To the members of Simbhaoli Sugars Limited

The directors have pleasure in placing the Seventh Board’s Report together with management discussion and analysis report for the financial year ended on March 31, 2018.

Materiality of Related Party Transactions

Related party transactions entered during the financial year have been on an arm’s length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company’s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its approval. The particulars of contracts entered during the year are enclosed herewith as Annexure 2 as per prescribed Form AOC-2.

The Board of Directors ofthe Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its related parties, in compliance with the applicable provisions of the Companies Act 2013, the rules made there under and the listing regulations.

Corporate social responsibility (CSR)

The Company is not covered by any of the criteria prescribed under the provisions of Section 135 of the Act to conduct the activities under corporate social responsibility (CSR) framework. However, Company has its own CSR policy indicating the guidelines for social welfare activities to be undertaken and implementing programs in the fields of education, healthcare, clean water, social welfare, village infrastructure development in reserved areas of its sugar mills. The Company has been accepting its social responsibility obligations and encouraging cleaner surroundings, improving village level infrastructure, unclogged drains and spreading the awareness and providing necessary training and learning process for the value of good hygiene and sanitation. A Charitable trust named Simbhaoli India Foundation (SIF), has also been working to ensure social obligations of the Company. The employees are also important stakeholders and have been contributing to the foundation on their own.

The Company has been disseminating information on its CSR policies, activities and progress to all their stakeholders and the public at large through its website and annual reports. It has constituted a committee of directors to review the activities under its CSR policy.

Information Technology

The information technology system of the Company is operating on SAP based enterprise resource planning (ERP) environment, optimizing the performance of its businesses as well as the business network.

Operations of Subsidiary/Associate Companies

1. Simbhaoli Power Private Limited (SPPL)

SPPL is a 51% subsidiary, with a joint venture with Sindicatum Captive Energy Singapore Pte Limited. SPPL is generating the power using the sugar mill bagasse and third party biomass at the Simbhaoli and Chilwaria Sugar complexes of the Company and selling the surplus power to State utilities under the long term power purchase agreements. During the year SPPL has generated 2.98 lacs MWh of power (Previous year 2.42 lacs MWh) and exported 2.09 lacs MWh (Previous year 1.65 lacs MWh). The gross revenues earned by the Company during the financial year 2017-18 have been Rs.129.80 Crore (Previous year Rs.110.43 Crore).

2. Uniworld Sugars Private Limited (USPL)

USPL is a joint venture company between Simbhaoli Sugars Limited and ED&F Man Sugar Ltd, UK, having a 1000 TPD (300,000 mt per annum) capacity sugar refinery near Kandla Port, Gujarat. The gross revenues earned by the Company during the year have been Rs.271.99 Crore (Previous year Rs.447.95 Crore) with a pre-tax loss of Rs.11.15 Crore (Previous year loss of Rs.45.09 Crore). The operations of the refinery were discontinued in June 2017 and discussion on the business restructuring is going on between the shareholders and lender.

A petition for Corporate Insolvency Resolution Proceedings has been admitted against Uniworld Sugars Private Limited, vide order passed by the Hon’ble National Company Law Tribunal, Allahabad bench on May 29, 2018 in the CP No. (IB)NO.120/ALD of 2017.

In the consolidated financial statements of the Company, Simbhaoli Sugars Limited (SSL), the unaudited financial results of USPL have been included.

3. Integrated Casetech Consultants Private Limited

Integrated Casetech Consultants Private Limited (ICCPL) is an 85% subsidiary and the technology vertical of SSL. It has successfully executed various domestic and international operation and maintenance assignments and working for improvement in the performance of the Company. ICCPL has earned gross revenues of Rs.1317.50 lacs (Previous year Rs.1216.91lacs) with a pre-tax profitof Rs.45.21lacs (Previous year loss of Rs.149.96 lacs) for the year 2017-18.

4. Simbhaoli Global Commodities DMCC

Simbhaoli Global Commodities DMCC, Dubai, is the wholly owned subsidiary of Simbhaoli Sugars Limited. No major business activities have been carried out by this Company during the year.

5. Simbhaoli Speciality Sugars Private Limited

No major business activities have been carried out by this Company during the year.

OPERATIONS

A summary of the standalone financial results of the Company for the year ended March 31, 2018 is stated as under:

(Rs. in lacs)

During the year, the business of the Company has been affected adversely on account of the lower realization from sugar sales, closure of distillery operations, high finance cost, and other industry related issues. The Company has been facing liquidity constraints, and accordingly, it is advised that no dividend will be recommended for the financial year 2017-18.

Unpaid Dividend: Since there was no unpaid/unclaimed dividend declared and paid in the previous years, the provisions of Section 125 of the Companies Act, 2013 do not apply.

The following is the summary of financial review for the performance during year:

Share Capital: 3,92,79,020 equity shares of Rs.10 each (Previous year 3,74,79,020 equity shares). During the year, the Company allotted 50,00,000 warrants to specified promoters, under the provisions of the Companies Act, 2013 read with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 for preferential issues. Out of these 50,00,000 warrants, the warrant holders have opted for conversion of 18,00,000 warrants on March 29, 2018 and the Company has allotted 18,00,000 equity shares of Rs.10 each as fully paid-up at an exercise price of Rs.32.10 (including premium of Rs.22.10) per equity share.

Reserves and Surplus: Following movement have taken place during the year:

(i) Molasses Storage Fund: Addition during the year, Rs.4.62 lacs (previous year Rs.3.41 lacs)..

Long term borrowings: Long term borrowings are at Rs.32,319.44 lacs (previous year Rs.23,060.25 lacs).

Short term borrowings: Short-term borrowings are at Rs.47,067.75 lacs against the previous year of Rs.61,831.12 lacs.

Fixed assets: Addition to the fixed assets aggregating to Rs.2,039.34 lacs (previous year Rs.320.05lacs) includes the following:

i) Rs.1405 lacs for ME Plant at Brijnathpur Division

ii) Rs.208 lacs for Bottling Plant in IMFL Division

The deduction of Rs.65.34 lacs (previous year Rs.40.17 lacs) from the value of the fixed assets.

Investments: The Company has the following investments as on March 31, 2018:

(Rs. in Lacs)

Status of shares under pledge: Out of the promoters’ shareholding, 33.14% in the total share capital is pledged with the financial institutions as security against various credit facilities availed by the Company. Out of the 29,011,770 shares held by the Company in Uniworld Sugars Private Limited, 1,12,04,708 shares have been invoked by the IDBI Bank Limited.

Inventories: Inventory amounting to Rs.33,503.70 lacs (previous year Rs.39,735.60 lacs) include finished goods, raw material, process stocks, and store items. The sugar stock at the end of the year is valued at net realizable value of Rs.2,785 perqtl (previous year Rs.3,649 per qtl).

Sundry debtors: Sundry debtors (net) amounting to Rs.3,673.50 lacs (previous year Rs.4,007.38 lacs), are considered good and realisable. Provisions are generally made for all debtors outstanding for over 360 days subject to their scope of realization, industry trend and management’s perception. Debtors are at 4.06% of gross revenues, representing an outstanding of 16 days.

Cash and Cash Equivalents: Cash and Cash Equivalents are at Rs.803.43 lacs (previous year Rs.1,164.00 lacs).

Bank Balances other than cash & Cash equivalents: Bank balance of Rs.955.89 lacs (previous year Rs.6,514.63 lacs includes fixed deposits of Rs.5,932.19 lacs out of which fixed deposits for on amount of Rs.5,623.46 lacs are pledged under the order of Hon’ble High court) Further, fixed deposits for an amount of Rs.138.82lacs (previous year Rs.905.14) are pledged with banks for securing certain loans, letters of credit, guarantees and other short term facilities.

Other Financial Assets: Other financial assets of Rs.3,584.28 lacs (previous year Rs.4,729.25 lacs) comprises interest accrued Rs.3,056.91 lacs (previous year Rs.2,619.81 lacs) and lease finance Rs.94.22 lacs (previous year Rs.282.66 lacs) against finance lease and royalty Rs.274.98 lacs (previous year Rs.324.98 lacs) receivable from Simbhaoli Power Private Limited.

Other Current Assets: Other current assets of Rs.843.59 lacs (previous year Rs.1,751.70 lacs) comprise a receivable of Rs.342.54 lacs (previous year Rs.400.90 lacs) are considered good and realisable. Provisions are generally made for all receivables outstanding for over 360 days subject to their scope of realization, industry trend and management’s perception. Balance with authorities Rs.269.75 lacs (previous year Rs.1,122.77 lacs) and prepaid expenses Rs.135.92 lacs (previous year Rs.128.61 lacs)

I Trade payables, other current liabilities, and provisions:

a) Trade payables at Rs.56,368.01 lacs (previous year Rs.57,632.10 lacs).

b) The other current liabilities of Rs.47,015.64lacs (previous year Rs.42,615.44lacs) reflect amount payable against finance charges and other miscellaneous liabilities.

c) The liability includes amount payable against sugarcane supply, other raw materials, stores and services.

Sales and other income: Sales and other income is Rs.93,029.07 lacs (previous year Rs.93,163.79 lacs). The segment wise allocation of revenues for the year 2017-18 and for proceeding two accounting years is as under:

(Rs. in lacs)

Other income of Rs.2,561.40 lacs (previous year Rs.3,270.11 lacs) comprises interest and rent, from subsidiary companies, liabilities/ provisions which are no longer required and written back and miscellaneous earnings.

Raw Material Consumption: Rs.81,733.42 lacs (previous year Rs.67,022.48 lacs) include sugarcane, molasses and raw sugar as the principal raw materials purchased by the Company.

Employees cost: The employee cost at Rs.4,986.03 lacs (previous year Rs.5,511.54 lacs).

Finance cost: Finance costs decreased to Rs.4,606.28 lacs (previous year Rs.12,268.82 lacs) on account of non-provisioning of interest cost of Rs.11,971.59 lacs for the current year.

Other Expenses: Other expenses increased to Rs.10,408.37 lacs (previous year Rs.8,109.72 lacs).

Accounting policies

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) read with the Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other relevant accounting principles generally accepted in India. The financial statements up to year ended March 31, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). Previous year numbers in the financial statements have been restated in accordance with Ind AS. Reconciliations and descriptions of the effect of the transition have been summarized in the Notes to accounts

These financial statements are the first financial statements of the Company under Ind AS. The date of transition to Ind AS is April 01, 2016. the Notes to accounts forming part of Annual reports for the details of first-time adoption (Ind AS 101) exemptions availed by the Company and an explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows. Post the applicability of Goods and Service Tax Act, 2017 (GST) with effect from July 01, 2017, revenues from operations are disclosed net of GST. Accordingly, the revenue from operations and excise duty expenses for the year ended March 31, 2018 are not comparable with previous periods presented in the financial statements.

The Board of Directors of the Company accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates/ judgments used in preparation of these statements. The estimates and/or judgments have been made on a consistent, reasonable and prudent basis to reflect true and fair view of the state of the affairs of the Company.

Loans, Guarantees, and investments under Section 186

The particulars of loans, guarantees or investments made under Section 186 of the Companies Act, 2013 and rules made there under are furnished in Note 30 in the Notes to accounts forming part of the Annual Report.

Particulars of contracts or arrangements made with related parties

The particulars of contracts or arrangements made with related parties made pursuant to Section 188 SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 and Accounting Standards 18 issued by the Institute of Chartered Accountants of India are furnished in Note 11 in the Notes to accounts forming part of the Annual Report.

Debt servicing and public deposits

During the year, the Company has not been able to meet its obligations towards the lenders for principal and interest, in terms with the respective letters of sanction/approvals. As there are delays in repayment of the loans, and the cane price arrears have mounted high, the Company’s credit rating has been downgraded. The loans availed by the Company have been classified as nonperforming assets (NPA) by the lenders and interest on the said loan accounts is not being charged to the loan accounts by them as per the relevant circulars of Reserve Bank of India. Further, the Company has approached its lenders to carry out a financial restructuring and debt resolution plan of its outstanding debts in accordance with its available future cash flows, which is under consideration by the lenders. The restructuring proposal under consideration, inter alia also includes waiver of un-paid Interest on these loan accounts till implementation of the proposed restructuring. In view of the submitted restructuring plan and discussions held with the lenders in this regard, the Company is hopeful that un-paid interest on certain loan accounts will be waived to carve out sustainable portion of debts. Accordingly, interest expense on these loan accounts for the current year amounting to Rs.11,972 Lac has not been recognized in the books of accounts. This has resulted in reversal of interest recognized on these loans in the financial results up to the period ended December 31, 2017 in the quarter ended March 31, 2018. The extent of exact amount of un-paid interest is under reconciliation with banks and will be determined at the time of approval of debt resolution plan. Un-paid interest, recognized in the books of accounts up to the end of March 31, 2017, will be reversed at the time of implementation of debt resolution plan.

The Company has not accepted any public deposits and no deposits are unpaid in any previous year.

Explanation or comments on qualifications, reservations or adverse remarks or disclaimers made by the Secretarial Auditors in their reports

The Comments/Remarks in the Secretarial Audit Report are self-explanatory and explained at the appropriate section of the Annual Report.

Material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of report

The Company has faced legal actions on account of defaults in repayments of loans and delay in approval of financial restructuring from banks towards the end of the financial year. The detail has been reported elsewhere in this report. The Company has also faced certain enquiries and investigations arising out of the above which are still persisting.

Application for reclassification of promoters of the Company

The special resolution for reclassification of promoters’ category was passed at 6th Annual General Meeting of the members of the Company. Thereafter, an application seeking reclassification of Mr. Gurpal Singh, Mr. Govind Singh Sandhu, Ms. Jai Inder Kaur, Mr. Angad Singh and M/s Pritam Singh Sandhu Associates Private Limited (Collectively referred to as ‘Sandhu Group/ Exiting Promoter’), from existing promoter group to the public category shareholders, in terms of provisions of regulation 31A (7) of SEBI (LODR) Regulations, 2015, was filed with SEBI/Stock Exchanges.

The Company has submitted the documents in support of the application as per the requirement, and discussions are going on with SEBI/Stock Exchanges through Merchant Bankers, appointed for this purpose and approval is awaited.

AUDITORS’ REPORT

The comments on the statement of accounts referred to in the report of the auditors are self-explanatory, and explained in the appropriate notes to accounts, the details of which are mentioned elsewhere in this report.

DIRECTORS

At the ensuing Annual General Meeting of the members of the Company, Mr. Gurmit Singh Mann is retiring by rotation on completion of term under the provisions of Section 152 of the Companies Act, 2013 and has offered himself for re-appointment. The Board considered and approved the re-appointment subject to the approval by the members.

During the year, Mr. B K Goswami, Mr. S K Ganguli, Justice (Retd) C K Mahajan, and Lieutenant General (Retd) D S Sidhu remained the independent directors under Section 149 of the Act and SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 during the year and they shall hold office for a period of 5 (five) consecutive years from the respective dates of their appointments.

During the year, Mr. S.C. Kumar an Independent Director, Mr. Sangeet Shukla, nominee director of State Bank of India and Mr. Jag Mohan Seth an Independent Director have submitted their resignations from the directorship and ceased to be directors of the Company on account of the other pre-occupations. During their tenure, they have guided the Company through their immense knowledge and experience. Directors place on record the appreciation and noted the valuable contribution of the outgoing directors during their association with the Company.

Declaration of Independent Directors

The Independent Directors have submitted their disclosures to the Board that they comply with all the requirements as stipulated under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015.

Company’s policy relating to director’s appointment, payment of remuneration and discharge of their duties

The Company’s policies relating to appointment of directors, payment of managerial remuneration, directors’ qualifications, positive attributes, independence of directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 has been disseminated at the Company’s website at the link-http://www.simbhaolisugars.com/ company_policies.asp.

The Board has approved the appointment and remuneration of Ms. Gursimran Kaur Mann as Managing director and Mr. Sachchida Nand Misra as chief operating officer/whole time director in the Company for a period of three years, and the consent on terms of appointment has been accorded at 6th Annual General Meeting of the members of the Company held on September 18, 2017. On applications of the Company, the Ministry of Corporate Affairs (MCA) has sought certain information/documents/ clarifications and the reply of which have been submitted and the approval is awaited.

Number of board meetings conducted during the year under review

Details of Board Meetings held during the year are furnished in the Report on the Corporate Governance forming part of this Annual Report.

Board Evaluation

The Company has devised the principles for review of the performance of the non-independent and also the independent directors, based on certain criterion as considered appropriate by the independent directors of the Company. Every year, the independent directors review the performance of the nonindependent directors based on the criterion such as job profile and market perception, self-declaration on the jobs handled/ taken up, opinion from peer and sub-ordinates, their performance evaluations, reporting and participation in the Company meetings and they have found their performance to be satisfactory. The independent directors find the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties to be satisfactory.

All the independent directors possess the requisite qualifications and experience in the respective areas. They have been discharging their duties diligently as defined in schedule IV to the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are contributing towards improvement in the governance standards of the Board of directors of the Company.

Secretarial Audit

M/s Amit Gupta & Associates, Company Secretaries, have been engaged as the Secretarial Auditors of the Company under the provisions of the Companies Act, 2013 for the financial year 2018-19. The Secretarial Audit Report for the FY 2017-18 is given as Annexure-1 to this report.

Cost Auditors

M/s Satnam Singh Saggu, Cost Accountants, have been engaged as the Cost Auditors of the Company under the provisions of the Companies Act, 2013 for the financial year 2018-19.

ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 are furnished in Annexure-3 and attached to this Report.

SUBSIDIARY, JOINT VENTURE, AND ASSOCIATE COMPANIES

The Company has four subsidiary Companies, viz. Simbhaoli Power Private Limited (SPPL), Integrated Casetech Consultants Private Limited (ICCPL), Simbhaoli Speciality Sugars Private Limited (SISPL) and Simbhaoli Global Commodities DMCC, Dubai (SGC). Uniworld Sugars Private Limited (USPL) is a joint venture company. The Consolidated financial statements have been prepared by incorporating audited financial results of subsidiary companies namely ICCPL, SISPL and SGC. However:

a. The financial statements of USPL have been included on the basis of unaudited financial statements as certified by their management. The Indian GAAP Compliant consolidated financial statement for the year ended March 31, 2017 was also prepared based on the unaudited financial statements of USPL, which was subject to disclaimer by the auditors. The Ind AS compliant figures for the year ended March 31, 2017 of the consolidated financial statement have been presented based on the restated Indian GAAP audited financial statements of USPL.

b. Financial statements of SPPL have not been incorporated as its accounts are still under compilation in accordance with Ind AS. Further, the outstanding balance of SPPL as well as the transactions entered into by the Company with SPPL as reported in the standalone financial statements are subject to reconciliation.

EMPLOYEE STOCK OPTION SCHEME

No stock options have been introduced during the year.

CORPORATE GOVERNANCE

The Report on Corporate Governance from the Practicing Company Secretary and certificate from Chief Operating Officer and Chief Financial Officer form part of this Annual Report.

VIGIL MECHANISM

The Company has established a vigil mechanism, which overseas through the Audit Committee, the genuine concerns expressed by the employees and other directors. The Company has provided adequate safeguards against victimization of employees or Directors, who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of co-employees and the Company.

The policy on the vigil mechanism comprising of the whistle blower policy, has been disseminated at the Company’s website at link-http://www.simbhaolisugars.com/company_policies.asp

During the year, no such complaint has been received by the Company.

LISTING OF SECURITIES

The equity shares of the Company are listed with the BSE Limited and National Stock Exchange of India Limited. The annual Listing fee for the financial year 2018-19 has been paid to both the stock exchanges.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION INITIATIVES, RESEARCH AND DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy, technology initiatives, Research and Development, Foreign exchange Earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure-4.

PARTICULARS OF EMPLOYEES

The disclosure under the provisions of Section 197 (12) of the Companies Act, 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure -5.

There was no employee of the Company, who has been paid remuneration under rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

AUDITORS

The Auditors, M/s Mittal Gupta & Company, Chartered Accountants, (the statutory auditors), had been appointed for a term of 5 years viz. 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20.They are being eligible have offered themselves and your directors have recommended their continuation of appointment for the financial years 2018-19 and 2019-20.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, read with the Rules made there under, with respect to the Directors’ responsibility statement, it is hereby confirmed:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2017-18 ended on March 31, 2018 and of the profit and loss of the Company for that period;

c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis;

e. the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively, and

f. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CAUTIONARY STATEMENT

Certain statements in this report may be forward looking and represent intention of the management. Actual results may differ materially due to a number of risks or uncertainties associated with the business. Investors/stakeholders, therefore, are advised to make their own judgments before taking any investment, business decisions. business decisions.

ACKNOWLEDGEMENT

The Board of Directors acknowledge the continued assistance and guidance provided by the Government of India, State Government of Uttar Pradesh, lender banks and institutions and the co-operation and assistance received from all executives, staff and workmen of the Company.

The Directors also express special thanks to the joint venture partners for their association in running the affairs of the business of the respective subsidiary/associate companies, being part of the future growth of the Company.

The Directors also wish to emphatically state their gratitude to the Indian Sugar Mills Association, farmers, suppliers and all other concerned persons who have continued their valuable support to your Company.

For and on behalf of the Board of Directors

Simbhaoli Sugars Limited

Gurmit Singh Mann

Place : New Delhi Chairperson

Date : May 30, 2018 (DIN - 00066653)