The directors have pleasure in placing the directors report together
 with management discussion and analysis for the financial year ended on
 September 30, 2010.
 
 
 FINANCIAL RESULTS AND ANALYSIS
 
 A summary of the financial results of the Company for the year under
 report is stated as under:
 
 (Rs in mn)
 
 Particulars                          Year ended      Year ended
                                      Sept 30, 2010   Sept 30, 2009
 
 Net Sales/Income from operations        12,616          7063
 
 Other Operating Income                     570           183
 
 Total operating income                  13,187         7,246
 
 Profit/(Loss) from Operations before      (477)          578 
 other income and interest
 
 Other Income                                64           740
 
 Profit/(Loss) before Interest             (413)         1319
 
 Interest and finance cost                 8,47           631
 
 Profit /(Loss) before tax               (1,260)          688 
 Tax expense
 
 Deferred tax benefit                        513           -
 
 Fringe benefit tax                           -            29
 
 Net Profit/(Loss) after Tax                (747)         717
 
 In view of substantial business losses, and need to conserve cash, the
 directors express their inability to recommend any dividend for the
 year.
 
 During the year, the business of the Company has been affected
 adversely by a sudden fall in sugar prices in a short span of time.
 The ex-factory prices of the sugar sold by the Company came down by 40%
 between February to August 2010. The Company has been carrying large
 inventories of white sugar, both from raw and cane, and unprocessed raw
 sugar, including raw sugar in transit. On such sales, it had to incur
 the operational losses on account of valuation of the stocks at NRV and
 the net sugar realisation falling lower than the cost of production.
 The valuation fall and lower realization of sugar inventory resulted in
 one-time exceptional loss of nearly Rs 4 per kg, and a non recovery of
 off season expenses including the interest expense.
 
 This has adversely affected the financial ratios and created liquidity
 constrains. The management is consciously aware of the situation and is
 confident that despite such valuation related losses, which have been
 common to the sugar industry, the measures taken by the Management, to
 improve its business viability by cost controls, product improvements
 and financial engineering, will improve the financial position of the
 Company. It is considering the options of carrying out business
 restructuring, future capitalisations, replacement of short term loans
 with the long term ones etc to tie over the liquidity constrains. Your
 directors are confident that the measures stated herein above, would be
 sufficient to continue the businesses of the Company viable both for
 short and long term.
 
 The analysis of the balance sheet of the Company as at September 30,
 2010 and profit and loss account for the year ended on that date is
 reported as under:
 
 Share capital
 
 The following movement in the share capital has taken place during the
 year:
 
 Preference shares: 2,16,000, 8% Cumulative Redeemable Preference shares
 of Rs. 100 each have been redeemed. There is no outstanding preference
 share capital at the end of the year.
 
 Equity shares: 28,140 (previous year 1,75,836) equity shares of Rs 10
 each were issued and allotted under Employee Stock Option Scheme, 2007
 as fully paid-up at an exercise price of Rs. 39 per equity share.
 
 Reserves and surplus
 
 The following movement has taken place during the year under the
 reserves and surplus head:
 
 (i) Revaluation reserve: Deduction of Rs. 0.15 crores due to
 depreciation charged on re-valued amount of fixed assets.
 
 (ii) Securities premium account: Increased by Rs. 0.08 crores on
 account of issue and allotment of equity shares under ESOP at a premium
 of Rs 29 per share and Rs 0.73 crores on account of reversal of premium
 on buy back of USD 1.5 mn FCCBs. The securities premium amount is
 further reduced by Rs 0.35 crores being the premium payable on
 redemption of securities.
 
 Total equity shareholder funds excluding revaluation reserve of the
 Company reduced to Rs. 42.02 crores (previous year Rs. 116.21 crores).
 The book value per equity share is Rs. 18.12 (previous year Rs. 50.16).
 
 Secured loans
 
 Additional foreign currency loan of Rs. 5.52 crores (previous year Rs
 64.86 crores) has been taken during the year to repurchase the USD 1.50
 million FCCBs. Sugar Development Fund loan of Rs 40.61 crores has been
 availed during the year and Rs 5.45 crores has been repaid. Besides, a
 sum of Rs 65.4 crores has been repaid to banks and other lenders.
 
 Unsecured loans
 
 Bought back FCCBs of USD 1.5 million (Rs 8.9 crores including premium)
 during the year at an average gain of 38.5% to book value. The
 outstanding FCCBs are USD 1.89 mn (Rs 11.26 crores including premium).
 The Company has taken unsecured loan from directors aggregating Rs 2.56
 crores as short term borrowings.
 
 Deferred tax liabilities/assets (net)
 
 Deferred tax asset of Rs 70.41 crores (Rs. 19.27 crores) recognised in
 the accounts keeping in view that sufficient taxable income will be
 available in future, against which these assets will be realized in the
 normal course of business of the Company.
 
 Fixed assets
 
 The following movements have taken place under the head of fixed assets
 during the year:
 
 a.  Capital expenditure: Capital expenditure for the year, Rs 46.56
 crores include setting up a new mill at Simbhaoli sugar plant,
 additions to the boilers at Chilwaria and Brijnathpur sugar division
 and new bio-digester at Brijnathpur ethanol division.
 
 b.  Retirement of assets: The Company has deducted from fixed assets
 Rs. 8.55 crores (previous year Rs 1.52 crores) including Rs 5.99
 crores, being the exchange differences on long term monetary items
 relatable to the acquisition of fixed asset.
 
 Pre-operative expenditure
 
 The pre-operative expenses pending allocation are nil (Previous year
 Rs. 1.33 crores), after the capitalization/commissioning of concerned
 capital assets.
 
 Inventories
 
 Inventory amounting to Rs 400.5 crores (previous year Rs 430 crores)
 includes raw sugars, both at plants and ports, finished goods and
 process stocks. Raw sugar in hand will be refined in following months
 along with sugarcane. Loss on account of marking the value of
 inventories to market price of Rs 48 crores, has been fully provided
 for.
 
 Sundry debtors
 
 Sundry debtors (net) amounting to Rs. 72.7 crores as on September 30,
 2010 (previous year Rs. 56.9 crores), are considered good and
 realizable. Provisions are generally made for all debtors outstanding
 for over 360 days subject to their scope of realization and depending
 on the managements perception. Debtors are at 4.9% (previous year
 5.7%), representing an outstanding of 18 days (previous year 20 days)
 of gross revenues.
 
 Cash and bank balance
 
 Cash and bank balance of Rs 139.2 crores (previous year Rs 56.10
 crores) includes fixed deposits of Rs 121.7 crores out of which Rs
 119.5 crores are pledged with banks for securing various Letters of
 credit/guarantees etc.
 
 Current liabilities and provisions
 
 Sundry creditors of Rs 1 lacs comprises amount due to small scale
 industries, the suppliers of raw materials, stores and services and
 other expenses. Other provisions include provision of Rs. 2.81 crores
 (previous year Rs. 4.09 crores) towards premium on redemption of FCCBs
 and Rs. 1.97 crores (previous year Rs. 1.87 crores) towards provisions
 for leave encashment. Provision for taxation is reduced to Rs 2.79
 crores (previous year Rs 10.65 crores) in view of lack of taxable
 profits.
 
 Sales and other income
 
 Sales and other income (net of excise) for the year was Rs.  1325.11
 crores (Previous year Rs. 798.75 crores), higher by 65.9%. The other
 income comprises interest, rent, profit on sale of fixed assets,
 liability/provisions no longer required to be written back and
 miscellaneous earnings.
 
 Negative EBIDTA under sugar segment is attributed to high cost of
 production in 2009-10 season, high value of raw sugar and sudden fall
 in sugar prices after February 2010. Negative EBIDTA under alcohol
 segment is attributed to lower capacity usage, higher molasses cost and
 steep discounts in potable liquor segment.
 
 The segment wise allocation of revenues for 2009-10 and preceding three
 years is as under:
 
 (Rs. in lacs)
 
 Years/         Sugar          Alcohol        Power            Others
 Segment   Turnover   %age  Turnover  %age Turnover  %age  Turnover  %age
 
 2006-07*    50,346   51.3   47,301   48.2     265    0.3    204     0.2
 
 2007-08     30,291   45.8   33,540  50.72    1478   2.23    825    1.25
 
 2008-09     58,909   58.8   38,739   38.8    1530    1.5    900     0.9
 
 2009-10    110,592  74.12   36,146  24.23   2,467    1.65    -
 
 *consisting of a period of 18 months
 
 Accounting policies
 
 The Companys financial statements are prepared in compliance with the
 requirements of the Companies Act, 1956 and Generally Accepted
 Accounting Principles. The management of the Company accepts
 responsibility for the integrity and objectivity of these financial
 statements, as well as for various estimates/ judgments used in
 preparation of these statements. The estimates and/or judgments have
 been made on a consistent, reasonable and prudent basis to reflect true
 and fair picture of the state of the affairs of the Company.
 
 Debt servicing and public deposits
 
 The Company has been able to meet its obligations towards the lenders
 for principle and interest, in terms with the respective letter of
 sanctions/ approvals. During the year, the Company has not accepted any
 fresh public deposit and no amount was outstanding at the end of the
 year.
 
 AUDITORS REPORT
 
 The comments on the statement of account referred to in the report of
 the auditors are self-explanatory, and explained in the appropriate
 notes to accounts. The Board has taken note of the qualification made
 by Auditors in their Report on Deferred Tax credit. Such credit is
 taken on the judgment exercised by the Company based on the following:
 
 1.  Recent increase in sugar prices and change in business cycles.
 
 2.  Changes in the Government policies deregulating the industry
 including reduction in levy quota, permitting exports, relaxing
 quantitative controls on sugar and permitting procurement of ethanol
 for admixing with petrol.
 
 3.  Emphasis on exports particularly export of sugar of 40,800 mt,
 which the Company is entitled under its past export obligations. Export
 of sugar is giving positive arbitrage over domestic price of sugar.
 Further, the Company is strengthening its ENA and IMFL export related
 activities and creating new markets.
 
 4.  The Company is enlarging its non cyclical business areas viz power
 and potable spirits which give higher margins. Increase in power export
 tariff will assist the Company to meet its plans. The new brands
 introduced in IMFL segment will yield higher margins.
 
 5.  The Company, having three integrated sugar refineries, is in the
 best possible position to reap benefits of changing sugar scenario.
 
 6.  The Company has developed risk assessment and mitigation skills
 over the years which will result in bringing stability in its earnings
 capability.
 
 7.  The Company has identified technical innovation as a key driver of
 growth. Under this approach, the Company is pursuing various technical
 and agricultural development models. It has created a new business
 vertical, Integrated Casetech Consultants Pvt Ltd, for this purpose.
 
 The management is confident that the above steps initiated by the
 Company will have a positive impact on the Companys financial
 performance, therefore, its ability to utilize the deferred tax credit
 going forward in future.
 
 DIRECTORS
 
 At the forthcoming 74th Annual General Meeting (AGM) of the Company,
 Dr. G S C Rao and Mr. Sanjay Tapriya, Directors on the Board of the
 Company, are retiring by rotation and being eligible offers themselves
 for re-appointment. The Company has appointed Mr. Basant Kumar Goswami
 as additional director on the Board of the Company on June 11, 2010.
 
 Mr. Goswami is a senior retired IAS Officer, who joined Indian
 Administrative Service in the year 1960. He has held important
 positions in various government/semi-government departments and has
 been awarded many times. Mr. Goswami has been director on the board
 and/or committees of various public and private limited companies in
 India. He has also been actively involved in various social, charitable
 and religious activities. He holds a Masters degree in English from
 the University of Punjab.  Mr. Goswami is an independent director
 within the meaning of Clause 49 of the listing agreement with stock
 exchanges. Being eligible, he offers himself for re- appointment.
 
 ICICI Bank has withdrawn the nomination of Mr. S D Saxena with effect
 from December 15, 2009. The Board of Directors places on record its
 appreciation for the advices and guidance extended by the outgoing
 director to the Company.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 During the year, 28,140 (previous year 1,75,836) equity shares of Rs 10
 each were issued and allotted under Employee Stock Option Scheme 2007
 as fully paid-up at an exercise price of Rs.  39 per equity share in
 accordance with the provisions of SEBI (Employee stock option scheme
 and employee stock purchase scheme) Guidelines, 1999. The details for
 stock options issued and exercised are given in Annexure A to the
 report.
 
 The scheme has been implemented in accordance with the said guidelines
 and the resolutions passed by the shareholders of the Company.
 
 FOREIGN CURRENCY CONVERTIBLE BONDS
 
 During the year, Company has bought back FCCBs of USD 1.5 mn out of
 total outstanding liability of USD 3.39 mn by raising additional
 external commercial borrowings from Punjab National Bank, Hong Kong in
 accordance with the guidelines issued by Reserve Bank of India. These
 Bonds were the part of the USD 33 mn FCCBs issued by the Company in
 2006, to part finance its growth plan.
 
 CORPORATE GOVERNANCE
 
 As per clause 49 of the listing agreement with the stock exchange, the
 report on corporate governance along-with certificate from the auditors
 and certificate from Chairman and Managing Director, Chief Executive
 Officer and Chief Financial Officer form part of this annual report.
 
 LISTING OF SECURITIES
 
 The equity shares of the Company are listed with Bombay Stock Exchange
 Limited and National Stock Exchange of India Limited.  Foreign Currency
 Convertible Bonds are listed with the Singapore Stock Exchange.
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 Foreign exchange aggregating of Rs. 53.17 crores (Previous year Rs.
 24.3 crores) was earned by the Company against the export of sugar and
 cancellation of raw sugar contracts. A sum of Rs. 639.3 crores
 (previous year Rs. 334.1 crores) inclusive of import of raw material
 was spent in foreign currency.
 
 RESEARCH AND DEVELOPMENT
 
 The details relating to Research and Development activities carried out
 by the Company are stated in Form B of this Report as required under
 the Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988.
 
 CONSERVATION OF ENERGY
 
 Details of steps taken for conserving the energy are stated in Annexure
 to this report.
 
 PARTICULARS OF EMPLOYEES
 
 Information relating to employees of the Company, as required under
 section 217(2A) of the Companies Act, 1956, read with the Companies
 (Particulars of Employees) Rules, 1975, as amended is set out in the
 Annexure B to this report. However, as per the provisions of section
 219(b) (iv) of the Companies Act, 1956, the report and the accounts are
 being sent to all the shareholders of the Company excluding the
 aforesaid information. Any shareholder interested in obtaining such
 information may write to the Company Secretary at the registered office
 of the Company. The said information is also available for inspection
 at the registered office during working hours up to the date of the
 annual general meeting.
 
 AUDITORS
 
 The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, New
 Delhi, retire at the ensuing annual general meeting of the Company and,
 being eligible, offers themselves for re-appointment. You are requested
 to re-appoint the auditors for the financial year 2010-11 and fix their
 remuneration.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the provisions of Section 217(2AA) of the Companies Act,
 1956 as amended, with respect to the Directors responsibility
 statement, it is hereby confirmed:
 
 (a) that in preparation of accounts for the financial year ended on
 September 30, 2010, the applicable accounting standards have been
 followed along with proper explanation relating to the material
 departures.
 
 (b) that the directors of the Company 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 as at September 30, 2010 and of the
 loss of the Company for the financial year ended on that date.
 
 (c) that the directors of the Company have taken proper and sufficient
 care 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, and
 
 (d) that the directors of the Company have prepared the accounts of the
 Company for the year ended September 30, 2010 on going concern basis.
 
 ACKNOWLEDGEMENT
 
 The Board of Directors places on record their gratitude to all the
 lender banks and financial institutions for their continued assistance
 and guidance. The Directors acknowledge with gratitude the co operation
 and assistance received from all executives, staff and workmen of the
 Company.
 
 The Directors also wish to emphatically state their gratitude to the
 Government of India, State Government of Uttar Pradesh, Indian Sugar
 Mills Association, and Sugar Technologist Association of India,
 farmers, suppliers and all other concerned persons who have continued
 their valuable support to your Company.
 
                         For and on behalf of the Board of Directors
                                            Simbhaoli Sugars Limited
 
 New Delhi                                         Gurmit Singh Mann
 
 November 29, 2010                                      Chairman and
                                                   Managing Director