Oudh Sugar Mills

The Directors take pleasure in presenting their Report and the audited
 Statements of Account of the Company for the year ended 30th June,
 2008.
 
                                                           (Rs. in Lacs)
 FINANCIAL RESULTS                          2007-08             2006-07
 
 2.  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
 
 FINANCIAL PERFORMANCE & DIVIDEND
 
 3.  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 ISSUE
 
 5.  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 PROJECTS
 
 6. 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.
 
 CORPORATE GOVERNANCE
 
 7.  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.
 
 DIRECTORS
 
 8.  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 STATEMENT
 
 10.  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.
 
 AUDITORS
 
 11.  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 COMPANIES
 
 14.  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 REQUIREMENTS
 
 15.  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.
 
 ACKNOWLEDGEMENTS
 
 18.  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 Board
 
                                                           C. S. NOPANY
                                         Chairman-cum-Managing Director
 Place : New Delhi,
 Dated : 26th August, 2008