and the Audit Committee of
 the Board and appropriate measures are taken to improve the process.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 Your Company has continued to play its role as a responsible corporate
 citizen, adding value to society and addressing the contemporary
 societal needs and challenges. The Corporate Social Responsibility
 philosophy ensures that while business objectives are met and
 shareholder value is enhanced, the Company equally focuses on engaging
 with the wider community and sustainably addressing environmental
 concerns in its sphere of operations.
 
 EMPLOYEES
 
 Relation with the employees remained cordial throughout the year. There
 is no employee whose information is required to be given under the
 provisions of Section 217(2A) of the Companies Act, 1956 read with the
 Companies (Particulars of Employees) Rules, 1975 as amended.
 
 ACKNOWLEDGEMENT
 
 Your Directors would like to express their grateful appreciation for
 the assistance and cooperation extended by the Banks & Financial
 Institutions during the year under review. Your Directors wish to place
 on record their deep sense of appreciation for the devoted services of
 the employees of the Company for its success.
 
 
                                     By Order of the Board of Directors 
 
 Registered Office:
 
 Oriental House,                                               D J SHAH
 
 7, Jamshedji Tata Road,                      Sr. Vice President (Legal)
 
                                         Churchgate, & Company Secretary
 
                                                        Mumbai - 400 020.
 
 9th November, 2012