Sakthi Sugars

A.  DEBENTURES:
 
 1) 19,53,530 - 12% Secured Redeemable Non-convertible Non-Cumulative
 Debentures (Series X) issued on private placement basis is redeemable
 at par on the expiry of 12/15 months from the date of allotment. The
 above debentures are secured by first mortgage/charge on the Companys
 immovable property situated at St.  Marys Road, Chennai 600 018 in
 favour of the Debenture Trustee. The amount outstanding including
 interest thereon is Rs. 1999.87 lakhs.
 
 2) 9,99,910 - 12% Secured Redeemable Non-Convertible Cumulative
 Debentures (Series XI) issued on private placement basis is redeemable
 at par on the expiry of 12/18 months from the date of allotment. The
 above debentures are secured by pari passu first mortgage/charge on the
 companys fixed assets relating to the Beverages division at the Sugar
 Mill premises in Sivaganga in Tamilnadu in favour of the Debenture
 Trustee.  The amount outstanding is Rs.999.91 lakhs.
 
 3) 3,05,960 - 12% Secured Redeemable Non-Convertible Non-Cumulative
 Debentures (Series XII) issued on private placement basis is redeemable
 at par on the expiry of 15 months from the date of allotment. The above
 debentures are secured by pari passu first mortgage/charge on the
 companys movable and fixed assets relating to the Beverages division
 at the Sugar Mill premises in Sivaganga in Tamilnadu in favour of the
 Debenture Trustee. The amount outstanding including interest thereon is
 Rs.307.81 lakhs.
 
 4) 4,10,000-12% Secured Redeemable Non-Convertible Cumulative
 Debentures (Series XIII) issued on private placement basis is
 redeemable at par on the expiry of 12 months from the date of
 allotment. The above debentures are secured by pari passu first
 mortgage/charge on the companys movable and fixed assets relating to
 the Beverages division at the Sugar Mill premises in Sivaganga in
 Tamilnadu in favour of the Debenture Trustee. The amount outstanding is
 Rs.410.00 lakhs.
 
 B.  SECURED LOANS :
 
 a) From Institutions and Banks:
 
 1) The amount outstanding under secured loans from financial
 institutions and banks includes loan of Rs.45947.31 lakhs (including
 interest) availed from IDBI Bank Limited (IDBI), Infrastructure
 Development Finance Company Limited (IDFC), State Bank of India, Canara
 Bank, Bank of India, Indian Overseas Bank, Punjab National Bank and
 Oriental Bank of Commerce.
 
 These Loans are secured by way of -
 
 i) First pari passu charge on the entire movable and immovable
 properties of the Company (excluding fixed assets of Sugar unit at
 Modakurichi and Co-generation plants at Sakthinagar, Sivaganga and
 Modakurichi and Beverage plant at Sivaganga and other assets
 exclusively charged).
 
 ii) Second pari passu charge on the current assets of the Company
 relating to Sugar units at Sakthinagar, Sivaganga and Dhenkanal,
 Distillery units and Soya unit. (excluding fixed assets of Sugar unit
 at Modakurichi and Co-generation plants at Sakthinagar, Sivaganga and
 Modakurichi and Beverage plant at Sivaganga and other assets
 exclusively charged).
 
 iii) Personal guarantees of Chairman and Vice Chairman & Managing
 Director.
 
 2) The amount outstanding under Secured loans from Banks includes Loan
 of Rs.246.87 lakhs availed by the Company from Oriental Bank of
 Commerce (OBC). This loan is secured by-
 
 i) First Charge on the movable and immovable assets of the Companys
 first cogeneration Plant at Sakthinagar Sugar Unit on pari passu basis
 with Allahabad Bank and the Tamilnadu Industrial investment Corporation
 Limited (TIIC);
 
 ii) Escrow of receivables on evacuation of power to Tamil Nadu
 Electricity Board (TNEB) from the first Co- generation Plant at
 Sakthinagar on pari passu basis with Allahabad Bank and TIIC;
 
 iv) Personal guarantees of Chairman and Vice-Chairman & Managing
 Director.
 
 3) The amount outstanding under Secured loans from Banks includes Loan
 of Rs.1717.61 lakhs (including interest) availed by the Company from
 Allahabad Bank. This loan is secured by:-
 
 i) First Charge on the movable and immovable assets of the companys
 First Co-generation Plant at Sakthinagar Sugar Unit on pari passu basis
 with OBC and TIIC;
 
 ii) Escrow of the receivable on evacuation of power to Tamil Nadu
 Electricity Board (TNEB) from the first co-generation plant at
 Sakthinagar on pari passu basis with OBC and TIIC;
 
 iii) Escrow of receivable on sale of ethanol from the Companys
 distillery unit at Sakthinagar on pari passu basis with TIIC; and
 
 iv) Personal guarantees of Chairman and Vice-Chairman & Managing
 Director.
 
 4) The amount outstanding under Secured loans from Banks includes Loan
 of Rs.3100 lakhs availed by the Company from the Tamilnadu Industrial
 Investment Corporation Limited. This loan is secured by
 
 i) First Charge on the movable and immovable assets of the Companys
 first co-generation plant at Sakthinagar Sugar Unit on pari passu basis
 with OBC and Allahabad Bank;
 
 ii) Escrow of the receivable on evacuation of power to Tamil Nadu
 Electricity Board (TNEB) from the first co-gen plant at Sakthinagar on
 pari passu basis with OBC and Allahabad Bank;
 
 iii) Escrow of receivable on sale of ethanol from the Companys
 distillery unit at Sakthinagar on pari passu basis with Allahabad Bank;
 and
 
 iv) Personal guarantees of Chairman and Vice-Chairman & Managing
 Director.
 
 5) The outstanding amount of Rs. 15782.75 lakhs (including interest)
 under secured loans from banks includes loans availed from:-
 
 a) Bank of India Rs.4828.55 lakhs (Including Interest) is secured by -
 
 i) Pari passu first charge on the fixed assets of sugar unit at
 Modakurichi, new co-generation units at Sakthinagar, Sivaganga and
 Modakurichi;
 
 ii) Pari passu second charge on the current assets of Sivaganga sugar
 unit; and
 
 iii) Personal guarantees of Chairman and Vice Chairman & Managing
 Director.
 
 b) Allahabad Bank Rs.2550.40 lakhs (Including Interest) is secured by-
 
 i) Pari passu first charge on the fixed assets of sugar unit at
 Modakurichi, new co-generation units at Sakthinagar, Sivaganga and
 Modakurichi;
 
 ii) Pari passu first charge/escrow on the receivables from new
 Co-generation units at Sakthinagar, Sivaganga and Modakurichi; and
 
 iii) Personal guarantees of Chairman and Vice Chairman &Managing
 Director.
 
 c) Canara Bank Rs.4883.92 lakhs (Including Interest) is secured by-
 
 i) Pari passu first charge on the fixed assets of sugar unit at
 Modakurichi and new co-generation units at Sakthinagar, Sivaganga and
 Modakurichi; and
 
 ii) Personal guarantees of Chairman and Vice Chairman & Managing
 Director.
 
 d) Indian Overseas Bank Rs.3519.88 lakhs (Including Interest) is
 secured by-
 
 i) Pari passu first charge on the fixed assets of the Company (except
 assets relating to beverage plant, first co-generation plant at
 Sakthinagar and other assets exclusively charged);
 
 ii) Pari passu second charge on the current assets of the Company; and
 
 iii) Personal guarantees of Chairman and Vice Chairman & Managing
 Director.
 
 6) The amount outstanding under Secured loans from Banks includes Loan
 of Rs.1926.34 lakhs (including interest) availed by the Company from
 Allahabad Bank. This loan is to be secured/secured by:-
 
 i) Second charge/escrow of the receivable on evacuation of power to
 Tamil Nadu Electricity Board (TNEB) from the first Co-generation Plant
 at Sakthinagar; and
 
 ii) Personal guarantees of Chairman and Vice-Chairman & Managing
 Director.
 
 7) The amount outstanding under Secured loans from Banks includes Loan
 of Rs.2532.38 lakhs (including interest) availed by the Company from
 Allahabad Bank. This loan is secured by:-
 
 i) Pari passu first charge by assignment of receivables of the first
 co-generation plant at Sakthinagar on pari passu with OBC & TIIC and
 Term Loan I of Allahabad Bank; and
 
 ii) Personal Guarantees of Chairman and Vice-Chairman & Managing
 Director.
 
 8) The amount outstanding under secured loans from banks includes loan
 of Rs.5166.11 lakhs under secured loan from banks includes loan availed
 from:-
 
 a) Bank of India Rs. 1987.00 lakhs is secured by-
 
 i) Pari passu residual charge on the Fixed Assets of the Sugar Units of
 the company, present and future; and
 
 ii) Personal Guarantees of Chairman and Vice Chairman & Managing
 Director.
 
 b) Indian Overseas Bank Rs.1191.11 lakhs is secured by -
 
 i) Pari passu residual charge on the Fixed Assets of the company-
 existing as well as future ( excluding power plant and beverage plant
 and other assets, which have been exclusively charged.); and 
 
 ii) Personal Guarantees of Chairman and Vice Chairman & Managing
 Director.
 
 c) Canara Bank Rs.988.00 lakhs is secured by:-
 
 i) Pari passu second charge on the entire fixed assets of the company;
 and
 
 ii) Personal Guarantees of Chairman and Vice Chairman & Managing
 Director.
 
 d) HDFC Bank Rs. 1000.00 lakhs is secured by -
 
 i) Pari passu residual charge on the fixed assets of the sugar units;
 and
 
 ii) Personal Guarantee of Vice Chairman & Managing Director.
 
 9) The amount outstanding under Secured loans from Banks includes Loan
 of Rs.606.12 lakhs (including interest) availed by the Company from
 Allahabad Bank. This loan is secured by a lien on fixed deposit of
 Rs.695 lakhs with Allahabad Bank.
 
 10) The amount outstanding under Secured loans from Banks includes
 corporate Loan of Rs.2501.82 lakhs (including interest) availed by the
 Company from Bank of India. This loan is secured by the assets of a
 group company and personal guarantees of Chairman and Vice-Chairman &
 Managing Director.
 
 11) The amount outstanding under Secured loans from Banks includes Loan
 of Rs.700.27 lakhs (including interest) availed by the Company from
 Axis Bank Limited. This loan is secured by first charge on the
 Companys Corporate Office land and building at Coimbatore and personal
 guarantee of Vice Chairman & Managing Director.
 
 12) The amount outstanding under Secured Loan includes Bill Discounting
 limit of Rs.327.32 lakhs availed by the Company from Allahabad Bank.
 This loan is secured by way of exclusive first charge on the
 receivables due to the Company on evacuation of power to Tamil Nadu
 Electricity Board (TNEB) from the Co-generation Plant at Sakthinagar.
 
 13) The amount outstanding under Secured Loan includes Bill Discounting
 limit of Rs.130.26 lakhs availed by the Company from Bank of India. The
 loan is secured by way of exclusive first charge on the receivables due
 to the Company on evacuation of power to Tamil Nadu Electricity Boad
 (TNEB) from the co-generation plant at Sivaganga.
 
 14) Hypothecation loans for working capital includes:
 
 a.  Working Capital facilities availed for Rs. 724.47 lakhs (including
 interest) from Citibank which is secured by first charge by way of
 hypothecation of finished goods, raw materials, stock in process,
 stores and spares, book debts of the companys sugar, distillery & soya
 units. It is further secured by personal guarantees of Chairman and
 Vice-Chairman & Managing Director. This loan is further secured by
 second/residual charge created on the immovable & movable assets of the
 said units in favour of Citibank.
 
 b.  Working Capital facilities availed for Rs. 4060.53 lakhs (including
 interest) from HDFC Bank Limited (Earlier from Centurion Bank of Punjab
 Limited) which is secured by first charge by way of hypothecation of
 finished goods, raw materials, stock in process, stores and spares,
 book debts of the Companys sugar units and soya unit. It is further
 secured by guarantee from the Vice-Chairman & Managing Director.
 
 c.  Working Capital facilities availed for Rs. 2014.91 lakhs (including
 interest) from Bank of India which is secured by first pari passu
 charge on the current assets of the Companys Sugar unit situated at
 Sivaganga. It is further secured by personal guarantees of Chairman and
 the Vice-Chairman & Managing Director.
 
 d.  Working Capital facilities availed for Rs. 506.37 lakhs (including
 interest) from Indian Overseas Bank which is secured by first pari
 passu charge on the current assets of the Companys Sugar unit and
 Collateral Security by way of pari passu second charge on the fixed
 assets of the company, existing as well as future, excluding fixed
 assets of Beverage plant at Sivaganga and first co-generation unit at
 Sakthinagar. It is further secured by personal guarantee of Chairman
 and the Vice-Chairman & Managing Director.
 
 b) From Others:
 
 1) The amount outstanding under Secured Loans from others includes
 Corporate Loan of Rs.36.93 lakhs availed by the Company from Housing
 Development Finance Corporation Ltd (HDFC). The Corporate Loan is to be
 secured /secured by a mortgage of companys property at New Delhi.
 
 2) The amount outstanding under Hire Purchase loan aggregating to
 Rs.232.85 lakhs (including interest) represents the amount availed by
 the company from public limited companies and is secured by
 hypothecation of vehicles so financed.
 
 3) The amount outstanding under Secured loan from others includes Term
 Loan of Rs.686.80 lakhs (including interest) availed by the company
 from Sugar Development Fund (SDF) of Govt. of India. The above loan is
 secured by pari passu first charge on the fixed assets of the Companys
 sugar units at Sakthinagar, Sivaganga and Dhenkanal.
 
 4) The amount outstanding under Secured loans from others includes term
 loan of Rs.114.82 lakhs (including interest) availed by the company
 from Technology Information Forecasting and Assessment Council (TIFAC).
 This loan is secured by the exclusive first charge on the assets
 acquired under the Scheme. This loan is further secured by the personal
 guarantee of Vice Chairman & Managing Director.
 
 C.  FIXED DEPOSITS:
 
 The aggregate amount of fixed deposits guaranteed by the Vice-Chairman
 & Managing Director is Rs. 122.85 lakhs.
 
 D.  FOREIGN CURRENCY CONVERTIBLE BONDS:
 
 The company has issued during May 2006, Zero oupon Foreign Currency
 Convertible Bonds in two Series aggregating to US$ 60 Million, i.e.,
 (i) US$ 20 Million Zero Coupon Convertible Bonds due on May 2009
 (Series A) and (ii) US$ 40 Million Zero Coupon Convertible Bonds due
 May 2011 (Series B). These Bonds are convertible at the option of the
 holders into fully paid equity shares at such conversion price as
 determined in accordance with the Offer Letter, but not less than Rs.
 177.39 per share.
 
 E.  Borrowing Cost capitalized during the year is Rs.2783.25 lakhs
 (Previous year Rs.477.44 lakhs).
 
 F.  The Company has pledged 4,38,59,394 equity shares holding in SACL,
 the wholly owned subsidiary, to secure the loan and obligation in
 relation to SACL.
 
 G.  Bank balance with Non Scheduled Banks aggregating to Rs.9.55 lakhs.
 
 The closing balance as on 31.12.2008 with Non Scheduled Bank of Cuttack
 Gramya Bank, Sujanpur Rs.0.03 Lakh, Cuttack Gramya Bank, Dihasahi
 Rs.0.08 Lakh, Dhenkanal Gramya Bank, Dhenkanal Rs.0.01 Lakh, Dhenkanal
 Gramya Bank, Kabera Rs.0.08 Lakh, Dhenkanal Gramya Bank, Pingua Rs.0.02
 Lakh, Puri Gramya Bank, Chari Chhak Rs.0.08 Lakh, Pandian Gramya Bank,
 Mitchalpattinam Rs.0.05 Lakh, Kalinga Gramya Bank, Sundaragram Rs.0.12
 Lakh and Pandian Gramya Bank, Sivaganga Rs.9.08 Lakhs.
 
 H.  Sugar sales includes incentive on export of sugar amounting to Rs.
 2412.58 lakhs.
 
 I. The Company has not received any information from suppliers
 regarding their status under the Micro, Small and Medium Enterprises
 Development Act 2006 and hence, disclosures, if any, relating to
 amounts unpaid as at 31st December 2008 together with interest
 paid/payable as required under the said Act have not been given.
 
 J.  Disclosure pursuant to AS-28 on Impairment of Assets:
 
 The Company, during the year, has reviewed the carrying value of the
 assets for finding out the impairment, if any. The review has not
 revealed any impairment of assets in terms of AS-28.
 
 K.  CONTINGENT LIABILITY:
 
 a) The Company had filed Writ petitions before the Honble High Court
 of Madras with respect to water charges payable by the Company to the
 Govt. of Tamil Nadu. The amount involved is Rs.611.81 Lakhs.
 
 b) Sales Tax demands (including penalties) against the Company
 aggregating to Rs.2250.75 Lakhs are disputed and pending before various
 appellate authorities.
 
 c) The Company has preferred an appeal before the Income Tax Appellate
 Tribunal, Chennai against the Order of the Commissioner of Income Tax
 and the disputed amount of tax is Rs.139.03 Lakhs.
 
 d) The Company has preferred an appeal before the Commissioner of
 Income Tax, Coimbatore against the Order of the Addl. Commissioner of
 Income Tax and the disputed amount of tax is Rs.333.45 Lakhs.
 
 e) The levy of fringe benefit tax under the Income tax act has been
 challenged by a writ petition before Honble High Court of Madras
 through the Indian Chamber of Commerce, Coimbatore. The Honble High
 Court has admitted the writ petition and the same is pending before the
 said court for disposal.  The amount involved is Rs.235.72 Lakhs.
 
 f) Demands against the company for payment of Excise duty aggregating
 to Rs.1645.89 Lakhs are disputed and appeals are pending before the
 various authorities.
 
 g) The Company has filed a writ petition before the Honble High Court
 of Orissa, Cuttack against the order of the Supt. of central Excise,
 Dhenkanal for an amount of Rs.32.63 lakhs. The writ petition is pending
 for disposal.
 
 h) Demands against the company for payment of service tax aggregating
 to Rs.155.34 Lakhs are disputed and appeals are pending before the
 various authorities.
 
 i) Demands against the company for payment of service tax on expenses
 incurred in connection with FCCB aggregating to Rs.217.55 Lakhs are
 disputed and the appeals are pending before the various authorities.
 
 j) A quantity of 171038 MTs. of sugar has to be exported by the Company
 to fulfill its obligation against import of raw sugar under Advance
 Licence Scheme. Non fulfillment of export obligation would result into
 a liability of Rs. 24390.21 lakhs.
 
 k) The Tamil Nadu Govt, has preferred an appeal before Supreme Court
 against the order of the High Court of Madras in respect of
 administrative service fee. The Supreme Court vide Interim Order dated
 4.5.2004 has clarified that the State Govt, shall charge the fee at the
 rate of 50 paise per litre only. The amount under dispute is Rs.967.57
 lakhs.
 
 l) An amount of Rs.13.67 lakhs decreed against the company for non
 performance of contractual obligation is under appeal before the
 Honble High Court of Andhra Pradesh.
 
 m) The Executive Engineer, Angul irrigation division, Angul, Orissa
 State has raised a demand of Rs.6.00 lakhs towards water tax arrears
 against which a writ petition before the High Court of Orissa, Cuttack
 has been filed and is pending for disposal.
 
 n) A writ petition has been filed in the Gujarat High Court against a
 show cause notice issued by the Dy.  Collector, Stamp valuation cell,
 Mehsana, Gujarat towards shortfall in stamp duty/registration fees.
 The amount involved is Rs.430.24 lakhs.
 
 o) The company has provided corporate guarantees aggregating to
 Rs.2277.42 lakhs to secure the loans availed by the cane growers
 societies at Orissa. The aggregate of the loans repayable by the above
 societies as on 31.12.2008 is Rs.3272.35 lakhs including interest
 thereon.
 
 p) The company has provided corporate guarantees aggregating to
 Rs.5000.00 lakhs to secure the loans availed by the sugar cane
 cultivators association at Sakthi Nagar and Sivaganga. The aggregate
 of the loans repayable by the above associations as on 31.12.2008 is
 Rs.5000.00 lakhs.
 
 q) The company has provided corporate guarantees aggregating to
 Rs.56131.13 lakhs to secure the loans availed by the subsidiary
 companies from banks/financial institutions. The aggregate of the loans
 repayable as on 31.12.2008 is Rs.44996.61 lakhs.
 
 r) The statutory minimum price for sugarcane fixed by the Govt, of
 India for the sugar seasons 2002-03 & 2003-04 has been challenged by a
 Writ petition before the Supreme Court of India by all the sugar mills
 through the Association. The Writ petition is pending disposal. The
 disputed amount is Rs.1170.21 lakhs towards price and Rs. 24.82 lakhs
 towards Additional Sales Tax on purchase turnover.
 
 L.  Wherever necessary, figures for previous year have been regrouped
 or reclassified to confirm to this years grouping or classification.
 
 M.  Previous years figures are not comparable with the current year
 figures as current year is for a period of 18 months.