annual report 2012-13 · 2014-01-30 · annual report 2011-12 notice notice is hereby given that...

19thANNUAL REPORT

2011-2012

NARAINGARH SUGAR MILLS LIMITED

Naraingarh Sugar Mills Ltd. Annual Report 2011-12

REGISTRAR AND SHARE TRANSFER AGENT M/s Alankit Assignments Limited205-206, Anarkali Market, Jhandelwala Extension, New Delhi, 11005

Annual Report 2011-12Naraingarh Sugar Mills Ltd.

BOARD OF DIRECTORS

Mr. Shashi Bhushan Mehan, Chairman

Mr. Onkar Anand, Director & Vice ChairmanMr. Mahavir Singh, Nominee Director (HSIDC)

Mrs. Renu Anand, Director

Mrs. Ravinder Kaur Kang, Director

Mr. Gurkirpal Singh, Independant Director

Mr. Gurdev Bassi, Independant DirectorMrs. Uma Sharma, Independant Director

Mr. Vijay Mehan DirectorMr. Jitendra Anand, Executive DirectorMr. Baldev Singh Kang, Managing DirectorCOMPANY SECRETARYMrs.Jaswant KaurSTATUTORY AUDITORSM/s VASUDEVA & ASSOCIATESChartered AccountantsChandigarhCOST AUDITORSM/s Khushwinder Kumar & Co.,Cost AccountantsJalandharREGISTERED OFFICE & WORKSVillage Banondi, P.O. Shahzadpur.Tehsil Naraingarh, Distt. Ambala (Haryana)BANKERSState Bank of IndiaState Bank of PatialaCanara BankOriental Bank of CommerceAllahabad Bank

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CONTENTS Page No.

Notice 2-4Directors' Report 5-11Corporate Governance Report 12-21Management Discussion & 22-30Analysis ReportCEO/CFO Certification 31Declaration on Code of Conduct. 31Auditors Certificate on 32Corporate GovernanceAuditors' Report 33-38Balance Sheet 39Profit & Loss A/c 40Notes to Balance Sheet 41-48Notes on Accounts 49-58Cash Flow Statement 59-61Proxy Form & Attendance Slip 62

Annual Report 2011-12

NOTICE

NOTICE is hereby given that the 19th Annual General Meeting of the company be and is hereby

convened to be held on Wednesday 22nd August, 2012 at 11.30 a.m. at the registered office of the

company at Village Banondi, PO; Shahzadpur, Teh. Naraingarh, Distt. Ambala to transact the

following business(s):

ORDINARY BUSINESS

1. To receive, consider and adopt the Balance Sheet as at 31st March, 2012 and the Profit & Loss

Account for the period ended at that date alongwith the Director's and Auditor's report

thereon.

2. To appoint a Director in place of Mrs. Uma Sharma who retires by rotation and being eligible

offers herself for reappointment.

3. To appoint a Director in place of Mr. Gurdev Singh Bassi who retires by rotation and being

eligible offers himself for reappointment.

4. To appoint a Director in place of Mr. Gurkirpal Singh Bedi who retires by rotation and being

eligible offers himself for reappointment.

5. To consider and if thought fit to pass with or without modification the following resolution as an

ordinary resolution:

To appoint Auditors and fix their remuneration.

RESOLVED THAT M/s. Vasudeva & Associates, Chartered Accountants, having office at SCO: 32-

35, Ist Floor, Madhya Marg, Sector 8C, Chandigarh, the Statutory Auditors of the company,

retiring at the ensuing Annual General Meeting, be and are hereby appointed as the

Statutory Auditors of the company for the financial year ending on 31st March, 2013.

RESOLVED FURTHER THAT the Board of Directors of the company be and are hereby authorised

to fix the remuneration and all out of pocket expenses in consultation with M/s. Vasudeva &

Associates, Chartered Accountants.

BY ORDER OF THE BOARD

FOR NARAINGARH SUGAR MILLS LIMITED

Sd/-

Dated: 25/07/2012 (Onkar Anand)

Place: Chandigarh Vice Chairman

2

Naraingarh Sugar Mills Ltd.


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Notes;

1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend

and vote instead of himself/herself and the proxy need not to be the member of the company.

The Proxies in order to be effective be deposited at the registered office of the company at

least 24 hrs before the time fixed of the meeting.

2. A member or Proxy should fill the enclosed attendance slip and deposit the same at the

entrance of the meeting hall.

3. All correspondence regarding change of address, transfer/transmission of shares etc maybe

made to the Registrars and Share Transfer agents M/s Alankit Assignments Limited, 205-206,

Anarkali Market, Jhandelwala Extension, New Delhi – 110055.

4. The members desirous of obtaining any information concerning the accounts and the

operations of the company are requested to send their queries to the company atleast seven

days before the date of meeting so as to enable the company to make available the desired

information at the meeting.

5. Share Transfer Books and Register of Members will remain closed from 16th August, 2012 to

22nd August, 2012 (both days inclusive)

6. Members are requested to bring their copies of Annual reports as no additional copies will be

provided.


FOR NARAINGARH SUGAR MILLS LIMITED

Sd/-

Dated: 25/07/2012 (Onkar Anand)




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Information pursuant to Corporate Governance of the Listing Agreement (s) regarding the

Directors seeking appointment/re-appointment in the Annual General Meeting

Name of the Director Uma Sharma Gurkirpal Singh Bedi Gurdev Bassi

Date of Birth 20.01.1970 26.01.1968 25.04.1966

Date of appointment 30/07/2011 30/07/2011 30/07/2011

Expertise in Specific 18 years of 20 years of post- 20 years of post-function post-qualification qualification qualification

experience in the experience in the experience in the following areas: following areas: following areas: ?Project Financing and

Loan Syndication for ?Establishing business ?Identification of projects new projects as well operations from and their implementationas for expansion scratch and effectively ?Providing Consultancy purposes. managing the same. services in Financial

?Arrangement and ?Mapping & analysing mattersManagement of Working business potential, ?Project Financing and Loan Capital & Term Finance. identifying new Syndication for new

?Budgeting and analysis profitable products & projects as well as for of variances on monthly product lines. expansion purposes.

basis. ?Driving sales initiatives ?Liaisoning with Banks and ?Finalization of Balance to meet desired targets Financial institutions for

Sheet. with overall responsibility arrangement and of achieving top line & Management of Working

?Costing on monthly basis. bottom line profitability. Capital and Term Finance.

?Handling Income Tax, Business Development ?Director of M/s Kamdhenu Service Tax, Sales Tax, E-solutions (P) LtdCosting, VAT, FBT and ?Formulating corporate ?Working as Outsourcing other allied matters. goals, short term and partners with following long term budgets and blue chip companies:

developing business Reliance Communications plans for the Limitedachievement of these HFCL Infotel Limitedgoals. TATA Teleservices Limited

?Identifying key accounts/Government Departments and strategically secure profitable business.

Qualification B.com, FCWA B.E (Chemical) B.com, FCA

Directorship of other N.A. Gee Solutions Private Kambhenu e-solutionsCompanies Limited Private Limited

Chairmanships/Membership of committees of other companies Nil Nil Nil

Number of shares held Nil Nil Nil

Relationship with other directors Not related to any director Not related to any director Not related to any director

Profit Centre Operations



5

DIRECTORS’ REPORT

To

The shareholders of

Naraingarh Sugar Mills Limited

Naraingarh

Your Directors are pleased to present the 19th Annual report of your company alongwith audited

annual accounts of the company for the period ended 31st March, 2012.

OPERATIONS & FINANCIAL RESULTS

Rs in Lacs

Particulars Current Year Previous year

(31.03.2012) (31.03.2011)

Total Income 7920.36 9091.42

Total expenditure 7522.22 8666.77

Profit before Depreciation and Tax 398.14 424.65

Depreciation 115.09 100.06

Profit after Depreciation and before tax 283.05 324.59

Taxes 59.71 62.67

Profit after Taxes 223.34 261.92

Earning per share 1.10 1.00

It is informed that during the current financial year the company achieved a turnover of Rs.

7920.36 Lacs which is approximately 13% lower than the last year figure of Rs. 9091.42 Lacs though

the company had crushed 3296237 qtls of cane which is approximately 17.5 % higher than the last

year figure of 2805732 qtls. There has been a decrease in net profit of Rs. 38.59 Lacs mainly due to

increase in cane price.



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The comparative figures of Cane crushed and recovery during the current year and last financial

year which is given hereunder:-

Particulars 2011-12 2010-11

Cane Crushed(Qtls) 3296237 2805732

Recovery (%) 9.53 9.45

Production(Qtls) 314235 265136

Future Plans

Your company is an established player in the sugar industry and has been achieving profits despite

overall poor performance of the industry in last 3-4 years. The management is taking keen interest

in upgrading the technology and performance of the sugar manufacturing unit. Presently, the sugar

mill has an installed capacity of 2500 TCD at its plant. Looking at the potential of the plant and the

uptrend in the sugar industry, the company has proposed to enhance the crushing capacity to 5500

TCD from the existing 2500 TCD and stabilizing operations to 229 TCH from existing 104 TCH. For

the purpose, the company has undertaken an in house feasibility with the help of newly recruited,

highly competent technical professionals and now envisages implementation of 25MW capacity

bagasse based cogeneration power plant alongwith expansion and modernization of Sugar Factory.

In addition to this, the company has already designed and proposed to install a sugar mill

modification scheme for achieving steam and power economy. The scheme is for 40% steam on cane

& 25 KWh/TCH. The cogen plant of 25MW shall operate on Bagasse generated during crushing

season. During the off season the company proposes to collect biomass from the surrounding areas

and indigenous coal for running the proposed cogen plant.

The proposed integrated project shall improve the quality of sugar for meeting the national and

international standards while operating at optimum levels, thereby reducing the manufacturing

costs and shall also provide raw material for cogen power plant in the form of Bagasse. In other

words, this expansion and modernization program shall lend a new lease of life to the sugar factory.

Your Board expects much better performance in the years to come in view of the above

modernization and expansion of sugar factory.

DIVIDEND

Keeping in view the financial constraints of the company, your directors have decided not to

recommend any dividend for the year under review.



7

DIRECTORS

Change in Directorship

During the financial year under review, the Board has appointed Mrs. Uma Sharma, FCWA, Mr.

Gurdev Bassi, FCA and Mr. Gurkirpal Singh Bedi as Additional Directors on 30th July, 2011 to act as

independent directors under the provisions of Clause 49 of the listing Agreement. The appointment

of Mrs. Uma Sharma, Mr. Gurdev Bassi and Mr. Gurkirpal Singh Bedi was regularized by the

shareholders on 26th September, 2011.

Besides, IDBI has also withdrawn nomination of Mr. Sanjay Suroya from the directorship of the

company w.e.f 7th May, 2011 and Mr. Romesh Chand Sud also resigned from directorship of the

company on 1st June, 2011.

Directors to retire by rotation

As per provisions of Section 256 of the companies Act, 1956 Mrs. Uma Sharma, FCWA, Mr. Gurdev

Bassi, FCA and Mr. Gurkirpal Singh Bedi retire by rotation and being eligible offer themselves for re-

appointment at the ensuing annual general meeting.

DIRECTORS’ RESPONSIBILITY STATEMENT

Following the directors’ Responsibility Statement as required under section 217 (2AA) of the

companies (Amended) Act, 2000, in respect of the Financial Statements, the directors, confirm

that:

?That during the preparation of annual accounts, applicable accounting standards and

policies have been followed along with proper explanation relating to material

departures.

?That the directors’ have selected such accounting policies and applied them consistently

and made judgments and estimates that are reasonable and prudent so as to give true and

fair view of the statement of affairs of the company at the end of the financial year ended

on 31.03.2012 and of the profit or loss of the company for that period.

?That the directors have taken proper and sufficient care for the maintenance of adequate

accounting records in accordance with the provision of companies Act,1956 for

safeguarding the assets of the company and for preventing and detecting fraud and other

irregularities.

?That the directors have prepared the annual accounts on a going concern basis.



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AUDITORS

M/s Vasudeva & Associates, Chartered Accountants of the company retire at the ensuing Annual

General Meeting. The said Chartered Accountants have confirmed their eligibility under section

224(1B) of the Companies Act, 1956. Your Board recommends their reappointment by way of

ordinary resolution.

AUDITORS’ REPORT AND OBSERVATIONS

The Auditors’ report is self explanatory and does not call for any comments as the auditors have not

made any adverse remarks/qualifications in the Auditors’ Report.

COST AUDITORS

M/s Khushwinder Kumar & Co., Cost Accountants, Jalandhar were appointed as Cost Auditors for

the financial year ended 31st March, 2012. Their report shall be submitted to the Department of

Company Affairs, Government of India in accordance with the requirements of law.

REPORT ON CORPORATE GOVERNANCE

As per clause 49 of the Listing Agreement report on Corporate Governance alongwith Certificate of

auditors in respect thereof and Management Discussion and Analysis Report forms an essential part

of this report and are annexed herewith as Annexure-B.

PUBLIC DEPOSITS

The company has not invited any public deposits under section 58A, 58AA of the Companies Act,

1956 during the financial year under review.

HUMAN RELATIONS

The Directors wish to place on record their appreciation of the earnest efforts and contributions

made by employees at all level for the smooth operation of the company.

PARTICULARS OF EMPLOYEES:

The Company has not employed any person, the information of which is to be given under section

217 (2A) of the companies act, 1956 read with the companies (Particulars of employees) Rules,

1975.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION

The particulars as required under section 217(1)(e) of the Companies Act, 1956 read with

Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988, the

information relating to conservation of energy and technology absorption and Foreign Exchange

earning and Outgo forms an integral part of this report and is annexed as Annexure A.


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ACKNOWLEDGEMENT

We take this opportunity to acknowledge our deep senses of gratitude to all Banks, central/state

government department and other local authorities for unstinted and continued guidance and

support. Our gratitude is also is also due to the shareholders, for the confidence and faith they have

reposed in us.

By Order of the Board

For Naraingarh Sugar Mills Ltd

Sd/-

Date: 25/07/2012 Onkar Anand



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Annexure A

Disclosure of Particulars in respect of conservation of energy and technology

A. Conservation of energy

(a) The company has installed most modern equipment in the plant in order to minimize energy

consumption.

(b) The company does not allow wastage of energy and resources.

(c) Every department has been given different electric connections which are used only at the

time of need. In the absence of staff all the electrical appliance are put off.

B. Power and Fuel consumption

Sl. Particulars Current year (2011-12) Previous year (2010-11)

No

01 Electricity

a. Purchased (units in No.s) 174823 127896

b. Amount (in Rs) 1189152 850300Rate per unit (Rs.) 6.80 6.60

c. Own Generation

i. Through Diesel Gen Set (units in No.s) 240469 455757

Unit per litre of Diesel oil 2.47 3.18

Diesel rate per unit (Rs.) 16.18 11.40

ii. Through Steam turbine generation unit 11403578 9363336

Unit per tonne of fuel rate/unit 222.22 216.68

Rate per unit 5.62 9.23(Being generated out of steam required for process)

2. Bagasse (quantity in MT) 91536.2 78913.00

Total cost (Rs. In Lacs) 1144.20 1380.9

Average rate (Rs.) 1250.00 1750.00

3. Fire Wood (quantity in MT) -- 34.50

Cost (Rs. In Lacs) -- 1.38

Rate per MT -- 4000

4 Consumption per unit of product

Electricity (KW/MT) 261.90 352.3

Bagasse (MT/MT) 2.93 2.97


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C.TECHNOLOGY ABSORPTION

1) The company is regularly carrying on activities of development of sugarcane in the area.

2) Agricultural implements, fertilizers, pesticides and cane seeds are supplied to the cane

growers on loan basis and at subsidized rates.

3) Expenditure incurred on R & D – Nil

4) Total Expenditure as %age of Turnover – Nil

5) Technology absorption, adoption and innovation.

(a) The company has adopted latest technology in the plant to maximize production, yield,

better quality and to minimize consumption of energy.

(b) Technology imported during last five years – Nil

D.FOREIGN EXCHANGE EARNING AND OUTGO

The company has not done any transactions in foreign exchange.


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ANNEXURE-B TO DIRECTORS’ REPORT.

REPORT ON CORPORATE GOVERNANCE

Corporate Governance

Corporate Governance is an ever-evolving art to put into practice ethical business conduct that

focuses on four of its key elements – transparency, fairness, disclosures and accountability.

Primarily, the governance system affects the way the company functions and hence impact its

performance. While governments can frame regulations that can direct the course of governance

in a country and the world, but it is for the companies and management to believe in and

implement the legal, economic and social process by which companies are run.

In India, Clause 49 of the listing agreement of the Indian Stock Exchanges mandates adherence of a

code of corporate governance by the listed companies. It encompasses certain mandatory and non-

mandatory clauses in various areas, like, statutory auditor-company relationship, auditor’s

independence, working of audit committees, Board composition and governance, certification of

accounts and financial statements by managers and directors, the role of independent directors

etc.

NSML has embedded the best of corporate governance practices in its day to day operations aimed

at building trust with shareholders, employees, customers, suppliers (including farmers) and

diverse stakeholders. The company’s policies on Corporate Governance and compliance thereof in

respect of specific areas for the year ended 31st March, 2012 in the format prescribed by Clause 49

of the Listing Agreement with the stock exchanges are set out below for the information of the

shareholders and investors of the company.

1. Company's Philosophy

In Naraingarh Sugar Mills Limited (NSML), the pursuit towards achieving good Corporate

Governance is an on-going process, thereby ensuring truth, transparency, accountability and

responsibility in all our dealings with customers, dealers, employees, shareholders and with every

individual who comes in contact with the Company.

NSML firmly believes that the practice of trusteeship, transparency, empowerment and

accountability in all dealings with its stakeholders, which leads to the creation of the right

corporate culture which fulfils the purpose of Corporate Governance. This helps the company to

perform better thus culminating into higher productivity of the corporate resources. The ethical

values have been sufficiently integrated with business acumen as part of Corporate Governance

framework implemented by the company. The philosophy, principles and practice of corporate

governance in NSML can be concisely stated as:


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?Observance with true spirit of law rather than just with the letter of law.

?Transparency in all business dealings and transactions.

?Maintaining a high degree of disclosure levels in timely and accurate manner.

?Correct and factual internal and external communication

?Equality in treating all shareholders – the organization is always keenly conscious of the

management’s role as a trustee of shareholder’s capital.

?Clear distinction between personal conveniences and corporate resources.

?Compliance with all the applicable law.

?Strategic guidance and effective monitoring by the Board of Directors

?The accountability of the Board of Directors to the company and shareholders.

2. Board of Directors

In compliance with the Corporate Governance norms the present strength of the Board is Eleven

headed by Mr. Shashi Bhushan Mehan, Chairman, Mr. Baldev Singh Kang as Managing Director, Mr.

Onkar Anand as Vice Chairman and Mr. Jitendra Anand as Executive Director. The new management

has rich experience in handling corporate matters. Except Mr. Shashi Bhushan Mehan, Mr. Baldev

Singh Kang, Mr. Onkar Anand and Mr. Jitendra Anand, all other Directors are Non-executive

Directors. Further, Mr. Mahavir Singh, Mr. Gurdev Bassi, Mrs. Uma Sharma and Mr. Gurkirpal Singh

Bedi are amongst the independent Directors.

None of the Directors on the Board is a Member of more than 10 Committees or Chairman of more

than 5 Committees across all the companies in which he is a Director. Necessary disclosure

regarding Committee positions in other companies as on March 31, 2012 have been made by the

Directors.

During the period under review 5 Board meetings were held on 30.04.2011, 30.07.2011,

30.08.2011, 29.10.2011 and 30.01.2012. The maximum time gap between two board meetings is

much less compared to the mandated requirement of not more than 4 months in Clause 49 of the

Listing Agreement.

Composition of Board of Directors, detail of number of directorships held in other public limited

companies and committee positions held by Directors is summarized in the table below:


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Name of the Director

Category of

Director

No. of Board Meetings Attended

during financial year

stended 31 March 2011

No. of Director-ship in public

Companies as on

31/03/2011

No. of Committee positions (as Chairman

/ Member) held in other public Companies

as on 31/03/2011

Chairman Member

Shashi Bhushan Mahen

C 04 Present 01 Nil 01

Baldev Singh Kang

MD 04 Present 01 Nil Nil

Onkar Anand VC 05 Present 03 01 01

Jitendra Anand ED 05 Present 02 Nil 01

Renu Anand NED 05 Present 03 Nil 01

Mahavir Singh INED 02 Not present

04 01 04

Sanjay Suroya# INED 00 Not present

01 02 Nil

Ravinder Kaur Kang

NED 04 Present Nil Nil Nil

Romesh Chand Sud

NED 01 Present 01 Nil Nil

Vijay Mahen NED 03 Present 01 Nil Nil

Mrs. Uma Sharma*

INED 03 Not present

Nil Nil Nil

Mr. Gurdev Bassi*

INED 03 Not present

Nil Nil Nil

Mr. Gurkirpal Singh Bedi*

INED 03 Not present

Nil Nil Nil

Attendance previous AGM held on August

th27 , 2010

# Nomination of Mr. Sanjay Suroya has been withdrawn by IDBI w.e.f. 7th May, 2011.

* Appointment of Mrs. Uma Sharma, Mr. Gurdev Bassi and Mr. Gurkirpal Singh as independent

directors was made w.e.f 30th July, 2011.

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Information supplied to the Board

The Board of NSML has complete access to any information within the company and to any

employee of the company. At the meetings, the Board is provided with all the relevant information

on important matters affecting the working of the company as well as all related details that

require deliberation by the members of the Board.

3. Committees of the Board

The Board has set up the following committees

(a) Audit Committee

As on 31st March, 2012, Audit Committee comprised of four members of which three were

Independent Directors with the following composition:-

1. Mr. Mahavir Singh, Chairman

2. Mr. Gurkirpal Singh Bedi, Member

3. Mr. Gurdev Bassi, Member

4. Mr. Shashi Bhushan Mehan, Member

Terms of Reference of Audit Committee

The terms of reference of Audit Committee are as per relevant guidelines and legislations.

The primary objective of the Audit Committee is to monitor and provide effective supervision

of the management's financial reporting process with a view to ensure accurate, timely and

proper disclosures and transparency, integrity and quality of financial reporting, reviewing with

the management, external and internal auditors, the adequacy of internal control systems

and review the adequacy of internal audit functions.

During the year under review four meetings of the Committee were held on 30.04.2011,

30.07.2011, 29.10.2011 and 30.01.2012.

Sl. No. Name of the Member Category Meeting held Meeting participated

1. Mr. Mahavir Singh Member 04 02

2. Mr. Shashi Bhushan Mehan Member 04 03

3. Mr. Gurdev Bassi Member 03 03

4. Mr. Gurkirpal Singh Bedi Member 03 03


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Terms of reference:

The terms of reference of the committee include:

1) To review the financial statements and pre-publication announcements before

submission to the Board.

2) To ensure the compliance of internal control systems and action taken on internal audit

reports.

3) To apprise the Board on the impact of accounting policies, accounting standards and

legislation.

4) To hold periodical discussions with statutory auditors on the scope and content of the audit.

5) To review the company's financial and risk management policies.

(b) Directors’ Remuneration Committee

The Board constituted Remuneration Committee to recommend the remuneration payable to

Executive Directors. The Company has not paid any remuneration to its non-executive directors

during the financial year 2011-12. The Company does not have any Stock Option Scheme. The

constitution of Remuneration committee was as follows:



3. Mr. Baldev Singh Kang, Member

4. Mr. Shashi Bhushan Mehan, Member

5. Mr. Gurdev Bassi, Member

(c) Share Transfer Committee

The composition of Share transfer Committee is as follows:


2. Mrs. Uma Sharma, Member


4. Mr. Baldev Singh Kang, Member

5. Mr. Onkar Anand, member

During the year under review four meetings of the Committee were held on 30.04.2011,

30.07.2011, 29.10.2011 and 30.01.2012.


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(d) Investor Protection Committee

The composition of Investors’ Protection committee is as follows:



3. Mr. Gudev Bassi, Member

4. Mr. Baldev Singh Kang, member

5. Mr. Onkar Anand, member

There had been no complaints from investors during the financial year under review.

The Board is responsible for constituting, assigning, co-opting and fixing terms of service for

committee members of various committees. The chairman, in consultation with the Company

Secretary and the committee chairman determines the frequency and duration of the committee

meetings. Recommendations of the committees are submitted to the Board for its approval.

Quorum for meetings of all committee meetings is two members or one third of the members,

which is higher.

4. General meetings

Location and Time of Last Three Annual General Meetings of the company is as follows:

Sl. Year Ended Date of Time Venue

No. Annual

General

Meeting

01 31.03.2009 30.09.2009 11.30 a.m. Vill. Banondi, Teh. Naraingarh, Distt. Ambala

02 31.03.2010 27.08.2010 11.30 a.m. Vill. Banondi, Teh. Naraingarh, Distt. Ambala

03 31.03.2011 26.09.2011 11.30a.m. Vill. Banondi, Teh. Naraingarh, Distt. Ambala

Ensuing Annual General meeting

The ensuing Annual General Meeting is being convened on 22nd August, 2012 at 11.30 a.m at the

registered office of the company at Vill. Banondi, Teh. Naraingarh, Distt. Ambala.

5. Postal Ballot

During the financial year 2011-2012 no special resolution was passed through postal ballot.


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6. Disclosures

During the financial year 2011-2012, the Company had no materially significant related-party

transactions, which are considered to have potential conflict with the interests of the Company at

large.

There has not been any instance of non-compliance, penalties or strictures imposed by the Stock

Exchanges, and/or SEBI on any matter relating to the capital markets, in the preceding three

years.

7. Management Discussion and Analysis Report

The Management Discussion and Analysis Report is being annexed herewith as Annexure B1.

8. Code of Conduct

The Company has adopted a Code of Conduct for its Directors and Senior Management. The

Chairman has given a declaration that all Directors and Senior Management of the Company have

affirmed the compliance with the Code of Conduct which is annexed as Annexure-B2

9. CEO/CFO Certification

As required under Clause 49 of the Listing Agreement a Certificate signed by the Mr. B.S. Kang

Managing Director and Mr. Ashwani Mittal, DGM (Finance & Accounts) is annexed as Annexure B3.

10. Means of Communication

The Quarterly results are published in Hindi Language Newspaper Ambala Bhaskar and English

Daily, The Financial Express and are also sent to Stock exchanges. Besides, the annual reports are

separately sent to all the shareholders.


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11. General Shareholder Information

1. Annual General Meeting 22.08.2012 at 11.30 a.m. at Village Banondi,

Teh. Naraingarh, Distt. Ambala

2. Financial year April 2011 to March, 2012

3. Proposed Dates for Approval of quarterly Qtr ended 30.09.2012: Last week of Oct. 12

results for next 12 months Qtr ended 31.12.2012: Last week of Jan. 13

Qtr ended 31.03.2013: Last week of Apr. 13

Qtr ended 30.06.2013: Last week of July, 13

4 Book Closure Tuesday 16th August, 2012 to Wednesday,

22nd August, 2012 (both days inclusive)

5. Dividend Payment Date Not Applicable (as no dividend has been recommended)

6. Listing on Stock Exchanges The Delhi Stock Exchange Assn Ltd, Delhi

The Bombay Stock Exchange Ltd, Mumbai

The Calcutta Stock Exchange Ltd, Kolkata

The Ludhiana Stock Exchange Ltd. Ludhiana

The Ahmendabad Stock Exchange Ltd, Ahmendabad

7. Scrip Code BSE: 531457

8. Market price Data Since the company’s trading is suspended the market

price data is not available. However, efforts are being

made by the management for revocation of suspension of

trading of company’s shares and the company’s share

shall be available for trading as soon as suspension is

revoked by BSE.

12. Registrar and Share Transfer Agent

The company has appointed M/s Alankit Assignments Limited as its share transfer agent. All

correspondence regarding change of address, transfer/transmission of shares etc maybe made to

the Registrars and Share Transfer agents M/s Alankit Assignments Limited, 205-206, Anarkali

Market, Jhandelwala Extension, New Delhi – 110055.

13. Share Transfer System

All requests for share transfers/transmission received from shareholders are processed by the RTA

which is thereafter approved by the Share Transfer committee.


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14. Distribution of Shareholding as on 30th June, 2012

No. of Equity Shares No. of

Shareholders holders held holding

Up to 5000 2353 95.00 3218310 15.85

5001 to 10000 53 2.14 490100 2.41

10001 to 20000 21 0.85 351100 1.73

20001 to 30000 12 0.48 301200 1.48

30001 to 40000 4 0.16 144400 0.71

40001 to 50000 2 0.08 100000 0.49

50001 to 100000 12 0.48 861530 4.24

100001 to Above 20 0.81 14845560 73.09

TOTAL 2477 100.00 20312200 100.00

15. Shareholding Pattern as on 30.06.2012

Sl. No. Category No. of Shares Held % of Shareholding

01 Promoters 9377660 46.17

02 Institutions (others):

Mutual Fund/UTI 1500000 7.38

03 Bodies Corporate 1161700 5.72

04 Individuals 7735490 38.08

06 NRIs/OCBs 537350 2.65

TOTAL 20312200 100.00

16. Dematerialisation of shares

The company has entered into an arrangement for dematerialization of shares with NSDL and CDSL.

Some shares, however, are still in physical form.

17. Plant location

The company is having one sugar manufacturing unit which is located at Village Banondi, PO:

Shazadpur, Teh. Naraingarh, Distt. Ambala (Hr.)

% of share No. of Shares % of Share


18. Address for Correspondence

The shareholders and other stakeholders may send their queries/grievances at the following

address:-

The Company Secretary

M/s Naraingarh Sugar Mills Limited

Village Banondi, PO: Shazadpur, Teh. Naraingarh,

Distt. Ambala (Hr.)

Email id: [email protected]


FOR NARAINGARH SUGAR MILLS LTD

Sd/-

Date: 25/07/2012 ONKAR ANAND

Place: Chandigarh VICE CHAIRMAN


21

22

ANNEXURE-B1 TO CORPORATE GOVERNANCE

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Introduction

Sugar Industry is the second largest agro-based industry next to textiles in India. Sugarcane is the

key raw material for production of sugar. Around 70 % Sugar is produced from Sugar Cane & 30% is

produced from Sugar Beet.

Your company is engaged in production of sugar from sugarcane and its only manufacturing unit is

located at Vill. Banondi, Teh. Naraingarh. The plant has an installed capacity of 2500 TCD (tons

crushing per day) with a co-generation of power of 5 MW.

Industry Structure and Developments

The Sugarcane industry has always been a cause of concern since its inception. The Indian sugar

industry ranks second among the agro based processing industries in India. Being an essential

commodity, sugar prices are closely monitored by the government and controlled by a set of

measures like export restriction, import enhancement and fiscal concession. The raw material for

production of sugar i.e. sugarcane is a seasonal crop and hence the success or failure of a sugar

factory mainly depends on the sugarcane produced in the country.

The two foremost challenges for our industry are the rigid regulations constraining us and the

cyclicality in production. Both these problems are inter-linked. The lack of freedom to make

decisions on sound commercial basis is amplifying the financial distress in the industry. This leads to

ever sharper swings in sugar production from year to year. If one looks at the reasons for cyclicality

in sugarcane and sugar production, bad weather is one reason but the predominant cause is the

delay in payment of adequate cane price to the farmers, leading to reduction in area under

sugarcane and lack of proper care of the crop by the farmers causing lower yields and lower sugar

recoveries. After two years of low sugarcane and sugar production in 2008-09 and 2009-10, the

sugar production in 2010-11 and 2011-12 was substantially more than the domestic consumption. If

we look at the past several years, we will notice that two years of high sugarcane and sugar

production is usually followed by two years of low sugarcane and sugar production and vice-versa.

Not only does this cyclicality in sugarcane and sugar production puts a huge burden on the sugar

industry, but also causes harm to the sugarcane farmers as well as consumers. The farmers do not

get adequate payment for their cane on time during surplus years and consumers have to pay a high

price on sugar during low production years when they are exposed to high import prices of sugar.

Our other great challenge is the lack of freedom to operate on normal commercial basis like every

other industry in the country. The Central government continues to exercise major controls over


23

the sugarcane and sugar sector right from the pricing of sugarcane and reservation of cane areas to

the quantity of sugar each mill can sell every month and levy obligation on sugar industry. The use

and movement of molasses and ethanol is also heavily regulated.

Further, some major sugar producing states declare State Advised Prices with no reference to

economics of the industry. These constraints have collectively made the industry weak and poorly-

capitalised. We are also seen by the investors and banks as lacking the ability to have significant

impact on our well being and future prospects and more subject to rigid controls.

In a free environment, companies would be more competitive and efficient and shall have better

access to capital, invest more in agricultural and technical development and better serve its

farmers and customers.

As per GAIN (Global Agricultural Information Network) report Sugar production is poised for a third

consecutive year of strong growth MY (marketing year) 2012-13 after moving through a downward

cycle in 2008-09 and 2009-10. India’s total centrifugal sugar production in 2012-13 is forecasted at

29.75 million metric tons, which includes 435,000 tons of Khandsari sugar, (a low recovery

centrifugal sugar prepared by open-pan evaporation method), due to an expected increase in

sugarcane planting and yields and gur production (a crude non-centrifugal lump sugar) is forecast

higher at 4.4 million tons due to the expectation of firm prices.

Modest-to-strong cane price realization despite weak sugar prices in domestic markets, coupled

with strong export prospects for Indian sugar in 2011-12, will likely help mills increase cash flows

and avoid mounting cane arrears. This should incentivize farmers to plant higher cane acreage in

2012-13. Assuming a normal monsoon and favorable weather conditions, sugarcane planting are

forecast at 5.25 million hectares, (up 3 percent over last year), and sugarcane production is

forecast higher at 365 million tons. However, deficit northeast monsoon rains in the 2012 rabi

season have raised concerns over accumulating moisture stress in southern and western India,

which may temper cane production prospects for 2012-13.

With the rising cost of labor and irrigation for sugarcane cultivation, some state governments are

assisting sugarcane farmers in procuring sugarcane harvesters. Industry observers believe that

mechanical cane harvesting will reduce the cost of sugarcane production, ensure timely and

reliable supplies of fresh cane to sugar mills, ensure timely harvesting for maximum yield and sugar

recovery, overcome labor problems, and improve soil structure. In general, rising sugarcane

cultivation costs, coupled with better remuneration from competing crops such as paddy, wheat

and corn, should keep cane prices firm during the forthcoming season.



24

Consumption:

Indian sugar consumption is set to rise in 2012-13 to 26.5 million tons on improved domestic

supplies and strong demand from bulk consumers. Prospects of growth in the Indian economy

(expected at 7.6 percent for fiscal 2012-13 and 8.6 percent for fiscal 2013-14 , and a rapidly

growing population (about 1.8 percent per annum) would support growth in sugar consumption.

Bulk consumers such as soft drink manufacturers, bakeries, confectionary, hotel and restaurant

consumers account for 60 percent of milled sugar demand. Most bulk consumers only use cane

sugar as India does not produce high fructose corn syrup (HFCS) in significant quantities. In the

recent 2012-13 Union Budget announcement, the Government of India (GOI) reduced the import

duty on corn syrup from 30 percent to 20 percent for fiscal year 2012-13. Lowering the import duty

will encourage imports of HFCS for commercial use. Local sweet shops consume most of India's

Khandsari sugar. Gur is mostly consumed in rural areas for household consumption and feed use.

Market Prices

After reaching a peak in January 2010, domestic sugar prices softened on the expectation of

increased domestic production in 2010-11 and forecasted higher production in 2011-12. Following

the GOI's decision to allow sugar exports in 2011-12, domestic sugar prices rose strongly in

November 2011, but was moderated as fresh sugar supplies pulled down prices. Current sugar

prices in India’s domestic wholesale market range from $540 to $600 per ton. Sugar prices in the

upcoming 2012-13 season are expected to remain range-bound on prospects of improved domestic

supplies, although international price movements can influence domestic prices. Gur prices have

been under pressure since the beginning of 2011-12 and its price in 2012-13 will be guided by sugar

price movements.

Trade:

Anticipating surplus sugar production and strong export demand for 2012-13, India will be a net

exporter of sugar for second consecutive year, with exports likely to reach as much as 2.5 million

tons. Given surplus sugar supplies for 2011-12, the GOI has allowed 3 million tons of commercial

exports under Open General License. With the recent softening of international sugar prices and

India's rising domestic cost of production, Indian sugar exporters will face lower export price

realization, especially in mills in northern India which face higher transport costs. However, mills in

western and southern India will continue to benefit from their proximity to ports and relatively

lower production costs.



25

Trade Policy

In order to augment domestic supplies due to concerns over rising food price inflation, the GOI took

measures to relax import restrictions. The GOI extended duty-free imports of raw and white sugar

through a series of notifications until March 2012. In the budget announcement for fiscal year

2012-13, the GOI has withdrawn the import duty on sugar (raw and white). Without further

notification, the import duty on sugar will remain zero. While ensuring an adequate supply of sugar

to end consumers, the GOI has also lifted stockholding limits on sugar for recognized traders and

wholesale dealers since December 2011.

Stocks:

Total 2012-13 ending stocks are forecast at 7.3 million tons, which is 750,000 tons over 2011-12

ending stocks. This is on par with normal stock levels, which is defined as India's three-month

consumption requirement.

Policy:

Sugarcane Production and Pricing Policy

The Government of India (GOI) supports research, development, training of farmers and transfer of

new varieties and improved production technologies (seed, implements, pest management) to

growers in its endeavor to raise cane yields and sugar recovery rates. The Indian Council of

Agricultural Research (ICAR) conducts sugarcane research and development at the national level.

State agricultural universities, regional research institutions, and state agricultural extension

agencies support these efforts at the regional and state levels. The central and state governments

also support sugarcane growers by ensuring finances and input supplies at affordable prices. To

increase the area of cultivation and production in India, a centrally sponsored scheme called the

Sustainable Development Fund of Sugarcane Based Cropping System Area under the Macro

Management Mode of Agriculture is being implemented in various sugarcane growing states.

The GOI establishes a minimum support price (MSP) for sugarcane on the basis of recommendations

by the Commission for Agricultural Costs and Prices (CACP) and after consulting state governments

and associations of the sugar industry and cane growers. In 2009, the GOI announced a new fair and

remunerative price system (FRP) that links cane prices with sugar price realization by sugar mills.

Several state governments further augment the MSP/FRP, typically by 30-40 percent, due to

political compulsions rather than market pricing.

Sugar mills are required to pay the “state advised price (SAP)” to sugarcane farmers irrespective of

the market price of sugar. Softening sugar prices, coupled with apprehensions of a large cane crop,

discouraged the sugar mills to pay higher cane prices vis-à-vis 2010-11. However, cane prices



26

received by farmers were higher than the MSP/FRP in most of the growing states. Although the local

industry has been advocating rationalization of cane pricing policy by linking it with

domestic/world sugar prices, industry sources do not expect any downward revision of the FRP in

the coming years given the political clout of the farmers lobby.

Sugar Production and Marketing Policy

The GOI levies a fee of Rs. 240 ($5.60) per ton of sugar produced by mills for the Sugarcane

Development Fund (SDF), which is used to support research, extension, and technological

improvement in the sugar sector. The SDF is also often used to support sugar buffer-stocks

operations, provide a transport subsidy for sugar exports, and provide an interest subsidy on loans

for the installation of power generation and ethanol production plants. In March 2008, the GOI

enacted the Sugar Development Fund (Amendment) Bill, 2008, that enables the government to

include the use of the fund for debt restructuring and granting soft loans to sugar mills.

The GOI follows a policy of partial market control and dual pricing for sugar. Local sugar mills are

required to supply 10 percent of their production to the government as"levy sugar" at below-

market prices, which the GOI distributes through the Public Distribution System (PDS) to the

below-poverty line population at subsidized rates. Mills are allowed to sell the balance of their

production as “free sugar" at market prices. However, the sale of free-sale sugar and levy sugar is

administered by the GOI through periodic quotas, designed to maintain price stability in the

market. Since April 2012, the GOI has reinstated the quarterly system of allocating sugar for open

market and fair price shops, and has done away with the previous regulated mechanism for the

monthly release of sugar. The GOI monitors the sales of the quota by the mills and takes penal

action against the defaulter mills who are not selling their quota allocation.

Decontrol of Sugar: Need of the hour

The industry has been continuously requesting the government to allow a phased reform of the

sugarcane and sugar sector. IN the first phase, A request was given for removal of the sugar

industry’s obligation to supply of production as levy sugar at a discounted price to the Government

for PDA and abolition of monthly regulated release mechanism by which each mills is told how

much to sell every month. None of these controls are being exercised by the Government on any

other agri-business sectors in the country. Similarly none of these controls are applicable to the

sugar industry in any of the major producing countries abroad. Then why such controls continue to

be imposed only on the Indian Sugar Industry?

The entire sugar industry is waiting for decontrol of sugar in one go to liberate the industry from the

shackles of control. The existing controls and rules were laid down when the industry was a single

product industry viz sugar. But with the industry turning into a multi-product industry based on the



27

by-products of sugarcane and sugar viz ethanol, baggasse, molasses and other values added stream

products, the existing controls and rules have no relevance.

Export of sugar

With two high sugar production years in 2010-11 and 2011-12 there is a challenge to sustain the high

production into the sugar season 2012-13. For which it must be ensured that the farmers get

adequate, remunerative cane prices and that also on time. If adequate steps are not taken on time,

replanting of cane would slow down and area under sugarcane may see a fall in the next sugar

season.

From a position of importing country during the previous two years, the country was able to export

substantial quantities during 2010-11 season. The central government during 2010-11 allowed

exports of sugar in batches, first against old Advance Authorisation Scheme and later under OGL in 3

tranches of 5 lac tones each. This took care of most of the surplus production during the year. The

policy of allocating the exportable quantity amongst all the sugar mills in the country on the basis

of last three years production definitely benefitted every sugar mill in the country.

RISKS AND CONCERNS

The Agro based sugar industry has a specific set of risk characteristics, which at NSML, are carefully

evaluated, managed and mitigated. The major risks are classified as under:-

Raw material risk

Sugarcane is the raw material and any disturbance on its timely availability will have a substantial

impact on operational cost. This risk may be caused by climatic conditions influenced by the

monsoon and local weather conditions over the crop cycle, which also affects both the quantity and

quality of cane. The profitability of alternative crops will influence the area of planting under

cane. Pests and disease and non-availability of farm labour also impact the cost incurred by the

cane grower.

Sugar Price Risk

The market price for sugar is function of demand and supply. Even a slight fluctuation in demand or

supply of sugar may move sugar price up or down, thereby directly impact the sugar industry.

Wholesale price of sugar has significant impact on our profits. Higher the price higher the profit is.

Like other agricultural commodities, sugar is subject to price, fluctuations resulting from weather,

natural disasters, domestic and foreign trade policies, movements in demand and supply and other

factors beyond the control of management. Besides, around 15-30% of sugar in the world is traded

on stock exchanges and hence is subject to speculation. As a result, any prolonged decrease in

sugar price may have an adverse effect on financial results of the company.



28

Regulatory risks

Sugar industry and hence our company is subject to several legal and regulatory measures imposed

by both Central and State Government. This includes both environmental and other legal strictures

which directly or indirectly impacts the performance of the company. The company may be

exposed to liability resulting from handling of hazardous substances and increased costs for

ensuring compliance of various laws.

Risk mitigation

The company has always maintained an amicable relationship with its farmers and taken up

initiatives to mitigate hardships by timely payment, cane development schemes through Bank

loans, promotion of right cane variety, maintaining goodwill among farmers. The Company adopts

appropriate procedures as per the policy and guidelines through internal control systems to

minimize the risk. The company maintains strong relationship with the customers for stabilizing

the domestic and international market through efficient production and best product delivery. As

explained earlier sugar cane price is also governed by both Central and State Government, the

company is always at a risk of a higher cane price and increased cost of production. These risks

cannot be mitigated unless the industry is completely decontrolled.

Competition Risk

The prospect for high growth in the industry encourages the company to face tough competition

from other companies in the industry and also from the new entrants.

Internal Control Systems and their adequacy

The Company has established a system of internal control across all of its business operations and

safeguarding of the Assets. The Board, Audit Committee and the Management ensure that the

internal control system operates effectively within the organization. Internal Audit team

supported by external experts as and when required, review the adequacy of internal control

systems and suggests necessary checks and balances to increase the effectiveness of the system.

Clear policies have been laid down for approval and control of expenditure. Investment decisions

involving capital expenditure are subject to detailed appraisal and review. Capital and revenue

expenditure are monitored and controlled with reference to approved budgets.



29

Financial performance of the company

OPERATIONS & FINANCIAL RESULTS

Rs in Lacs

Particulars Current Year

(31.03.2012) (31.03.2011)

Total Income 7920.36 9091.42

Total expenditure 7522.22 8666.77

Profit before Depreciation and Tax 398.14 424.65

Depreciation 115.09 100.06

Profit after Depreciation and before tax 283.05 324.59

Taxes 59.71 62.67

Profit after Taxes 223.34 261.92

Earning per share 1.10 1.00

It is informed that during the current financial year the company achieved a turnover of Rs. 7920.36 Lacs which is approximately 13% lower than the last year figure of Rs. 9091.42 Lacs though the company had crushed 3296237 qtls of cane which is approximately 17.5 % higher than the last year figure of 2805732 qtls. There has been a decrease in net profit of Rs. 38.59 Lacs mainly due to increase in cane price. The average Sale price of sugar is almost same.

The comparative figures of Cane crushed and recovery during the current year and last financial year which is given hereunder:-

Particulars 2011-12 2010-11

Cane Crushed(Qtls) 3296237 2805732

Recovery (%) 9.53 9.45

Production(Qtls) 314235 265136

Future Plans

Your company is an established player in the sugar industry and has been achieving profits despite overall poor performance of the industry in last 3-4 years. The management is taking keen interest in upgrading the technology and performance of the sugar manufacturing unit.

Previous year


For the purpose, the company has undertaken an in house feasibility with the help of newly recruited, highly competent technical professionals and now envisages implementation of 25MW capacity bagasse based cogeneration power plant alongwith expansion and modernization of Sugar Factory. Besides, it is also proposed to enhance the crishing capacity to 5500 TCD from the existing 2500 TCD and stabilizing operations to 229 TCH from existing 104 TCH.

In addition to this, the company has already designed and proposed to install a sugar mill modification scheme for achieving steam and power economy. The scheme is for 40% steam on cane & 25 KWh/TCH. The cogen plant of 25MW shall operate on Bagasse generated during crushing season. During the off season the company proposes to collect biomass from the surrounding areas and indigenous coal for running the proposed cogen plant.

The proposed integrated project shall improve the quality of sugar for meeting the national and international standards while operating at optimum levels, thereby reducing the manufacturing costs and shall also provide raw material for cogen power plant in the form of Bagasse. In other words, this expansion and modernization program shall lend a new lease of life to the sugar factory

Your Board expects much better performance in the years to come in view of the above modernisation and expansion of sugar factory.

Human Resources / Industrial Relations

Employee relation is one of the key success factors which are continued throughout the year. Lot of development initiatives in all facets is implemented and practiced including six sigma concepts in order to be competitive in the industry. The organization provides a learning atmosphere across levels and aims at improving the standards through innovation. The industrial relations maintained with the employees are satisfactory.

CAUTIONARY STATEMENT

Statement in this Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from these expressed or implied. The Company assumes no responsibility in respect of these forward looking statements that may be amended or modified later, on the basis of subsequent developments, information or events and in view of the changes brought by the Government Rules and Regulations.


FOR NARAINGARH SUGAR MILLS LTD

Sd/-




30



31


Annexure B2 to Corporate Governance Report

DECLARATIONAs provided under Clause 49 of the Listing Agreement with the Stock Exchanges, this is to confirm that all the members of the Board and the Senior Management have affirmed compliance with the Code of Conduct for the year ended March 31, 2012.

Sd/-



Annexure B3 to Corporate Governance Report

CERTIFICATE UNDER SUB CLAUSE V OF CLAUSE 49 OF LISTING AGREEMENT

We, Baldev Singh Kang, Managing Director and Ashwani Mittal, DGM (Finance & Accounts) of the company hereby confirm and certify that:-1. These statements do not contain any materially untrue statements or omit any material fact or

contain statements that might be misleading;2. These statements together present a true and fair view of the Company's affairs and are in

compliance with existing accounting standards, applicable laws and regulations.3. There are, to the best of our knowledge and belief, no transactions entered into by the

Company during the year ended 31st March, 2012 which, are fraudulent, illegal or violative of the Company's Code of Conduct.

4. We accept responsibility for establishing and maintaining internal controls for financial reporting. We have evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee those deficiencies in the design or operation of such internal controls of which, we are aware and the steps we have taken or propose to take to rectify these deficiencies.

5. We have indicated to the Auditors and the Audit Committee:(a) there have been no significant changes in internal control over financial reporting during

this year.(b) there have been no significant changes in accounting policies during this year.(c) there have been no instances of significant fraud of which we have become aware and the

involvement therein, of management or an employee having significant role in the company’s internal control systems over financial reporting.

Sd/- Sd/-

Date: 25.07.2012 Baldev Singh Kang Ashwani Mittal

Place: Chandigarh Managing Director DGM (F&A)


32


Auditors’ certificate on Corporate Governance

The Members

Naraingarh Sugar Mills Limited

We have examined the compliance of conditions of Corporate Governance by Naraingarh Sugar

Mills Limited for the year ended 31st March, 2012 as stipulated in Clause 49 of the Listing

Agreement of the said Company with the Stock Exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the Management.

Our examination was limited to a review of procedures and implementation thereof, adopted by

the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither

an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information & according to the explanations given to us, we

certify that the Company has complied with the conditions of Corporate Governance as stipulated

in Clause 49 of the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the

Company nor the efficiency or effectiveness with which the management has conducted the affairs

of the Company.

For VASUDEVA & ASSOCIATES

CHARTERED ACCOUNTANTS

Firm Registration No. 022239N

Sd/-

Dated: 25th July, 2012 (PIYUSH SINGLA)

Place : Chandigarh PARTNER

Membership No. 520263


33


AUDITOR’S REPORT

The Members,

Naraingarh Sugar Mills Limited.

1. We have audited the attached Balance Sheet of Naraingarh Sugar Mills Limited as at

31st March, 2012, the related Statement of Profit & Loss and Cash Flow Statement for the year

ended on that date annexed thereto. These financial statements are the responsibility of the

Company’s management. Our responsibility is to express an opinion on these financial

statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India.

Those standards require that we plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosure in the financial

statements. An audit also includes assessing the accounting principles used and significant

estimates made by the management, as well as evaluating the overall financial statements

presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, (as amended) issued by the

Central Government of India in terms of sub-section (4A) of Section 227 of ‘The Companies Act,

1956’ and on the basis of such checks of the books and records of the Company as we

considered appropriate and according to the information and explanations given to us, we

enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said

Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that :

a) We have obtained all the information and explanations which to the best of our knowledge

and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by Law have been kept by the Company

so far as appears from our examination of those books.

c) The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement, dealt with by this

report, are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement,

dealt with by this report, comply with the Accounting Standards referred to in sub-section


34


(3C) of Section 211 of the Companies Act, 1956, to the extent applicable.

e) On the basis of written representations received from the directors as on 31st March, 2012

and taken on record by the Board of Directors, none of the directors is, prima facie,

disqualified as on 31st March, 2012 from being appointed as a director in terms of clause

(g) of sub-section (1) ofSection 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to

us the said accounts, read with notes annexed thereto, give in the prescribed manner the

information required by the Companies Act, 1956 and give a true and fair view

inconformity with the accounting principles generally accepted in India.

i) in the case of the Balance Sheet, of the state of affairs of the Company as at

31st March, 2012.

ii) in the case of the Statement of Profit & Loss, of the profit for the year ended on that

date.

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that

date.

For VASUDEVA & ASSOCIATESCHARTERED ACCOUNTANTS

Firm Registration No. –022239N

Sd/-

Dated : 25th July, 2012 (PIYUSH SINGLA)

Place : Chandigarh PARTNERMembership No. - 520263


35


ANNEXURE TO THE AUDITOR’S REPORT

(Referred to in paragraph 3 of our report of even date on accounts of Naraingarh Sugar Mills

Limited for the year ended 31st March, 2012).

i. In respect of its Fixed Assets :

a) The Company has maintained proper records showing full particulars, including

quantitative details and situation of fixed assets.

b) As explained to us, the Company has a phased programme of physical verification all of its

fixed assets which, in our opinion, is reasonable having regard to the size of the Company

and the nature of its assets. In accordance with such programme the management, during

the year, has physically verified its fixed assets and no material discrepancies were noticed

on such verification.

c) The Company, during the year, did not dispose off any of its fixed assets.

ii. In respect of its Inventories :

a) According to the information and explanations given to us, the physical verification of

inventories is conducted by the management at periodic intervals; the frequency of

verification is reasonable having regard to the size of the Company and the nature of its

inventories.

b) The procedures of physical verification of inventories followed by the management are

reasonable and adequate in relation to the size of the Company and the nature of its

business.

c) As explained to us, the Company is maintaining proper records of inventory and no

material discrepancies were noticed on physical verification. However, minor

discrepancies noticed on physical verification were properly accounted/adjusted.

iii. a) According to the information and explanations given to us, the Company has not granted

any loan, secured or unsecured, to Companies/firms/other parties covered in the register

maintained under Section 301 of the Companies Act, 1956; accordingly clause (iii) (b) to

(d) of paragraph 4 of the Order are not applicable; hence not commented upon.

b) The Company has taken, interest free, loans from four parties (Balance outstanding

` 1,161.11 lacs & Maximum balance outstanding during the year 1,161.11 lacs); covered

in the register maintained under Section 301 of the Companies Act, 1956; terms &

conditions of repayment etc; (though not determined) are, prima facie, not prejudicial to

the interest of the Company.

c) The Company has not taken any loans, secured or unsecured from Companies/firms

covered in the register maintained under Section 301 of the Companies Act, 1956.

iv. In our opinion and according to the information and explanations given to us, there are

adequate internal control system commensurate with the size of the Company and the nature

of its business with regard to purchases of inventory, fixed assets and with regard to sale of

goods and services. During the course of our audit, we have not observed any continuing

failure to correct major weaknesses in the internal control system.

v. a) According to the information and explanations given to us, the particulars of contracts or

arrangements that need to be entered in the register maintained under Section 301 of the

Companies Act, 1956 have been so entered.

b) According to the information and explanations given to us, the transactions made in

pursuance of contracts and arrangements referred to in para v(a) above & exceeding the

value of rupees five lacs in respect of any party, during the year, have been made at prices

which are, prima facie, reasonable having regard to the prevailing market prices at the

relevant time.

vi. According to the information & explanations given to us, the Company has not accepted

deposits from the public within the provisions of Sections 58A and 58AA of the Companies Act,

1956 and the Companies (Acceptance of Deposits) Rules, 1975.

vii. In our opinion and according to the information & explanations given to us, the internal audit

system is commensurate with the size of the Company and nature of its business.

viii. We have broadly reviewed the accounts and records maintained by the Company pursuant to

the rules made by the Central Government for the maintenance of cost records under clause

(d) of sub-section (1) of Section 209 of the Companies Act, 1956 and are of the opinion that,

prima facie, the prescribed accounts and records have been made and maintained.

However, we have not made a detailed examination of the records with a view to determine

whether they are accurate & complete.

ix. In respect of its Statutory dues :

a) According to the information & explanations given to us and on the basis of our

`


36


examination of the records of the Company, amounts deducted/accrued in the books of

account in respect of undisputed statutory dues including Provident Fund, Employees

State Insurance, Income Tax, Sales Tax, Service Tax, Excise Duty, Customs Duty, Wealth

Tax, Cess and other material statutory dues, to the extent applicable, have generally

been regularly deposited, during the year, by the Company with the appropriate

authorities.

According to the information and explanations given to us, no undisputed amounts

payable, in respect of Provident Fund, Employees State Insurance, Investor Education and

Protection Fund, Income Tax, Sales Tax, Service Tax, Excise Duty, Customs Duty, Wealth

Tax, Cess and other material statutory dues, were in arrears as at 31st March, 2012 for a

period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no statutory dues

(except Cane Purchase Tax ̀ 33,910,041/- for the financial years 1996-1997 to 2002-2003)

which have not been deposited with the appropriate authorities, as at 31st March, 2012,

on account of any dispute.

x. The Company does not have any accumulated losses as at 31st March, 2012 and has not

incurred any cash losses during the financial year ended on that date or in the immediately

preceding financial year.

xi. According to the information & explanations given to us and on the basis of verification of

records, the Company has not defaulted in repayment of dues to the banks. The Company has

not taken any loan from financial institution.

xii. According to the information & explanations given to us, the Company has not granted loans

and advances on the basis of security by way of pledge of shares, debentures or other

securities.

xiii. According to the information & explanations given to us, the provisions of any special statute

applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the

Company.

xiv. According to the information & explanations given to us, the Company is not dealing or

trading in shares, securities, debentures and other investments; accordingly clause (xiv) of

paragraph 4 of the Order is not applicable to the Company.

xv. According to the information & explanations given to us, the Company has not given any

guarantee for loans taken by others from banks or financial institutions.


37



38


xvi. According to the information and explanations given to us, term (vehicle) loans have been

applied for the purpose for which the loans were obtained.

xvii.According to the information & explanations given to us and on an overall examination of the

Balance Sheet of the Company as at 31st March, 2012, we report that no significant funds

raised on short-term basis have, prima-facie, been used for long-term investment by the

Company.

xviii. The Company has not made any preferential allotment of shares to parties and Companies

covered in the registered maintained under Section 301 of the Companies Act, 1956, during

the year.

xix. According to the information & explanations given to us, the Company, during the year has

neither issued any debentures nor raised any money through a public issue; accordingly the

provisions of clauses( xix) &( xx) of paragraph 4 of the Order are not applicable to the

Company.

xx. Based on the information & explanations furnished by the management, which have been

relied upon by us, we report that no case of fraud on or by the Company has been noticed or

reported during the year under audit.

For VASUDEVA & ASSOCIATES

CHARTERED ACCOUNTANTS

Firm Registration No. – 022239N

Sd/-

Dated : 25th July, 2012 (PIYUSH SINGLA)

Place : Chandigarh PARTNER

Membership No. - 520263


39


BALANCE SHEET AS AT 31ST MARCH, 2012NOTE As at 31st March, 2012 As at 31st March, 2011

` ` ` `EQUITY & LIABILITIES Shareholders' FundsShare Capital "A" 211,953,510 211,953,510Reserves & Surplus "B" 233,729,547 445,683,057 206,323,159 418,276,669Non-Current LiabilitiesLong-Term Borrowings "C"-Secured Loans 1,757,378 42,580,170-Unsecured Loans 122,074,548 123,831,926 122,185,613 164,765,783Other Long-Term Liabilities "D" 3,305,412 2,203,171Long-Term Provisions "E" 5,934,123 5,528,414Current LiabilitiesShort-Term Borrowings "F"-Secured Loans 514,180,166 465,702,221Trade Payables 11,984,672 18,737,920Other Current Liabilities "G" 315,358,290 88,906,793Short-Term Provisions "H" 31,425,579 872,948,707 27,183,110 600,530,044

TOTAL ` 1,451,703,225 1,191,304,081ASSETSNon-Current AssetsFixed Assets "I"-Tangible Assets 400,135,790 410,404,968Deferred Tax Asset (Net) 9,235,882 9,546,142Long-TermLoans & Advances "J" 36,593,039 31,520,099Current Assets "K"Inventories 821,022,170 628,021,670Trade Receivables 7,758,164 6,500,823Cash & Bank Balances 27,388,196 19,526,835Short-Term Loans & Advances 98,694,913 31,867,256Other Current Assets 50,875,070 1,005,738,514 53,916,288 739,832,872

TOTAL ` 1,451,703,225 1,191,304,081Significant Accounting Policies& Notes to Accounts "S"Notes referred to above form anintegral part of these accounts."AUDITOR'S REPORT"In terms of our attachedreport of even date.

sd/- sd/-For VASUDEVA & ASSOCIATES SHASHI BHUSHAN MEHAN ONKAR ANANDCHARTERED ACCOUNTANTS (Chairman) (Vice-Chairman)Firm Registration No. 022239Nsd/- sd/- sd/-(PIYUSH SINGLA) BALDEV SINGH KANG JITENDRA ANAND PARTNER (Managing Director) (Executive Director)Membership No. 520263

sd/- sd/-Dated : 25th July, 2012 ASHWANI MITTAL JASWANT KAURPlace : Chandigarh (DGM - A & F) (Company Secretary)


40


STATEMENT OF PROFIT & LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2012

For the year ended For the year endedSCHEDULE 31st March, 2012 31st March, 2011

` ` ` `REVENUERevenue "L"from operations (Net)-Sales 805,722,243 946,189,151 Less : Excise Duty 40,998,188 39,425,698

764,724,055 906,763,453-Other Operating Revenues 20,750,859 785,474,914 1,730,314 908,493,767Other Income "M" 6,560,736 648,892Total Revenue 792,035,650 909,142,659EXPENSESCost of MaterialConsumed "N" 738,849,653 680,799,213Changes in Inventories "O" (193,615,960) (1,839,870)Employee Benefits Expense "P" 23,935,716 19,135,493Finance Costs "Q" 90,222,391 75,699,135Depreciation & Amortisation Expense 11,508,942 10,005,657Other Expenses "R" 92,830,270 92,883,246Total Expenses 763,731,012 876,682,873Profit before tax 28,304,638 32,459,786 Tax Expense 6,267,160-Current Tax 7,244,150 Less : MAT Credit Entitlement 1,583,220 5,660,930-Deferred Tax 310,260 5,971,190Profit after tax 22,333,448 26,192,626 Earning per share(face value of ` 10/- each)-Basic 1.10 1.00Significant Accounting Policies& Notes to Accounts "S"Notes referred to above form anintegral part of these accounts."AUDITOR'S REPORT"In terms of our attachedreport of even date.

sd/- sd/-For VASUDEVA & ASSOCIATES SHASHI BHUSHAN MEHAN ONKAR ANANDCHARTERED ACCOUNTANTS (Chairman) (Vice-Chairman)Firm Registration No. 022239Nsd/- sd/- sd/-(PIYUSH SINGLA) BALDEV SINGH KANG JITENDRA ANAND PARTNER (Managing Director) (Executive Director)Membership No. 520263

sd/- sd/-Dated : 25th July, 2012 ASHWANI MITTAL JASWANT KAURPlace : Chandigarh (DGM - A & F) (Company Secretary)


41


NOTE "A" : SHARE CAPITALFor the year ended For the year endedAs at 31st March, 2012 As at 31st March, 2012` ` ` `

Authorised-21,000,000 Equity shares 210,000,000 210,000,000 of ` 10/- each-9,000,000 Redeemable Preference shares of ` 10/- each 90,000,000 300,000,000 90,000,000 300,000,000

Issued, Subscribed & Paid upEquity Share Capital-20,312,200 Equity shares of ` 10/- each, fully paid up 203,122,000 203,122,000 Less:- Calls in arrear 12,941,000 190,181,000 12,941,000 190,181,000Preference Share Capital-2,177,251 (12%) Redeemable, (Non-Cumulative), Preference shares of ` 10/- each 21,772,510 21,772,510

TOTAL ` 211,953,510 211,953,510

NOTE ''B" : RESERVES & SURPLUS

As at 31st March, 2012 As at 31st March, 2011

` ` ` `

Capital Reserve 37,395,013

-Balance brought forward 37,395,013

Capital Redemption Reserve 48,845,220

-Balance brought forward 48,845,220

Surplus

-Balance brought forward 89,031,977 84,949,509

-Add : Net Profit

For current year 22,333,448 26,192,626

111,365,425 111,142,135

-Less : Appropriations 0 22,110,158

111,365,425 89,031,977

-MAT Credit Entitlement 36,123,889 147,489,314 31,050,949 120,082,926

TOTAL ` 233,729,547 206,323,159

For the year ended For the year ended


42


NOTE ''C" : LONG-TERM BORROWINGS"A" Secured Loans

For the year ended For the year endedAs at 31st March, 2012 As at 31st March, 2011` ` ` `

Term Loan-From : Bank 0 15,300,000Vehicle Loans -From : Non-Banking Financial Companies 1,757,378 496,799-From : Bank 0 1,757,378 116,032 612,831

Excise Term Loans-From : Banks 0 26,667,339

TOTAL ` 1,757,378 42,580,170

Note : Vehicle Loans from Non-Banking Financial Companies are secured against hypothecation of respective vehicles.* inclusive of instalments (due and payable in the year 2012-2013).

"B" Unsecured LoansFor the year ended For the year endedAs at 31st March, 2012 As at 31st March, 2011` ` ` `

From : Non-Banking Financial Companies 3,751,710 4,412,775

From : Directors 115,995,000 113,295,000

From : Others 2,327,838 4,477,838

TOTAL ` 122,074,548 122,185,613

* represent deposits received from Vice-Chairman (` 105,995,000/-) and other directors (` 10,000,000/-)

NOTE ''D" : OTHER LONG-TERM LIABILITIESAs at 31st March, 2012 As at 31st March, 2011` ` ` `

Security Deposits(From Dealers) 1,372,623 1,165,689

Retention Money 1,932,789 1,037,482

TOTAL ` 3,305,412 2,203,171


43


NOTE ''E" : LONG-TERM PROVISIONS"A" Secured Loans


Gratuity 3,543,981-balance brought forward 3,543,981-Add : Current year's provision 916,667 4,460,648-Less : paid during the year 510,198 3,950,450

Leave Encashment 1,984,433-balance brought forward 1,984,433-Add : Current year's provision 166,065 2,150,498-Less : paid during the year 166,825 1,983,673

TOTAL ` 5,934,123 5,528,414

NOTE "F" : SHORT-TERM BORROWINGSFor the year ended For the year endedAs at 31st March, 2012 As at 31st March, 2011` ` ` `

Working Capital loans

from : Banks 514180166 465702221

TOTAL ` 51480166 465702221

Note :Working Capital Loans from scheduled banks are secured by (a) first hypothecation charge on pari-passu basis with member banks of consortium (State Bank of India, State Bank of Patiala, Canara Bank, Oriental Bank of Commerce and Allahabad Bank) over all current assets of the Company consisting of raw material, semi-finished & finished goods (b) second, pari passu, charge on fixed assets of the Company alongwith equitable mortgage of Land & Building of the Company.

NOTE "G" : OTHER CURRENT LIABILITIESFor the year ended For the year endedAs at 31st March, 2012 As at 31st March, 2011` ` ` `

Taxes & Expenses Payable 3,905,233 4,790,149IDBI Bank 19,702,187-Interest accrued but not due 19,226,000-Interest accrued & due 6,350 19,232,350Sundry Acceptances 41,900,622 58,330,279Tax deducted at source 423,237 448,722Other Liabilities 249,896,848 5,635,456

TOTAL ` 315,358,290 88,906,793


44


NOTE "H" : SHORT-TERM PROVISIONSFor the year ended For the year endedAs at 31st March, 2012 As at 31st March, 2011` ` ` `

For : Excise Duty on Inventories

of Finished Goods 25,764,649 20,526,950

For : Current Tax * 7,244,150 6,656,160

Less : MAT Credit Entitlement 1,583,220 5,660,930

TOTAL ` 31,425,579 27,183,110

* represents current year's provision for Income Tax.

NOTE ''J'' : LONG-TERM LOANS & ADVANCES


As at 31st March, 2012 As at 31st March, 2011

` ` ` `

Deposits with Government

Departments & Other Agencies 469,150 469,150

Taxes

-MAT Credit Entitlement 36,123,889 31,050,949

TOTAL ` 36,593,039 31,520,099


45


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46


NOTE ''K'' : CURRENT ASSETS


Inventories

(As taken, valued & certified by the management)

-Work-in-Process 20,666,840 15,415,590

-Finished Goods 788,845,980 600,481,270

-Stores & Spares etc. 11,509,350 821,022,170 12,124,810 628,021,670

Trade Receivables

(Unsecured & considered good

-unless otherwise stated.)

-Exceeding six months 2,561,183 3,012,260

-Others 5,196,981 7,758,164 3,488,563 6,500,823

Cash & Bank Balances

-Cash Balances 15,829,596 11,936,525

-Balances

with Scheduled Banks 4,290,961 815,729

-Deposit

with Scheduled Bank 7,201,459 6,705,799

-Cheques pending realisation 66,180 27,388,196 68,782 19,526,835

Short-Term Loans & Advances

-For Supplies & Expenses 97,254,588 30,831,237

-Staff 131,744 71,970

-Taxes 55,076 45,438

-Balances with Excise

& Custom Authorities 1,253,505 98,694,913 918,611 31,867,256

Other Current Assets

-Amount Recoverable

(Unsecured & considered good -

unless otherwise stated.)

Exceeding six months 49,602,050 52,523,053

Others 285,008 926,820

49,887,058 53,449,873

-Prepaid Expenses 988,012 50,875,070 466,415 53,916,288

TOTAL ` 1,005,738,514 739,832,872


47


NOTE "L" : REVENUE FROM OPERATIONS (NET)


31st March, 2012 31st March, 2011

` ` ` `

Sales

-Sugar 720,352,470 881,483,929

-Molasses 78,960,507 63,850,725

-Bagasse 6,409,266 854,497

805,722,243 946,189,151

-Less : Excise Duty 40,998,188 764,724,055 39,425,698 906,763,453

Other Operating Revenues 20,750,859 1,730,314

TOTAL ` 785,474,914 908,493,767

NOTE "M" : OTHER INCOME



` ` ` `

Interest earned 550,736 648,892

Other Non-Operating Revenues

-Sale of Trees 6,010,000 0

TOTAL ` 6,560,736 648,892

NOTE "N" : COST OF MATERIAL CONSUMED



` ` ` `

Opening Stock 0 20,072,660

Purchases 738,849,653 660,726,553

TOTAL ` 738,849,653 680,799,213

NOTE "O" : CHANGES IN INVENTORIES



` ` ` `

Stock at Commencement

-Work-in-Process 15,415,590 12,258,120

-Finished Goods 600,481,270 615,896,860 601,798,870 614,056,990

Stock at Close

-Work-in-Process 20,666,840 15,415,590

-Finished Goods 788,845,980 809,512,820 600,481,270 615,896,860

TOTAL ` (193,615,960) (1,839,870)


48


NOTE "P" : EMPLOYEE BENEFITS EXPENSE



` ` ` `

Establishment 20,035,716 15,235,493

Directors' Expenses 3,900,000 3,900,000

TOTAL ` 23,935,716 19,135,493

NOTE "Q" : FINANCE COSTS



` ` ` `

Bank Charges & Interest

-Bank Charges 3,539,418 2,991,795

-Interest

Banks/

Non-Banking Financial Companies 84,375,388 70,956,501

Others 2,307,585 86,682,973 1,750,839 72,707,340

TOTAL ` 90,222,391 75,699,135

NOTE "R" : OTHER EXPENSES



` ` ` `

Manufacturing & Operating Expenses 79,616,183 77,223,358

Rent 764,858 1,149,004

Repairs & Maintenance

-Computers 80,165 41,660

-Vehicles 1,494,753 1,574,918 1,439,100 1,480,760

Insurance 714,816 1,050,401

Rates & Fee 699,766 776,074

Miscellaneous Expenses

-Other Administrative Expenses 3,172,939 3,686,359

-Travelling & Conveyance

(Staff/Others) 715,070 865,766

-General Charges 2,627,398 3,645,525

-Selling & Distribution Expenses 2,801,822 2,865,99

Payments to Auditor 142,500 140,000

TOTAL ` 92,830,270 92,883,246


49


NOTE ‘S’ Significant Accounting Policies & Notes to Accounts(Forming part of Accounts)

FOR THE YEAR ENDED 31ST MARCH, 2012

“A” Significant Accounting Policies

1. Basis of Accounting

The financial statements have been prepared under historical cost convention on accrual basis of accounting in accordance with accounting principles generally accepted in India, the applicable Accounting Standards (AS) and the relevant provisions of the Companies Act, 1956.

2. Valuation of Inventories-Raw Material

At cost -Material in Process

At estimated process cost.- Finished Goods

At cost or market price whichever is lower. (inclusive of Excise Duty)

- Stores & Spares etc.At estimated realisable value.

3. Excise Duty/Cenvat

- Excise Duty in respect of goods lying in the factory, at the close of the year, is accounted for at the prevalent applicable rate of duty.

- Cenvat on capital goods is credited to respective assets.

- Cenvat on purchase of raw material and other material is deducted from the cost of such material.

- Cenvat on Input Service is credited to respective expense.

4. Prior Period Items/Extra-ordinary Items

Prior period items/Extra-ordinary items, having material impact on the financial affairs of the Company, are disclosed separately.

5. Depreciation

- Depreciation on fixed assets is provided, on the basis of actual working days/utilisation, on written down value method, as per the rates prescribed in Schedule XIV of the Companies Act, 1956.


50

- Depreciation on additions to fixed assets is calculated on month-end balances.

- Depreciation on assets sold & scrapped, during the year, is provided upto the month in which such fixed assets are sold or scrapped.

6. Revenue Recognition

- Revenue from sales of goods is recognised when risk and rewards of ownership are transferred to the customers.

- Revenue from services is recognised as and when services are rendered and related costs incurred.

- Other income is recognised on accrual basis unless otherwise stated.

- Sales are shown net of Excise Duty and other taxes, as applicable.

7. Fixed Assets

Tangible assets

- Fixed Assets are stated at their cost of acquisition or construction less accumulated depreciation and impairment of assets, if any.

- Cost comprises of purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Capital Work-in-Progress

Expenses incurred during construction/installation period are included under capital work-in-progress and allocated to relevant fixed assets in the ratio of cost of the respective assets on completion of construction/installation.

8. Foreign Currency Transactions

- Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction.

- Gains or losses, if any, arising due to exchange differences at the time of transaction or settlement are accounted for in the Statement of Profit & Loss.

9. Investments

- Current Investments are carried at cost or fair value whichever is lower.

- Long-term investments are carried at cost. Provision for diminution in value of long term investments is made only, if a decline is other than temporary.

10. Employee Benefits

- Contributions as required under the Statute/Rule are made to Provident Fund and charged to the Statement of Profit & Loss of the year when the contributions to the fund are due.


51


- Provisions of Employees State Insurance are not applicable.

- Leave Encashment and Bonus are accounted for on accrual basis.

- Gratuity is accounted for on accrual basis - the Company has not opted for any policy for Group Gratuity Scheme from Life Insurance Corporation of India or any other insurer covered under the specified provisions of the Income Tax Act, 1961.

- Termination benefits are recognised as an expense as and when incurred.

11. Borrowing Costs

Borrowing costs which are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of such assets. Other borrowing costs are recognised as an expense in the period in which they are incurred.

12. Operating Lease

Leases where significant portion of reward and ownership are retained by the lessor is classified as Operating Lease & lease rentals, thereon, are charged to Statement of Profit & Loss.

13. Earning Per Share (EPS)

Annualised basic earning per equity share is arrived at based on net profit/(loss) attributable to equity shareholders to the basic weighted average number of equity shares.

14. Taxes on Income

- Current Tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961.

- Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets/liabilities, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

15. Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of the assets exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased.

16. Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when

52


there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the Notes to Accounts.

Contingent assets are neither recognised nor disclosed in the financial statements.

17. Insurance and other claims

Insurance claims are accounted for on settlement of claims/on receipt.

18. Miscellaneous Expenditure

The Company follows the policy of treating some expenditure, the benefits of which accrue to the Company over an extended period as miscellaneous or deferred revenue expenditure and amortises such expenditure over a period of upto five years depending on the nature & expected future benefits of such expenditure.

“B” Notes to Accounts

a) Estimated amount of contracts remaining to be executed and not provided for in the books of account - Nil (previous year - Nil).

b) Contingent Liabilities:

- Claims against the Company not acknowledged as debt - Nil (previous year - Nil).

- The following amounts, in earlier years, were deposited (under-protest)

Hon’ble Delhi High Court (` 10,934,631/-):

Sales Tax (` 9,812,631/-) on demand raised by the Department; whereas, as per the policies of the Central Government Sales Tax on sale of molasses was exempt for five years.

Amit Electricals (` 1,122,000/-), pending settlement of accounts.

Haryana State Government (` 1,491,098/-) :

on account of Local Area Development Tax.

The decisions of the concerned authorities are awaited.

- Liabilities in respect of Income Tax and Sales Tax have been accounted for on the basis of respective returns filed with the relevant authorities. Additional demand, if any, arising at the time of assessments will be accounted for in the year in which assessments are completed.

There is no demand pending in respect of the completed assessments.

Note : Fixed Deposits (` 978,711/-) with State Bank of Paitala & (` 5,656,667/-) with Allahabad Bank have been pledged with the respective banks.


53


2. In the opinion of the Directors, “Current Assets” and “Loans & Advances” are approximately of the value stated in the Balance sheet, if realised in the ordinary course of business and to the best of their knowledge provisions for all the known liabilities have been made and, as certified, all the contractual and statutory obligations have been duly complied with.

3. Party balances, in certain cases, are under reconciliation & subject to confirmation; however the same have been incorporated in the financial statements at the value as per the books of account & are considered hopeful of recovery/good for payment therefore provision for bad & doubtful debts / unclaimed balances is not required.

4. Provision for Excise Duty (` 25,764,649/-) on inventories of finished goods lying in the factory, at the close of the year, has been made on estimation basis in accordance with the guidance note of the Institute of Chartered Accountants of India. However, the said provision does not have any impact on profit for the year.

5. “A” Employee Benefits

- Contributions as required under the Statute/Rule are made to Provident Fund and charged to the Statement of Profit & Loss of the year when the contributions to the fund are due.

- Provisions of Employees State Insurance are not applicable.

- Gratuity is accounted for on accrual basis - the Company has not opted for any policy for Group Gratuity Scheme from Life Insurance Corporation of India or any other insurer covered under the specified provisions of the Income Tax Act, 1961.

“B” Taxes

- Provision for Current Tax has been made, at specified rates, in accordance with the applicable provisions of the Income Tax Act, 1961.

- MAT Credit Entitlement (` 36,123,889/- i.e. ` 37,707,109/- brought forward from the financial year 2011-2012 less ` 1,583,220/- adjusted during the year) has been shown under the head ‘Reserves & Surplus’ with corresponding effect under the head ‘Long-Term Loans & Advances’ in accordance with the accepted accounting principles.

The exact liability of Excise Duty, CST/VAT, Income Tax and other statutory dues are indeterminate pending finalisation of assessments and no undisputed amounts and disputed dues were outstanding or remained unpaid as at 31st March, 2012.

"C” Others

Issued, Subscribed & Paid up Capital :

- Calls in arrears ( 12,941,000/-) are due from public at large including associates; effective steps have been initiated to regularise and appropriately adjust the account in the ensuing year.

`


54


- Calls in arrears (` 12,941,000/-) are due from public at large including associates; effective steps have been initiated to regularise and appropriately adjust the account in the ensuing year.

-Redeemable (Non-cumulative) Preference Shares have not yet been redeemed.

Unsecured Loans:

- Unsecured loans from Directors (`115,995,000/-) and Others (`2,327,838/- i.e. deposits/advances received from farmers, suppliers/dealers/contractors) are exempt deposit, inconformity with the relevant applicable provisions of the Companies Act, 1956 and the rules framed thereunder

- The Company has not entered into any contractual agreement(s) with the above referred parties (others) with regard to repayment/refund or payment of interest etc.

Other Long-Term Liabilities (` 3,305,412/-) include Retention Money (`1,932,789/-) due to suppliers.

Trade Receivables outstanding for a period exceeding six months have been disclosed, as per the past practice followed by the Company; Whereas, as per the revised Schedule - VI of the Companies Act, 1956, the same are required to be disclosed from the date they became due for payment.

6. List of Shareholders (holding more than 5% shares of the Company)

Year ended Year ended31st March, 2012 31st March, 2011

Name of the No. of shares % age of No. of % age ofshareholder Shareholding shares Shareholding

United Vanaspati Ltd. 4,458,200 21.95 4,447,700 21.90

Onkar Anand 1,700,000 8.37 1,700,000 8.37

Network Fiscal Services Pvt. Ltd. 1,588,600 7.82 1,588,600 7.82

Industrial Financial Corporation of India 1,500,000 7.38 - -

P.L. Lamba 1,133,400 5.58 1,133,400 5.58

7. Long Term Borrowings

Secured Loans :Vehicle Loans (` 1,755,470/-) :

From : Non-Banking Financial Companies

According to the agreed terms, principal amount outstanding is payable to Kotak


55


Mahindra Prime Ltd. & Reliance Capital Ltd. in monthly installments of ` 75,485/- & ` 29,900/- each respectively.

Unsecured Loans :Business Loans (` 3,751,710/-) :

From : Non-Banking Financial Companies

According to the agreed terms, principal amount outstanding is payable to Religare Finvest Limited & Tata Capital Ltd. in monthly installments of ` 195,109/- & ` 222,950/- each respectively.

-Vehicles Loans & Business Loans are inclusive of installments payable within twelve months of the reporting date and the same are not inconformity with the provisions of Revised Schedule VI of the Companies Act,1956.

8. Segment Reporting (AS-17)

Since the Company primarily operates in one segment (Manufacturing/Trading of Sugar) – therefore segment reporting as required under Accounting Standard -17 is not applicable – there is no reportable geographical segment either.

9. Related Party Disclosures (AS-18)

Related parties relationship and transactions with related parties - As per Annexure - (A).

10. Earning Per Share (AS– 20)

Year ended Year ended31st March, 2012 31st March, 2011

NumeratorNet Profit attributable to Equity shareholders As per Annexure - (B) ` 22,333,448 ` 20,327,688

DenominatorNumber of Equity shares No.’s 20,312,200 No.’s 20,312,200

Nominal Value per Equity share ` 10/- `10/-

Earning per share -Basic ` 1.10 ` 1.00


56


11. Deferred Tax Assets & Liabilities (AS-22)

The major components of Deferred Tax Asset and Deferred Tax Liability – arising out of timing differences are:

Particulars Amount Total ` `

a) Deferred Tax LiabilityDepreciation-As per Income Tax Act, 1961 10,375,050-As per Financial Statements 11,508,942 (1,133,892)

Expensesu/s 43B of the Income Tax Act, 1961(paid during the year)-Excise Duty 15,363,726-Cane Purchase Tax 4,913,532-Leave Encashment 166,825

-Gratuity 510,198-Bonus 1,039,632 21,993,913 20,860,021

b) Deferred Tax AssetExpenses u/s 43B of the Income Tax Act, 1961(Not paid during the year)-Excise Duty 17,718,764-Leave Encashment 166,065-Gratuity 916,667

-Bonus 1,102,260 2,184,992 19,903,756

Deferred Tax Liability (Net) 956,265

Tax on Deferred Tax Liability (@ 32.445%) 310,260

Less : Opening Balance 9,546,142

Deferred Tax Asset (Net) Total ` 9,235,882

12. Impairment of Assets (AS-28)

During the year, the Company has undertaken a review of all the fixed assets in line with the requirements of AS-28 on “Impairment of Assets” issued by the Institute of Chartered Accountants of India; based on such review, no provision for impairment is required to be recognised for the year.

13. Micro, Small & Medium Enterprises

The Company has not received any communication from any of its suppliers/service

providers confirming that they are registered under the Micro, Small & Medium Enterprises Development Act, 2006. In absence of any positive confirmation the information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 could not be determined

14. General:-

Statutory books, as required under the Companies Act, 1956, are being updated.

15. Auditor’s Remuneration

31st March, 2012 31st March, 2011AMOUNT AMOUNT ` `

-Audit Fee 95,000 95,000

-In other capacity 30,000

Taxation Matters 17,500

Company Law Matters 17,500 35,000

-Reimbursement of Expenses 12,500 15,000

Total` 142,500 140,000

16. Additional information pursuant to the provisions of paragraph 5 of General Instructions under Part-II of revised Schedule VI of the Companies Act, 1956 to the extent applicable to the Company.

“A” Raw Material Consumed

31st March, 2012 31st March,2011Particulars QTY AMOUNT QTY AMOUNT

(in QTL) ` (in lacs) (in QTL) ` (in lacs)

Sugar Cane 3,296,237 738,849,653 2,805,732 680,799,213

“B” Finished Goods


Particulars QTY AMOUNT QTY AMOUNT


Turnover-Finished goods Sugar (Bags) 247,353 720,352,470 290,439 881,483,929-By products Molasses 161,709 78,960,507 132,806 63,850,725 Bagasse 50,765 6,409,266 4,619 854,497


57


58

31st March, 2012 31st March,2011Particulars QTY AMOUNT QTY AMOUNT


Opening Stock Sugar (Bags) 200,814 570,863,894 186,695 573,096,600-By productsMolasses 22,446 9,090,427 22,642 9,396,326

Closing Stock-Finished goodsSugar (Bags) 265,734 765,583,235 200,814 570,863,894-By products

Molasses 9,652 4,606,536 22,446 9,090,427

"C" Imported & indigenous consumption of Raw Material/Stores & Spares

31st March, 2012 31st March, 2011AMOUNT % age of total AMOUNT % age of total

`(in Lacs) Consumption `(in Lacs) Consumption

‘A’ Imported Nil - Nil -

‘B’ Indigenous-Raw Material 7,388.50 100 6,807.99 100-Stores & Spares 232.47 100 216.51 100

17. Figures for previous year have been regrouped/rearranged where necessary to conform to the current year’s presentation.

18. Figures have been rounded off to nearest rupee.

In terms of our attached report of even date. For and on behalf of the Board of Directors

sd/- sd/-

For VASUDEVA & ASSOCIATES SHASHI BHUSHAN MEHAN ONKAR ANANDCHARTERED ACCOUNTANTS (Chairman) (Vice-Chairman)Firm Registration No. 022239N

sd/- sd/- sd/-

(PIYUSH SINGLA) BALDEV SINGH KANG JITENDRA ANANDPARTNER (Managing Director) (Executive Director) Membership No. 520263

sd/- sd/-

ASHWANI MITTAL JASWANT KAUR (DGM A & F) (Company Secretary)

Dated: 25th July, 2012

Place : Chandigarh



59


CASH FLOW STATEMENT

FOR THE YEAR ENDED 31ST MARCH, 2012CURRENT YEAR PREVIOUS YEAR

31ST MARCH, 2012 31ST MARCH, 2011

( in 000) ( in )

"A" CASH INFLOWS

( I ) FROM OPERATING ACTIVITIES

a) Profit before tax and extra-ordinary items 28,304.64 32,459.79Adjustments :Depreciation and amortization 11,508.94 10,005.66Amortization of stock compensation 0.00 0.00

(Gain)/Loss on sale of fixed assets 0.00 0.00

(Gain)/Loss on sale of investments 0.00 0.00 Assets written off 0.00 0.00

Provision/ (Reversal) for doubtful debts and advances 0.00 0.00

Dividend received 0.00 0.00Interest earned (550.74) 0.00

Interest paid/incurred (Net) 86,682.97 72,058.00

Profit from operating activities 125,945.82 114,523.44

b) Working capital changes :

Decrease in Inventories 0.00 18,519.53Decrease in Trade Receivables 0.00 16,959.74Decrease in Short-Term Loans and Advances 0.00 0.00

Decrease in Other Current Assets 3,041.22 18,728.37

Increase in Other Long-Term Liabilities 1,102.24 0.00

Increase in Trade Payables 0.00 0.00

Increase in Other Current Liabilities 226,451.50 0.00

Increase in Provisions 5,643.41 0.00

Extraordinary Items

-Prior Period Adjustments 0.00 0.00

Total "I" 362,184.18 168,731.08

( II ) FROM INVESTING ACTIVITIES

a) Proceeds from sale of fixed assets 0.00 0.00

b) Proceeds from sale of investments 0.00 0.00

c) Realisation of Long-Term Loans and dvances from subsidiaries/ associates/ business ventures 0.00 0.00

d) Decrease in other Long-Term Loans and Advances 0.00 0.00e) Decrease in Other Non-Current Assets 0.00 0.00

f) Dividend received 0.00 0.00

g) Interest received 550.74 648.89

Total "II" 550.74 648.89

NARAINGARH SUGAR MILLS LIMITED

` ` 000


60


( III ) FROM FINANCING ACTIVITIESa) Proceeds from issue of share Capital 0.00 20.00b) Share application money pending allotment 0.00 0.00

c) Capital Subsidy received 0.00 0.00

d) Proceeds from Long-Term Borrowings 0.00 0.0e) Proceeds from Short-Term Borrowings 48,477.95 2,395.62

Total "III" 48,477.95 2,415.62

Total cash inflows (I+II+III) 411,212.86 171,795.60

"B" CASH OUTFLOWS

( I ) FROM OPERATING ACTIVITIES

a) Loss from operating activities 0.00 0.00Adjustments :Depreciation and amortization 0.00 0.00Amortization of Stock compensation 0.00 0.00

Gain/(Loss) on sale of fixed assets 0.00 0.00

Assets written off 0.00 0.00(Provision)/ Reversal for doubtful debts and advances 0.00 0.00

b) Working capital changes :Increase in Inventories 193,000.50 0.00Increase in Trade Receivables 1,257.34 0.00Increase in Short-Term Loans and Advances 66,827.66 16,772.00Increase in Other Current Assets 0.00 0.00

Increase in Deferred Tax 0.00 389.00

Decrease in Trade Payables 6,753.25 13,579.63Decrease in Other Current Liabilities 0.00 3,918.65

Decrease in Provisions 0.00 3,093.68

c) Direct taxes paid (Net of refunds) 6,656.16 6,267.00

Total "I" 274,494.91 44,019.97

( II ) FROM INVESTING ACTIVITIES

a) Purchase of tangible assets/capital work-in-progress 1,239.76 710.39

b) Purchase of intangible assets/assets under development 0.00 0.00

c) Purchase of investments 0.00 0.00

d) Investments in subsidiaries/ associates/ business ventures 0.00 0.00

e) payment of other long-term loans and advances to subsidiaries/associates/ business ventures 0.00 0.00

f) Increase on other long-term loans and advances 0.00 0.00g) Increase in other non-current assets 0.00 0.00

Total "II" 1,239.76 710.39

( III ) FROM FINANCING ACTIVITIESa) Redemption of Preference Shares 0.00 16,245.22

b) Repayment of Long-Term Borrowings 40,933.86 55,487.98

c) Repayment of Short-Term Borrowings 0.00 166.20d) Dividends paid (including distribution tax) 0.00 5,864.94e) Interest and other finance costs 86,682.97 72,707.35

61


f) Share issue expenses 0.00 0.00

Total "III" 127,616.83 150,471.69

Total cash outflows (I+II+III) 403,351.50 195,202.05

"C" Net (decrease)/Increase in cash and cash equivalents (A - B) 7,861.36 (23,406.45)

Add : Cash and cash equivalents at the beginning of the period 19,526.84 42,933.29

"D" Cash and cash equivalents at the end of the period 27,388.20 19,526.84

Cash and Cash equivalents comprises of CURRENT YEAR PREVIOUS YEAR31ST MARCH, 2012 31ST MARCH, 2011

` (in thousand) ` (in thousand)

Cash in hand 15,829.60 11,936.53

Bank BalancesCurrent Accounts -with Banks 4,357.14 884.51

Fixed Deposits-with Banks 7,201.46 6,705.80

27,388.20 19,526.84

Notes :

1. The above Cash Flow Statement has been prepared under the indirect method set out in Accounting Standard - 3 notified under Section 211(3C) of the Companies Act, 1956.

2. Previous year figures have been regrouped/reclassified wherever necessary.

sd/- sd/-

For VASUDEVA & ASSOCIATES SHASHI BHUSHAN MEHAN ONKAR ANANDCHARTERED ACCOUNTANTS (Chairman) (Vice-Chairman)Firm Registration No. 022239N

sd/- sd/-

(PIYUSH SINGLA) BALDEV SINGH KANG JITENDRA ANANDPARTNER (Managing Director) (Executive Director) Membership No. 520263

sd/- sd/-

ASHWANI MITTAL JASWANT KAUR (DGM A & F) (Company Secretary)

Dated: 25th July, 2012

Place : Chandigarh


62

PROXY FORMNARAINGARH SUGAR MILLS LIMITED

Regd. Office : Village Banondi, PO: Shahzadpur, Tehsil Naraingarh, Distt. Ambala (Haryana)

Folio No. .................................No. of Shares ..........................

I/We ...................................................................................... of .........................................................................

being member(s) of the above named company, hereby appoint ......................................................................

................................................................ of ............................................................................ or falling him/her

............................................................................. of .......................................... as my/our proxy to attend and

vote for me/ue on my/our behalf at the 19th Annual General Meeting of the Company to be held at Village

Banondi, Tehsil Naraingarh, Distt. Ambala (Haryana) on Wednesday 22nd day of August 2012 at 11:30 a.m. and

at any adjournment thereof.

Signed this ............................... day of ............................ 2012

Note : The proxy form duly completed should be deposited at the Registered Office of the Company not later than 48 hours before the time for holding the aforesaid meeting.

ATTENDANCE SLIPNARAINGARH SUGAR MILLS LIMITED

Regd. Office : Village Banondi, PO: Shahzadpur, Tehsil Naraingarh, Distt. Ambala (Haryana)

PLEASE COMPLETE THIS ATTENDANCE SLIP AND HAND OVER AT THE ENTRANCE OFTHE MEETING HALL

Name : ________________________________________________________________________________

Shareholder : ___________________________________________________________________________

Proxy : ________________________________________________________________________________

I hereby record my presence at the 19th Annual General Meeting of the Company on Wednesday 22nd day of August, 2012 at 11:30 a.m. at the Regd. Office of the Company.

Signature of the Shareholder/Proxy : _________________________________________________________

Regd. Folio Number No. of Share Held


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