The Members,
 
 The Directors take pleasure in presenting their Report as a part of
 the 79th Annual Report and the audited Accounts of the Company for the
 year ended 30th June, 2011.
 
 2. Financial Results and Appropriations
 
                                                          (Rs. in lacs)
 
                                         2010-11               2009-10
 
 Gross Sales                            91982.79              55498.33
 
 Gross Profit/(Loss) 
 before Depreciation 
 and Interest                            7972.42               1109.63
 
 Less:     Interest            11313.66            8105.81
 
 Depreciation                   4111.88 15425.54   4077.30    12183.11
 
 Profit/(Loss) Before Tax               (7453.12)            (11073.48)
 
 Less: Provision for Tax:
 
 -Current                          3.00               3.40
 
 -Deferred Tax Charge
 /(Credit)                     (2343.33)          (3684.77)
 
 -MAT Credit
 (Entitlement) / Reversal           -               836.59
 
 -Income Tax provisions 
 no longer required 
 written back                      1.34              (3.62)
 
 -Fringe benefit Tax                -   (2341.67)     2.82    (2845.58)
 
 Profit/(Loss) After Tax                (5111.45)             (8227.90)
 
 Add: Surplus/(Deficit) 
 brought forward                        (4991.38)              1511.40
 
 : Transfer from General Reserve            -                  1725.12
 
 Amount carried forward to the 
 Balance Sheet                         (10102.83)             (4991.38)
 
 
 OPERATING PERFORMANCE
 
 3.  A detailed analysis of the Company''s operations, future
 expectations and business environment has been given in the Management
 Discussions & Analysis , which is attached to and made an integral part
 of this Report.
 
 FINANCIAL PERFORMANCE 2010-2011
 
 4.  The Company had recorded a Net Revenue of Rs. 89,268.46 lacs
 (including other income and Agricultural Profit aggregating to Rs.
 403.14 lacs) for the year ended 30th June, 2011. The Gross Sales
 (inclusive of Excise Duty) of the Company for the year 2010-11
 increased by 65.74% to Rs. 91,982.79 lacs from Rs .55,498.33 lacs in
 the year 2009-10.
 
 5.  The earning before interest, depreciation, tax for the year under
 review stood at Rs. 7972.42 lacs representing 8.93% of the net revenue
 and showed an increase of 618.47% over previous year''s Rs. 1109.63
 lacs. The improvement of EBIDTA of the Company during the year under
 review can be attributed to better capacity utilization due to more
 availability of sugarcane during the year under review.
 
 6.  The sugar industry continued facing difficulties on account of the
 negative policies of the Government during the year under review. Sugar
 prices remained under severe pressure during the year largely due to
 measures taken by the Central Government in its overall policy of
 controlling inflation.  Sentiment in the free sugar market continues to
 be bearish with the continued imposition of restrictions on exports,
 stockholding limits on sugar, impending increase in sugar production
 and large releases by the government under the monthly release
 mechanism.
 
 7.  The State Government fixed an exorbitant price of Rs. 205/qtl of
 sugarcane based on political criteria. On one hand sugar prices
 plummeted and remained under pressure while on the other hand sugarcane
 prices was increased by Rs. 40/qtl by the State Government which
 resulted in huge losses for the industry as a whole.
 
 8.  The performance of the industrial alcohol divisions and the
 renewable power divisions of the company improved during the year due
 to better availability of molasses and bagasse.  The prices of the raw
 materials continued to be firm during the year due to strong demand by
 these two sectors.
 
 FINANCIAL RESTRUCTURING
 
 9.  The Company''s proposal to restructure its debts (CDR proposal) was
 approved by the Corporate Debt Restructuring Empowered Group (EG) at
 its meeting held on 9th February, 2011. The CDR proposal was prepared
 on the basis of no loss to any of the lenders and incorporating
 deferment of installments of loan falling due between 1st July, 2010 to
 30th June, 2012 and the conversion of interest on term loans also
 falling due between this period into funded interest term loan.
 
 CHANGE IN THE CAPITAL STRUCTURE
 
 10.  The Authorised Share Capital of the Company was increased from Rs.
 40,00,00,000 (Rupees forty crore only), divided into 4,00,00,000 equity
 shares of Rs. 10/- each to Rs. 120,00,00,000 (Rupees one hundred twenty
 crore only) by creation of an additional 8,00,00,000 unclassified
 shares of Rs. 10 each by taking the approval of the Shareholders at the
 Extra Ordinary General meeting of the Company held on 2nd May, 2011.
 
 11.  In order to augment its resources and reduce the debt burden, the
 Board had issued and allotted 5,00,00,000 Cumulative Redeemable
 Preference Shares of Rs. 10/- each amounting to Rs. 50,00,00,000 after
 classifying equal number of unclassified shares in to such Preference
 Shares.
 
 EXPENDITURE ON CANE DEVELOPMENT
 
 12.  During the year under review the Company had incurred a sum of Rs.
 242.20 lacs on Research & Development activities with an aim to improve
 the sugar recovery ratio and in educating the cane growers to cultivate
 improved variety of sugarcane with higher sucrose contents.
 
 DIVIDEND
 
 13.  The Board of Directors do not recommend any dividend for the year
 under review in view of the losses.
 
 CORPORATE GOVERNANCE
 
 14.  Pursuant to Clause 49 of the Listing Agreement, Management
 Discussion & Analysis, Statement in respect of Conservation of Energy,
 the Report on Corporate Governance, Declaration of Managing Director on
 Code of Conduct and Auditors'' Certificate on compliance of conditions
 of Corporate Governance are all attached to and form integral part of
 this Report and are annexed to this Report as Annexure A, B, E,
 F and G respectively.
 
 DIRECTORS
 
 15.  The Company has nine Non Executive directors having experience in
 varied fields and a Chairman cum Managing Director. Two directors Mr.
 Ashvin Chinubhai Dalal and Mr. Chand Bihari Patodia shall retire from
 the Board by rotation at the ensuing Annual General Meeting and they
 are eligible for re-appointment.
 
 16.  Mr. Chandra Shekhar Nopany was reappointed as the Managing
 Director of the Company for a period of 3 years with effect from 1st
 July, 2008 and he has been reappointed as the Managing Director for a
 further period of 3 years with effect from 1st July, 2011 without any
 variation in the remuneration. The shareholders of the Company at its
 meeting held on 2nd May, 2011 approved the reappointment of Mr. Chandra
 Shekhar Nopany as the Managing Director of the Company for a renewed
 period of 3 years.
 
 17.  Mr. Pushkar Sahay, a Nominee of State Bank of India and Mr.
 Inderpal Singh Kalra, a Nominee of IDBI Bank Limited were taken on the
 Board of the Company with effect from 7th May, 2011 and 24th June, 2011
 respectively.
 
 18.  Other information on the Directors including required particulars
 of Directors retiring by rotation is provided in the Report of
 Corporate Governance annexed to this Report as Annexure E.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 19.  Your Directors confirm that -
 
 i) in the preparation of the annual accounts, the applicable accounting
 standards have been followed and there is no 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.
 
 To ensure this, the Company has established internal control systems,
 consistent with its size and nature of operations, in weighing the
 assurance provided by any such system of internal controls and in
 recognizing its inherent limitations. These systems are reviewed and
 updated on an ongoing basis. Periodic internal audits are conducted to
 provide reasonable assurance of compliance with these systems. The
 Audit Committee meets at regular intervals to review the internal audit
 functions;
 
 iv) the annual accounts have been prepared on a going concern basis.
 
 AUDITORS, AUDIT QUALIFICATIONS AND BOARD''S EXPLANATIONS
 
 20.  The Auditors'' Report is self-explanatory. However, the Auditors
 have made an observation regarding recognition of Deferred Tax Assets
 amounting to Rs. 5398.01 lacs for the year. The Company''s projections
 are that there would be sufficient taxable income in the future to
 claim credit of Deferred Ta x Assets.
 
 21.  The Auditors, Messrs S. R. Batliboi & Co., Chartered Accountants,
 retire at the forthcoming Annual General Meeting of the Company and are
 eligible for re-appointment.  According to the certificate submitted to
 the Company by the said firm of Auditors the said re-appointment, if
 made by the Shareholders will be well within the limits prescribed in
 Section 224(1B) of the Companies Act, 1956.
 
 22.  The Board, on the recommendation of the Audit Committee, has
 proposed that Messrs S. R. Batliboi & Co., Chartered Accountants, be
 re-appointed as the Statutory Auditors of the Company for the period
 beginning the conclusion of the ensuing Annual General Meeting of the
 Company and ending on the conclusion of the Annual General Meeting to
 be held next thereafter.
 
 COST AUDITORS
 
 23.  In accordance with the directives of the Central Government under
 Section 233B of the Companies Act, 1956, M/s.  D Radhakrishnan & Co.,
 Cost Accountants, have been appointed as Cost Auditor to audit the cost
 accounting records for the year ending on 30th June, 2012.
 
 24.  Cost Audit Reports for all the applicable products for the year
 ended 30th June, 2010 were filed on 7th December, 2010 with cost audit
 cell of Ministry of Corporate Affairs department within due dates viz.,
 31st December, 2010.
 
 SUBSIDIARY COMPANIES
 
 25.  The Company has three direct subsidiaries and one step down
 subsidiary as per details given below:
 
 i) Hargaon Investment & Trading Company Limited
 
 ii) Champaran Investment & Trading Company Limited
 
 iii) OSM Investment & Trading Company Limited
 
 iv) Hargaon Properties Limited – step down subsidiary
 
 26.  In compliance with General Circular No. 2/2011 of Government of
 India, Ministry of Corporate Affairs and as per the resolution passed
 by the Board of Directors the Company has opted to avail the exemption,
 provided under Section 212(8) of the Companies Act, 1956 and
 accordingly the Audited statement of Accounts along with the report of
 the Board of Directors and Auditor relating to the Company''s
 subsidiaries and step down subsidiary are not annexed as required u/s
 212(8) of the Companies Act, 1956. However, the Consolidated Financial
 Statement conforming to the Accounting Standard 21, 23 and 27 and
 including inter alia the financial performance of the said subsidiary
 forms an integral part of the annexed Audited Statement of Accounts. A
 statement pursuant to section 212 of the Companies Act, 1956 is
 attached and marked as Annexure ''D''
 
 27.  The Annual accounts of the said subsidiary companies and step down
 subsidiary shall also be kept for inspection by any shareholder in the
 Registered Office of the holding Company and of the subsidiary
 companies and step down subsidiary concerned. The same will also be
 published on the website www.birla-sugar.com.
 
 28.  The Company shall furnish a hard copy of the detailed accounts of
 the subsidiary companies and step down subsidiary to any shareholder on
 demand at any point of time.
 
 PARTICULARS OF EMPLOYEES
 
 29.  Particulars of Employees as required under Section 217(2A) of the
 Companies Act, 1956 is attached as a separate Annexure C and forms an
 integral part of this Report.
 
 ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS & OUTGO
 
 30.  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 are as per Annexure B
 and form part of this Report.
 
 FIXED DEPOSITS
 
 31.  As on 30th June, 2011, your Company had 438 depositors with fixed
 deposits of Rs. 364.59 lacs. The company had been regular in refunding
 the deposits on maturity.
 
 CEO/CFO CERTIFICATION
 
 32.  Mr. Chandra Shekhar Nopany, the Chairman cum Managing Director and
 Mr. Dilip Patodia, President (Finance) & CFO have submitted a
 certificate to the Board as contemplated in Clause 49 of the Listing
 Agreement.
 
 ACKNOWLEDGEMENTS
 
 33.  Your Directors take this opportunity of recording their
 appreciation of the shareholders, financial institutions , bankers,
 suppliers and cane growers for extending their support to the Company.
 Your Directors are also grateful to the various ministries in the
 Central Government and State Governments of Uttar Pradesh, Bihar and
 Assam, the Sugar Directorate and the Sugar Development Fund for their
 continued support to the Company. The Directors also recognize the
 valuable contribution made by the employees at all levels to the
 Company''s progress.
 
                                     For and on behalf of the Board
 
                                             Chandra Shekhar Nopany
 
 Mumbai                              Chairman-cum-Managing Director
 
 Dated, 10th August, 2011