SBEC Sugar Ltd

Dear Shareholders,

Your Directors take pleasure in presenting the 15th Annual Report of the Company together with the Audited Accounts for the period ended 30th June 2009.

FINANCIALRESULTS

The summarised financial results of SBEC Sugar Ltd. as well as Consolidated with its subsidiaries i.e. M/s. SBEC Bioenergy Ltd.,M/s. SBEC Stockholding and Investment Ltd and Modi Gourmet Limited are as follows:

The financial results for the period ended 30.06.2009 are for a period of 15 months, and for the previous year were for a period of 18 months, and therefore are not comparable.

OPERATIONS

The cane crushing for the period under review was 101.15 lakhs quintals in 150 days with an average crushing rate of 67435 quintals per day as against 232.61 lakhs quintals in 326 days (Include two crushing season) with an average crushing rate of 71354 quintals per day for the previous period. The sugar recovery has reduced to 8.77 % as against 9.12% in the previous period. The main reason for the lower cane crushing was less sowing of cane crop by the farmers and sugar recovery was adversely affected due to irritating rains and climate condition in the entire Western Uttar Pradesh.

The Company, during the period under review, made a profit before tax Rs. 678.01 lakhs against loss for the previous period Rs. 2485.21 Lakhs and as consolidated profit of Rs.1250.21 lakhs against loss of the previous period Rs. 2209.65 lakhs.The Net profit for the period was Rs.700.16 lakhs as against loss of Rs.1969.36 lakhs in the previous period. The earning per share works out to Rs. 1.47 per share (previous period Rs. (4.13) per share) and as consolidated Rs. 2.50 per share (previous period Rs. (3.58) per share).

FIXED DEPOSITS

During the period under review, the Company accepted deposits to the extent of Rs. 563.75 lakhs. The total amount of fixed deposit held as on 30th June 2009 was Rs. 602.95 lakhs and there were three deposits lying unclaimed as on that date.

DIRECTORS

In accordance with the provisions of Section 256 of the Companies Act, 1956 and Article 125 of the Articles of Association of the Company, Mrs. KumKum Modi, Non Executive Director and Mr. Man Mohan , Independent and Non-Executive Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

SUBSIDIARY COMPANY AND CONSOLIDATED ACCOUNTS

Pursuant to section 212 of the Companies Act, 1956, audited statement of accounts alongwith the report of the Board of Directors of the Subsidiary Companies, namely M/s SBEC Bioenergy Limited, M/s SBEC Stockholding and Investment Limited and Modi Gourmet Limited and the respective Auditors' Report thereon for the period/year ended 31sl March 2009 and a statement thereon are annexed.

AUDITORS

M/s Doogar and Associates, Chartered Accountants, who are Statutory Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

ACCOUNTS AND AUDITORS' REPORT

Reference to the Auditors comments relating to the deviation from the AS-2: Valuation of Inventories, it is hereby clarified that the management decided to value the stock of free sugar as on 30.06.2009 at average market price prevailing during June, 2009 in lieu of the cost price so as to show realistic profits of this period. This was necessitated because of the vide variation in the cost and market price of sugar as was prevalent during this period and further on account of the change in the accounting year of the Company which does not correspond with the seasonal cycle of the sugar Industry.

The Company has duly mentioned the reasons for such deviation in schedule 13 Note no. B 6 of the Notes to account in compliance with the requirements of the Statute.

DIRECTORS RESPONSIBILITY STATEMENT UNDER SECTION 217

Pursuant to the requirement under section 217 (2AA) of Companies Act, 1956, the Directors of your company declare as under:

I. That in the preparation of the Annual Accounts, the applicable accounting standards, except that for deviation from accounting standard -2, had been followed alongwith proper explanation relating to material departures;

II. That the Company has 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 and of the profit of the company for that year;

III. That proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and preventing and detecting fraud and other irregularities;

IV. That the Annual Accounts are prepared on going concern basis.

CORPORATEGOVERNANCE

As per clause 49 of the Listing Agreement with the Stock Exchange, Report on Corporate Governance, a Management Discussion and Analysis Statement, Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is included in the said Corporate Governance Report.

SECRETARIALAUDIT

As per the direction of the Securities and Exchange Board of India, the Secretarial Audit of the Company is being conducted on quarterly basis by a Practicing Company Secretary. The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Listing Agreement with the Stock Exchanges, and all the Regulations of Securities and Exchange Board of India (SEBI) as applicable to the Company.

LISTING OF SECURITIES

The equity shares of your Company are listed on The Bombay Stock Exchange Limited, and The Calcutta Stock Exchange Association Limited. The Company's application for delisting of shares with The Calcutta Stock Exchange Association Limited is still pending.

ENERGY CONSERVATION,TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO

As stipulated under the provisions of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules 1988, Annexure containing the particulars is annexed hereto which forms a part of this report

PARTICULARS OFEMPLOYEES

Information required under section 217 (2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time:-During the period under review, there was one employee who was in receipt of remuneration more than the limit prescribed under section 217 (2A) of the Companies (Particulars of Employees) Rules, 1975 as amended.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their appreciation and gratitude to the farmers and to the co-operative cane societies for their invaluable support. Your Directors also take this opportunity to express their appreciation and gratitude to Government Agencies, Shareholders, Business Associates, Employees, Suppliers and Bankers of the Company for their help and support continuously extended to the Company.

(DISCLOSURE OF PARTICULARS IN THE REPORTOF BOARDOF DIRECTORS) RULES, 1988

FORM A: DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY:

FORM B: DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION

(A) RESEARCH AND DEVELOPMENT (R&D)

The Company per se did not carry out any basic R & D work during the period. However, some activities carried out through indigenous sources have resulted in improvement in the performance of the plant

(B) TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts in brief, made towards technology absorption, adaptation and innovation:

2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution etc.:

1 & 2: The Company has acquired the latest technology for production of sugar.

3. In case of imported technology (imported during the last five years reckoned from the beginning of the financial year), following information may be furnished:

FOREIGN EXCHANGE EARNING AND OUTGO

i) Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export Plans: Efforts are being made towards export of the product of the company.