Uttam Sugar Mills

The Directors take pleasure in presenting their Thirteenth Annual
 Report together with the audited accounts for the year ended 30th
 September 2007.
 
 FINANCIAL RESULTS
 
 The financial results of the Company for the year ended on 30th
 September 2007 are as under:-
 
                                                          (Rs. in Lacs)
 
                                         Year ended         Year ended
                                         30.09.2007         30.09.2006
 
 Net Sales                                 27886.56          21454.90
 
 Profit/ (Loss) before 
 Depreciation and Tax                      (1118.08)          4123.77
 
 Depreciation                              (1888.83)          (983.10)
 Profit/(Loss) before Tax                  (3006.91)          3140.67
 Provision for taxation:
 Current Tax                                  _               (287.03)
 Less MAT credit                              _                257.07
 Deferred Tax                                330.47           (815.58)
 Fringe Benefit Tax                          (30.77)           (19.79)
 Profit/ (Loss) after taxation             (2707.21)          2275.35
 Balance brought forward from 
 Previous Year                              5420.35           3145.00
 Less: Income Tax for earlier year            -                   - 
 Surplus transferred to Balance Sheet       2713.14           5420.35
 
 REVIEW OF OPERATIONS
 
 During the Financial Year 2006-07, your Company crushed 216.72 lacs of
 qtls of cane and produced 21.35 lacs of qtls of sugar at a recovery
 rate of 9.86% as compared to 112.39 lacs of qtls of cane crushed and
 11.12 lacs of qtls of sugar produced for the previous Financial Year
 2005-06. During the year under review, two new Green field sugar plants
 at Shermau, District Saharanpur (U.P.) and Khaikheri, District
 Muzaffarnagar (U.P.), have been commissioned with an installed capacity
 of 5000 TCD and 4500 TCD respectively.
 
 DIVIDEND
 
 In view of the unfavorable performance, your Directors are not in a
 position to recommend any dividend for the financial year 2006-07.
 
 SHIFTING OF REGISTERED OFFICE
 
 Registered Office of the Company has been shifted from 7C, 1st Floor,
 J Block Shopping Centre, Saket, New Delhi - 110 017 to Village
 Libberheri, Tehsil Roorkee, District Haridwar, Uttarakhand with effect
 from 2nd November, 2007, pursuant to Section 17 read with Section 146
 and other applicable provisions of the Companies Act, 1956 as approved
 by Company Law Board order dated 26th day of October, 2007, confirming
 the alteration in Clause II of the Memorandum of Association of the
 Company.
 
 FUTURE OUTLOOK
 
 The Financial Year 2006-07 was not good for the Sugar Industry as a
 whole. Your Company was no exception despite best efforts to improve
 the operations of the factories. The depressed sugar market due to high
 production of about 28 Million MT for the season caused steep fall in
 the selling price of the sugar. After taking into account consumption,
 there was a huge carry forward of stocks. The Central Government banned
 export of sugar some time in July, 2006 which was an unwarranted action
 when the international price of sugar was favorable. This action on the
 part of the Central Government resulted in building larger inventory
 with the consequential impact on the price of sugar. This factor has
 severely effected the working result of your company also. Recently,
 some incentive measures have been announced by the Government for the
 support of exports and also creation of buffer stock of 5 Million MT.
 However, all these measures have not improved the situation very much.
 
 The U.P. Government has scrapped the existing sugar incentive policy
 which was announced by the previous Government being excessive and
 unreasonably tilted towards larger units. It is reported that the State
 Government is considering a new alternative policy which is yet to be
 announced.
 
 EXPANSION
 
 As already reported in the previous years Directors Report, your
 Company has commissioned two new units in Village Khaikheri, District
 Muzzafamagar, U.P. and Village Shermau, District Saharanpur, U.P.
 during the financial year under review.
 
 Expecting a turnaround in the sugar industry in the next season
 beginning October, your Company is investing Rs. 350 Crore to expand
 its crushing capacity to 30,250 tonnes crushing daily (TCD) from the
 existing 22,750 TCD. Post expansion, your company will have the
 countrys seventh-largest crushing capacity. The cogeneration of
 exportable power will also increase from the current 22 MW to 100 MW by
 next season while the distillery capacity will go up to 200 kiloliters
 per day (KLPD) from the current 75 KLPD.
 
 Besides above, your Company is also planning to set up two integrated
 sugar complexes at Belgaum (Karnataka) with the facilities for
 manufacturing refined sugar/ raw sugar, cogeneration facilities and
 ethanol distillery at an estimated outlay of Rs. 325 Crores.
 
 AUDIT COMMITTEE
 
 The Audit Committee was re-constituted on 28th March, 2007 consisting
 of Mr. N.K. Sawhney, Mr. V.S. Tandon and Dr. R. Vasudevan satisfying
 the requirements of Section 292A of the Companies Act, 1956 and Clause
 49 of the Listing Agreement with the Stock Exchange.
 
 DIRECTORS
 
 Mr. Ranjan Adlakha and Mr. N.K. Sawhney, Directors of the Company are
 retiring by rotation at this forthcoming Annual General Meeting of the
 Company and are eligible for reappointment.
 
 Mr. Prabhkaran Singh Lalli was appointed as an Additional Director of
 the Company during the period under review and he holds office till
 this forthcoming Annual General Meeting. However, the Company has
 received a notice u/s 257 of the Companies Act, 1956 from a Shareholder
 proposing his candidature for the office of Director.
 
 Mr. U.R.K. Rao, Whole Time Director of the Company has resigned from
 Directorship of the Company during the period under review. The Board
 places on record its deep appreciation for the services rendered and
 valuable guidance provided by him during his tenure.
 
 DIRECTORS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217(2AA)
 OF THE COMPANIES ACT, 1956
 
 The Directors confirm that :-
 
 (i) in the preparation of annual accounts, the applicable accounting
 standards have been followed .
 
 (ii) they have, in the selection of the accounting policies consulted
 the Statutory Auditors and have 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 losses of the Company for that period;
 
 (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 OBSERVATION
 
 Regarding the observation of the Auditors in their Report vide para
 4(f), your Directors wish to clarify that Note no. 13(i) to Schedule
 19-B is self explanatory and give full information.
 
 CORPORATE GOVERNANCE
 
 As per clause 49 of the Listing Agreement with the Stock Exchanges, a
 report on Corporate Governance together with Certificate from a
 Practising Company Secretary forms part of the Annual report.
 
 Your Directors wish to confirm that the entire proceeds of initial
 public issue (IPO) has been utilised for the purpose for which it has
 been raised as stated in the prospectus dated 23rd March, 2006.
 
 The Companys shares are listed on National Stock Exchange and Bombay
 Stock Exchange. The Company has already paid the Listing fees for the
 Financial Year 2007-08 to both the Stock Exchanges.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT
 COST AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
 
 Particulars in respect of Conservation of Energy, Technology
 Absorption, Foreign Exchange Earnings and Out- go u/s 217(1)(e) of the
 Companies Act, 1956 are given in a separate Annexure A attached
 hereto and form a part of this Report.
 
 EMPLOYEES
 
 As required by the provisions of sub-section (2A) of Section 217 of the
 Companies Act, 1956 as amended, read with the Companies (Particulars of
 Employees) Rules, 1975, the names and other particulars of the
 employees are set out in Annexure B to the Directors Report.
 
 AUDITORS
 
 M/s B.K. Kapur & Co., Chartered Accountants, Ghaziabad, Statutory
 Auditors of the Company retires at the forthcoming Annual General
 Meeting and are eligible for reappointment. The Company has received a
 certificate from Auditors to the effect that their appointment, if
 made, would be within the prescribed limits under section 224 (1B) of
 the Companies Act, 1956.
 
 INDUSTRIAL RELATIONS
 
 Industrial relations continued to remain cordial throughout the year
 under review.
 
 PUBLIC DEPOSITS
 
 The Company has not accepted any public deposits since incorporation.
 
 ACKNOWLEDGEMENT
 
 Your Directors wish to place on record their appreciation for the
 support received from the Shareholders, Central Government, Government
 of Uttarakhand and U.P., Industrial Development Bank of India Ltd.,
 Indian Overseas Bank, Punjab National Bank, State Bank of India,
 Oriental Bank of Commerce and customers for their support and
 co-operation. Finally, your Directors acknowledge the dedicated
 services rendered by all the employees of the Company.
 
                                       By Order of the Board 
                                       For UTTAM SUGAR MILLS LTD.
 
 Place: Noida                         (RAJ KUMAR ADLAKHA)
 Date : 31st December, 2007            Chairman & Managing Director