Jeypore Sugar Company Ltd

The Sugar Industry in India showed improvement in the working of the sugar mills in theseason 2011-2012, but the overall situation has not improved much. The prediction in theGlobal and Indian sugar scenario is increased area of sugarcane cultivation resulting inhigher sugar output, in the seasons to come. The development compared to the earlier yearsare only the quarterly release mechanism in the place of monthly release and allowingexport of sugar without quantitative restrictions. The levy mechanism still continues. Theuncertainty over the availability of sugarcane and also the increase in sugarcane pricesare causing concern to the sugar mills. The Government should come out with a clear cutpolicy for the sugar industry, which will aim at reasonable sugarcane prices linked to theprice of the finished product. Modern methods of farming, mechanization and betterhi-breed inputs will help to reduce the cost of cultivation and also the cost ofproduction of sugar to improve the profitability of the industry. A better policy fromGovernment of India on Ethanol also will encourage the sugar mills to optimize theoperations of the distilleries leading to increased revenue. The Co-generation units ofthe sugar mills also can play a lead role in meeting the energy requirements of thecountry the support of the local and Central Governments.

7. REVIEW OF OPERATION NEW SUGAR UNIT AT POTHAVARAM

The unit is complete in all respects, however it could not be made fully operationaldue to the non availability of the cane

VVS SUGARS, CHAGALLU

Our Company - The Jeypore Sugar Co Ltd., with its two units has the largest crushingcapacity in A.P. In the present globalised context the size of the factory s i mostimportant, but the capacity in being under-utilised due to competition from cash cropslike maize, tobacco, paddy which give a profitable return in a shorter time. Besides it ishaving sizable co-gen facility and distillation facilities.

A.SUGAR SEASON

B.FINANCIAL YEAR

DISTILLERY DIVISION, CHAGALLU AND JANGAREDDYGUDEM

Both the Distilleries at Chagallu and Jangareddygudem operated at near optimum level ofcapacity.

We have procured molasses from the market to keep both the Distilleries to operatecontinuously. We expect the distilleries to perform better this year as the demand forEthanol and RS is bright.

CO-GENERATION

The Co-generation project has worked continuously and successfully during the seasonand generated 31546 MW of power. We have offered to generate power using coal as rawmaterial to A.P. Government, (who are very short of power and buying from other states).The Government is not willing to increase the price for the units to be supplied, hence weare keeping our generation capacity idle for almost six months

8. CONSERVATION OF ENERGY

Form A (Rule 2) enclosed.

9. SAFETY & POLLUTION CONTROL SAFETY:

The safety record has improved considerably by taking appropriate steps to reduce theaccidents, hazards and other unwanted incidents.

Air & Water Pollution:

In both air and water all the norms as stipulated by Pollution Control Board have beenachieved. BOD & COD levels of our effluent are much below the prescribed norms.Similarly the air emissions are maintained within the stipulated standards

1. Name of the Subsidiary

JEYPORE SUGAR FINANCE AND INVESTMENT CORPORATION LTD.

2. Financial year

Year ended 31-03-2012

3. Holding Company's

Interest

4,10,000 Equity Shares of Rs.10/- each (99.88 % of capital)

4. Net Amount of Profit/Loss

Net Loss for the current financial year is Rs.14,638/-. and adding against the loss inprofit & loss account of previous year of Rs.86,57,995/- the balance of loss comes toRs.86,72,633/- is taken as deficit in profit and loss account.

5. Profit/Loss of subsidiary dealt with in Holding Company's A/c

Nil

11. DIRECTORS

The following Directors retire at the conclusion of the Annual General Meeting andbeing eligible, offer themselves for re-election.

1 Dr.S.R.K.Prasad

2. Sri.Boppana Ramalingeswara Rao

3. Smt.M.A.Vedavalli

12. MANAGEMENT STAFF

Information as required under section 217 (2A) of the Companies Act, 1956 read with therelevant rules thereunder, in respect of particulars of Employees, is given in a separateannexure to this board of Directors report.

13 STAFF RELATIONS

The relationship with the staff and workers continued to be cordial during the year.The Directors wish to place on record their appreciation of the valuable work done andco-operation extended by them at all levels.

14. AUDITORS

a) M/s.Brahmayya & Co, Chartered Accountants, Vijayawada' retire at the conclusionof the forthcoming Annual General Meeting and being eligible, offer themselves forre-appointment.

b) Aruna Prasad , Cost Accountants, Chennai has been appointed as Statutory CostAuditor for the sugar unit of the Company

15 AUDITORS OBSERVATION

The Directors offer the following explanations with reference to the observations madeby the auditors in their report.

1) With regard to the observations of the auditors in respect of amounts outstanding ofRs.37.47 lakhs due to the bank as overdue, the company has made arrangements to settle thesame immediately.

2) As far as the observations of the auditors regarding the utilization of short termfunds for long term purposes over a period of time the same had to be resorted to in viewof the business exigencies and circumstances. The company has taken note of the same.

16. DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Directors confirmthat

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

b) the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent, so as to give a trueand fair view of the state of affairs of the company at the end of the financial year andof the profit or loss of the company for that period ;

c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records, in accordance with the provisions of the Companies Act,1956 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities; and

d) the Directors have prepared the annual accounts on a going concern basis.

17. CORPORATE GOVERNANCE

The Corporate Governance and Management Discussion and analysis Reports form anintegral part of this Report and are set out as separate to this Report. The Certificatefrom the Auditors of the Company certifying compliance of the Listing Agreement withMadras Stock Exchange Ltd.is also annexed to the Report on Corporate Governance.

18. CONSOLIDATED FINANCIAL STATEMENT

Consolidated Financial statement has been prepared as required in AS21 and attachedwith Annual Report.

19. LISTING OF STOCK EXCHANGES

Your Company's shares are listed on the Madras Stock Exchange Ltd.,and the annuallisting fees for the financial year 2012-2013 was paid. Indo next segment trading ofshares in Bombay Stock Exchange Ltd.

20. DEMATISIN NUMBER

INEI80E01014

21. ACKNOWLEDGEMENT

The Directors wish to place on record their appreciation and thank the Company'sBankers, Financial Institutions and various departments of Central and State Governmentsand the shareholders for the valuable support received from them. The Board also places onrecord their appreciation for the co-operation being extended by the cane growers in theChagallu area to increase the sugarcane supply to the factory to meet the requirements ofthe expanded capacity.