THE UGAR SUGAR WORKS LIMITED THE UGAR SUGAR WORKS LIMITED

Transcription

1 COMPOSITE APPLICATION FORM (CAF) FOR THE EQUITY SHAREHOLDERS OF THE COMPANY AND RENOUNCEES ONLY (Please read accompanying abridged version of Letter of Offer and instructions on the reverse of this form carefully) PLEASE DO NOT TEAR OR DETACH ANY PART OF THIS FORM THIS DOCUMENT IS OF VALUE AND IS NEGOTIABLE PART 'A' FORM OF APPLICATION BY EQUITY SHAREHOLDERS (For acceptance of rights entitlement and application for additional shares without renunciation) FOLIO NO. CAF NO. THE UGAR SUGAR WORKS LIMITED ( Incorporated on the 11 th September, 1939 as a Limited Company, under the Indian Companies Act, 1913 as amended upto 1936 by Act XXII of 1936.) Registered Office: Mahaveer Nagar, Sangli ,(Maharashtra) Tel No , ; Fax No Contact Person: Mr. B.G. Kulkarni, Company Secretary and Compliance Officer rights.issue@ugarsugar.com website: Factory and Administrative Office: Ugarkhurd (Dist-Belgaum) Tel No Fax No ISSUE OF 2,25,00,000 EQUITY SHARES OF THE FACE VALUE OF Rs. 1 EACH AT A PREMIUM OF Rs. 7 PER SHARE FOR AN AMOUNT AGGREGATING TO Rs 18,00,00,000 ON RIGHTS BASIS TO THE EXISTING SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF ONE EQUITY SHARE FOR EVERY FOUR EQUITY SHARES HELD ON THE RECORD DATE, THAT IS ON 29 TH SEPTEMBER, 2008 FOR BANK'S USE ONLY BANK'S SERIAL NO. BANK'S STAMP & DATE OF RECEIPT 'A' PART B FORM OF RENUNCIATION The Board of Directors, THE UGAR SUGAR WORKS LIMITED Mahaveer Nagar, Sangli ,(Maharashtra) ISSUE OPENS ON : NOVEMBER 17, 2008 LAST DATE FOR REQUEST FOR SPLIT APPLICATION FORMS : NOVEMBER 24, 2008 ISSUE CLOSES ON : DECEMBER 02, 2008 Date... NO. OF EQUITY SHARES RENOUNCED [BLOCK VII] IN FIGURES IN WORDS Dear Sirs, Pursuant to the Letter of Offer dated October 24, 2008, I/We hereby renounce my/our Rights to the Equity Shares indicated in Block VII above in favour of the person(s) accepting the same and signing Part C below with respect to such Equity Shares [Form of Applications by Renouncee(s)]. I/We have not made any application to the Company for the allotment of these Equity Shares in my/our name(s). 'B' CRYSTAL Forms Ltd. - (022) / 918 The Board of Directors, THE UGAR SUGAR WORKS LIMITED Mahaveer Nagar, Sangli ,(Maharashtra) Dear Sirs, I/We hereby accept and apply for allotment of the Equity Shares mentioned in BLOCK III below in response to the Letter of Offer dated October24, 2008 and the attached abridged version thereof, offering the Equity Shares to me/us on rights basis. I/We also apply for additional Equity Shares indicated in BLOCK IV below and agree to accept these Equity Shares or whatever lesser number of Equity Shares as may be allotted by the Board of Directors. I/We enclose the amount specified in BLOCK VI below at the rate of Rs. 8/- per Equity Share payable on application on the total number of Equity Shares specified in BLOCK V below. I/We agree to accept the Equity Shares allotted to me/us upon the terms and conditions of the said Letter of Offer, this CAF and subject to the provisions of the Companies Act, 1956, the Memorandum and Articles of Association of the Company and the Equity Shares to be issued / credited in this regard. I/We undertake that I/we will sign all such other documents and do all such acts, if any, necessary on my/our part to enable me/us to be registered as the holder(s) of the Equity Shares in respect of which this application may be accepted. I/We also agree to accept the shares subject to laws, guidelines, notifications and regulations relating to the issue of capital and listing of securities issued as applicable from time to time by SEBI/Government of India/RBI and/or other authorities. I/We hereby solemnly declare that I am/we are not applying for the Equity Shares in contravention of Section 269SS of the Income-Tax Act, I/We confirm that I/We are not a US Person or are not applying for these shares on behalf of US Person. NUMBER OF EQUITY SHARES HELD ON RECORD DATE [BLOCK I] Account No., Name of Bank and Branch of Sole/First Applicant for refund, if any, please refer to Instruction No. (e) SAVINGS / CURRENT A/c. No.* (For Residents) NRE/FCNR/NRO/Special NRE/NRO/ OTHER A/c. No* (For Non-Residents) * Strike off whichever is not applicable Sole/First Joint Applicant Second Joint Applicant Third Joint Applicant NOTE : (1) Complete this form if you wish to apply as an Equity Shareholder (2) Leave Part 'A' blank, if you wish to renounce (3) Do not use both Parts 'A' and 'B'. If all the Parts are filled in, the allotment will be made under Part B & C i.e. renouncee(s) only and entry in Part A shall be ignored. (4) Please check the number of Shares registered in your name and your entitlement of the number of Equity Shares as indicated in BLOCK (I) and (II), in case you find any mistake in your entitlement, please intimate the Registrar to the Issue so that the Registrar may amend the same (if necessary) on the basis of the entry in the Register of Members on Record date. (5) Please read the instructions at the reverse of this form and the Abridged version of Letter of Offer attached carefully, for further details. FOLIO NO./CLIENT ID NO. A/c. No. REQUEST FOR SHARES IN ELECTRONIC FORM I/We, the undersigned, want delivery of Equity Shares of THE UGAR SUGAR WORKS LIMITED under the Rights Issue, in the Dematerialised Form. Details of my/our Beneficiary (Electronic) account are as given below: (tick ( ) whichever is applicable) Depository Name Depository Participant (DP) Name DP-ID No. Beneficiary Account Number NSDL Beneficiary Account Number CDSL NUMBER OF EQUITY SHARES OFFERED [BLOCK II] I N NSDL NO. OF EQUITY SHARES ACCEPTED [BLOCK III] Refund through RTGS : IFSC Code of the branch : CAF No. REGISTRAR'S SERIAL NO. APPLICANTS SHOULD MENTION FOLIO NO./ CLIENT-ID & DP-ID AND CAF NO. ON THE REVERSE OF THE CHEQUE/DRAFT AMOUNT PAYABLE PER EQUITY SHARE ON APPLICATION : Rs. 8/- Please tick ( ) whichever is applicable. I am / We are Indian National(s) resident in India and that I am/we are not applying for the Equity Shares as nominee(s) of any person(s) who is/are resident outside India or Foreign National(s) or a foreign company or a foreign controlled company. I am / We are Non Resident Indian who have made payments by way of a cheque drawn on NRO Account maintained in Mumbai or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. I am/we are Non-Resident Indian(s)/Person(s) of Indian Origin residing abroad and have made payments by demand draft/cheque payable at Mumbai or funds remitted from abroad in the following way :- By Indian Rupee drafts purchased from abroad & payable at Mumbai or By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in Mumbai Rupee draft purchased by debit to NRE/FCNR account maintained elsewhere in India & payable in Mumbai We are Foreign Institutional Investors(s) registered with SEBI and have remitted funds from special Non-Resident Rupee Deposit Account. NUMBER OF ADDITIONAL EQUITY SHARES APPLIED FOR [BLOCK IV] Bank and Branch Address Date... I/We understand that : i) in case of allotment of Equity Shares to me/us, my/our Beneficiary Account as mentioned above would get credited to the extent of allotted shares. ii) in case of allotment of Equity Shares to me/us, if shares cannot be credited to my/our Beneficiary Account for any reasons whatsoever, I/We will be given Physical Certificate(s) iii) if the names of applicants in this application are not identical and also not in the same order as the Beneficiary Account details with the above mentioned DP, only physical certificates will be issued, and iv) The market lot for company's Equity Shares in Electronic Mode is one share however for whatever reason if the company issues physical certificate, only one consolidated certificate will be issued for the entire holding under one folio. [Signature(s) as per specimen recorded with the Company] [In case of joint shareholders, all the Shareholders must sign in the same sequence as per the specimen recorded with the Company/Depository) CDSL TOTAL NUMBER OF EQUITY SHARES APPLIED FOR [BLOCK V (BLOCK III+IV)] Contact Details of Sole / First Joint Applicant Phone/Mobile No.: Address: PAYMENT DETAILS Amount paid Rs...Rupees(in words)......by Cash/Cheque/Bank Draft No....Dated... Drawn on (Bank Name)... Branch... IN CASE OF POSTAL APPLICATION WHERE PAYMENT IS MADE BY DRAFT (Please Refer Instruction No. 1) GROSS AMOUNT PAYABLE (AS IN BLOCK VI) Rs. LESS : DEMAND DRAFT AND POSTAL CHARGES Rs. NET AMOUNT PAID (IN FIGURES) Rs. (IN WORDS) Sole/First Joint Applicant Second Joint Applicant Third Joint Applicant TOTAL AMOUNT Rs. 8 per Share [BLOCK VI (BLOCK V x Rs. 8)] Please refer Instruction No. 3 Permanent Account No. (PAN) Refer Instruction No.5 Details of Nominee : Name Address If minor, date of Birth Name of the Guardian Total No. of Shares Applied For Electronic Form Physical Form Total (TEAR HERE) ACKNOWLEDGEMENT SLIP (To be filled in by the Sole / First Joint Applicant) Registered Office: Mahaveer Nagar, Sangli ,(Maharashtra) Tel No , ; Fax No Contact Person: Mr. B.G. Kulkarni, Company Secretary and Compliance Officer rights.issue@ugarsugar.com website: Received from Mr/Mrs/Ms/M/s. an application for Equity Shares of Re. 1/- each at a premium of Rs. 7/- per share alongwith Cash / Cheque /Demand Draft No.* dated drawn on for Rs. being the application money payable thereon. (Please write full address on the reverse, if the application is sent by post. Please preserve this acknowledgement slip carefully). 'W' PART 'C' FORM OF APPLICATION BY RENOUNCEE(S) (TO BE FILLED IN BY RENOUNCEE(S) ONLY) The Board of Directors, THE UGAR SUGAR WORKS LIMITED Mahaveer Nagar, Sangli ,(Maharashtra) Dear Sirs, Sole / First Joint Applicant Second Joint Applicant Third Joint Applicant Sole/First Joint Applicant's Address Sole/First Joint Applicant Second Joint Applicant Third Joint Applicant [Signature(s) as per specimen recorded with the Company] [In case of joint shareholders, all the holders should sign in the same order and as per specimen recorded with the Company/Depository) NO. OF EQUITY SHARES ACCEPTED [BLOCK VIII] Full Name Father's/Husband's Name Full Name Full Name NUMBER OF ADDITIONAL EQUITY SHARES APPLIED [BLOCK IX] TOTAL NO. OF EQUITY SHARES APPLIED FOR [BLOCK X (BLOCK VIII + IX)] In terms of the Letter of Offer dated October 24, 2008 and abridged version thereof and pursuant to the Form of Renunciation signed by the above mentioned shareholder(s), I/We apply for allotment of Equity shares as indicated in block X above. In respect of these "Equity Shares", I/We enclose the amount specified in Block XI being the amount payable on application. I/We also apply for additional Share(s) indicated in BLOCK IX above (included in Block X above) and agree to accept these Share(s) or whatever lesser number of Share(s) allotted by the Directors. I/We agree to accept the "Equity Shares" allotted to me/us and to hold such "Equity Share" upon the terms and conditions of the said Letter of Offer and subject to the provisions of the Companies Act, 1956, the Memorandrum and Articles of Association of the Company and the Equity Shares to be issued in this regard. I/We authorise you to place my/our name(s) on the Register of Members. I/We undertake that I/we will sign all such other documents and do all such acts, if any, necessary on my/our part to enable me/us to be registered as the holders of the Equity Shares in respect of which this application may be accepted. I/We also agree to accept the shares subject to laws, applicable guidelines, notifications and regulations relating to the issue of capital and listing of securities issued from time to time by SEBI/Government of India/RBI and/or other authorities. I/We hereby solemnly declare that I am/we are not applying for the Equity Shares in contravention of Section 269SS of the Income-Tax Act, I/We authorize you to place my/our name(s) in the "Register of Member". PAYMENT DETAILS Amount paid Rs...Rupees(in words)......by Cash/Cheque/Bank Draft No....Dated... Drawn on (Bank Name)... Branch... IN CASE OF POSTAL APPLICATION WHERE PAYMENT IS MADE BY DRAFT (Please Refer Instruction No. 1) GROSS AMOUNT PAYABLE (AS IN BLOCK XI) Rs. LESS : DEMAND DRAFT AND POSTAL CHARGES Rs. NET AMOUNT PAID (IN FIGURES) Rs. (IN WORDS) Phone/Mobile No.: (TO BE FILLED IN BY RENOUNCEE(S) ONLY) AMOUNT PAYABLE ON Rs. 8 PER EQUITY SHARE [BLOCK XI ([BLOCK X x Rs. 8]) (Rs. in Figures) REQUEST FOR SHARES IN ELECTRONIC FORM : I/We, the undersigned, want delivery of Equity Shares of THE UGAR SUGAR WORKS LIMITED under the Rights Issue, in the Dematerialised Form. Details of my/our Beneficiary (Electronic) account are as given below : (tick ( ) whichever is applicable) Depository Name NSDL CDSL Depository Participant (DP) Name DP-ID No. Beneficiary Account Number NSDL Beneficiary Account Number CDSL Age Age Age (Rs. in Words) SIGNATURE(S) Pin Signature & Stamp of the Banker to the Issue Date : 'X' 'C' 'Y' I/We understand that : i) in case of allotment of Equity Shares to me/us, my/our Beneficiary Account as mentioned above would get credited to the extent of allotted shares. ii) in case of allotment of Equity Shares to me/us, if shares cannot be credited to my/our Beneficiary Account for any reasons whatsoever, I/We will be given Physical Certificate(s) iii) if the names of applicants in this application are not identical and also not in the same order as the Beneficiary Account details with the above mentioned DP, only physical certificates will be issued, and iv) The market lot for company's Equity Shares in Electronic Mode is one share however for whatever reason if the company issues physical certificate, only one consolidated certificate will be issued for the entire holding under one folio. Account No., Name of Bank and Branch of Sole/First Applicant for refund order, if any, please refer to Instruction No. e A/c. No. Bank and Branch Address SAVINGS / CURRENT A/c. No.* (For Residents) NRE/FCNR/Special NRE/NRO/OTHER A/c. No.* (For Non-Residents) * Strike off, whichever is not applicable Refund through RTGS THE UGAR SUGAR WORKS LIMITED I N IFSC Code of the branch Date... Please tick ( ) whichever is applicable. I am / We are Indian National(s) resident in India and that I am/we are not applying for the Equity Shares as nominee(s) of any person(s) who is/are resident outside India or Foreign National(s) or a foreign company or a foreign controlled company. I am / We are Non Resident Indian who have made payments by way of a cheque drawn on NRO Account maintained in Mumbai or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. I am/we are Non-Resident Indian(s)/Person(s) of Indian Origin residing abroad and have made payments by demand draft/cheque payable at Mumbai or funds remitted from abroad in the following way :- By Indian Rupee drafts purchased from abroad & payable at Mumbai or By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in Mumbai Rupee draft purchased by debit to NRE/FCNR account maintained elsewhere in India & payable in Mumbai We are Foreign Institutional Investors(s) registered with SEBI and have remitted funds from special Non-Resident Rupee Deposit Account. Sole/First Joint Applicant Second Joint Applicant Third Joint Applicant Please refer Instruction No. 3 4 Permanent Account No. (PAN) Refer Instruction No. 5 Details of Nominee : Name 19 Address If minor, Date of Birth Name of the Guardian Address: Total No. of Shares Applied For Electronic Form Physical Form Total Occupation 1) Service 2) Business 3) Housewife 4) Student 5) Others (for Sole/First Joint Applicant only) If you are an existing shareholder, in the same order of names, please quote the Folio No. or DP ID CL. ID Sole / First Joint Applicant Second Joint Applicant Third Joint Applicant 'Y' *(Cheques / Drafts are subject to realisation).

2 PART 'D' REQUEST FOR SPLIT APPLICATION FORMS If you wish to Split the CAF, fill in this part of the form and send the entire CAF to the Registrars to the Issue viz. Bigshare Services Private Limited, E/2, Ansa Industrial Estate, Sakivihar Road, Sakinaka, Andheri (E), Mumbai Tel: ; Fax: Website: ugarrights@bigshareonline.com Contact person:mr.ashok Shetty The Board of Directors, THE UGAR SUGAR INDUSTRIES LIMITED Mahaveer Nagar, Sangli ,(Maharashtra) Dear Sirs, Pursuant to the Company's Letter of Offer dated October 24, 2008 and the attached abridged version thereof, please send me/us Split Forms as detailed below : No. of Shares NUMBER OF SPLIT FORMS (A) (From Block II Part A overleaf) NO. OF EQUITY SHARES DESIRED IN EACH SPLIT FORM (B) * Total in (C) in above table must agree with BLOCK II of Part A Signature in the same sequence as per specimen(s) recorded with the Company/Depository Sole / First Joint Applicant Second Joint Applicant Third Joint Applicant LAST DATE FOR REQUESTS FOR SPLIT APPLICATION FORMS NOVEMBER 24, 2008 TOTAL NO. OF EQUITY SHARES (A) x (B) = (C) Notes: 1) Request for Split Forms will be entertained only if it is made in this form. 2) Split Forms cannot be re-split. 3) Request for Split Forms will not be entertained from Renouncee(s). 4) Request for Split Forms will be entertained only once. 5) Request for Split Forms should not be sent to the Company or to the Lead Manager. TOTAL* APPLICATIONS WILL BE COLLECTED AT THE FOLLOWING BRANCHES Bankers to the Issue : AXIS S-266, BANK Greater LIMITED: BANK Kailash OF BARODA: II, New UNION Delhi BANK OF INDIA: Authorised Collection Centres for Resident Applicants : Date... Branches of Axis Bank Limited, Bank of Baroda & Union Bank of India. Union Bank of India : Belgaum, Coimbatore, Kolhapur, Pune, Karad, Sangli, Kudachi, Ugar, Nipani, Mangalore, Mumbai, Mysore, Nagpur Bank of Baroda: Allahabad, Bangalore, Belgaum, Bhopal, Kanpur, Kolhapur, Lucknow, Mumbai, Nashik, Pune, Sangli, Hubli. Axis Bank of India: Ahmedabad, Athani, Bangalore, Belgaum, Bhuvaneshwar,Chennai, Ernakulam/ Cochin, Guwahatti, Hyderabad, Indore, Jaipur, Kolhapur, Kolkata, Ludhiana, Mumbai, New Delhi, Patna, Pune, Rajkot, Surat, Vadodara, Satara, Sangli, Panjim. Collecting FOR NON RESIDENT Branch APPLICANT for Non -: Resident NON RESIDENT shareholders APPLICANT applying MUST SUBMIT on THEIR repatriable APPLICATION basis TO : NI ABOVE & SS MENTIONED Div B S Marg, THREE Fort BANKS, Mumbai AT MUMBAI. 400 OR REGISTRAR 023. TO THE ISSUE, BIGSHARE SERVICES PVT. LTD, AT THE ADDRESS MENTIONED BELOW. Note : Applicants residing at places other than those mentioned in the CAF and applicants who wish to send their applications by REGISTERED POST are requested to send their applications directly to the Registrar to the Issue together with their Demand Draft (net of bank and postal charges) drawn in favour of The Ugar Sugar Rights Issue A/c crossed A/c Payee only payable at Mumbai, so as to reach them on or before the closure of the issue. The Company is not responsible for any postal delay/loss in transit and applications received through mail after the closure of the issue and those application are liable to be rejected and returned to the applicant. Applications through mail should not be sent in any other manner except as mentioned above. The CAF(s) alongwith the Application Money must not be sent to the Lead Manager or the Company except as stated otherwise. The Applicants are requested to strictly adhere to these instructions. No shares will be offered to Non Residents Indian on Repartriable basis. For Non Residents applying on Non Repartriable basis all cheques/ drafts submitted by NRI shareholders should be drawn in favour of "The Ugar Sugar Rights issue account" crossed A/c Payee only payable at Mumbai. Renounces who are NRI/FII/Non Resident should submit their application, either by hand delivery or by registered post with acknowledgment to Bigshare Services Private Limited only at the below mentioned address. LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE BOB Capital Markets Limited. (Wholly owned subsidiary of Bank of Baroda) BIGSHARE SERVICES PRIVATE LIMITED E/2, Ansa Industrial Estate, Sakivihar Road, Ground and First floor, Meher Chambers, Sakinaka, Andheri (E), Mumbai Dr. S.B. Marg, Off R. Kamani Marg,Mumbai Tel: ; Fax: Tel: ; Fax: Website: ugarrights@bobcapitalmarkets.com Contact Person: Mr. Y.K. Garg ugarrights@bigshareonline.com Contact person:mr.ashok Shetty INSTRUCTIONS FOR FILLING UP COMPOSITE APPLICATION FORM Option Option Available Action Required A. Accept whole or part of your entitlement without renouncing the Fill in and sign Part A (All joint holders must sign) balance. B. Accept your entitlement in full and apply for additional Equity Shares Fill in and sign Part A including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign) C. Accept only a part of your entitlement of the Equity Shares offered to you (without renouncing the balance) Fill and sign Pat A of the CAFs D. Renounce your entitlement in full to one person (Joint renouncees not exceeding three are considered as one renouncee). E. 1. Accept a part of your entitlement and renounce the balance to one or more renouncee(s) OR 2. Renounce your entitlement to all the Equity Shares offered to you to more than one renouncee 'Z' Fill in and sign Part B (all joint holders must sign) indicating the number of Equity Shares renounced and hand over the entire CAF to the renouncee. The renouncees must fill in and sign Part C of the CAF (All joint renouncees must sign) Fill in and sign Part D (all joint holders must sign) requesting for Split Application Forms. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for Split Forms. Splitting will be permitted only once. On receipt of the Split Form take action as indicated below. (i) For the Equity Shares you wish to accept, if any, fill in and sign Part A of one split CAF (only for option 1). (ii) For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand over the split CAFs to the renouncees. (iii) Each of the renouncees should fill in and sign Part C for the Equity Shares accepted by them. F. Introduce a joint holder or change the sequence of joint holders This will be treated as a renunciation. Fill in and sign Part B and the renounces must fill in and sign Part C. (a) (b) Please read the instructions printed on the enclosed CAF carefully. Application should be made on the printed CAF, provided by our Company except as mentioned under the head Application on Plain Paper and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of this Letter of Offer are liable to be rejected and the money paid, if any, in respect there-of will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the applicants, details of occupation, address, father s husband s name must be filled in block letters. (c) The CAF together with cheque / demand draft should be sent to the Bankers to the Issue / Collecting Bank or to the Registrar to the Issue and not to our Company or Lead Manager to the Issue. Applicants residing at places other than cities where the branches of the Bankers to the Issue have been authorised by our Company for collecting applications, will have to make payment by Demand Draft payable at Mumbai and send their application forms to the Registrars to the Issue by REGISTERED POST. If any portion of the CAF is / are detached or separated, such application is liable to be rejected. (d) PAN / GIR Number: Applications by the applicant or in the case of application in joint names, each of the applicants, should mention his/ her PAN number allotted under the Income-Tax Act, 1961 or a communication from the Income Tax authority indicating allotment of PAN ( PAN Communication ) along with the application for the purpose of verification of the number. Applicants who do not have PAN are required to provide a declaration in Form 60 / Form 61 prescribed under the IT Act along with the application. Application Forms without PAN / GIR Number/PAN Communication/ declaration will be considered incomplete and are liable to be rejected. (e) Bank Account Details: It is mandatory for applicants to provide information as to their savings/ current account number and the name of our Company with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Application not containing such details is liable to be rejected. (f) Payment by cash: The payment against the application should not be effected in cash if the amount to be paid is Rs. 20,000 or more. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon. Payment against the application if made in cash, subject to conditions as mentioned above, should be made only to the Bankers to the Issue. (g) Signatures should be either in English or Hindi or in any other language specified in the Eight Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with our Company or depositories. (h) In case of an application under power of attorney or by a body corporate or by a society, a certified true copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Issue and to sign the application and a copy of the Memorandum and Articles of Association and / or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with our Company, the same need not be a furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue. (i) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with our Company. Further, in case of joint applicants who are renouncees, the number of applicants should not exceed three. In case of joint applicants, reference, if any, will be made in the first applicant s name and all communication will be addressed to the first applicant. (j) Application(s) received from Non-Resident / NRIs, or persons of Indian origin residing abroad for allotment of Equity Shares shall, inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of application money, allotment of Equity Shares, subsequent issue and allotment of Equity Shares, interest, export of share certificates, etc. In case a Non-Resident or NRI Equity Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF. (k) All communication in connection with application for the Equity Shares, including any change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first / sole applicant Equity Shareholder, folio numbers and CAF number. Please note that any intimation for change of address of Equity Shareholders, after the date of allotment, should be sent to the Registrar to the issue, in the case of Equity Shares held in physical form, and to the respective depository participant, in case of EquityShares held in dematerialized form. (l) Split forms cannot be re-split. (m) Only the person or persons to whom Equity Shares have been offered and not renouncee(s) shall be entitled to obtain split forms. (n) Applicants must write their CAF number at the back of the cheque / demand draft. (o) Only one mode of payment per application should be used. The payment must be either in cash or by cheque / demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted. (p) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or post-dated cheques and postal / money orders will not be accepted and applications accompanied by such cheques / demand drafts / money orders or postal orders will be rejected. The Registrar will not accept payment against application if made in cash. (For payment against application in cash please refer point (f) above). (q) No receipt will be issued for application money received. The Bankers to the Issue / Collecting Bank/ Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF. Grounds for Technical Rejections Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following: Amount paid does not tally with the amount payable by the applicant; In case of physical shareholders, bank account details (for refund) are not given; Age of first applicant not given; PAN Number not given; In case of application under power of attorney or by limited companies, corporate, trust, etc., relevant authority documents are not submitted; If the signature of the existing Equity Shareholder does not match with the one given on the application form and in case of renounces, if the signature does not match with the records available with their depositories; If the applicant desires to receive the Equity Shares in electronic form and the application form does not have the applicant s depository account details; Application forms are not submitted by the applicant within the time prescribed as per the applicationform and the Letter of Offer; Applications not duly signed by the sole/joint applicants; Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs to participate in the Issue; INSTRUCTIONS Applications accompanied by stock invest; In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the applicants (including the order of names of joint holders), the Depositary Participant s identity (DP ID) and the beneficiary s identity; Applications by ineligible non-residents (including on account of restriction or prohibition under applicable local laws) and where last available address in India has not been provided. Multiple Applications Disposal of application and application money No acknowledgment will be issued for the application monies received by our Company. However, the Bankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. In case an application is rejected in full, the whole of the application monies received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be refunded to the applicant within six (6) weeks from the close of the Issue in accordance with section 73 of the Act. For further instruction, please read the Composite Application Form (CAF) carefully. Utilisation of Issue Proceeds The Board of Directors declares that: (i) (ii) (iii) The funds received against this Issue will be transferred to a separate bank account other than the bank account referred to in sub-section (3) of Section 73 of the Act. Details of all monies utilised out of the Issue shall be disclosed under an appropriate separate head in the balance sheet of our Company indicating the purpose for which such monies have been utilised. Details of all such unutilised monies out of the Issue, if any, shall be disclosed under an appropriateseparate head in the balance sheet of our Company indicating the form in which such unutilised monies have been invested. The funds received against this Issue will be kept in a separate bank account. Our Company would have no access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90% of the issue has been received. Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders Our Company agrees that as far as possible the allotment of the Equity Shares shall be made within thirty (30) days of the closure of Issue. Our Company further agrees that it shall pay interest at the rate of 15% per annum if the allotment has not been made and/or the refund orders have not been dispatched to the investors or if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions have not been given to the clearing system in the disclosed manner within thirty (30) days from the date of closure of the Issue. Undertakings by our Company 1. The complaints received in respect of the Issue shall be attended to by our Company expeditiously and satisfactorily. 2. All steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the Equity Shares to be issued pursuant to this Issue are to be listed will be taken within seven (7) working days of finalization of basis of allotment. 3. The Refund Order/ Warrnts will be despatched to the unsuccessful applicants withine 30 days from the closure of the issue and the funds required for dispatch of refund to unsuccessful applicants shall be made available to the Registrar to the Issue by our Company. 4. The certificates of the securities/ refund orders to the non-resident Indians shall be dispatched within the specified time. 5. No further issue of securities affecting equity capital of our Company shall be made till the securities issued/offered through the Issue are listed or till the application monies are refunded on account of non- listing, etc. 6. Our Company accepts full responsibility for the accuracy of information given in this Letter of Offer and confirms that to best of its knowledge and belief, there are no other facts the omission of which makes any statement made in this Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts. 7. All information shall be made available by the Lead Manager and the Issuer to the Equity Shareholders at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc. 8. The Issuer and Lead Manager shall update the Letter of Offer and keep the investors informed of any material changes till the listing and trading commences. Important Please read this Letter of Offer carefully before taking any action. The instructions contained in the accompanying CAF are an integral part of the conditions of this Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected. All enquiries in connection with this Letter of Offer or accompanying CAF and requests for Split Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and superscribed THE UGAR SUGAR RIGHTS ISSUE on the envelope) to the Registrar to the Issue at the following address: BIGSHARE SERVICES PRIVATE LIMITED E/2, Ansa Industrial Estate, Sakivihar Road, Sakinaka, Andheri (E), Mumbai Tel: Fax: Website: ugarrights@bigshareonline.com Contact person:mr.ashok Shetty It is to be specifically noted that this Issue of Equity Shares is subject to the section entitled Risk Factors beginning on page 6 of this Letter of Offer. Period of Subscription The Issue will be kept open for period of Sixteen (16) days or for such longer period as our Company may determine, subject to such period not exceeding thirty (30) days. Details of Adverse Events affecting our Company since the last financial statement In the Opinion of Directors there have not arisen any circumstances since the date of last financial statements as disclosed on the offer document and which materially and adversely affect or is likely to affect the trading or profibility of the issuer company, or the value of its assets, or its ability to pay its liabilities within the next twelve months. Material Developments Save as stated in the Letter of Offer, there are no material developments after the last date of last financial statements. Further there are no changes in the activities of the issuer company which may have had a material effect on the statement of profit/loss for the five years. FOR FURTHER DETAILS PLEASE READ THE LETTER OF OFFER CAREFULLY TO BE FILLED BY THE FIRST APPLICANT IN CASE APPLICATION IS SENT BY POST NAME: ADDRESS: PIN CODE Unless otherwise notified all future communication regarding the issue should be addressed to the Registrars to the Issue quoting Full Name of the First Applicant, Reg. Folio No., Serial No. of the CAF, No. of Equity Shares entitled and applied for, Date and Name of the Bank and Branch with which the application was lodged. REGISTRAR TO THE ISSUE Bigshare Services Private Limited E/2, Ansa Industrial Estate, Sakivihar Road, Sakinaka, Andheri (E), Mumbai Tel: ; Fax: Website: ugarrights@bigshareonline.com Contact person:mr.ashok Shetty

3 FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY LETTER OF OFFER THE UGAR SUGAR WORKS LIMITED ( Incorporated on the 11 th September, 1939 as a Limited Company, under the Indian Companies Act, 1913 as amended upto 1936 by Act XXII of 1936.) Registered Office: Mahaveer Nagar, Sangli ,(Maharashtra) Tel No , ; Fax No Contact Person: Mr. B.G. Kulkarni, Company Secretary and Compliance Officer rights.issue@ugarsugar.com website: Factory and Administrative Office: Ugarkhurd (Dist-Belgaum) Tel No Fax No ISSUE OF 2,25,00,000 EQUITY SHARES OF THE FACE VALUE OF Rs. 1 EACH AT A PREMIUM OF Rs. 7 PER SHARE FOR AN AMOUNT AGGREGATING TO Rs 18,00,00,000 ON RIGHTS BASIS TO THE EXISTING SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF ONE EQUITY SHARE FOR EVERY FOUR EQUITY SHARES HELD ON THE RECORD DATE, THAT IS ON 29 TH SEPTEMBER, 2008 GENERAL RISKS Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of loosing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risk involved. The securities have not been recommended or approved by the Securities Exchange Board of India, (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to section titled Risk Factors beginning on page 6 of this Letter Of Offer before making an Investment in this issue. ISSUER S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter Of Offer contains all information with regards to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and the intentions expressed herein are honestly held and that there are no facts, the omission of which makes this Letter of Offer as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing equity shares of our Company are listed on the Bombay Stock Exchange Limited. Our Company has received in-principle approval from Bombay Stock Exchange Limited by letter no. DCS/PREF/JA/IP-RT/3722/07-08 dated March 28, 2008 granting in-principle approval for listing the securities arising from this Issue. For the purpose of this Issue the Designated Stock Exchange is Bombay Stock Exchange Limited. LEAD MANAGERS TO THE ISSUE REGISTRAR TO THE ISSUE BOB CAPITAL MARKETS LIMITED. (Wholly owned subsidiary of Bank of Baroda) Ground and First floor, Meher Chambers, Dr. S.B. Marg, Off R. Kamani Marg, Mumbai Tel: ; Fax: ugarrights@bobcapitalmarkets.com Contact Person: Mr. Y.K. Garg BIGSHARE SERVICES PRIVATE LIMITED E/2, Ansa Industrial Estate, Sakivihar Road, Sakinaka, Andheri (E), Mumbai Tel: ; Fax: Website: ugarrights@bigshareonline.com Contact person:mr.ashok Shetty ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT APPLICATION FORMS ISSUE CLOSES ON

4 Sr. No. TABLE OF CONTENTS Particulars Page No. 1 Definitions and Abbreviations 2 2 Presentation of Financial Information and Use of Market Data 4 3 Forward Looking Statements 5 4 Risk Factors 6 5 Summary 13 6 General Information 19 7 Capital Structure 23 8 Objects of the Issue 33 9 Basic Terms of Issue Basis for the Issue Price Tax Benefits Industry Overview Business Overview Corporate Structure and Management Promoters Financial Information Details of Group Companies Management s Discussion and Analysis Outstanding Litigations and Material Developments Other Regulatory and Statutory Disclosures Stock Market Data Government Approvals Dividend Policy Terms of Present Issue Main Provisions of the Articles of Association of our Company Material Contracts and Documents for Inspection Declaration 218 1

5 DEFINITIONS AND ABBREVIATIONS In this Letter of Offer, the terms we, us, our, Our Company, The Company, Ugar, "TUSWL", "USWL" or "USW" unless the context otherwise implies, refers to The Ugar Sugar Works Limited. All references to Rs or INR refer to Rupees, the lawful currency of India, USD or US$ refers to United States Dollar, the lawful currency of United States of America, and refers to Euro, the lawful currency of European Union. References to the singular also refer to the plural and one gender also refers to the other gender, wherever applicable. The words Lakhs or Lacs means 100 Thousand and the word million or mn means 10 Lacs and the word crore means 10 million or 100 Lacs. Any discrepancies in any table between total and the sums of the amounts listed are due to rounding off. Conventional/ General Terms: AGM Annual General Meeting EPS Earnings Per Share FEMA Foreign Exchange Management Act,1999 FIIs Foreign Institutional Investors registered with SEBI under applicable laws. FY Financial year ending March 31. (2003 to 2006 Financial years ended on September 30) GoI Government of India IT Act Income-tax Act, 1961 and amendments thereto NAV Net Asset Value NR Non Resident NRI(s) Non Resident Indian(s) OCB(s) Overseas Corporate Body(ies) RBI Reserve Bank Of India RoC Registrar of Companies SEBI Securities & Exchange Board of India SEBI Act, 1992 Securities Exchange Board of India Act, 1992 and amendments thereto SEBI DIP Guidelines The Guidelines for Disclosure and Investor Protection issued by SEBI on January 19, 2000 read with amendments issued there after from time to time till the date of filing this Letter of Offer with SEBI Takeover Code The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 as amended to date The Act The Companies Act, 1956 and amendments thereto from time to time Offering-related Terms: Bankers to the Issue Axis Bank Limited, Bank of Baroda & Union Bank of India. BSE Bombay Stock Exchange Limited CAF Composite Application Form CDSL Central Depository Services ( India) Limited DP Depository Participant Designated Stock Exchange Designated Stock Exchange means a stock exchange in which securities of the company are listed or proposed to be listed and which is chosen by the company for purposes of a particular issue under SEBI DIP Guidelines. For the present rights issue it being Bombay Stock Exchange Limited. Issue Opening Date Issue Closing Date Issue Price Rs. 8 2

6 Lead Manager BOB Capital Markets Limited Offer Document Letter of Offer Letter of Offer Letter of Offer circulate to the shareholders of The Ugar Sugar Works Limited. NSDL National Securities Depository Ltd Record Date 29 th September, 2008 Registrar to the Issue or Registrar Bigshare Services Private Limited Renouncees The persons who acquire Rights Entitlement from Equity Shareholders Rights Entitlement The number of securities that a shareholder is entitled to in proportion to his/her shareholding in our company on the Record Date Rights Issue Rights Issue means an issue of capital under Sub-section (1) of Section 81 of the Companies Act, 1956, to be offered to the existing shareholders of the company on rights basis based on terms of this Letter of Offer The Offer or The Issue Issue of Equity Shares of the Face Value of Rs. 1 each at a premium of Rs. 7 per equity share for an amount aggregating to Rs 18,00,00,000 on Rights Basis to the existing shareholders of our company in the ratio of 1 Fully paid Equity Share for every 4 Equity Shares held by an existing shareholder on the record date, ie on 29 th September, 2008 Company/ Industry-related Terms: AICRP All India Coordinator Research Projects Articles, AoA Articles of Association of Our Company Auditors Refers to M/s. P.G.Bhagwat Chartered Accountants unless otherwise specified Board or Board of Directors Board of Directors of Our Company or a Committee(s) thereof CAGR Compounded Annual Growth Rate Capital or Share Capital Capital of our company CIMMYT Centro International de Mejora Miento de Maize y Trigo Equity Share(s) or Share(s) Ordinary shares of our company which are listed on BSE Equity Shareholders Investors holding the Equity Shares of our Company ICARDA International Center for Agricultural Research in the Dry Areas IMFL Indian Made Foreign Liquor Investor(s) Means holder(s) of equity shares of our company as on the Record date ie [29 th September, 2008] and Renouncees MACS Maharashtra Association for the Cultivation of Science Memorandum Memorandum of Association of our Company MoU Memorandum of Understanding Promoter Shri. R.V. Shirgaokar, Shri. P.V. Shirgaokar, Shri. S.S. Shirgaokar Registrar and Share Transfer Bigshare Services Private Limited Agent The Ugar Sugar Works Limited or the Company or Ugar or our Company or the Issuer The Ugar Sugar Works Limited, a company incorporated on September 11, 1939 under the Indian Companies Act, TCD Tons Crushed per Day 3

7 PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA In this Letter of Offer, unless the context otherwise requires, all references to one gender also refers to another gender and the word "Lakh" or "Lac" means "one hundred thousand" and the word "million" means "ten lac" and the word "Crore" means "ten million". In this Letter of Offer, any discrepancies in any table between total and the sum of the amounts listed are only due to rounding-off. Throughout this Letter of Offer, all figures have been expressed in Lacs or Lakh unless otherwise stated. All references to India contained in this Letter of Offer are to the Republic of India. For additional definitions used in this Letter of Offer, see the section Definitions on page 2. In the section entitled Main Provisions of Articles of Association on page 204 of this Letter of Offer, defined terms have the meanings given to such terms in the Articles of Association of the Company. Industry data used throughout this Letter of Offer has been obtained from industry publications and other published data. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe industry data used in this Letter of Offer is reliable, it has not been independently verified. Similarly, internal Company reports, while believed by us to be reliable, have not been verified by any independent sources CURRENCY OF PRESENTATION In this Letter of Offer, all references to Rupees and Rs. are to the legal currency of India, 4

8 FORWARD LOOKING STATEMENTS AND MARKET DATA This Letter of Offer contains certain forward-looking statements. These forward-looking statements generally can be identified by words or phrases like will, aim, will likely result, believe, expect, will continue, anticipate, estimate, intend, plan, contemplate, seek to, future, objective, goal, project, should, will pursue and similar expressions or variations of such expressions, that are forward looking statements. Similarly, statements that describe our objectives, plans or goals are also forward-looking statements. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include but are not limited to: General economic and business conditions in India; Our ability to successfully implement our growth strategy and expansion plans; Our ability to respond to technological changes; Changes in laws and regulations relating to the industry in which we operate; Changes in political and social conditions in India; The loss of our key employees and staff; Any adverse outcome in the legal proceedings in which our Company is involved; and The loss or shutdown of operations of our Company at any time due to strike or labour unrest or otherwise The occurrence of natural disasters or calamities affecting the areas in which we have our operations. For further discussion of factors that could cause our actual results to differ, refer to the section titled Risk factors beginning on page 6 of this Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither we, our Directors, Merchant Banker, nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date thereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, the Merchant Banker and we will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges in respect of the Equity Shares offered through this Issue. Market data used throughout this Letter of Offer was obtained from our internal Company reports, data, websites and industry publications. Industry publication data and website data generally state that the information contained therein has been obtained from sources believed to be reliable, but that their accuracy and completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Although, we believe market data used in this Letter of offer is reliable, it has not been independently verified. Similarly, internal Company reports and data, while believed by us to be reliable, have not been verified by any independent source. 5

9 RISK FACTORS An Investment in Equity Shares involves a high degree of risk. You should carefully consider all the information in this Letter of Offer, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks actually occur, our business, results of operations and financial condition could suffer, the price of our equity shares could decline, and you may lose all or part of your investment. The financial and other implications of material impacts of risks concerned, wherever quantifiable, have been disclosed in the risk factors mentioned below. However there are a few risk factors where the impact is not quantifiable and hence the same has not been disclosed in such risk factors. This Letter of Offer also includes statistical and other data regarding to Indian Sugar Industry. This data was obtained from industry publications, reports and other sources that we and the Lead Manager believe to be reliable. Neither the Lead Manager nor we have independently verified such data. Internal Risk Factors: 1. LITIGATION INVOLVING CRIMINAL LAWS Mr. R V Shirgaokar Chairman & Managing Director and Mr. P. V. Shirgaokar- Executive Director Sr. No. Case No. & Institution date Plaintiff/defendant /97 Pollution Control Board., Govt of Karnataka Vs. USWL & R V Shirgaokar, P V Shirgaokar Name of the Court CJM Belgaum Amount involved Not Quantifiab le Subject matter of the case and relief sought For not providing Effluent treatment plant Status as on date Next date to be fixed 2. The object of the Issue is to repay the clean loan obtained from Bank of India of Rs. 15 crore taken for equity contribution to M/s. Sadashiva Sugars Ltd. The Company is holding 49% stake in M/s. Sadashiva Sugars Ltd. Sadashiva Sugars Ltd., is being a new project, the Company may not earn any profit in the initial periods and we may not receive any dividend from this investment. Since the investment in shares is less than 50%, there is likely that Company cannot exercise full control over this Company. 3. We have suffered losses from operations in the Sugar Segment during the first six months of the current year and during the earlier two financial years. As the price to be paid for the raw material i.e. sugar cane and the sale of sugar are regulated by the Government we cannot assure that our operations in the Sugar Segment will be continuously profitable in future. We have suffered net losses from its operations during the first six months of Operations in the Sugar Segment had suffered losses in the FY ended and as well. This has been due to steep fall of almost 25% in the prices of Sugar. There is also lack of alignment between sugarcane and sugar prices.sugar Industry is a cyclical industry and sugar production is influenced by excesses and shortages while the payment to sugar cane growers and sale of sugar are regulated by the Government. Though our activities are diversified and we have revenues from three different Segments such as Sugar, Power Generation and Distillery our main activity is manufacturing and sale of Sugar. Since the pricing of raw material and the sale of sugar are not within our control we have suffered losses in the past and cannot assure of profitable operations continuously in future. 4. For the six months period ended on 30 th September, 2007, our Company has incurred a net loss of Rs Lakh due to low realization of sugar prices and payment of higher cane price. 6

10 5. There are litigations involving our company, our promoters and Directors pending before the various adjudicating authorities and the results from all these litigations may not be favourable to us and therefore could adversely affect the results of our operations. There are litigations pending under various statutes before various courts and other adjudicating authorities which are filed by and/or against the company, its promoters and/or Directors. While we have taken all necessary steps to pursue/defend these cases suitably, we cannot assure that all these cases will be decided in favour of the company and/or its promoters/directors. Any adverse decision in any of these cases could adversely affect the results of our operations. Sr No Types of Cases Brief Details of Outstanding Litigations Total No of Cases by/against Company Total amount involved (Rs. In Lakh) Total No of Cases by/against Promoters Total amount involved (Rs. In Lakh) 1 Criminal * Civil * Arbitration Income Tax Central Excise/ State Excise/ Service Tax 5 Central/State Sales tax * Securities Laws/ Economic Laws 7 Company Law Litigations against Directors 9. Labour Cases Sr No * Filed by the Company ** Out of 6 only 2 cases filed against the Company Types of Cases 1 Securities/ Income Tax/Company Law/Directors 2 Criminal Cases/Civil Total No of Cases by/against Directors Total amount involved (Rs. In Lakh) Total No of Cases by/against Group Companies Total amount involved (Rs. In Lakh) Cases 3. Labour/Industrial Cases **Not Ascertainable 4. Central/State Sales tax Central Excise ** Amount not quantifiable as the cases relates to Unfair Labour Practice and the fine cannot be ascertained until the matter is decided. 6. One of the projects implemented by us for manufacturing of sugar ships has not been able to commence commercial production and generate adequate revenues to justify the investment in the project. As such we cannot assure that our investment in other such projects will be successful and will generate profits for the investors. We have set up a 100% Export Oriented Unit (EOU) to export sugar cubes in the form of Ships. We have 100% buy-back agreement with M/s. Fragies Verwaltungs GmbH & Co. KG, Germany, whose representatives are 7

11 supervising the manufacturing process. The agreement with the supplier of plant & machinery M/s. Klockner Hansel Processing GmbH, Hannover, Germany, provided for the maximum period of three weeks trial runs. However, this being a new and innovative product this has taken a long time. We are, therefore, unable to manufacture the guarantee number of sugar ships as per agreement. The representatives of manufacturers of machinery have visited the factory sometime last month and have promised to improve the production capacity in the next few weeks. 7. Two sugar units one at Tasgaon and one at Phaltan both in Maharashtra taken on lease and run by us suffered losses during , and The results of the company have therefore been adversely affected during these years. 8. Some of the Group Companies, promoted by our promoters/ relatives of promoters have incurred loss in the previous years. Some of the Group Companies, promoted by our promoters/ relatives of promoters have incurred loss in the previous 5 years. The detailed figures of Profit/ Loss incurred in a particulars year(s) are as follows: Name of Company Ugar Pipe Industries Pvt. Ltd , ,15,915 Shantaram Machineries Pvt. Ltd. 1,02,70,613 1,06,81,286 21,29, Ugar Theatres Pvt. Ltd 38,618 21,384 1,99, S. B. Reshellers Pvt. Ltd 3,06,77,238 3,74,33,204 1,16,23,954 61,65, Ugar Consultancy Ltd 10,79,452 12,02, ,462 2,24,796 Tara Tiles Pvt. Ltd. -1,48,909 5,22, Sangli Fabricators Pvt. Ltd. -1,01, ,34, Tara Floorings Pvt. Ltd -2,86,940 2,34,599 3,63, Sadashiva Sugars Ltd 5,68,508 3,60, Sanjeev Shirgaokar Inv. Pvt. Ltd -97,687 8,17,005 1,73,937 2,50,671 24,693 Shishir Shirgaokar Inv. Pvt. Ltd. -1,23,281 8,59,959 1,80,225 3,30,047 1,11,025 Prafulla Shirgaokar Inv. Pvt. Ltd -58,630 7,30,870 2,20,558 2,89,261 95,980 Prabhakar Shirgaokar Inv. Pvt. Ltd 25,886 18,45,074 4,64,675 5,07,530 63, Three of our Independent Directors are also directors in the Group Companies, which are unlisted Companies. Shri. M. G. Joshi, Dr. M. R. Desai and Shri. V. Balasubramanian- Independent Directors of our Company are also Directors in M/s. Ugar Consultancy Limited belonging to Promoter Group, which is an unlisted Company and Dr. M. R. Desai is also a Director in M/s. Sadashiva Sugars Ltd in which we are making investment, which is also an unlisted Company. They have no pecuniary interest in these Companies Sugar cane industry is an agro based industry and is subject to vagaries of nature, further there is always a risk of diversion of cane for khandsari and gur manufacturing, which affects availability of sugar cane for crushing. Sugar cane supply is dependent upon variety of factors namely rain fall, availability of irrigation facility. Excess or shortage of rain fall adversely affects the sugar cane supply. Khandsari or gur manufacturers are attracting the cane growers by giving higher price for their crop and early harvest is also an incentive to the farmers. Which may also affect cane supply. 8

12 11. Weather conditions and crop diseases can adversely affect sugarcane crop yields and sugar recovery rates for any given harvest and while we pay for the sugarcane at prescribed rates and as per competitive conditions, lower sugar recovery rate can adversely affect the results of our operations. 12. The Command Area proposed for the Sadashiva Sugar project needs to be developed for sugarcane growing. Though sugar cane growing has been started in a small way, it is expected to take 2-3 years to fully develop the area and until then sugar cane will have to be sourced from areas at a distance of up to 50 KMs or more which will add to the transportation cost of cane and there by lower the profitability of the project. The project will require approx 6.40 Lakh tons of sugar cane for utilizing full capacity for 180 days. The company has estimated that approx 1 Lakh ton sugarcane is already available within the command area of 15 KMs and an additional 3500 acres of land has already been brought under sugarcane cultivation which will provide another 1.5 Lakh tons of cane. We envisage coverage of another acres of land within the command area within the next 1-2 years on account of the setting up of the mill. Although we have estimated cane availability, it is likely that we may not get the cane as anticipated. In such eventualities, non-availability of sufficient quantity of sugarcane will adversely affect our results of operations. 13. Bagasse generated by the factory will be available only during the season i.e. 180 days in a year. There are no other sugar industries in the nearby area from which bagasse can be procured for running power plant. Non-availability or reduced availability of sugar cane will affect the generation of bagasse during the crushing season and thereby affect the cogeneration. This may compel the company to look for alternate fuels such as coal which can affect the profitability of the power plant. 14. Tata Power Trading Company Limited is currently our sole customer for the purchase of electricity produced by us and any problem in our arrangement with Tata Power may compel us to look alternative buyers of power which may affect sale of power and or the results of our operations. Our co-generation business is currently dependent on the Tata Power Company, as our sole customer. While the Electricity Act, 2003, allows open access and hence assists us in selling to third parties, any problem with our arrangement with Tata Power or any non-payment or delay in payment for the power supplied by us to Tata Power Trading Company Limited and/or any inability on their part to pay us for the power supplied to them by us, would impact our business and profitability. In such an eventuality we may be compelled to look for alternative power purchasing companies. 15. We are compelled to hold large inventory of sugar until the same is permitted to be released by the Government. Though part of the carrying cost is reimbursed to us by the Government of India we are obliged to incur substantial cost on this count and can be reduced only in case the liquidation of stock can happen faster. We cannot assure that Financing costs constitute a substantial part of our expenditure in our business. Financing costs of our borrowings are substantial expenditure of our Company. We are subject to risks arising from changes in interest rates, wherever the prescribed interest rates are not fixed and interest on working capital finance is material. The entire production takes place in about 180 days and the sugar is sold as per the releases of the Government of India, based on the demand. Interest is thus dependent on average inventory holding which are beyond our control. If the liquidation of stocks takes place faster, the average inventory holding would be lower and lower working capital finance would be required, resulting in lower finance cost. Similarly, in the event of slower liquidation of stocks, the finance cost will be higher. Any adverse change in this regard may impact our profitability and financial condition. 16. The Company has contingent liabilities to the tune of Rs laks which they have not provided for. We have contingent liabilities to the tune of Rs Lakhs as at 30 th September We have not provided for these contingent liabilities as we have been legally advised that the claims are not sustainable against us. However in case any of these liabilities should crystallize against us, the same may affect our financial position and result of operations. 17. Our success depends in large part upon our senior management and key personnel and our ability to attract and retain them. 9

13 We are highly dependent on our senior management and other key personnel. Our future performance will depend upon the continued services of these persons. We have an ongoing recruitment process in place and we also have a very low attrition rate. As such we do not envisage any shortage of key personnel. However in case we are not able to retain any of our senior management personnel or attract and retain new senior management personnel in the future the same may at least temporarily affect our operations. 18. Our business is dependent on our manufacturing facilities. The loss of or shutdown of operations at any of our manufacturing facilities may have a material adverse effect on our business, financial condition and results of operations. Our principal manufacturing facility at Ugar is subject to operating risks, such as the breakdown or failure of equipment, or processes, performance below expected levels of output or efficiency, obsolescence, Labour disputes, earthquakes and other natural disasters, industrial accidents and the need to comply with the directives of relevant government authorities. The occurrence of any of these risks could significantly affect our operating results. We carry out planned shut-downs of our plants for maintenance. Although we take precautions to minimize the risk of any significant operational problems at our facilities, our business, financial condition and results of operations may be adversely affected by any disruption of operations at our facilities, including due to any of the factors mentioned above. 19. Recruitment and retention of qualified and experienced professional and technical personnel may not be easy in the factory location which is a remote rural area. This may add to the manpower cost by of way of additional incentives such as accommodation, transportation and other infrastructure to be built up. This may also entail delay and could affect the operations of the factory. 20. The Company has an export obligation of Rs. 20,70,41,208 in respect of Turbine imported from Japan for using at Jewargi Unit of the Company against EPCG License No dated Similarly Company has to meet an export obligation of 45 Lakh boxes of 270gms (0.92 Euros per box of sugar ship) Sugar ships per annum for a period of 5 years against the 100% EOU. If the Company fails to meet this obligation, the Company will have to pay the duty saved with interest and penalty, approximately Rs crores against EPCG and Rs. 5 crores against EOU. 21. Pending Govt. Approvals: M/s. Sadashiva Sugars Ltd., is yet to receive following pending approvals from the Government : Details of pending approvals from Government: SL. No Details of Approvals Issuing Authority Status 1 Crushing license for Secretary, Industrial Dept. Application submitted 2 Pollution control board final approval Member Secretary Application submitted 3 Ecology and Environmental clearance Member Secretary Application submitted 4 Factory license under Factories Acty Inspector of Factories Application submitted If the Company doesn t get these approvals from the Government, Company cannot start its operations and this may affect on the implementation of the Project. 22. Time/ cost overrun in setting up projects including proposed project M/s. Sadashiva Sugars Ltd., The sugar plant at Jewargi and Bagalkot were delayed due to delay in machinery supply, drawings for the machinery, civil work, bank finance, etc. In view of delay in implementation of these projects the cost of the project has gone up from Rs. 128 crores to approximately to Rs. 145 crores due to interest and increase in the machinery, civil, labour costs. 10

14 23. The Promoters/ Directors of the issuer company and director of Sadashiv Sugars Ltd, are involved in the same activity of manufacturing of sugar and co-generation. It is likely that, there will be conflict of interest in the activities of the issuer company and Sadashiv Sugars Ltd. In our opinion, since issuer company with its promoters are holding more than 50% of shares in the Sadashiv Sugars Ltd. there is not likely to have any conflict of interest. Both the units are situated beyond 200 Kms. The diversion of sugarcane is not likely. 24. Sadashiv Sugars Ltd, has purchased major portion of lands from promoters of their company, the total quantum of area and amount for the lands purchased from promoters is : Area in acres Amount (Rs in Lakhs) External Risk Factor: 1. Sugar industry is impacted by commodity cycles and large sugar inventory exposure and sugar price volatility results in high sugar price risk for the sector as a whole and units like ours which operate in the sector suffer from lower profitability as well as losses at times because of such price volatility which is beyond our control. The sugar industry has historically been subject to commodity cycles and is sensitive to changes in domestic market prices, supply and demand. The sugar sector is impacted by induced cyclicality, since high sugar and sugarcane prices lead to increase in production at the cost of other crops. The resulting low prices for sugar impact the ability of mills to pay the farmers, thus leading to creation of arrears. High arrears lead to a significant fall in cane cultivation in the next year, leading to high sugar prices and increased attractiveness of cane. This cyclical nature of the industry adversely affects the units operating in the sugar industry including our unit on which we have no control. 2. Sugar is a heavily regulated industry and changes in Government policies may adversely affect the industry in which we operate. Sugar industry is a highly regulated by both the Central as well as State Governments. It is the Government which allots the area for cane plantation to mills, stipulates the cane prices and decides how much sugar the mill can sell in the free market in a month. The government was maintaining levy and free sell ratio at 10:90 per cent during the financial year Change in government policies relating to land allocation for cultivation of sugar cane, payment to sugarcane growers, proportion of levy and open market sales, export and import of sugar etc will affect the entire industry and we will have no control on the adverse impact of the same on the results of our operations. 3. We are subject to risks arising from exchange rate fluctuations. Stability of policies and political situation in India can determine the fortunes of the Industry. We have set up a 100% export oriented unit to manufacture and export sugar cubes in the shape of ships. While we do not import any inputs appreciation of the rupee against other currencies such as Euro, US Dollar etc could adversely affect the export proceeds and our profitability. Changes in government policies such as upward revision in cane prices, restrictions on export of sugar etc. may also adversely affect the sugar industry in general and the results of our operations also. 4. IMFL industry is heavily regulated by the Government. The business of the company is subject to the State Government policy on excise. Changes in the fiscal policies of the Government could have an adverse impact on the profitability of the company. A significant change in the Government liberalization and deregulation policies could affect business and economic conditions in India and the business of the company in particular. Adverse changes in other regulation such as the distribution norms may affect the operations of the company. States may individually decide to impose prohibition on the sale of alcoholic beverages, including IMFL, as has been done in the past. 11

15 5. IMFL industry is witnessing high level of competition as the domestic players gear up to compete for a larger share of the market. The entry of multinationals in the domestic liquor business has led to increased competition. Growing competition may force the company to reduce the prices of its products and services which may reduce its revenues and margins and/or decrease its market share, either of which could have a materially adverse effect on its business, financial condition and results of operations. In view of favorable market scenario, prospects of liquor industry are very promising. The company,therefore, does not foresee any problem despite competition and entry of multinationals. The company s products command good brand equity and has augmented its market share in the semi premium and regular categories. The company aims to keep growth with the dynamic business strategy and plans to broad-base its product mix by introduction of new products. The Company is now making conscious efforts to enhance the brand positioning. 6. Floods, earthquakes, terrorist attacks and other acts of violence or war/destruction involving India and other countries where the company sells its products could adversely affect the Company s business. These acts may also result in a loss of business confidence and other services more difficult and ultimately affect the Company s business, financial conditions and results of operations. The consequences of any of the above are unpredictable and the company may not be able to foresee events that could have a material adverse effect on its business, financial conditions or results of operations. Notes to Risk factors: 1. The investors are advised to refer the section titled Basis for Issue Price beginning on page no. 47 before investing in this Issue. 2. The size of the issue is Rs. 18 Crores. 3. Net Worth as on September 30, 2008 was Rs Lakh. 4. The Net Asset Value as per share as on September 30, 2008 was Rs The aggregate amount of Related Party transactions as on September 30, 2008 was Rs Lakh. For Related Party Transactions please refer to section titled Related Party Transactions beginning on page no. 119 of this Letter of Offer. 6. The average cost of acquisition of Equity shares of the Promoters is as follows: Sr. No Name of the Promoter Average cost of Acquisition in (Rs.) 1 Shri. Rajendra V. Shirgaokar Shri. Prafulla V. Shirgaokar Shri. Shishir S. Shirgaokar Book Value per share as on September 30, 2008 was Rs.8.98/- 8. The aggregate amount of loans and advances made to any person(s)/ companies in which the directors are interested stands at Rs Lakh. 12

16 SUMMARY Industry and Business Summary: Sugar industry is the second largest agro-based industry located in the rural India. About 45 million sugarcane farmers, their dependents and a large mass of agricultural laborers are involved in sugarcane cultivation, harvesting and ancillary activities. Besides about 0.5 million skilled and semi-skilled workers, mostly from the rural areas are engaged in the sugar industry. Some of the sugar factories have also diversified into by-product based industries and have invested and put up distilleries, organic chemical plants, paper and board factories and co-generation plants. The industry generates its own power without depending on other sources of fuels. We, The Ugar Sugar Works Ltd. (USWL) is one of the pioneers in sugar production in the state of Karnataka. The Company was incorporated on 11th September 1939, under the patronage of his late Highness The Rajasahab of Sangli. In the year 1940 the Late Highness invited Dr. S.R.Shirgaokar, maternal uncle of late Mr. V.S.Shirgaokar (the first Chairman & Managing Director of Ugar Sugar Works) for setting up a sugar plant. Late Mr.V.S.Shirgaokar under the guidance of late Dr. S.R.Shirgaokar, set up the sugar factory at Ugarkhurd a fertile village on the banks of River Krishna, with a capacity of 500 TCD which started crushing on 21 April Subsequently Late Mr. Suresh Shirgaokar, younger brother of late Mr. V.S.Shirgaokar, who was popularly known as Babu Kaka took over as Chairman & Managing Director. The management of Ugar Sugar Works Ltd was carried out under the administration of M/s. Shirgaokar Brothers a partnership firm as Managing Agents till 31 December Under the administration of the Managing Agents, crushing capacity of the factory was raised to 2000 TCD from time to time till 31st December Subsequently the management was assumed by the present promoters directly. M/s. Ugar Sugar Works Ltd. presently has an integrated TCD Sugar plant with distillery and Indian Made Liquor section and a 45 MW Co-generation plant located at Ugarkhurd, Distt: Belgaum, Karnataka State. Further 3500 TCD capacity is being added alongwith a 15 MW cogeneration plant at at Malli Village, Jewaragi Taluka, Gulbarga District, Karnataka State In addition. we are presently implementing 3500 TCD capacity sugar project with 15 MW cogeneration plant jointly with Sadashiva Sugars Ltd at Nagral Village, Taluk & District Bagalkot, Karnataka State, part funding of which is proposed through the present rights issue. 13

17 Summary of Consolidated Financial Statements: Statement of Profits and Losses, as restated (Rs. in Lakh) For Peiod ended on For the year ended Particulars 30/09/ /03/ /03/ /09/ /09/ /09/2004 Income: Sales 25, , , , , , Less: Excise Duty 4, , , , , , Net Sales 20, , , , , , Increase/(Decrease) in Stock (12,559.63) (4,353.46) 11, , (4,017.94) (3,185.63) Other Income , , Total 8, , , , , , Expenditure: Raw Materials Consumed & Purchase of Trading Goods 2, , , , , , Manufacturing, Selling & Administrative Expenses 4, , , , , , Interest and Finance Charges , , , , Depreciation , , , , Amortisation Total 8, , , , , , Net Profit Before Tax and exceptional items , , , Less: Exceptional items Profit before Tax , , , Less: Provision for Taxation Current Tax Fringe Benefit Tax Deferred Tax (163.68) (37.59) (207.59) (40.03) (109.59) Net Profit after Tax and exceptional items Note: The financial year ended on was for a period of six months. (38.55) 1, ,

18 Statement of Assets and Liabilities, as restated (Rs. in Lakh) For Peiod ended on For the year ended Particulars 30/09/ /03/ /03/ /09/ /09/ /09/2004 A. Fixed Assets: a) Gross Block 22, , , , , , Less: Depreciation 14, , , , , , Net Block 8, , , , , , b) Capital Work in Progress 14, , , , Total 22, , , , , , B. Intangible Assets C. Investments (net) 1, , D. Current Assets, Loans & Advances: a) Inventories 6, , , , , , b) Sundry Debtors 2, , , , , , c) Cash & Bank Balances 1, , , , , , d) Other Current Assets 3, , , , , , e) Loans & Advances 2, , , , , Total 15, , , , , , E. Total Assets (A+B+C+D) 40, , , , , , F. Less: Liabilities and Provisions: a) Secured Loans 19, , , , , , b) Unsecured Loans 3, , , , , , c) Current Liabilities & Provisions : Current Liabilities 7, , , , , , Provisions , , , , , , , Total Liabilities 32, , , , , , G. Net worth before deferred tax liability(e-f) 8, , , , , , H. Deferred Tax Liability I. Adjusted Net worth (G-H) 8, , , , , , J. Net Worth Represented by 1. Share Capital Reserves & surplus 7, , , , , , K. Misc. Expenditure (to the extent not written off) L. Adjusted Net Worth 8, , , , , ,

19 NOTE: 1. The Company has changed its financial year from 30 th September every year to 31 st March every year from March 31, 2007 onwards. 2. Secured Loans and reasons for substantial increase in secured loans is: Comparing the figures, there has been an increase of Rs. 9, lakh. The increase has been in the following loan accounts: Loan Accounts: Amount as on Rs. Lakh Amount as on Rs. lakh Increase Rs. lakh Decrease Rs. Lakh Working capital loan against hypothecation of stores and spares Working capital loan against pledge of stock of sugar 11, , , Working capital loan against FD Receipt 2, , Corporate Loan from Axis Bank Ltd. 3, , Axis Bank Ltd 1, (200.00) Rabo India Finance (200.00) Rabo International (18.66) Sugar Technology mission & board (6.22) Term Loan for Jewargi Project from Bank of Baroda 2, , Term Loan for Jewargi Project from Central Bank of India 3, , Total , (424.88) The net increase in secured loans is Rs Lakh The Secured loan during the year ended has gone up because of the Term Loan taken from Bank of Baroda & Central Bank of India for Jewargi Project & also the working capital finance has gone up due to increased crushing and increase in holding of stock of sugar for the period ended

20 THE UGAR SUGAR WORKS LIMITED Dear Shareholder(s), Pursuant to the resolution passed by the Board of Directors by our Company at its meeting held on August 18, 2007 it has been decided to make the following offer to the Equity Shareholders of our Company, with a right to renounce. ISSUE OF 2,25,00,000 EQUITY SHARES OF THE FACE VALUE OF Rs. 1 EACH AT A PREMIUM OF Rs. 7 PER SHARE FOR AN AMOUNT AGREEGATING TO Rs 18 CRORE ON RIGHTS BASIS TO THE EXISTING SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF ONE EQUITY SHARE FOR EVERY FOUR EQUITY SHARES HELD ON THE RECORD DATE, THAT IS ON 29 TH SEPTEMBER, AMOUNT PAYABLE ON APPLICATION: RS PER SHARE THE ISSUE PRICE IS 8 TIMES THE FACE VALUE OF THE SHARES OF OUR COMPANY. IMPORTANT This offer is applicable to only those Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the shares held in electronic form and on the Register of Members of the Company in respect of the shares held in physical form as on 29 th September, 2008 i.e Record Date, fixed in consultation with BSE. Your attention is drawn to the section titled Risk Factors beginning on page no 6 of this Letter of Offer. Please ensure that you have received the CAF with this Letter of Offer/ Abridged Letter of Offer. Please read this Letter of Offer/Abridged Letter of Offer and the instructions contained herein and in the CAF carefully, before filling in the CAF. The instructions contained in the CAF are an integral part of this Letter of Offer/ Abridged Letter of Offer and must be carefully followed. Applications are liable to be rejected if they are not in conformity with the terms of the Letter of Offer/ Abridged Letter of Offer or the CAF. All enquiries in connection with this Letter of Offer/ Abridged Letter of Offer or CAF should be addressed to the Registrar to the Issue, Bigshare Services Private Ltd, quoting the Registered Folio Number/ Depository Participant (DP) Number and Client ID Number and the CAF Numbers as mentioned in the CAF. In case the original CAF is not received, lost or misplaced by the shareholder, the Registrar will issue a duplicate CAF on the request of the shareholder who should furnish the registered folio number/ DP ID/ Client ID number and his/her full name and address to the Registrar. Please note that those applicants who are making the application in the duplicate CAF should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. In case the original and the duplicate CAFs are lodged for subscription, allotment will be made on the basis of duplicate CAF and the original CAF will be ignored. The offer will be kept open for a minimum period of fifteen days. If extended, it will be kept open for a maximum period of thirty days. 17

21 The Issue Program is as follows: Issue Opens On Last Date for Request for Split Application Forms Issue Closes On The funds received against the offer will be kept in a separate bank account(s) and our Company will not have any access to such funds unless we satisfy the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90% of the Issue has been received by our Company. If our Company does not receive the minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the applicants within forty two days from the date of closure of the Issue. The Promoters have undertaken to subscribe to the unsubscribed portion to ensure that the Issue is successful. THE ISSUE Equity shares Issued by the Company 2,25,00,000 Equity Shares Rights Entitlement One Equity Share of the face value of Re 1 for every four equity shares of the Company held on the Record Date. Record Date 29 th September, Issue Price per Equity Share Rs 8 per share (including a premium of Rs 7 per share) Amount payable on application Rs per share (including Rs.1.00 towards face value and Rs.7.00 towards premium) Equity Shares outstanding prior to the Issue 9,00,00,000 Equity Shares of face value of Rs 1 each Equity Shares outstanding after the Issue 11,25,00,000 Equity Shares of face value of Rs 1 each Terms of the Issue For more information refer to section Basis terms of the issue beginning on page no 45 of this Letter of Offer 18

22 GENERAL INFORMATION Our Company was incorporated on the 11 th September, 1939 as a Limited Company, under the Indian Companies Act, 1913 as amended upto 1936 by Act XXII of 1936.With its Registered Office: Mahaveer Nagar, Sangli (Maharashtra). Tel No , Fax No Our Company is registered with Registrar of Companies Pune, PMT Building, 3rd Floor, Deccan Gymkhana, Pune, Maharashtra. The Registration Number of our Company is of 1939 and CIN (Corporate Identity Number) is L15421PN1939PLC Registered Office: Mahaveer Nagar, Sangli, Maharashtra. India Tel no: / Fax No: Board of Directors of The Ugar Sugar Works Limited Sr. No. Name Designation 1 Mr. R.V. Shirgaokar Chairman & Managing Director 2 Mr. P.V. Shirgaokar Executive Director 3 Mr. Shishir S Shirgaokar Wholetime Director 4 Mr. V Balasubramanian Independent Director 5 Mr. M.B. Karmarkar Independent Director 6 Mr. S.N. Inamdar Independent Director 7 Mr. B.N. Kalyani Independent Director 8 Mr. M.G. Joshi Independent Director 9 Dr. M.R. Desai Independent Director 10 Mr. A.B. Kage Independent Director 11 Mr. B.S. Patil Director 12 Mr. D.B. Shah Independent Director Brief write-up on the Executive/ whole-time Directors: Chairman & Managing Director Shri. Rajendra Vinayak Shirgaokar, aged about 72 years is Bachelor of Science in Chemical Engineering from London University. He is a well known industrialist in sugar industry. He has been serving the organization for the past 41 years. He has been instrumental in developing distillery and IMFL sections in the Company. He is actively involved in setting up new projects and setting up clean development mechanism. He has worked as a President of All India Distillers Association. He is responsible for total administration and production. Executive Director Shri. Prafulla Vinayak Shirgaokar, aged about 69 years is a Master in Science. He is a well known industrialist in sugar industry and has been serving the organization since past 37 years. He has keen interest in the administration, cane development activities and purchase. He has developed Ugar Niravari scheme which is the largest co-operative irrigation scheme in the country for irrigating the area allotted for cane development by the Company. He has served as President of South Indian Sugar Mills Association. Whole time Director Shri. Shishir Suresh Shirgaokar, aged about 63 years is a Science Graduate from Fergusson College, Pune. He is an eminent industrialist in sugar industry and has been serving the organization since past 37 years. He has primary responsibility of taking care of the financials of the Company and the group. Other areas where he is mainly involved are Banking, New Projects Execution and Inventory Control. 19

23 ISSUE MANAGEMENT TEAM Company Secretary and Compliance Officer: Mr. B. G. Kulkarni Company Secretary The Ugar Sugar Works Limited P.O. Ugar-Khurd; Dist. Belgaum, Karnataka; India Tel No: Fax No: LEAD MANAGER TO THE ISSUE BOB Capital Markets Limited Ground and First Floor, Meher Chambers, Dr. S.B. Marg, Off R. Kamani Marg Ballard Estate, Mumbai Tel no: Fax no: Contact Person: Mr. Y.K. Garg. REGISTRAR & SHARE TRANSFER AGENT FOR THE COMPANY BIGSHARE SERVICES PRIVATE LIMITED E/2, Ansa Industrial Estate, Sakivihar Road, Sakinaka, Andheri (E), Mumbai Tel: Fax: Website: ugarrights@bigshareonline.com Contact person:mr.ashok Shetty AUDITORS TO THE COMPANY M/s. P.G. Bhagwat Charted Accountant Manoj Arcade, Tilakwadi, Belgum-Karnataka, India Tel No: Fax No: uday_shevade@pgbhagwatca.com Contact Person: Mr. M. K. Shevade LEGAL ADVISORS Kesvy & Co. Advocates. No. 24, Giri School Street, Sheshadri Nagar, Bangalore Ph: Fax No: Contact Person: Mr. Shashidhar shasuj@rediffmail.com 20

24 BANKERS TO THE COMPANY Central Bank of India Br. Mahaveernagar, Wakhar Bhag, Sangli Ph No; Fax No: Bank of Baroda Br. Amrai Road, Sangli Phone No: Fax No: Axis Bank Ltd. Br. Ground Floor, DSP Plaza, Amrai Road, Anand Chowk, Sangli Ph No: Fax No: HDFC Bank Ltd. Br.- Sangli Ph No: Fax No: Union Bank of India Br.- Athani, Athani Ph No: BANKERS TO THE ISSUE Axis Bank Ltd., Azad Chowk, Opp. Collectors Bunglow, Amrai Road, Sangli Tel: Fax: Website: Contact person: Mr. Sameer Mulye Bank of Baroda, Mumbai Main Office, 10/12, Mumbai Samachar Marg Fort, Mumbai Tel: Fax: Website: Contact Person: Mr. Ashokan S. B. Union Bank of India, Merchant Banking Division, 2 nd Floor, Mumbai Samachar Marg Br., Fort Mumbai Tel: / Fax: Website: bchandramohan@unionbankofindia.com Contact person: Mr. B. Chandramohan/ Mrs. Aruna 21

25 Note: Investors are advised to contact the Registrar to the Issue/ Compliance Officer in case of any pre-issue/ postissue related problems such as non-receipt of Letter of Offer/ Letter of Allotment/ Debenture Certificate (s) / Share Certificate(s)/ Warrant Certificate(s)/ Refund Orders/ Demat Credit. Credit Rating Details Our present issue has not been rated by any Credit Rating Agency. Inter-se allocation of Responsibilities Not Applicable Monitoring Agency Not Applicable Appraising Entity Not Applicable Underwriting Details Our Company has not entered into any standby arrangements with underwriters for underwriting the present issue. Impersonation As a matter of abundant caution, attention of the applicant is specifically drawn to the provisions of subsection(1) of the Section 68A of the Act which is reproduced below: Any person who makes in a fictitious name an application to the company for acquiring or subscribing for, any shares therein, or otherwise induces the company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years. Minimum Subscription If our Company does not receive the minimum subscription of 90% of the issue, the entire subscription shall be refunded to the applicants within forty two days from the date of closure of the issue. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to pay the subscription amount (i.e. forty two days after closure of the issue), our Company will pay interest for the delayed period, at the rate of 15% as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, Note: 1) Investors are advised to contact the Registrar to the Issue/ Compliance Officer in case of any preissue/ post-issue related problems such as non-receipt of Letter of Offer/ Letter of Allotment/ Share Certificate(s)/CAF / Refund Orders/ Demat Credit. 2) The funds received against this Issue will be transferred to a separate bank account other than bank account referred in sub-section (3) of section 73 of the Act. 22

26 CAPITAL STRUCTURE Share Capital 23 Nominal Value (Rs) Share Premium Total Value (Rs.) Authorized Capital 20,00,00,000 Equity Shares of Re. 1 each 20,00,00,000 Nil 20,00,00,000 Issued, Subscribed and Paid-up Capital 9,00,00,000 Equity Shares of Re. 1 each 9,00,00,000 Nil 9,00,00,000 Present Rights Issue through this letter of offer 2,25,00,000 Equity Shares of Re. 1 each at a premium of Rs. 7 per share 2,25,00,000 15,75,00,000 18,00,00,000 Total Paid-up Capital after the offer 11,25,00,000 Equity Shares of Re. 1 each 11,25,00,000 Nil 11,25,00,000 Share Premium Account Before the Offer After the Offer Nil Nil Nil 15,75,00,000 Notes: The Capital Structure Statement is prepared on the assumption that proposed right issue of Equity Shares Rs. 8/- per share will be subscribed fully. SHARE CAPITAL HISTORY A. EQUITY SHARES Year Date of Allotme nt Date when fully paid No of Shares Face Value Rs. Issue Price Rs. Cumulative Shares Cumulative Paid Up Capital Rs. Nature of Payment Nil 15,75,00,000 Remarks N.A N.A 29, ,645 29,64,500 Cash Share Capital as on /02/60 15/05/60 20/11/60 21/02/60 15/05/60 20/11/ , ,655 29,660 39,660 29,65,500 29,66,000 39,66, No change 21/05/66 21/05/66 13, ,260 53,26,000 Cash By conversion of Pref A shares in ratio of 40 share for 1 share held 30/06/66 27/02/67 10, ,912 63,91,200 Bonus Ratio 1: /06/67 30/06/67 15, ,728 *68,94,780 Cash On 50 callup, Rs. 7,90,800 Add:- Calls In Advance Rs. 58,855 Less:- Cash

27 Calls in Arrears Rs = Rs *( Rs. 6,39, ,03,580 = ) Year Date when fully paid No of Shares Face Value Rs. Issu e Pric e Rs. Date of Allotment Cumulative Shares Cumula-tive Paid Up Capital Rs. Nature of Pay-ment Remarks /07/67 03/07/67 4, ,080 82,90,975 Cash Calls in arrears Rs. 1,17, ,93,525 Cash Calls in arrears Rs. 14, ,01,750 Cash Calls in arrears Rs. 6, No Change ,06,125 Cash Calls in arrears Rs. 1, ,08,000 Cash Calls in arrears NIL /08/73 20/08/73 16, ,00,896 1,00,89,600 Bonus Ratio 1: No change 1,00,896 1,00,89, /07/88 01/08/88 01/09/88 29/09/88 01/07/88 01/08/88 01/09/88 29/09/88 59,256 5,824 15,795 5, ,60,152 1,65,976 1,81,771 1,87,120 1,60,15,200 1,65,97,600 1,81,77,100 1,87,12,000 Rights Rights in ratio of 4 shares for every 5 shares held at Rs. 100 per share. Calls in arrears Rs. 94,050 out of the shares issue during the year

28 /10/88 27/11/88 26/12/88 18/10/88 27/11/88 26/12/88 1,031 3,348 8, ,88,151 1,91,499 2,00,000 1,88,15,100 1,91,49,900 2,00,00, No change 2,00,000 2,00,00, /08/94 21/10/94 05/08/94 21/10/94 5,00,000 12,50, ,00, ,50,00,000 3,63,30,500 Cash Bonus Rights *Split from Rs. 100 to Rs. 10, Issue of 12.5 Lakh share at Rs.10 & 5 Lakh share as Bonus by Capitali zation in ratio of 1 share for 4 share held & Calls in Arrears Rs. 11,69,50 0 Calls in arrears NIL ,50,000 3,75,00,000 Cash No change 37,50,000 3,75,00, /02/98 24/02/98 7,50, ,00,000 4,50,00,000 Bonus Ratio 98 1: /11/98 10/11/98 11,25, ,25,000 5,61,56,000 Right Ratio 1:4 Calls in arrears of Rs Calls in arrears 2000 No change ,25,000 5,62,50,000 Cash NIL No change 56,25,000 5,62,50, /7/05 12/7/ ,00,00,000 9,00,00,000 Bonus Shares 05 Split from Rs 10 to Re. 1 & Bonus in the Ratio 25

29 3:5 B. PREFERENCE SHARES Year Nature of Payment N A Date when fully paid *Amount Paid up Rs. 45 per share No of Shares Face Value Rs. Issue Price Rs. Cumula tive Shares Date of Allotment Cumulative Paid Up Preference Capital Rs. Remarks **1, * 1,500 67,500 Cash **Convert ed into 1500 Equity shares of Rs. 100 each Rs. 45 paid up in Preference "A" Shares N A ,100 Cash N A ,000 Cash Converted into 13,600 Equity shares of Rs. 100 each on As per auditor certificate, the issuer Company has made preferential allotment of equity shares to the promoters and issued bonus shares from time to time as detailed below by following Relevant/ SEBI Guidelines prevailing at the time of Issue. Year of No. of Face Value per Nature of Remarks Issue Shares share (Rs) Issue , Bonus Ratio 1: , Bonus Ratio 1: ,00, Each Share of Rs. 100 split into 10 shares of Rs. 10 each. Bonus shares issued in the ration 4:1 12,50, Preferential Basis Issue of 12.5 laks shares to the promoters/ promoter group ,50, Bonus Ratio 1: ,37,50,000 1 Bonus Each Share of Rs. 10 split into 10 shares of Rs. 1 each. Bonus shares issued in the ration 3:5 Present Right Issue: Type of Instrument Equity Shares Ratio Face Value No. of Shares Issue Consideration (Re) Price (Rs.) 1:4 1 2,25,00,000 8 Cash The shares will be in the denomination of Rs. 1/- only. 26

30 Pre and Post Issue Shareholding pattern as on 30 th June, Category Pre-Issue Shareholding *Post-Issue Shareholding (as on ) No of Shares % of Shareholding No of Shares % of Shareholding Promoters - Indian Promoters/ Promoter 12,279, ,345, Group - Foreign Promoters Sub-total (A) 12,279, ,345, Promoter Group Companies 27,019, ,772, Total Promoters and 39,298, ,117, Promoters Group (A+B) Institutional Investors a. Mutual Funds & UTI b. Banks, Financial 2,369, ,958, Institutions/ Insurance Co c. FIIs Sub-total (C) 2,369, ,958, Others a. Private Corporate Bodies 4,373, ,467, b. Indian Public 43,501, ,382, c. NRI/ OCBs 379, , d. Others 77, , Sub-total (D) 48,331, ,423, Grand Total (A+B+C+D) 90,000, ,500, *Post issue shareholding is based on the assumptions that all shareholders will subscribe to their rights entitlement fully. Shareholding pattern of Promoters (as on ) Particulars Pre-Issue Shareholding *Post-Issue Shareholding No of Equity Shares % to Present Equity No of Equity Shares % to Post Issue Equity a. Promoters - Shri. R. V. Shirgaokar - Shri. P. V. Shirgaokar - Shri. Shishir S. Shirgaokar 4,32,680 3,76,096 8,43, Total 16,52, *Post issue shareholding is based on the assumptions that all promoters will subscribe to their rights entitlement fully. 27

31 Shareholding pattern of Promoters/Directors/ Relatives of Promoters as on 30 th June, 2008 Sr. No. Name of the shareholder Number of shares Shares as a %age of total number of shares 1 Rajendra V. Shirgaokar Prafulla V Shirgaokar Shishir S Shirgaokar Vinita M Samant Shilpa N Kumar Savita S Shirgaokar Niraj S Shirgaokar Chitra A Dalvi Sindhu V Dalvi Vijay J Dalvi Sachin R Shirgaokar Laxmi S Shirgaokar Radhika S Shirgaokar Smita P Shirgaokar Dinkar Madhusudan Shirgaokar Shradha D Shirgaokar Shirgaonkar Brothers Kalpana M Shirgaokar Mugdha Sudanshu Purohit S B Wagle Kunda K Shirgaokar Sanat Shirgaokar Tarini S Shirgaokar Saraswati Divan Puja H. Pusalkar Nishikant Divan Jeevan V Shirgaokar Anuja V Shirgaokar Avinash V Shirgaokar Aniket J Shirgaokar Chandan S Shirgaokar Sohan S Shirgaokar Prakash S Shirgaokar Rekha R Khedekar A B Kage Deepchand B Shah Mallapa R Desai Page Total

32 Sr. No. Name of the shareholder Number of shares Shares as a %age of total number of shares B S Patil S N Inamdar M G Joshi V Balsubramanian B N Kalyani M B Karmarkar S J Hiremath S A Kage Nivedita Sarnaik Sena Desai Rekhadevi Desai Chinnadevi Desai Shantadevi Desai Rajatkumar Sarnaik Sunita B Kalyani Madhavi Dalvi Rajeev Dalvi Sumit R Khedekar Harshada A Shirgaokar Sukhada A Shirgaokar Kaujalagi Shivanand H Kaujalagi Basavraj S Kaujalagi Mahantesh S Shrikant Keshavrao Chaugule Vijay K Chougule Vaishali Marathe Pandurang V Jog Chandrashekhar Bhide B. A. Kage Page Total TOTAL

33 Sr. No. Name of the shareholder Number of shares Shares as a %age of total number of shares PROMOTER BODY CORPORATES 1 SHANTARAM MACHINERIES PVT LTD TARA TILES PVT LTD B.B. THEATRES PVT LTD SANGLI FABRICATORS PVT LTD UGAR PIPE IND PVT LTD VINAYAK SHIRGAOKAR INV PVT LTD SURESH SHIRGAOKAR INV PVT LTD D.M. SHIRGAOKAR INV PVT LTD M. SHIRGAOKAR INV PVT LTD PRAFULLA SHIRGAOKAR INV PVT LTD SHISHIR SHIRGAOKAR INV PVT LTD SANJEEV SHIRGAOKAR INV PVT LTD PRABHAKAR SHIRGAOKAR INV PVT LTD S. B. RESHELLERS PVT LTD TOTAL NO'S TOTAL PROMOTERS HOLDING SHARES PERCENTAGE 66 INDIVIDUAL/HUF COMPANIES TOTAL Details of Directors Shareholding as on 30 th June, Sr. No. Name of the shareholder Number of shares Shares as a %age of total number of shares 1 Rajendra V. Shirgaokar Prafulla V Shirgaokar Shishir S Shirgaokar A B Kage Deepchand B Shah Mallapa R Desai B S Patil S N Inamdar M G Joshi V Balsubramanian B N Kalyani M B Karmarkar Details of sale and purchase of securities of our Company by the Promoters and Directors, Promoter Group in the last six months. Name Date Buy Sale Rate Amount 1. Mr. R V. Shirgaokar 07/09/ , Mr. P V Shirgaokar 16/10/ , ,32,371 30

34 3. Mr. M B Karmarkar 16/11/ , ,10, Mr. N.S. Shirgaokar 21/12/ , ,98, Mr. S.R.Shirgaokar 26/12/ , ,27, Mr. R.V. Shirgaokar 15/02/2008 1, , Mr. S.S. Shirgaokar 08/02/ , Transfer as per terms of will of his mother Late. Smt. Tarabai Suresh Shirgaokar 8. Mr. N.S. Shirgaokar 04/02/ , ,45, Details regarding Top 10 Shareholders: The details of top 10 shareholders and the number of shares held by them are as below: A. As on date of filing the Letter of Offer with Stock Exchange. Sr No Name No of Shares %age 1 S B RESHELLERS PRIVATE LIMITED 10,174, PRABHAKAR SHIRGAOKAR INVESTMENTS PVT LTD 2,875, MOHAN SHIRGAOKAR INVESTMENTS PVT LTD 2,630, VINAYAK SHIRGAOKAR INVESTMENT PVT. LTD 2,178, LIFE INSURANCE CORPORATION OF INDIA 2,079, MURKUMBI INDUSTRIES PVT LTD 1,850, D M SHIRGAOKAR INVESTMENT PVT LTD 1,771, SHISHIR SHIRGAOKAR INVESTMENTS PVT. LTD 1,730, PRAFULLA SHIRGAOKAR INVESTMENTS PVT LTD 1,579, SANJIV SHIRGAOKAR INVESTMENTS PVT LTD 1,505, B. 10 days prior to filing the Letter of Offer with Stock Exchange. Sr No Name No of Shares %age 1 S B RESHELLERS PRIVATE LIMITED 10,174, PRABHAKAR SHIRGAOKAR INVESTMENTS PVT LTD 2,875, MOHAN SHIRGAOKAR INVESTMENTS PVT LTD 2,630, VINAYAK SHIRGAOKAR INVESTMENT PVT. LTD 2,178, LIFE INSURANCE CORPORATION OF INDIA 2,079, MURKUMBI INDUSTRIES PVT LTD 1,850, D M SHIRGAOKAR INVESTMENT PVT LTD 1,771, SHISHIR SHIRGAOKAR INVESTMENTS PVT. LTD 1,730, PRAFULLA SHIRGAOKAR INVESTMENTS PVT LTD 1,579, SANJIV SHIRGAOKAR INVESTMENTS PVT LTD 1,505, C. Two years prior to filing the Letter of Offer with Stock Exchange. % to Sr. No. Name No of Shares Capital 1 S.B. RESHELLERS PVT LIMITED 1,00,11, PRABHAKAR SHIRGAOKAR PVT LIMITED 26,57, LIC 26,29, MOHAN SHIRGAOKAR PVT LIMITED 23,62, VINAYAK SHIRGAOKAR PVT LIMITED 19,60, D.M. SHIRGAOKAR PVT LIMITED 16,77, SHISHIR SHIRGAOKAR PVT LIMITED 16,22, PRAFULLA SHIRGAOKAR PVT LIMITED 14,71, B.N. KALYANI 12,67, SUNITA BABASAHEB KALYANI 12,00,

35 3. No further issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or in any other manner will be made by our Company during the period commencing from submission of the Letter of Offer with SEBI till the Securities referred in this Letter of Offer have been listed, or application money is refunded on account of failure of the issue. 4. Our Company presently does not have any intention or proposal to alter its capital structure within a period of six months from the date of opening of the issue, by way of split/ consolidation of the denominations of shares or further issue of shares whether preferential or otherwise. 5. Our Company has 19,960 Equity Shareholders as on At any given point of time there shall be only one denomination for the Shares of our Company and we shall comply with such disclosures and accounting norms as may be prescribed by SEBI. 7. Our Company has raised loan against the proceeds of this issue from Bank of India. 8. Our Company has not entered into any standby arrangements. 9. The rights entitlement of the Promoter/ Promoter Group will be fully subscribed. 10. The Issue will remain open for 15 days. However, the Board will have the right to extend the issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date 11. If our Company does not receive the minimum subscription of 90% of the issue, the entire subscription shall be refunded to the applicants within forty two days from the date of closure of the issue. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to pay the subscription amount (i.e. forty two days after closure of the issue), our Company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, The issue will become under subscribed after considering the number of shares applied as per the entitlement plus additional shares. The undersubscribed portion can be applied for only after the close of the Issue. To ensure that the Issue is successful the Promoters of The Ugar Sugar Works Limited have undertaken to subscribe to such unsubscribed portion either by themselves or through their group, including group companies and or associates if the issue does not receive subscription to the extent of 90% of the Issue size. This acquisition of additional Equity Shares, if allotted to the Promoters of The Ugar Sugar Works Limited or their group including group companies and or associates shall be in terms of proviso to regulation 3(1)(b)(ii) of the Takeover Code and will be exempt from the applicability of regulation 11 and 12 of Takeover Code. This disclosure is made in terms of the requirement of Regulation 3(1)(b)(ii) of the Takeover Code. Further this acquisition will not result in change of control of management of our Company. 12. The Company/ Directors/ Lead Managers have not entered into any buy-back and/ or standby arrangements for purchase Of Equity Shares of the Company with any person. 13. All the legal requirements applicable till the filing of the prospectus/ Letter of Offer with ROC/ Stock Exchange will be complied with. 14. There are no other ventures of the Company who have commercial interest in the business of the Company. 32

36 OBJECTS OF THE ISSUE The following are the objects for which funds are proposed to be raised through the present issue: 1. To part fund the Promoter s Equity contribution in Sadashiva Sugars Ltd which is implementing a Project to setup a 3500 TCD crystal sugar manufacturing unit and 15 MW cogeneration plant. 2. To repay Clean Loan of Rs 15 crores from Bank of India utilized for meeting the urgent funding requirement to ensure the timely implementation of the above mentioned project. 3. To meet issue expenses. The main object clause of our Memorandum of Association and objects incidental to the main objects enable the company to invest in the Equity of other company engaged in similar business. The funds requirement and details of deployment are based on the Techno Economic Viability Report prepared by MITCON Consultancy Services Ltd, Kubera Chambers, 1 st Floor, Shivajinagar, Pune (hereinafter called MITCON). The fund requirements detailed below are based on our current business plan. In view of the competitive and dynamic nature of the industry in which we operate we may have to revise our business plan from time to time and consequently our fund requirement may also change. This may include rescheduling of our capital expenditure programme and increase or decrease in the capital expenditure for a particular purpose vis-à-vis current plans at the discretion of the management. In case of any variations in the actual utilizations of funds earmarked for the above activities, increased fund deployment for any particular activity will be met from the internal accruals. Rationale for Sadashiva Sugars Ltd., not coming out with IPO: The promoters of M/s. Sadashiva Sugars Ltd., approached our Company for a Joint Venture for setting up of this unit in During the year , the sugar industry was passing through a difficult phase and coming out with IPO was not practical. Promoters of M/s. Sadashiva Sugars Ltd., had the funds to invest in this project and they thought once the Company starts performing they can think of going public. Project Location: Sadashiva Sugars Limited CIN U15421KA2002PLC Nagral, Nainegali, 7 th Kilometer from Almatti Bridge on NH-13, Bagalkot Taluk & District Karnataka State. At present there is no sugar factory in the vicinity of the proposed site & there is great potential of growing cane due to irrigation facilities of distributaries from back water of Narayanpur Dam/ downstream of Alamatti dam. It is a demand of local cultivators to have such industry in the area. Therefore the The Ugar Sugar Works Ltd decided to join Sadashiva Sugars Ltd for setting up 3500 TCD sugar plant expandable to 5000 TCD with 15 MW cogeneration plant. Sadashiva Sugars Limited is a company promoted by Mr. R.S.Patil, Mr. G.S. Patil, Mr. S.G. Patil, Mr. Rajendra Patil and Mr. M.B.Thimmapur and incorporated as a public limited company on 3 rd January The company was incorporated for the purpose of setting up a sugar manufacturing unit and cogeneration plant. Though the company had during planned setting up a 2500 TCD facility for manufacturing crystal sugar, the project could not achieve financial closure as the Karnataka Power Transmission Corporation was not entering into power purchase agreements for purchase of power from renewable energy projects. With the change in policies, Sadashiva Sugars Ltd decided to set up the project and entered into a Memorandum of Understanding with M/s. Ugar Sugar Works Ltd a public limited company incorporated under the Companies Act 1956, having existing sugar manufacturing units and cogeneration plants, for setting up the project as a joint venture. The project will include a cogeneration plant generating 15 MW of power utilizing bio-mass such as bagasse and other such biological waste. 33

37 List of Directors Sadashiva Sugars Limited as on Sr. No Name of Director Designation 1 Mr. B. S. Patil Chairman 2 Mr. Shishir S. Shirgaokar Director 3 Dr. M. R. Desai Director 4 Mr. Sanat K. Shirgaokar Executive Director 5 Mr. I. S. Patil Director 6 Mr. R. Patil Director 7 Mr. G. S. Patil Director 8 Mr. R.S. Patil Director List of Shareholders of Sadashiva Sugars Ltd., as on 31 st March, Name of Shareholder No. of Equity Shares % of Equity Capital R.S.Patil 22,000 0 G.S.Patil 6,000 0 Rajendra Patil 282,000 1 B.S.Patil 610,000 2 Sanathkumar Shirgaonkar 1,000 0 I.S.Patil 1,001,000 3 Chandrashekar Yelamali B.S.Patil Representing ABC 2,100,000 6 Rajendra Patil HUF 9,035, Rekha Patil 700,000 2 Harish Y 5,000, Santhosh Karimattan 238,200 1 Future Exime (India) P.Ltd 500,000 1 Ugar Sugar Works Ltd 17,485, Mohan Shirgaonkar Investment Pvt Ltd. 200,000 1 Shishir Shirgaonkar Investment Pvt Ltd. 80,000 0 Sanjeev Shirgaonkar Investment Pvt Ltd. 80,000 0 Vinayaka Shirgaonkar Investment Pvt Ltd. 230,000 1 Suresh Shirgaonkar Investment Pvt Ltd. 80,000 0 Prabhakar Shirgaonkar Investment Pvt Ltd. 100,000 0 D.M Shirgaonkar Investment Pvt. Ltd. 150,000 0 Prafulla Shirgaonkar Investment Pvt. Ltd. 40,000 0 Total 37,941, Financials of Sadashiva Sugars Limited: Brief Financials as on 31 st March As on Share Capital 37,94,12,000 6,25,000 6,25,000 5,00,000 5,00,000 5,00,000 Share Application Money 9,00,52,928 21,30,08,064 Nil Nil Nil Nil Total Income 19,69,083 8,37,750 Nil Nil Nil Nil Reserves & Surplus 8,81,345 3,12,837 Nil Nil Nil Nil Pre-operative Expenses 14,92,71,904 3,62,69,568 28,63,646 7,46,896 7,35,945 7,03,400 Profit/ (Loss) after Tax 5,68,508 3,60,692 (47,855) Nil Nil Nil Earning Per Share(Rs) (0.77) Nil Nil Nil 34

38 Note: The profit shown in the Year is only out of Bank Interest earned. The company has not been carrying on any operation since incorporation. The sugar factory and cogeneration project is under implementation and expenses during the Project Implementation have been capitalized. For Audited Financial of Sadashiv Sugars Limited refer to page no. 144 of Letter of Offer. The break-up of expenditure of the Project being implemented by Sadashiva Sugars Ltd as estimated by MITCON is as follows: Rs in Lacs Serial No Particulars Amount 1 Setting up of 3500 TCD crystal sugar manufacturing unit 7, MW Cogeneration Plant 4, Total The Margin Money for Working Capital to be brought in from long term sources was estimated at approximately Rs 669 lakhs thus the Project Cost was estimated at Rs Means of Finance Rs in Lacs Serial No Particulars Amount 1 Term Loans from Banks 8, Promoters Equity Contribution Patil Family (Promoters of Sadashiva Sugars Ltd) Ugar Sugars Promoters of Ugar Sugar Works Ltd Total 12, Tying up of Loan Funds - Sanction of Term Loans by Banks: Term Loans have been sanctioned for the project as detailed below: State Bank of India State Bank of Mysore State Bank of Indore Total Rs Lakhs Rs Lakhs Rs Lakhs Rs Lakhs Subsequent there was an increase in the project cost and the revised project cost as appraised by State Bank of India is as follows: Rs in Lakhs Description Original Revised Project Cost Project Cost Land & Site Development Building & Civil works Plant & Machinery Misc Fixed Assets Contingency Preliminary & Pre-Operative Interest during construction Working capital Total

39 Escalation in Cost of Project:- The Cost of Project has gone-up due to escalation in the Machinery Cost, Increase in the Cost of Civil Work as prices of cement and steel and labour have increased. The increased Cost of the Project is proposed to be funded as under: Rs in Lacs Serial No Particulars Amount 1 Term Loans from Banks 8, Promoters Equity Contribution Patil Family (Promoters of Sadashiva Sugars Ltd) Ugar Sugars Promoters of Ugar Sugar Works Ltd , Total Position of Promoters Contribution in Equity of M/s Sadashiva Sugars Ltd as on ( Rs in Lacs.) Contributors Total Funds Contributed The Ugar Sugar Works Ltd Promoters of Ugar Sugar Works Ltd 9.61 Patil Family Total Pending the approval for the Rights Issues, loans sanctioned to Ugar Sugar Works Ltd including the loan from Bank of India was utilized to meet the urgent funding requirement of the project so as to ensure the timely implementation of the project. PROJECT SWOT ANALYSIS: STRENGTHS 1. The Project is being executed by Ugar Sugars who are pioneers in this field having several decades of exposure to the vagaries of the sugar industry and during the last decade exposure to the Co-Gen power plant too. The plant will be run under the overall guidance of Ugar Sugars Team whose help is always available to Jewargi Unit for recruitment of its operating and other personnel and also in commercial aspects. 2. The Project is an integrated one with Sugar and Co-Generation Power. The by product of the sugar plant, i.e. bagasse becomes the main fuel or raw material for the Co-gen power plant free of cost during the season and also partly during the off-season, thereby increasing the profitability. 3. Excellent irrigation facilities are now available in the proposed command area of the project from where the sugarcane is to be purchased, due to the recently commissioned Upper Krishna Cannal Project from Narayanpur Dam on the River Krishna. 4. The Shiragaonkar Family has a strong hold and influence in the district due to their name in Sugar Factory. They have deployed the net work of Agriculture Officers to develop & maintain good relationship with the local population especially in the rural areas and that too the farmers, which are very essential for succeeding in the agro based industry. 5. Availability of Reliable Technology, Plant & Machinery indigenously, both with proven track record normally helps in commissioning the Project without any difficulty. WEAKNESSES 1. Sugarcane processing is a cyclical industry subjected to vagries of the nature. Diversion of cane for Khandasari or Gur manufacturing cannot be ruled out depending on their end prices. 2. The Command Area proposed for this project will have to be developed for sugarcane growing as the farmers in this region are not comfortable with sugarcane for want of irrigation facilities earlier. Hence, their mindset has to be changed to adopt new practices for sugarcane. Many farmers may resort to Paddy which can be harvested faster than sugarcane, requires less maintanence and quicker returns, though less. 36

40 3. Availability of produced bagasse or other equivalent biomass or other fuels may be limited or cost may become prohibitive. Some extent of imported coal can be used but its price may vary according to Government import policy. OPPORTUNITIES 1. There is scope for diversification to a distillery to manufacture alcohol, ethanol and Indian Made Foreign Liquor, using in house produced molasses. 2. There is scope for expansion of the sugarcane crushing capacity to 5000 TCD along with additional Co-gen power plant, as there is no Sugar factory within a radius of 50 Kms. 3. There is scope for setting up a sugar refinery to manufacture refined sugar with value added, which has greater acceptance in hotel industry, pharmaceuticals, exports, etc. In addition there is also scope to import raw sugar and refine the same. 4. There is scope for getting the project approved under the Carbon Credit Program to obtain additional income by trading the Carbon Credits in the International market. THREATS 1. Several new units, especially with very large capacities, are coming up besides the existing ones going in for massive expansion. This might lead to unhealthy competition if the supply exceeds the demand. 2. The domestic sugar price depends heavily on the international market price for sugar, which is difficult to predict. 3. Attrition rate among the experienced manpower especially at middle and senior levels, which might affect the working of the factory. 4. Improper cane management program may result in insufficient sugarcane availability. Utilization of Rights Issue Proceeds Equity contribution by Ugar Sugar Works Ltd as co-promoter of the Project is Rs lakhs. Out of this an amount of Rs lakhs has already been contributed through utilization of existing loans including the loan of Rs 1500 lakhs from Bank of India. Details of proposed utilization of the Rights Issue Proceeds are as follows:- Rs. In Lacs Serial No Particulars Amount 1 Repayment of Clean loan from Bank of India utilized for meeting the urgent funding requirement for implementing the Project at Sadashiva Sugars Ltd. 2 Partly meet the Promoter s equity contribution in Sadashiva Sugars Ltd which is implementing a Project to setup a 3500 TCD crystal sugar manufacturing unit and 15 MW cogeneration plant Issue Expenses Total 1, Details relating to the loan obtained from Bank of India by The Ugar Sugar Works Ltd., is as follows: Loan Amount: Rs Lakhs Rate of Interest: 2.75% below BOIBPLR presently 10.50% p.a. Security: Clean with personal guarantee of working directors. Terms of repayment: To be repaid in full along with interest by 30 th September, 2008 and further extention is sought from Bank. * CA Certificate dated 02 nd June 2008 regarding the purpose and utilisation of the Clean Loan has been obtained and has been included in the material documents. 37

41 Sugar Manufacturing Serial No. Particulars of Expenditure Name & Address of Supplier 1. Total 191 acres of Land and its development for Sugar Unit and Power Plant (Common) 2. Civil Work ** Main Factory Building & Pratibha Constructions Machinery Foundations Engineers & Contractors Pvt. Ltd, Kolhapur. Miscellaneous Work Shri.Durga Constructions, Dandeli Cooling Towers Aminbhavi & Hegde, Dharwad 3. Plant & Machinery Mill House Walchand Nagar Industries Ltd, Boiling House a. Centrifugal Walchand Nagar Industries Ltd, b. Crystallizer Shantaram Machineries Pvt. Ltd c. Juice Sulphiter, Evaporator Lunar Engineers Set, Vaccum Pan Turbine Turbine Shin Nippon Machinery Co., Ltd., Japan Rs. In Lacs No. & date of Estimated quotation Amount PO. Sadashiva/ 05-06/7789/ dt PO.Sadashiva/05-06/ 10068/dt Sadashiva/05-06/ dt Sadashiva/05-06/ 10593/dt Sadshiva/ SNM/ 1822/ dt , Cooling Towers Industrial Cooling Sadashiva/ 06-07/ Towers, Dharwad dtd Automation Honeywell Automation I. Ltd Sadashiva/ Automation/ dt Electrical Dhanashree Sadashiva/ Power Enterprises Cable/ 3044 dtd Balance of Equipments, Taxes, Freight, etc % of Project Cost (Common for Sugar & Co-gen) 6 Preliminary & Preoperative Expenses. (Common for Sugar & Co-gen) 7 Sugarcane Development Exp Estimated Total 7, MW Co-generation Unit Serial Particulars of Expenditure Name & Address No. of Supplier 1. Total 191 acres of Land and its development for Sugar Unit and Power Plant (Common) 2. Civil Work ** 38 No. & date of quotation Rs. In Lacs Estimated Amount

42 Main Factory Building & Machinery Foundations Miscellaneous Work Cooling Towers Pratibha Constructions Engineers & Contractors Pvt. Ltd, Kolhapur. Shri.Durga Constructions, Dandeli Aminbhavi & Hegde, Dharwad Plant & Machinery Boiler Walchand Nagar Industries Ltd, Turbine Ancillaries Shin Thermo Dynamics Engg. Pvt. Ltd. Cooling Towers Industrial Cooling Towers, Dharwad Automation Honeywell Automation I. Ltd Electrical Zen Projects Constructions Pvt Ltd Dhanashree Enterprises POSadashiva Boiler/ 3890/ dt Sadashiva/ STDE/ 3825/ dt Sadashiva/ 06-07/ dated Sadashiva/ Automation/ dt Sadashiva/ Switchyard/ dt Sadashiva/ Power Cable/ 3044 dated , Balance of Equipments, 1, Taxes, Freight, etc. 5 Computerization Management Estimate Estimated Total 4, ** Land and Civil Work estimates are for both sugar unit and power plant. Land The requirement of land for the project has been estimated at 200 acres keeping in view the need for future expansions also. The project, in addition to the sugar factory, cogeneration plant, godown for storage of sugar, space for sugarcane, bagasse etc envisages administrative building, housing colony, shopping area, guest house etc. The company has purchased 54 acres of land. Since the land available is agricultural land and there are restrictions on ownership of agricultural land by companies, 136 acres of land purchased in the name of the promoters belonging to the Patil family. The process of conversion of the land for commercial use and transfer in the name of the company is presently on. Thus total of 191 acres will be available for the project. Details of Parties from whom Land has been purchased and purchase price Sr No Name Area in Acre Amount Rs. Address 1 K.B. Gandodi 6 1,314,570 2 Y.H. Halvar ,032,855 3 B.S. Goudra ,550 4 S.B. Goudra 10 2,190,500 5 Sita Bai S. Lamani 4.7 1,004,220 Nainegalli, Tal, Dist-Bagalkot Nainegalli, Tal, Dist-Bagalkot Nainegalli, Tal, Dist-Bagalkot Nainegalli, Tal, Dist-Bagalkot Nainegalli, Tal, Dist-Bagalkot 39

43 6 S.Y. Goudra ,032,825 7 Prashantagouda G.Patil ,500 8 Abhay Iranagouda patil ,000 9 Prashantagouda G. Patil 2 360, Prashantagouda G. Patil 4 780, Rajendragouda R. Patil ,204, Rajendragouda R. Patil ,256, Prashantagouda G ,740,000 Patil 14 Abhay Iranagouda Patil , Abhay Iranagouda Patil , Prashantagouda G. Patil 2 380, Abhay Iranagouda Patil , Abhay Iranagouda Patil , Abhay Iranagouda Patil , Abhay Iranagouda Patil , Abhay Iranagouda Patil , Sandeep B. Patil , Sandeep B. Patil ,405, Prashantagodua G. Patil ,111, Abhay Iranagouda Patil , Chandrashekar V.Yelamali , Prashantagouda G. Patil , Prashantagouda G. Patil , S.V. Nadagouda ,572, S.V. Nadagouda ,500 Nainegalli, Tal, Dist-Bagalkot Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag S V Nagar, No 26 sector 63A, Navanagar Bagalkot Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag 40

44 31 S.V. Nadagouda 4 760, Chandrashekar V.Yelamali ,280, S.V. Nadagouda , S.V. Nadagouda , S.V. Nadagouda ,000 Grand Total Goudaroni, Ron, Tal, Dist-Gadag S V Nagar, No 26 sector 63A, Navanagar Bagalkot Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Goudaroni, Ron, Tal, Dist-Gadag Summary Sr Item of Expenditure Amount (Rs). No 1 Stamp Duty & Registration Charges 29,77, Conversion Charges 10,10, Bank Charges etc. 36, Land Price Paid 369,89, Total Land Value 410,14, All the Land is in the name of the Company. Out of total land 54 acres of land has already been converted in NA and for 105 acres of land acquired in the name of the company, the NA process is on and is expected to be completed in couple of months. The land acquired by the Company is free from all the encumbrances and has a clear title. Company has mortgaged these land to secure the loan taken from State Bank of India, State Bank of Mysore and State Bank of Indore. Connectivity for Transportation The project is coming up on land adjunct to National Highway No.13 and therefore transportation from and to the factory from within the district or outside is facilitated. Raw Material Availability: The project will require approx 6.40 Lakh tons of sugar cane for utilizing full capacity for 180 days. The company has estimated that approx 1 Lakh ton sugarcane is already available within the command area of 15 KMs and an additional 3500 acres of land has already been brought under sugarcane cultivation which will provide another 1.5 Lakh tons of cane. We envisage coverage of another acres of land within the command area within the next 1-2 years on account of the setting up of the mill. The soils of the nearby area of the proposed site are black, well drained & hence, most suitable for growing sugarcane. The factory is located very near to the Almatti Dam on River Krishna and the command area around the factory lies in between River Krishna and River Malaprabha. Approx 3500 acres of land have already been brought under sugarcane cultivation and the area has very good potential for sugarcane cultivation due to the nearby sources of water in plenty and irrigation facilities available from the canals of Almatti Dam. We do not foresee any difficulty in sourcing the required quantity of sugarcane as the crushing of sugarcane stabilizes and factory achieves ability to operate to the full installed capacity within 2 years of commencement of crushing. 41

45 Utilities: Water: The total requirement of water for the sugar plant of 3500 TCD is estimated at 25 Lakhs liters/ day. The company proposes to meet the water supply requirements from Krishna River and will be drawn through a 10 dia pipeline. For the construction purposes the company has already laid a 4 pipeline and water is being drawn through this pipeline from River Krishna. Power: Conventionally the power requirement is met through captive generation. The total power requirement of sugar plant of 3500 TCD is estimated at 5 MW, which company proposes to meet through 1 turbo alternator of 15 MW. The surplus power of 9.22 MW is proposed to be sold to the Tata Power Trading Company Ltd. In order to meet the emergency power requirement during season i.e. on cleaning days & mill breakdowns as well as offseason requirements 1 DG Set of 1250 KVA is proposed to be provided. Bagasse Handling System Bagasse from the mill house is fed to the Bagasse elevators. Bagasse from the elevator is carried through belt conveyor to the distribution carrier, this shall be transported to feed conveyor through a storage hopper, which in turn, feeds the other chain slat conveyor to feed the boiler. In case of shortage of bagasse due to problems in mill, reclaimed bagasse shall flow through conveyor to take care of the deficit. For stacking purpose, bagasse shall be directed towards stacking conveyor for generating bagasse pile by means of traveling wing tripper. This pile may be further compacted by dozers to increase storage capacity. For reclaiming the stored bagasse from the open yard, Bagasse shall be dozed to any of the reclaim hoppers on ground, which in turn shall be carried by underground offtake conveyor to over ground. Conveyor shall then transport this reclaimed bagasse to through flap gate to feed the boilers. Procured bagasse from other sugar factories shall be manually stored in the adjacent bagasse pile area under shed. Reclaiming of this bagasse shall be through the reclaim hoppers & the underground conveyor common to the main bagasse reclaim system. Manpower The necessary technical and skilled manpower will be recruited from nearby areas. Sufficient unskilled manpower is available in the districts of Bagalkot and Bijapur and we do not envisage any problem in recruiting the required number of personnel. Products and Services Sadashiva Sugars Ltd. shall manufactures the following:- Sugar a) White Crystal Sugar b) Raw Sugar Power Generation Cogeneration of power utilizing bagasse and other biological waste. Sale of molasses Molasses generated by the unit shall be sold to distilleries. Nature of the Products: Sugar is consumed by public at large as well as by food processing industries and sale of sugar is regulated by the Government of India. Surplus power generated, i.e. after captive consumption, is proposed to be sold through the Tata Power Trading Company Limited 42

46 Deployment of Funds so far As per the certificate dated October 22, 2008 from M/s. Santhappa & Co., Chartered Accountants the details of funds deployed in the project up to is tabulated below:- Rs. In Lakh Sr. No. Particulars Certificate Civil Work 1, Purchase of Land Purchase of Machinery & Equipments 9, Total 11, Other Expenses in connection with the project 4 Interest on Term Loans 1, Consultanry, Survey, Site Expenses & Others Margin for Letter of Credit (Current Account with Banks) Advance net of other Liabilities Total Other Expenses in connection with the Project 3, Grand Total 14, Sources of Funds 1 Loan Funds from State Bank of India, State Bank of Mysore 9, & State Bank of Indore 2 Promoters Contribution 5, Total 14, Schedule and Actual status of Implementation: Particulars Scheduled Completion on Status of completion Mill House Civil September, 2007 Completed on January, 2008 Mechanical September, 2007 Completed on February, 2008 Electrical September, 2007 Completed on March, 2008 Instrumentation October, 2007 To be commissioned Boiling House Civil September, 2007 Completed on January, 2008 Mechanical September, 2007 Completed on February, 2008 Electrical September, 2007 Completed on March, 2008 Instrumentation/ Automation October, 2007 To be commissioned Boiler Civil January, 2007 Completed on January, 2007 Mechanical September, 2007 Completed on February, 2008 Electrical September, 2007 Completed on March, 2008 Instrumentation October, 2007 Completed on March, 2008 Turbine House Civil September, 2007 Completed on January, 2008 Mechanical September, 2007 Completed on February, 2008 Electrical September, 2007 Completed on March, 2008 Instrumentation October, 2007 Completed on March, 2008 Electrical Evacuation Civil September, 2007 Completed on January, 2008 Mechanical September, 2007 Completed on February, 2008 Electrical January, 2008 Completed on June 2008 Instrumentation October, 2007 Completed on March,

47 Government/Statutory and other Approvals for the Project All initial approvals have already been received to enable implementation of the project except the following:- Conversion of additional agricultural land for commercial use and its transfer in the name of the company is pending. Part of the land for the project has been purchased in the name of original promoters of Sadashiva Sugars Ltd. Pending Govt. Approvals M/s. Sadashiva Sugars Ltd., is yet to receive following pending approvals from the Government : Details of pending approvals from Government: SL. No Details of Approvals Issuing Authority Status 1 Crushing license for Secretary, Industrial Dept. Application submitted 2 Pollution control board final approval Member Secretary Application submitted 3 Ecology and Environmental clearance Member Secretary Application submitted 4 Factory license under Factories Acty Inspector of Factories Application submitted If the Company doesn t get these approvals from the Government, Company cannot start its operations and this may affect on the implementation of the Project. The Company has already approached the Governmental Authorities for the approvals and whatever steps are required for getting these approvals have already been taken by the Company. 44

48 BASIC TERMS OF THE ISSUE Basis for the Issue The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders of our Company whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in dematerialized form and on the Register of Members of our Company in respect of the Equity Shares held in physical form at the close of business hours on the Record Date, i.e., 29 th September, 2008, fixed in consultation with the Designated Stock Exchange, i.e. Bombay Stock Echnage Limited. Principal Terms and Conditions of the I ssue Face value Each Equity Share shall have the face value of Rs. 1. Issue Price Each Equity Share is being offered at a price of Rs.8 (including a premium of Rs.7). TERMS OF PAYMENT Nominal Value per Share Premium per Share Total On Application & Allotment Total Payment should be made in by Cash/ Cheques / demand draft / drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub member of the Bankers to the Issue clearing house located at the centre where the application is accepted. A separate Cheques/ draft must accompany each application form. Outstation Cheques/ drafts will not be accepted and application(s) accompanied by such Cheques/ drafts will be rejected. Additional Equity Shares You are eligible to apply for additional equity shares in addition to the number of Equity shares to which you are entitled, provided you apply for all the Equity Shares offered to you without renouncing them, in whole or in part, in favor of any other person(s). The renouncees applying for all the equity shares renounced in their favor may also apply for additional equity shares. The company would endeavour to make allotment of additional equity shares in such lots. The allotment of the additional Equity Shares in above cases shall be at the absolute discretion of the Board of Directors of the company and in event of oversubscription, it will be considered on equitable basis with reference to the Equity Shares held on the Record Date and in consultation with The Bombay Stock Exchange and in case of Non-Resident, it will also be subject to the approval of Reserve Bank of India or such other requisite authority as may be necessary. Rights Entitlement Ratio The Equity Shares are being offered on rights basis to the existing Equity Shareholders of our Company in the ratio of 1 Equity Shares for every 4 Equity Shares held as on the Record Date. Fractional Entitlements The shareholders are entitled to one equity share for every 4 shares held. In case of any shareholding other than in multiples of 4, the fractional entitlements arising therein, would be rounded off to the highest integer for determining the respective rights entitlement. The Equity Shares needed for such shares will be first adjusted from the unsubscribed portion of the Issue, if any, and should there be further requirement, from the Promoter and Promoter Group s entitlement at the time of allotment. 45

49 Joint-Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint-tenants with benefits of survivorship subject to provisions contained in the Articles of Association of our Company. 46

50 BASIS OF ISSUE PRICE Qualitative Factors: Promoters with adequate experience in the sugar industry. Plant located on the bank of Krishna River, having abundant raw material potential. Manufacturing of Sugar, Power generation, IMFL- Diversified product mix. Assured quality standards ensured under ISI certification. Utilizes non-conventional fuel for Power generation thereby reducing use of fossil fuels and resultant emissions of green house gases. There is no dilution of equity by the promoters of the company. The present holding of the promoters is 43.67% which will be maintained by subscribing fully to their share in this Right Issue. Quantitative Factors: 1) Earnings per share (EPS) for the last 3 years: Year EPS(Rs) Weight (FY ended on 30 September 2006) (FY ended on 31 March 2007)* (FY ending on 31 March, 2008) Weighted Average *Financial Year was changed from 30 th September to 31 March during hence FY was of 6 months only As per the auditor certificate of The Ugar Sugar Works Limited dated the Accounting Standard 20 have been followed by the company in computation of EPS. 2) Price/Earnings Ratio (P/E) in relation to Issue price of Rs. 8 per share: a. Based on 12 months ended b. Based on Weighted Average EPS 9 Industry P/E: Highest Lowest Average Source: Capital Market, Vol. XXIII/08, June 16-29, ) Return on Net Worth: Year % Weight (FY ended on 30 September 2006) (FY ended on 31 March 2007)* (FY ending on 31 March, 2008) Period ended on (0.48) 4 Weighted Average ) Net Asset Value (NAV) Year Amount in Rs. a (FY ended on 30 September 2006)

51 b (FY ended on 31 March 2007)* 7.64 c (FY ending on 31 March, 2008) 7.15 d. Period ended on Comparison of Accounting Ratios with Peers: FY-06 The closest comparables to our Company in the industry are Jeypore Sugars Company, Rajshree Sugars & Chemicals and Rana Sugars Limited. Comparable ratios for these companies are given below: Face EPS P/E RNOW % Book value per Net Sales Value share The Ugar Sugar Works Limited Jeypore Sugars Company Rajshree Sugars & Chemicals Rana Sugars Limited *Source: Dalal Street- Small Cap The face value of shares of Ugar Sugar Works Ltd. is Re. 1 and all other companies is Rs. 10 per share. 2. Financial ratio worked out considering the capital issued till date. Taking into account the above Qualitative and Quantitative factors, the Issue Price of Rs 8/- per share is considered justified. The face value of the Equity Shares is Re 1 per share and the Issue Price is 8 times the face value. Information as required by Government of India, Ministry of Finance, circular No. F2/5/SE/76 dated February 5, 1977 as amended vide their Circular of even number dated March 8, 1977 is given below: 1.Working results of our Company are updated up-to 30 th September, 2008 and shall be further updated in the Final Letter of Offer if necessary. 2. Save as stated elsewhere in the Letter of Offer there are no material changes and commitments, which are likely to affect the financial position of our Company since September 30, 2008 (i.e. the last date up to which the audited information is incorporated in this Letter of Offer) 3. Weekend Prices of the Equity Shares of our Company for the last four weeks on the BSE are as follows: Week ended on Closing Price (Rs.) 3 rd October, th October, th October, th October, Source: BSE 4. Closing price of the Equity Shares of our Company as on 24 th October, 2008 was Rs per Equity Share on the Bombay Stock Exchange. 5. Highest and Lowest prices of the Equity Shares of the company on the Bombay Stock Exchange during the above period was as shown below: Week Ended On High Price Rs. Low Price Rs. 3 rd October, th October, th October, th October,

52 TAX BENEFITS The Board of Directors, The Ugar Sugar Works Limited, Sangli Dear Sirs, Sub: Statement of Possible General Tax Benefits available to the Company and its Shareholders We hereby certify that the enclosed statement states the possible special (and major) as well as general tax benefits available to the Company under the Income Tax Act, 1961, presently in force in India and to the shareholders of the Company under the Income tax Act, 1961, Wealth Tax Act, 1957 and the Gift Tax Act, 1958, presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon utilizing such conditions, which based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill. The benefits discussed in the enclosed statement are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance as to whether : the Company or its shareholders will continue to obtain these benefits in future ; or the conditions prescribed for availing the benefits have been / would be met with. The contents of the enclosed statement are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company. For M/s P.G.Bhagwat Chartered Accountants M.K.Shevade Partner Membership No Place : Pune Dated : 24 th October,

53 STATEMENT OF POSSIBLE DIRECT TAX BENEFITS AVAILABLE TO THE UGAR SUGAR WORKS LIMITED ( THE COMPANY ) AND ITS SHAREHOLDERS: UNDER THE INCOME TAX ACT, 1961 As per the current provisions of the Income Tax Act, 1961 (hereinafter referred to as IT Act ) and the existing laws for the time being in force, the following benefits are available to the Company and to its shareholders. The tax benefits available to the Company and its Shareholders are as under as per the tax law presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives the Company faces in the future, the Company may or may not choose to fulfil. TO THE COMPANY Special major tax benefits being availed by the Company are as follows: The Company is claiming and is eligible for tax holiday as per the provisions of section 80IA of the Income Tax Act, 1961, in respect of its income from co-generation unit(s) and electricity for a period of 10 years. General tax benefits available to the Company are as follows: 1. In terms of section 10(34) of the Act, any income by way of dividends referred to in Section 115-O (i.e. dividends declared, distributed or paid on or after 1 st April, 2003 by domestic companies) received on the shares of any company is exempted from the tax. 2. By virtue of section 10(38) of the IT Act, the long term capital gains on sale of shares where the transaction of sale is entered into on a recognized stock exchange in India and is chargeable to Securities Transaction Tax shall be exempt from tax. 3. Under Section 48 of the Act, if the investments in shares are sold other than through a recognized stock exchange after being held for not less than twelve months, the gains (in cases not covered under section 10(38) of the Act), if any, will be treated as long-term capital gains and the gains shall be calculated by deducting from the gross consideration, the indexed cost of acquisition. 4. Under Section 54EC of the Act and subject to the conditions and to the extent specified therein, longterm capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset will be exempt from capital gains tax if the capital gains are invested in certain notified bonds within a period of 6 months after the date of such transfer for a period of at least 3 years. However, if the assessee transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would be chargeable to tax as long-term capital gains in the year in which the bonds are transferred or converted into money. 5. Under section 112 of the Act, long-term capital gains, (i.e. if the shares are held for a period exceeding 12 months) (in cases not covered under section 10(38) of the Act), arising on transfer of investment in shares, shall be taxed at the rate of 20% (plus applicable surcharge and cess) after indexation as provided in the second proviso to section 48, or at the rate of 10%(plus applicable surcharge and cess) without indexation at the option of the Company. 6. Under section 111A of the Act and other relevant provisions of the Act, short-term capital gains (ie. if the shares are held for a period not exceeding 12 months), arising on transfer of investment in shares listed on a recognized stock exchange, shall be taxed at a rate of 10% (plus applicable surcharge and cess) in cases where securities transaction tax has been paid. 7. Under section 32 of the Act, the Company is entitled to claim depreciation on tangible and intangible assets as explained in the said section. 8. Subject to compliance of certain conditions laid down in section 32(iia) of the Act, the Company is entitled to additional depreciation on new plant and machinery used in production. 50

54 9. Under section 35D of the Act, the Company will be entitled to a deduction equal to 1/5 th of the expenditure of the nature specified in the said section, including the expenditure on the proposed issue and also for the purpose of preparation of project appraisal report by way of amortization over a period of five years, subject to the stipulated limits. 10. The Company will be eligible for tax holiday as per the provisions of section 80 IA of the Income Tax Act, 1961, in respect of its income from power co-generation unit(s) and electricity for a period of 10 years. The Company will also be eligible to claim deduction under section 80JJA in respect of its income from generation of power using bio-degradable waste for a period of 5 years. 11. The company can carry forward the excess of tax paid under MAT (Section 115 JB) over and above the normal tax payable on its Total Income. The same can be carried forward and set-off against normal tax payable in subsequent five years, subject to the stipulated limits. TO THE SHAREHOLDERS OF THE COMPANY Resident Shareholders : 1. In terms of section 10(32) of the Income-tax Act, any income of minor children, included in the total income of the parent under section 64(1A) of the IT Act will be exempt from tax to the extent of Rs.1500 per minor child. 2. In terms of section 10(34) of the Act, any income by way of dividends referred to in section 115-O received on the shares of the company is exempt from tax. 3. By virtue of section 10(38) of the IT Act, the long term capital gains on sale of shares where the transaction of sale is entered into on a recognized stock exchange in India and is chargeable to Securities Transaction Tax shall be exempt from tax. 4. In terms of section 88E of the Act, the securities transaction tax paid by the shareholder in respect of the securities transactions entered into in the course of his business would be eligible for rebate from the amount of income-tax on the income chargeable under the head Profit and gains of business or professions arising from taxable securities transactions. As such, no deduction in respect of amount paid on account of securities transaction tax will be allowed in computing the income chargeable to tax as capital gains. 5. Under Section 48 of the Act, if the company s shares are sold after being held for not less than twelve months, the gains (in cases not covered under section 10(38) of the Act), if any, will be treated as long term capital gains and the gains shall be calculated by deducting from the gross consideration, the indexed cost of acquisition. 6. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of investment in shares will be exempt from capital gains tax, if the capital gains are invested in certain notified bonds within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gain in the year in which the bonds are transferred or converted into money. 7. Under section 54F of the Act, long-term capital gains (in cases not covered under section 10(38) of the Act) arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the Company will be exempt from capital gain tax subject to certain conditions, if the net consideration from such shares are used for purchases of residential house property within a period of one year before and two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer. 8. Under section 112 of the Act, long-term capital gains, (i.e. if the shares are held for a period exceeding 12 months) (in cases not covered under section 10(38) of the Act), arising on 51

55 Mutual Funds : transfer of investment in shares, shall be taxed at the rate of 20% (plus applicable surcharge and cess) after indexation as provided in the second proviso to section 48, or at the rate of 10%(plus applicable surcharge and cess) without indexation at the option of the Company. 9. Under section 111A of the Act and other relevant provisions of the Act, short-term capital gains (i.e., if the shares are held for a period not exceeding 12 months), arising on transfer of shares listed on a recognized stock exchange, shall be taxed at a rate of 10% (plus applicable surcharge and cess) in cases where securities transaction tax has been paid. Additional Benefits Available to Non-Resident Indian : 1. Under section 115-I of the Act, the non-resident Indian shareholder has an option to be governed by the provisions of Chapter XIIA of the Income Tax Act, 1961 viz. Special Provisions Relating to Certain Incomes of Non-Residents which are as follows: a. Under section 115E of the Act, where shares in the company are acquired or subscribed to in convertible Foreign Exchange by a Non-Resident Indian, capital gains arising to the non-resident on transfer of shares held for a period exceeding, 12 months shall (in cases not covered under section 10(38) of the Act) be concessionally taxed at the flat rate of 10% (plus applicable surcharge and cess) (without indexation benefit but without protection against foreign exchange fluctuation). b. Under provisions of section 115F of the Act, long-term capital gains (in cases not covered under section 10(38) of the Act) arising to a non-resident Indian from the transfer of shares of the company subscribed to in convertible Foreign Exchange shall be exempt from Income tax, if the net consideration is reinvested in specified assets within six months of the date of transfer. If only part of the net consideration is so reinvested the exemption shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition. c. Under provisions of section 115G of the Act, Non-Resident Indians are not required to file a return of income under section 139(1) of the Act, if their only income is income from forex asset investments or long term capital gains in respect of those assets or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act. d. Under section 115H of the Act, where the Non-Resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under section 139 of the Act to the effect that the provisions of the Chapter XIIA shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money. 2. Provisions of the Act vis-à-vis provisions of the tax treaty : In terms of Section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to non-resident. In terms of section 10(23D) of the Act, all Mutual Funds set up by Public Sector Banks or Public Financial Institutions or Mutual Funds registered under the Securities and Exchange Board of India Act / regulation there under or Mutual Funds authorized by the Reserve Bank of India, subject to the conditions specified, are eligible for exemption from income tax on all their income, including income from investment in the shares of the company. Benefits to Shareholders of the Company under the Wealth Tax Act, 1957 : Shares of company held by the shareholder will not be treated as an asset within the meaning of Section 2(ea) of Wealth Tax Act, Hence shares are not liable to Wealth Tax. 52

56 Benefits to Shareholders of the Company under the Gift Tax Act, 1958 : Note : Gift made after 1 st October, 1998 is not liable for any gift tax, and hence, gift of shares of the company would not be liable for any gift tax. 1. All the above benefits are as per the current tax law as amended by the Finance Act, The stated benefits will be available only to the sole / first named holder in case the shares are held by joint holder. 3. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to any benefits available under the Double Taxation Avoidance Agreements, if any, between India and the Country in which the non-resident has fiscal domicile. 4. In view of the individual nature of tax consequences, each investor is advised to consult his / her own tax advisor with respect to specific tax consequences of his / her participation in the scheme. 53

57 INDUSTRY OVERVIEW Global Scenario Sugar is produced in more than 100 countries through out the world using either sugarcane (70 to 75%) or Beet. India and Brazil are the two major sugar producing countries in the world besides Australia, Thailand, China, Mexico and few European countries. The developed countries subsidize export of sugar in order to keep realization high in the domestic markets. The current WTO guidelines require that subsidies provided by the developed countries on sugar exports need be lower. The WTO had ordered European Union to discontinue dumping of subsidized sugar in the global markets within a given time period. The current sugar production worldwide is also on the higher side as in the domestic market. Since the price of oil is touching US$ 100 a barrel, Brazil which has a ready infrastructure may switch over to production of Ethanol from cane juice resulting in the International market picking up a little in the next year. World Sugar Production Million Tons Production Consumption Surplus / (Deficit) Import demand Export availability Source: International Sugar Orgn quarterly market outlook, May 2007 The sugar industry in India is amongst the few industries that have successfully contributed to the rural economy of the country. It has done so by commercially utilizing the rural resources to meet the large domestic demand for sugar and by generating surplus energy to meet the increasing energy needs of India. In addition to this, the industry has also become the mainstay of the alcohol industry. The sector supports over 50 million farmers and their families, and delivers value addition at the farm side. The sector also has a significant standing in the global sugar space. The Indian domestic sugar market is one of the largest markets in the world, in volume terms. India is also the second largest sugar producing geography. India remains a key growth driver for world sugar, growing above the Asian and world consumption growth average. Globally, in most of the key geographies like Brazil and Thailand, regulations have a significant influence on the sugar sector. Perishable nature of cane, small farm landholdings and the need to influence domestic prices; all have been the drivers for regulations. In India, too, sugar is highly regulated. Since 1993, the regulatory environment has considerably eased, but sugar still continues to be an essential commodity under the Essential Commodity Act. There are regulations across the entire value chain land demarcation, sugarcane price, sugarcane procurement, sugar production and sale of sugar by mills in domestic and international markets. However, fundamental changes in the consumer profile and the demonstrated ability of the sector to continuously ensure availability of sugar for domestic consumption has diluted the need for sugar to be considered as an essential commodity. According to a recently conducted nation wide survey, nearly 75 percent of the total non-levy sugar is consumed by industrial, small business and high-income household segments. Further, even for a low-income household, 10 percent increase in sugar price would result in less than 1 percent increase in the monthly food expense. While the sector grows in stature and continues to play a key role in the economy, it is expected to face some significant challenges. There is lack of alignment between sugarcane and sugar prices. As a result, it leads to cane payment arrears and induces cyclicality. The arrears typically result in the eventual need for government support packages, while the pronounced cyclicality destabilizes the sector revenues. The average sugarcane yields have also, at best, stagnated, and the average recovery is amongst the lowest in comparison with key sugar producing nations. Large sugar inventory exposure

58 and sugar price volatility also results in high sugar price risk for the sector. In the past ten years, on an average basis, even the large listed sugar firms have struggled to generate Return on Invested Capital (ROIC) over and above their cost of capital. This is primarily due to high mandated fixed cane prices and volatile sugar prices. Present Scenario Currently the sugar industry is passing through a phase of surplus production and there is an expected surplus of 7.8 million MT of sugar. This has been largely due to the remunerative sugar cane prices that are prevalent for the last two years as well as the inability of the sugar industry to export sugar when the world prices were viable last year. As a result, the sugar stocks in India are at an all time high which has depressed the domestic sugar prices making it difficult for the mills to pay the farmers. A host of factors, including a coincidental surplus in the international market, has intensified the seriousness of the situation. Sugar Cane & Sugar Production Trend Production in Lacs of Tons Sugar Cane Sugar Year The figures for are projections. The year refers to Sugar Year i.e. October to September. Source: Indian Industry Monthly Review December 2007 CMIE The sugar sector is impacted by induced cyclicality, since high sugar and sugarcane prices lead to increase in production at the cost of other crops. The resulting low prices for sugar impact the ability of mills to pay the farmers, thus leading to creation of arrears. High arrears lead to a significant fall in cane cultivation in the next year, leading to high sugar prices and increased attractiveness of cane. Domestic demand opportunity India accounts for approx 14% of world sugar consumption and in 2007, the domestic sugar consumption is estimated to be 20 million MT. It is expected that the drivers for consumption i.e. the GDP growth and population growth would continue to grow at current rates. Based on the past ten years' growth in consumption and estimates from various independent sources, it is expected that in 2017, the domestic sugar consumption would be approximately 28.5 million MT. Given the high cost of imports and the strategic importance of food security, India would need to target its production in excess of domestic consumption. 55

59 Projected Domestic Consumption of Sugar 400 InLakcsof Tons Ye ar Given the past trend in production cyclicality, sugar equivalent to 1.5 months of consumption i.e. an additional 3.5 million MT of sugar would need to be produced by Price of Sugar in the Domestic & International Markets Rs. Per Ton Nov-06 Nov Domestic International Sugar Prices per Metric Ton declined on an average by approx 20% in thedomestic and 26% in the international markets during Source: Indian Sugar Mills Assn Exports International trade is of strategic importance to India as it can help maintain stability in the domestic market, despite the cyclicality in production. If there is a sugar surplus either due to excess production or due to greater economic attractiveness of cane for ethanol and cogeneration in the future, exports could be used if the surplus cannot be managed in the domestic market. Acceptability as a credible exporter will provide the Indian sector an alternate set of markets for diverting surplus production. Similarly, in case of deficits, raw sugar imports could help bridge the supply gap. 56

60 India has the potential to export to major Indian Ocean markets, due to freight competitiveness with respect to key competitors, Brazil and Thailand. Due to the increasing emergence of destination refineries, key markets are importing greater share of raw sugar, and India's competitiveness for raw exports is relatively lower as of today. Currently, India's competitiveness is higher in markets, where share of white sugar imports as percentage of cumulative imports is higher. Going forward, India would need to build the capability to produce raw sugar and refined sugar of international quality standards, in order to leverage the export opportunity. The target markets are estimated to import 10 million MT of sugar by India would be able to leverage this opportunity through productivity improvements and alignment of cane and sugar prices in the domestic market. Productivity Increase in sugar production would be primarily through productivity improvements and increase in the crushing capacity of existing mills. The average sugar recovery rate has ranged between 10.20% and 10.50% during the past 7 years and the sector has the potential to improve sugarcane yields as well as improve the sugar recovery rate. The area under cane would also need to increase and this would be possible by better utilization of existing cane demarcated areas. This would also ensure minimal impact on other crops. Sugarcane is a water intensive crop and is dependent to a large extent on monsoons. Adoption of advanced techniques like drip irrigation would help achieve sustainable growth for the sector. Encouraging efficiency of the mills, quality improvements in cultivation practices and strengthening of relationship between the farmers and mills will all require greater intervention of the policy makers. Larger investments in research and development of seed varieties would be required for improving farm productivity. By-products Indian Made Liquors - Industry Structure and developments: The total Indian liquor market is estimated at around 750 million litres The products consist of Whisky, Rum, Brandy, Gin and Vodka. The country liquor market is a regional market with small manufacturers spread across various States and is estimated to be larger than the above market of Indian made liquors. The prominent liquor manufacturers have a nation wide presence with a network of distributors and retail merchants. The whisky segment which is approx 60% of the market composition is classified into Scotch, Super Premium, Premium, Prestige/Deluxe, Regular, Medium and Cheap segments. Regular whisky is the single largest segment in the whisky market, comprising approximately 40% of the whisky market. This segment is also the most competitive with nearly 30 brands competing in the segment. With increase in the price at the consumer level due to higher taxation, there is a downward shift towards cheaper products in key whisky and rum segment. The major volume growth in the whisky segment is coming in from the cheap segment. The cheap whisky segment has been growing at a faster rate as compared to the overall market. Prestige/Deluxe segment has recorded impressive growth over the past 3 years and the growth rate is likely to remain strong in future. The low per-capita consumption in India, the high volume in the unorganized cheap segment of the spirits business with its likely transition into the organized sector, the changing consumer perception of alcohol and the progressive regulatory changes are the key drivers to the growth of this industry. Ethanol Fuel ethanol and surplus power production through cogeneration are the other by-products' related opportunities. Globally energy security and environmental concerns are driving the adoption of fuel ethanol across countries. Leading countries including Brazil, U.S., Europe, Australia, Canada and Japan have established fuel ethanol programmes. In the future, global fuel ethanol demand is likely to grow exponentially. Global ethanol exports, currently at 6.5 billion litres are expected to increase to 50 to 200 billion litres by Power It is estimated that by 2017, there will be a total exportable power potential of approximately 9,700 MW. This can fulfil almost 6 percent of the additional power requirement of 128 GW by The sector can also generate 48 million carbon credits through cogeneration. 57

61 Regulatory Issues There are arguments in favour of and against complete deregulation. However deregulation may expose the farmers, millers and consumers to significant risks including risk of sugarcane off take, sugarcane availability and sugar availability, respectively. Sugar is regulated at the central and state levels. Hence, it is also subject to conflicts that arise from diverse perspectives at the two governance levels. Some of these conflicts relate to announcement of the Statutory Minimum Price (SMP) and State Advised Price (SAP), incentive schemes, molasses control and cogeneration (MNES Act). Sugarcane is covered under the Essential Commodities Act due to its perishable nature and the need for regulation on cane supply and pricing. Given the large number of farmers with small landholdings involved in farming cane, sugarcane needs to be regulated. Cane is also increasingly being viewed as a strategic crop due to the emergence of ethanol and cogeneration. Since cane is produced primarily in nine states but cane based products are consumed across the country, it needs to be regulated in a unified manner. Both central government as well as the state government regulate and legislate cane pricing, sometimes causing avoidable aberrations through conflicting laws. A consensus between central and state governments on cane pricing is therefore an essential prerequisite for healthy development of the industry. 58

62 BUSINESS OVERVIEW Background & History We, The Ugar Sugar Works Ltd. (USWL) is one of the pioneers in sugar production in the state of Karnataka. The Company was incorporated on 11th September 1939, under the patronage of his late Highness The Rajasahab of Sangli. In the year 1940 the Late Highness invited Dr. S.R.Shirgaokar, maternal uncle of late Mr. V.S.Shirgaokar (the first Chairman & Managing Director of Ugar Sugar Works) for setting up a sugar plant. Late Mr.V.S.Shirgaokar under the guidance of late Dr. S.R.Shirgaokar, set up the sugar factory at Ugarkhurd a fertile village on the banks of River Krishna, with a capacity of 500 TCD which started crushing on 21 April Subsequently Late Mr. Suresh Shirgaokar, younger brother of late Mr. V.S.Shirgaokar, who was popularly known as Babu Kaka took over as Chairman & Managing Director. The management of Ugar Sugar Works Ltd was carried out under the administration of M/s. Shirgaokar Brothers a partnership firm as Managing Agents till 31 December Under the administration of the Managing Agents, crushing capacity of the factory was raised to 2000 TCD from time to time till 31st December Subsequently the management was assumed by the present promoters directly. M/s. Ugar Sugar Works Ltd. presently has an integrated TCD Sugar plant with distillery and Indian Made Liquor section and a 45 MW Co-generation plant located at Ugarkhurd, Distt: Belgaum, Karnataka State. Further 3500 TCD capacity is being added alongwith a 15 MW cogeneration plant at Malli Village, Jewaragi Taluka, Gulbarga District, Karnataka State In addition. we are presently implementing 3500 TCD capacity sugar project with 15 MW cogeneration plant jointly with Sadashiva Sugars Ltd at Nagral Village, Taluk & District Bagalkot, Karnataka State, part funding of which is proposed through the present rights issue. Crushing Capacity Additions by The Ugar Sugar Works Ltd. Addition of Crushing Capacity in Tons per Day (TCD) Cummulative Capacity TCD Year Plants and their Locations The Ugar Sugar Works Ltd. Ugarkhurd Distt: Belgaum Karnataka State The Project has been completed and trail runs are on 3500 Joint Venture for the purpose of The Project which the present has been Right Issue is completed made and trail runs are on The Ugar Sugar Works Ltd, Malli Village, Jewaragi Taluka, Gulbarga District, Karnataka State Sadashiva Sugars Ltd, Nainegalli, Nagral Village, Taluk & District Bagalkot, Karnataka State 59

63 Diversification/Forward Integration into Distillery and Cogeneration of Power In the year 1963 we diversified into distillery to utilize the molasses generated by the sugar factory. The distillery at present has a capacity of Litres Per Day (30000 LPD batch type & LPD continuous type). Out of this we have the facility to produce LPD Ethanol and LPD Extra Neutral Alcohol with blending and bottling of 9 different Indian Made Liquor varieties. We are producing high quality and premium brands such as Vatted Malt, Old Castle Whisky etc. The brands of the company are well accepted in the market. Upto the year we were generating power for captive consumption only utilizing part of the bagasse generated by the sugar factory. During we set up a cogeneration plant with a capacity to produce 28 MW energy. This has since been increased to 44 MW during As on date we export 25 MW power and the balance is captively consumed. We have also set up facility for generation of 1 MW power through heat engines run on bio methane gas originating from chemical digesters. Alternatively this gas can be used as a fuel in package boiler to produce steam. Methane gas generated by biodegradation of filter cake, which is one of the by-products of the Sugar factory, is used for domestic consumption and the gas is supplied to 170 residential quarters adjacent to the factory. The sugar factory has also been provided with full fledged effluent treatment plant. The plant includes Chemical digesters, concentration and spray drying of spent wash and mixed lagoons for anaerobic and aerobic treatment of sugar factory effluents and distillery spent-wash etc. A summary of the various capacities of our factory at Ugarkhurd, Belgaum Distt, Karnataka are provided in the following table: Product Installed Capacity Production Production (6 months)* Production Production Sugar TCD** 2.21 Lakh Tons 1.94 Lakhs Tons 2.19 Lakhs Tons 1.16 Lakhs Tons Sugar Ships 600 MT per year Rectified Spirit LBL per year@ LBL LBL LBL LBL Denatured Spirit do do do do do- Potable Alcohol do do do do do- Arrack do do do do do- Electricity Lakhs KW per day Lakh KW Lakhs KW Lakhs KW *The financial year was changed from September to March and therefore data is only for part of the crushing season. **The installed capacity indicated is Sugar cane crushing capacity per day. Utilization of capacity with reference to crushing of sugar cane is provided on page No. 61 of this Letter of LBL = Lakhs Bulk Litres Main Objects of the Company: Lakhs KW According to the Memorandum of Association the Objects for which the Company was established are :- (1) To produce, manufacture or turn out sugar from sugarcane or jaggery or to produce, manufacture or turn out jaggery from sugarcane or such other material produce or crop cultivated or caused to be cultivated or purchased by the Company and as may be found capable of producing sugar or jaggery. (2) To purchase, take on lease, or otherwise acquire for the purposes of the Company, any estate, lands, buildings, easements or other interests in real property and to sell, let on lease, or otherwise dispose of or grant rights over any real Property belonging to the Company throughout the Indian Union. (3) To cultivate or give for cultivation land, and to do all such incidental things as may be deemed

64 necessary, for growing, planting and producing sugarcane or agricultural produce of any and every description, type, quality, and brands as shall be found capable of producing sugar and jaggery therefrom and to cultivate any other profitable crops or any experimental crop other than sugarcane on the lands held by the Company and to manufacture finished goods out of the said crops. Changes in the Objects Clause of Memorandum of Association since Incorporation: Date of Change July 04, 1994 Purpose Addition of clauses 27 to 37 in Objects Clause to enable diversification into other businesses including cogeneration of power. Changes in the authorized capital are detailed in the Share Capital History provided on page No. 23 of this Letter of Offer. Products and Services The Ugar Sugar Works Ltd. manufactures the following:- Sugar a) White Crystal Sugar b) Raw Sugar Distillery a) Rectified Spirit b) Extra Neutral Alcohol c) Ethanol d) Indian Made Liquors Power Generation Cogeneration of power utilizing bagasse and other biological waste. Sugar Production Our Sugar Mill has an installed capacity of TCD and depending on the availability of sugar cane have been able to utilize it during the season. The quantitative details of sugar cane crushed and sugar produced during the past five years are tabulated below: Year Capacity available in Metric Tons Cane Crushed In Metric Tons *Utilization of Capacity % Sugar Produced In Metric Tons Sugar Recovery Rate % ,00,000 14,67, , ,00,000 8,37, , ,00,000 10,43, , ,75,000 18,76, , ,18,000 22,01, , ,75,000 19,49, , *The installed capacity is taken at 18,00,000 Metric Tons equivalent to 180 days x 10,000 MT for and 2005 and x 180 for 2006 including the capacity of units at Tasgaon and Phalton run on lease. The accounting year of the company has been changed from 30 September to 31 March from 2007, though the figures included for 2007 are for the full crushing period of 187 days which commenced on and ended on June 01, 2007 including the leased units with a crushing capacity of 4000 TCD. The crushing typically starts with a smaller quantity and may reach full capacity within days from the date of commencement of crushing. Similarly as the season draws towards the last 15 days of the crushing season the arrivals of sugarcane taper off. Therefore the mills are able to crush full capacity only for approx 5 months and therefore we may say that the capacity is utilized to the full extent depending solely on the availability of cane. 61

65 While the average sugar recovery rate for the industry has ranged between 10.30% to 10.60% during the past 5 years we have consistently been able to show better recovery rates. This has been possible due to better quality cane availability enabled by us through our Research & Development efforts. Sugar Manufacturing Units on Lease Anticipating an upward movement in sugar prices. we took two sugar units (a) New Phalton Sugar Works Ltd, Sakharwadi, Taluk Phalton, District Satara, Maharashtra with a crushing capacity of 1250 TCD; and (b) Tasgaon Taluka Sahkari Sakhar Karkhana, Turchi, Tasgaon Taluka, District Sangli, Maharashtra with a crushing capacity of 2750 TCD on lease during the year These units had only sugar producing facilities and the by-products such as molasses and bagasse had to be sold. Prices of sugar declined sharply during and and we incurred total losses to the tune of Rs crores upto September The Phalton unit has been handed back to the lessor w.e.f. November 01, In the case of the Tasgaon unit, the Maharashtra State Cooperative Bank has taken over possession of the assets of the unit under the SARFESI Act w.e.f. 30 th August Thus we have stopped operating both these units. The sugar prices saw a decline of 20% in the domestic market and 26% in the international market during November 2006 to November The sugar industry in general suffered losses from the Sugar segment because of the decline in sugar prices while the cane prices remained unchanged. Our sugar segment suffered losses during the financial years ended 30 th September 2006 and 31 March 2007 and the six months period ended 30 th September Sugar Ship Project We have set up a 100% Export Oriented Unit for manufacturing sugar cubes in the shape of ships which are called Sugar Ships for export to Germany as per a Contract entered into by us with M/s.Fragies Verwaltung Gmbh, Haffenstrasse I Rantum/Sylt, Germany. The MOU provides for 100% buyback, by M/s. Fragies, of the sugar ships manufactured by us, at a cost plus pricing arrangement. The entire plant and machinery for the project has been recommended by M/s. Fragies to be purchased from and has since been supplied by M/s. Kloeckner Haensel Processing Gmbh, D-30103, Hannover, Germany. The project has been completed at a total cost of Rs. 27 crore and trial runs have been commenced. Though according to the agreement with the machinery supplier trial run was to be undertaken for a maximum period of 3 weeks, trial runs have been continuing for the past several months. Presently we are outsourcing refined sugar and other inputs which go into the manufacturing of sugar ships. The unit has the capacity to produce 45 lakhs boxes, each box containing 250 gms totaling 1125 Metric Tons per annum. Export obligation: The Company has an export obligation of Rs. 20,70,41,208 in respect of Turbine imported from Japan for using at Jewargi Unit of the Company against EPCG License No dated Similarly Company has to meet an export obligation of 45 Lakh boxes of 270gms (0.92 Euros per box of sugar ship) Sugar ships per annum for a period of 5 years against the 100% EOU. If the Company fails to meet this obligation, the Company will have to pay the duty saved with interest and penalty, approximately Rs crores against EPCG and Rs. 5 crores against EOU. The company has 8 years time from the installation of this machinery i.e. January, 2008 for fulfillment of this export obligation and Company do not see any problem in meeting this Export obligation. Further, in respect of 100% EOU, the Company is exploring the possibilities of export to Asia pacific to meet the shortfall of the export obligation of export to Germany. Sugar Manufacturing Process Sugarcane is harvested and clean cane is loaded in the vehicles and brought to the factory. The gross weight is taken and cane is unloaded on the feeder table with the help of electric crane. The tare weight of the vehicle is taken to arrive at the weight of the cane. Cane is fed to cane carrier from the feeder table. The preparatory devices viz. Kicker, cutter, fibrizer etc., are installed on the carrier for the preparation of cane. The prepared cane is taken to Mills by second carrier where juice is extracted using compound imbibitions process and hot water is applied for maximum extraction before last mill. 62

66 Mixed juice is strained and sent for processing. Water for imbibition s and mixed juice both are weighed in automatic weighing scale & by mass flow meter respectively. Bagasse (residue of cane after juice extraction) is used as fuel in the boiler and surplus bagasse saved in the form of bales. Mixed juice is clarified by sulphitation process by heating at 70 0 C in a juice heater, phosphoric acid, sulphur dioxide gas & milk of Lime are used as clarificants. These are thoroughly mixed in juice sulphiter. Then the sulphited juice is heated to C in another juice heater. This juice is passed on to continuous clarifier through flash tank for settling. The settled mud is filtered with the help of vacuum filter where filtrates are separated and sent back to process. Hot condensate water is used to wash the cake & recover maximum sugar from the cake. The washed filter cake with minimum sugar content is sent out as bye product. Decanted clear juice from clarifier is taken to Evaporators (multiple effect). The concentration is increased to syrup consistency. The heat required for heating and evaporation is used from exhaust steam and the bled vapours from evaporators. Exhaust steam is obtained from prime mover turbine of power generation. The syrup from evaporators is sulphited to ph of & it is used in vacuum pan boiling to produce A Massecuite. The necessary seed crystals are taken in the pan and boiled with syrup / melt at about 60 0 C. This gives A massecuite. A Massecuite from the pan is discharged into crystallizer. Then the sugar crystals are separated from the surrounding film of mother liquor in centrifugal machine. It is also washed by superheated water wash. The liquor is called as A Heavy molasses and the white crystal sugar is dropped on the hopper from centrifugal machine. The sugar is conveyed on hoppers graded & bagged. The crystal sugar gets dried & cooled while conveying on hoppers. A heavy molasses is subjected to second boiling to get B Massecuite there by B- sugar is used as Seed and / or excess it melted and melt is used in A boiling. B-Heavy molasses is subjected to third boiling to get C- Massecuite and there by C- sugar and final molasses. C- sugar is magmized and double cured. The mother liquor separated is called C-Light molasses. It is used in C boiling. C-double cured sugar is melted and melt is used in A boiling. Final molasses is weighed and stored in steel tanks to be used by the distillery. 63

67 SUGAR MANUFACTURING PROCESS FLOW CHART 64

68 65

69 66

70 Sale of Sugar Sugar sales are governed by sugar control order of Central Government & the releases are given to the Sugar Factory in proportion to their production / stock of season with the factory. Factory will follow these rules for sugar sale & abide by the rules. Sugar is sold to Government nominees & or wholesale dealers registered with the Government. Government of India permits sale of 90% of the production in the open market as per releases permitted by the government and the remaining 10% is sold as levy sugar to be distributed by the Government through the Public Distribution System. Sugar permitted to be sold in the open market can also be exported either White or Raw, depending upon the local conditions i.e. the capacity to store sugar and the market conditions. Distillery We are utilizing the molasses generated by the sugar factory to produce potable alcohol, Ethanol etc in the distillery. The distillery at present has a capacity of Litres Per Day (30000 LPD batch type & LPD continuous type). Out of this we have the facility to produce LPD Ethanol and LPD Extra Neutral Alcohol with blending and bottling of 9 different Indian Made Liquor varieties. We are producing high quality and premium brands such as Vatted Malt, Old Castle Whisky etc. The brands of the company are well accepted in the market. Distillation Process We currently have two distilleries and Indian Made Liquor (IML) units in our premises at Ugar Khurd. The first one is an old distillery of capacity 30,000 LPD, while the second one is a newly constructed distillery from Praj Industries, Pune having a capacity of 45,000 LPD. The Praj distillery runs on the continuous fermentation technology. The whole unit of distillation process is having material of construction in copper, which gives a very good quality of spirit. This plant is having a high level of computerisation and automation. Continuous Fermentation We have adopted & realtered 30,000 Litres continuous fermentation by removing the old batch type Fermentation Process. The Technology adopted continuous Fermentation (Ugar High Yield Fermentation Technology). The Specialty of Fermentation is continuous and final alcohol percentage in the process is 8.5% to 9.5% high yield. The fermentation foam is separated by a mechanical process. The continuous fermentation system called Hiferm GR consists of three main fermenters where-in the alcoholic fermentation takes place. The wash is then taken for distillation from the fermentation system, which is incorporated with the molasses weighing system, molasses broth mixer and air blower. The fermentation system is incorporated with yeast vessels of capacities m3, m3 and m3. The vessels are used to propagate special type of yeast strain. During the process, required doses of nutrients and oxygen are supplied through the filtered air. The temperature is maintained by circulation through the plate type heat exchanger. When the desired number of yeast cells are developed, the whole biomass is transferred to main fermenter, where alcoholic fermentation takes place. Fermenter No. 1 is connected to continuous molasses diluter. In the molasses diluter proper dilution takes place which is continuously fed to fermenter No. 1. The overflow of fermenter No. 1 is taken to fermenter No. 2 and the overflow of fermenter No. 2 is taken to fermenter No. 3 where almost all the fermentable sugars are exhausted and fermentation reaction is ceased. This wash is ready for distillation. Thus the fermented wash from fermenter NO. 3 is continuously taken to a continuous steam distillation unit known as ECOFINE-P. The distillation process consists of an Analyser column 1695-mm dia, a Degassifying column 1250-mm dia, Aldehyde column 560 mm dia, Rectifying column 1085 mm dia, and exhaust column 1085 mm dia with proper number of trays. It is also incorporated with Beer heater, principal condenser and vent condenser of capacity

71 mm O.D for affecting partial condensation and maintaining the reflux ratio for enrichment of alcoholic liquid to 95% v/v. The distillation process is a conventional continuous one. The fermented wash is fed continuously at the top of analyzer column and the steam is continuously injected at the bottom of the same column, and hence there will be very good contact between the vapours and liquid at each trays of the analyzer column resulting in the enrichment of alcoholic vapours which are fed to the rectifying column. The Aldehyde column serves to separate aldehydes which are separately stored. The rectifying column consists of 44 Nos. of trays which are responsible to enrich the alcoholic liquid (ethyl alcohol) to 95% V/V by way of reflux and partial condensation from Beer heater and condensers. Exhaust column is meant to exhaust traces of alcohol from the spent lease. Ethyl alcohol of 95% V/V accumulates at the top of the rectifying column which is continuously tapped and passed through cooler, tester and stored. Ethanol The Ethanol, being manufactured by the sugar industry in Brazil and other countries has been successfully mixed upto a certain percentage with petrol. This is a relatively new area of business for the sugar industry in India. We started production of Ethanol-Bio Fuel in March The Ethanol plant has been commissioned by Messrs. Associated Engineers. Gujarat and the plant has a capacity of producing upto 20,000 LPD. The Ethanol production is based on the Azeotropic Distillers method in which Benzene is used as a entariner. The Ethanol plant is having two columns. One is a dehydration column which is having 48 plates and 1200mm diameter, rectified spirit is main raw material for ethanol. Ethanol of purity 99.6% is tapped from the bottom plates of the same column. The possible losses of Benzene & Rectified Spirit during the distillation column are recovered through the recovery column and are again fed to the dehydration column. The Ethanol of purity 99.6% thus produced, is stored in to the air tight receivers. We have started issuing of ethanol i.e. Bio Fuel to the Petroleum Companies like IOCL, BPCL etc., for 5% blending with petrol. Rectified Spirit Rectified Spirit is produced from cane molasses. The molasses is diluted & fermentation is done by using yeast as a catalyst. After fermentation, the Rectified Spirit is produced by means of fractional distillation in a copper column Finally, the Rectified Spirit is collected & stored in M.S tanks. Rectified Spirit is used in the preparation of Medicines, Syrups and Perfumes. It is also used for the preparation of extra neutral alcohol, absolute alcohol, ethyl actitate and acetic acid. The Ugar Sugar Works Distillery division is producing Rectified Spirit of ISI grade, first and middle grade alcohol. The licensed capacity of Rectified Spirit is 75,000 Litres per day. Denatured Spirit Any spirit i.e Rectified spirit, ethanol, or Middle grade alcohol which is mixed with the prescribed denaturant is called Denatured Spirit. Sale of the products from Distillery Rectified Spirit and Extra Neutral Alcohol (ENA) is sold as per requirement of the market and the market fluctuates a lot due to the cyclic nature of the sugar industry. Bulk of the sale is in Karnataka State and the balance in the neighboring states. Ethanol is sold to the oil companies namely Indian Oil Corporation, Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd. by participating in the tender process. IML is mainly sold in the state of Karnataka through Karnataka State Beverages Corporation Ltd. (KSBCL), a Corporation of the Govt. of Karnataka. As a policy matter all the liquor is sold in Karnataka has to be sold through the Corporation. This has increased our sales due to improving the process of selling and transparency in transaction. The IML is also sold outside the state but the quantum is quite low due to the export duty on liquor sold outside the state of Karnataka. Hence most of the factories have started bottling units in different states. Accordingly, we have also started bottling in the states of Maharashtra and Kerala. 68

72 Cogeneration: The Company commissioned a 28 MW power Cogeneration Plant in the year 1998 to generate power using bagasse which is a by product of the sugar factory. During with the expansion of the crushing capacity of the sugar mill to TCD, the capacity of the power plant was also enhanced to 44 MW. The Company also entered into Power Purchase Agreement with the Govt. of Karnataka for supply of excess power to the grid. Until the Electricity Act 2003 came into being the Company was supplying power to the Karnataka Power Transmission Co.Ltd. (KPTCL) as per the Power Purchase Agreement (PPA). However, after the introduction of the Open Access Scheme through the Elecricity Act 2003 the Company entered into an agreement with the Tata Power Trading Co. Ltd. to supply excess power to them. We are presently exporting 25 MW of power to the Tata Power Trading Company Ltd. The steam flow at MCR conditions under different conditions (season, off season) of operation high-pressure steam from the superheater of the boiler enters the HP stage of the steam turbine. One uncontrolled extraction and one controlled extraction will provide process steam requirement. The steam from the first extraction is also used for deaeration & steam at is also used for feed water heating. The remaining steam, after expansion is condensed in a two pass condenser (in two halves) & returned to the boiler. Bagasse Handling System Bagasse from the mill house shall be fed to the Bagasse elevators. Bagasse from the elevator is carried through belt conveyor to the distribution carrier, this shall be transported to feed conveyor through a storage hopper, which in turn, shall feed the other chain slat conveyor to feed the boiler. In case of shortage of bagasse due to problems in mill, reclaim bagasse shall flow through conveyor to take care of the deficit. For stacking purpose, bagasse shall be directed towards stacking conveyor for generating bagasse pile by means of traveling wing tripper. This pile may be further compacted by dozers to increase storage capacity. For reclaiming the stored bagasse from the open yard, Bagasse shall be dozed to any of the reclaim hoppers on ground, which in turn shall be carried by underground off-take conveyor to over ground. Conveyor shall then transport this reclaimed bagasse to through flap gate to feed the boilers. Procured bagasse from other sugar factories shall be manually stored in the adjacent bagasse pile area under shed. Reclaiming of this bagasse shall be through the reclaim hoppers & the underground conveyor common to the main bagasse reclaim system. Carbon Credit We are eligible for Carbon Credit for using biomass as fuel and thus reducing carbon emissions into the atmosphere. Income from trading the carbon credits was Rs lakhs during and Rs lakhs during Technology Equipment and Facilities: We continuously endeavour to upgrade the technology and the facilities available as per current industry scenario. Research & Development Work The Company has a reasonably good R & D Wing carrying out research and developmental work for Product improvement, cost reduction, product development, imports substitution etc The Company carries out Research and Development in sugarcane, process modifications in the sugar production, quality liquor and Ethanol production, improvement in Technology, Cogeneration of power and bi-methanation from press mud and zero effluent discharge system. We are continuing with our efforts to locate more dual purpose varieties, which could give good cane yields, excellent recoveries and reasonably high fibre content. Co and Co (Both are Soma-clones of CoC- 671) will replace or supplement CoC-671 (Q63 x Co-775) so as to obtain an average seasonal recovery of 12.50% plus. We are trying to stop the spread of the undesirable variety viz. Co-8011 (Co-740 x Co-6304). We will totally stop receiving Co-7704 (Co-740 x Co-6806) variety during crushing season as it is a good yielder of poor 69

73 quality cane. Co-8011 and Co-7704 will be replaced by Co (Co x CoC-671), Co (Co-7201 x Co-775) and COM (Co-740 x Co-6806). Co-7508, Co and Co show good promise in saline soils. Co is in the pipeline and the suitable variety for Co-generation plant. Bio-fertilizers viz. Azotobacter, Acetobacter, Azospirillum, Phosphate Solubilizing Microbial (P.S.B./P.S.M.) inoculants are cost-effective as their application works out to be substantially less expensive vis-à-vis chemical fertilizers and contribute significantly towards enhancing the Productivity of land. This is the 9 th year of conducting Initial Varietal Trials, AVT (Autumn and Spring), MLVT of All India Coordinated Research Project (AICRP) to evaluate the performance of Zonal varieties and thus it will give a chance to select suitable varieties. Important trial on Evolving Multiratooning technology and studies on the Multiratooning Potential of Sugarcane Varieties is laid under the guidance of Dr. B. Sundara, Principal Scientist, Head, Crop Production, Sugarcane Breeding Institute, Coimbatore. The S.B.I., Coimbatore supplied 5000 clones for screening of White Woolly Sugarcane Aphid. Three most promising Sugarcane White Woolly Aphid resistant clones, viz. SNK44, SNK49 and SNK754 will be multiplied to conduct large scale yield trials across agro-ecologies on Northern Karnataka to know their suitability for commercial cultivation under the guidance of The University of Agricultural Sciences, Dharwad. CoS derivative of 8436 GC (COVC ) will also be tested for resistant to White Woolly Sugarcane Aphid. The trials conducted under the guidance of S.B.I., Coimbatore, U.A.S., Dharwad and AICRP on Sugarcane (ICAR, New Delhi) are highly appreciated by the concern authorities. There are 40 odd new sugarcane varieties under trial in our R and D Farm. The U.A.S., Dharwad sanctioned us a project for multiplication of predator, Brown lace wings (Micromus Sp.) in the laboratory to control White Woolly Sugarcane Aphid WWSA Ceratovacuna lanigera Zehnt. Short Duration Crops: The work with wheat, soybean and sunflower is reasonably successful as a rotation of crop and useful indications are likely to be obtained this year. Wheat: Our work on wheat is getting along well. Experiments under the guidance of CIMMYT (South America), ICARDA (Middle East), MACS, Pune, U.A.S., Dharwad and ICAR, New Delhi are laid on a big scale and the stand of the crop is excellent. Vinayak (DWR 162) wheat variety identified by our R and D Wing is not only popular in this part of the country but in Indonesia it is also released as Devata. Soyabean: JS-335, PK-1024, PK-1029, DSb-6, MACS-450 and NRC-37 are soybean varieties doing well in our area inspite of incidence of rust. National Research Centre For Soyabean, Indore sanctioned a second time Rs.40,000/- research grant to us for screening a large number of soyabean varieties against rust and the Company will pursue the effort still further. Sugar Beet: Our R&D trials on sugar beet in Non-saline alkali (Black alkali / Sodic) soils are laid to study sucrose %, tuber yield and impurities such as Potassium, Sodium and amino-nitrogen % in collaboration with Syngenta, KWS (Germany), SES (Belgium), Europe and U.S.A. as supplementary / complimentary / companion crop in sugarcane based industry area. Monogerm seeds viz. Posada (Indus), Dorotea (Cawery), HI0064 (Subhra) LAETITIA, FELICITA, ESPERANZA and CAPITANA genotypes are included in the trials. Jatropha Curcus (Raton Jyot): We have planted large number of seedlings of Jatropha as a rain fed crop in the command area which can be used as a source of bio-diesel and the seedlings are developing satisfactorily. Awards: The Company has over the years won several awards. To highlight a few 70

74 1) Year National Safety Award for the longest Accident Free Period 2) Year S.V. Parthasarathy Memorial Award for Outstanding Performance from Indian Sugar Technology Association, Chennai 3) Year to , S.V. Parthasarathy Memorial Award for Excellence in R&D Work from Indian Sugar Technology Association, Chennai 4) Awards Received for R&D Work Year (a) Deccan Sugar Technologists Association (b) K.S.Kale Memorial Award (c ) Vasant Dada Memorial Prize (d) J.S. Puja Shield e) Year Dr. Haldikar Vigyan Pratishtan Award Regulatory Environment: Sugar Industry is one of the highly regulated industries regulated by several bodies of State and Central Governments at several levels. The Statutory Minimum Price (SMP) of sugarcane is decided by the Central Government on a formula based on factory wise sugar recovery of the previous year. Then the sugar releases are also governed by the Central Govt. and our factory gets a release from the Govt. of India at the beginning of the month and only that quantum of sugar is sold in the open market. Export of sugar is also regulated by the Govt. of India depending on the domestic needs. There is a Wage Board formulated by the Govt. of India to decide upon the wages of sugar factory workers. The State Govt. also has several restrictions on sale and captive consumption of Molasses and Rectified Spirit. The State Govt. also regulates sale and purchase of power through Karnataka Electricity Regulatory Commission (KERC) with regard to export of power generated by Co-generation. Current regulations for the sugar industry Current regulations Cane price Statutory Minimum Price (SMP) by determination Central Government State Advised Price (SAP) by States Impact Sugar mills in states where SAP is applicable stands at a disadvantage as the domestic sugar market is demand supply driven SAP being higher than SMP Command area Monthly release mechanism Levy quota and levy price No new mill can be set up at a distance of less than 15 km from existing mill Monthly releases given to each mill by the government 10% of the mills production procured by the government at levy price for distribution through Public Distribution Scheme (PDS) Demand supply imbalance in sugarcane requirement and sugar capacities can impact sugar mills operations Sugar mills impacted in case of over production of sugar on account of piling up of inventory thereby leading to higher carriage cost Sugar mills will necessarily have to sell 10% of sugar production at levy price irrespective of prevailing free market price 71

75 Communication Strategy: The Ugar Sugar Works Ltd. communicates with its shareholders through yearly Balance Sheet and Profit and Loss Account besides any particular circulars of note. The Company also has a website ' which is updated on a quarterly basis. Human Resource: The Company has a reasonably good Human Resource Development team led by senior functionaries. The Company has had cordial relations with the workers and problems faced by the workers are discussed, negotiated and resolved. The Company has a very low employee attrition rate. Other Projects under implementation: A. Sugar Manufacturing unit in Jewaragi Taluka, Gulbarga District, Karnataka State Ugar Sugar Works is also implementing another project with 3500 TCD and 15 MW cogeneration unit at Malli village of Jewaragi Taluka, in the Gulbarga District of Karnataka State. The required land admeasuring approx sq. mtrs has been acquired and various plant and equipment, machinery and cogen plant (including boiler and auxiliaries, steam turbine generator and auxiliaries, electrical evacuation system, water treatment / cooling tower and auxiliaries, fuel and ash handling system, bagasse yards, piping and instrumentation, water storage and distribution system, switchyard, cable trenches and cabling, chimney miscellaneous plant buildings and various offices, etc.) have been installed and the project is expected to start trial runs during the current year I,.e The trial runs have taken during season. This project site is adjacent to NH 13 about 0.5 Km on the West side of the High way. The total project cost is estimated at Rs. 120 crore funded by Terms Loans of Rs. 80 crore from Bank of Baroda and Central Bank of India. The remaining amount of Rs. 30 crore has been met by raising Corporate Loan from Axis Bank. The current cost has gone up now to Rs. 140 crore B. Ugar Quality Packaging Private Ltd, MIDC Ratnagiri, Karnataka Ugar Quality Packaging Private Ltd was incorporated on 21 June 2006 and registered as a 100% export oriented unit.. This project has been taken up because of the requirement of specialized packaging requirement for export of Sugar Ships manufactured by Ugar Sugar Works for export to Germany. The project is being implemented in association with Mr. Jitendra Joshi, a packaging expert and who has been operating two packaging units by the name Quality Screen and Quality Service at MIDC, Ratnagiri. Both are sole proprietorships manufacturing specialized packaging material. Mr Joshi is participating in equity to the extent of 40% and will be responsible for running the unit. The project is being implemented at a total cost of Rs. 526 Lakhs the break up of which is as follows: Equity Preference Term Loans Deferred Payment Rs lakhs Rs lakhs Rs lakhs Rs lakhs Equity Participation: Ugar Sugar Works 25% Promoters of Ugar Sugar 25% Employees of Ugar Sugar 10% Mr.Jitendra Joshi, Technocrat 40% The entire preference capital and 25% of equity (Total amount Rs. 100 lakhs) has been contributed by Ugar Sugar Works. Approx 40% of the production will be captively consumed by Ugar Sugar Works and the balance 60% will be sold to other export oriented units. 72

76 Trial production has already been commenced in December 2007 and is expected to commence commercial production by February Profitability, Dividend Payments and Future Prospects We have been consistently a profit making company and have been paying dividends except the last year i.e The sugar industry in general suffered losses due to unprecedented fall in sugar prices. We are confident that during the current year we will be reporting positive results and with sugar prices improving and the revenues from our new projects flowing in we will again be able to declare dividend from the next financial year onwards. Details of dividend payments during the past five years are provided on page 186 of this document. Promises vs Performance of earlier issues Our company came out with a Rights one equity share for every four shares held at a price of Rs. 25/- per share including face value of Rs.10 and premium of Rs. 15 per equity share. The issue opened on 24th September 1998 and closed on 24 th October 1998 and was fully subscribed. The money was raised for expanding the crushing capacity from 5000 to 7500 Tons per day and commencement of cogeneration of power. The project was successfully implemented utilizing the funds. 73

77 Details of Board of Directors: CORPORATE STRUCTURE AND MANGEMENT Sr. Name/ Father s Name/ Designation/ DIN No/ No. Address/ Qualification 1 Mr. Rajendra V. Shirgaokar. S/o Mr Vinayak Shirgaokar. Chairman & Managing Director, DIN No.: Address: Ugarkhurd Talathani, Belagaum Qualification: B.Sc (Hon) (Chem.Engg London) 2 Mr. Prafulla V. Shirgaokar S/o Mr Vinayak Shirgaokar. Executive Director, DIN No: Address: Ugarkhurd Tal-Athani Qualification:M.Sc 3 Mr. Shishir.S. Shirgaokar S/o Mr Suresh Shirgaokar. Wholetime Director, DIN No.: Address: 12 Kostika House, Pali Rd., Bandra Mumbai Qualification:B.Sc 4 Mr.. M. B. Karmarkar S/o Mr Balkrishna Karmarkar. Independent Director, DIN No.: Address: Karmarkar Sadan, Khan Bhag, Sangli Qualification:Bsc. LLB (Spl) 5 Mr. S. N. Inamdar S/o Mr Narhar Inamdar. Independent Director, DIN No.: Address: 2-A, Ameya Apartments, Kashinath Dhuru Marg, Dadar, Mumbai Qualification: B.Com LLB (Spl) 6 Mr. M. G. Joshi S/o Mr Gopal Joshi. Independent Director, 74 Age Other Directorships Ugar Consultancy Ltd.** 2. Indian Sugar Exim Corporation Ltd. 3. Shishir Shirgaokar Inv Pvt Ltd 4. Forest Industries (P) Ltd 5. Sitara Tiles Pvt Ltd 6. Suresh Shirgaokar Inv Pvt Ltd 7. S.B. Reshellars Pvt Ltd 70 1.Ugar Consultancy Ltd.** 2. DM. Shirgaokar Inv Pvt. Ltd 3. Prafulla Shirgaokar Inv Pvt Ltd 4. S.B. Reshellers Pvt. Ltd 5. Shantaram Reshellers Pvt Ltd 6 Prabhakar Shirgaokar Inv P. Ltd 7. Tara Tiles Pvt Ltd 8. Mohan Shirgaokar Inv Pvt Ltd 9. Shantaram Machinary Pvt Ltd 10.Vinayak Shirgaokar Inv Pvt Ltd 11. Ugar Pipe Industries Pvt Ltd 12. Ugar Theaters Pvt Ltd Ugar Consultancy Ltd.** 2. Kulkarni Power Tools Ltd. 3. Camlin Ltd. 4. Sadashiva Sugars Ltd. 5. SLK Software Services Pvt. Ltd. 6.. Shishir Shirgaokar Inv Pvt Ltd 7. Sangli Fabricators Pvt Ltd 8. Tara Tiles Pvt Ltd 9. Shantaram Machinary Pvt Ltd 10. Indo-Schottle Auto Parts Pvt Ltd 11 Forest Industries (P) Ltd 12. Mohan Shirgaokar Inv Pvt Ltd 13. Prabhakar Shirgaokar Inv P. Ltd 14. Ugar Pipe Industries Pvt Ltd 15. D. M. Shirgaokar Inv Pvt. Ltd 77 NIL Kirloskar Brothers Ltd. 2. Sudarshan Chemicals Industries Ltd. 3. Kulkarni Power Tools Ltd. 4. Force Motors Ltd. 5. Kirloskar Ferrous Industries Ltd. 6. PIH Finvest Company Ltd. 7. Sakal Papers Ltd. 8. Kirloskar Proprietary Ltd. 9.Finolex Industries Ltd 10.Finolex Infrastructure Ltd Ugar Consultancy Ltd.**

78 DIN No.: Address: 3, Vasant Baug, Bibwewadi Pune Qualification: B.Sc,ANSI, Fellow of Sugar Technologist Association of India 7 Mr.. V. Balsubramanian S/o Mr Venkatachalam. Independent Director, DIN No.: Address: 4/1, Hall Road, Richards Town, Bangalore Qualification: Retd. IAS 8 Mr.. B. S. Patil S/o Mr Sangangowda Patil Director, DIN No.: Address: 149, 10 th Main, 5 th Cross, Rajmahal Vilas Extension, Bangalore Qualification : Retd. IAS 9 Mr. B. N. Kalyani S/o Mr Neelkanth Kalyani Independent Director, DIN No.: Address: Amit, 221/A, Kalyani Nagar, Yerwada, Pune Qualification: M.Tech (MIT, USA). 10 Mr. D. B. Shah S/o Mr Bhalchandra Shah. Independent Director, DIN No.: Address: Ugarbudruk , Tal Athani Dist Belgaum Qualification :- (Non Degree Holder) Agriculturist 11 Mr. A. B. Kage S/o. Bharamgonda Kage Independent Director, DIN No.: Address: P. O. Ugarkhurd Ugarkhurd , Tal Athani Dist Belgaum Qualification :- (Non Degree Holder) Agriculturist 12 Dr. M. R. Desai S/o. Rachappa Desai Independent Director, DIN No.: International Sericulture Alliance Ltd. 2. Bhagyanagar Solvent Extractions Ltd. 3. Gem Sugar Co. Ltd. 4.Ugar Consultancy Ltd.** M/s. Shetron Ltd. 2. Sadashiva Sugars Ltd. 3. UB (Holdings) Ltd 4. Mangalore Chemicals & Fertilisers Ltd. 5. Suprajit Engg. Ltd. 6. Grover Vineyard Ltd. 7. UB International Trading Ltd. 8. Sanyo BPL Ltd. 9. Scotts Garments Co. Ltd Bharat Forge Ltd. 2. Kalyani Steels Ltd. 3. Automotive Axles Ltd. 4. Hikal Ltd. 5. Nandi Infrastructure Corridor Enterprises Ltd. 6. Kalyani Lemmerz Ltd. 7. Kalyani Carpenter Special Steels Ltd. 8. Kalyani Carpenter Metal Centres Ltd. 9. Meritor HVS(India) Ltd. 10. BF Utilities Ltd. 11. Nandi Economic Corridor Ent. Ltd. 12. CDP Bharat Forge Gmbh Germany 13. Bharat Forge America Inc. 14. Bharat Forge Kilsta AB, Sweden 15. Bharat Forge Scottish Stampings Ltd, Scottland. 16. Epicenter Technologies Pvt Ltd 17. UTI Asset Management Company Private Ltd. 67 NIL 89 NIL Ugar Consultancy Ltd.** 2. Sadashiva Sugars Ltd. 3. Indian Sugar Exim Corporation Ltd.

79 Address: P. O. Yadhalli , Tal - Bilagi Dist - Bijapur Qualification: MBBS Note:- **1. The name of the company Ugar Power Generation & Consultancy Services Ltd has been changed to Ugar Consultancy Ltd w.e.f Except Chairman & Managing Director/ Executive Director/Whole-time Director all the Directors are liable to retire by rotation. 3. Except Chairman & Managing Director/ Executive Director/ Wholetime Director and Shri B.S. Patil all other Directors are Independent Directors. BRIEF INFORMATION ABOUT BOARD: 1. R V SHIRGAOKAR - Chairman & Managing Director Shri. Rajendra Vinayak Shirgaokar, aged about 72 years is Bachelor of Science in Chemical Engineering from London University. He is a well known industrialist in sugar industry. He has been serving the organization for the past 41 years. He has been instrumental in developing distillery and IMFL sections in the Company. He is actively involved in setting up new projects and setting up clean development mechanism. He has worked as a President of All India Distillers Association. He is responsible for total administration and production. 2. P V SHIRGAOKAR - Executive Director Shri. Prafulla Vinayak Shirgaokar, aged about 69 years is a Master in Science. He is a well known industrialist in sugar industry and has been serving the organization since past 37 years. He has keen interest in the administration, cane development activities and purchase. He has developed Ugar Niravari scheme which is the largest co-operative irrigation scheme in the country for irrigating the area allotted for cane development by the Company. He has served as President of South Indian Sugar Mills Association. 3. SHISHIR S SHIRGAOKAR - Whole time Director Shri. Shishir Suresh Shirgaokar, aged about 63 years is a Science Graduate from Fergusson College, Pune. He is an eminent industrialist in sugar industry and has been serving the organization since past 37 years. He has primary responsibility of taking care of the financials of the Company and the group. Other areas where he is mainly involved are Banking, New Projects Execution and Inventory Control. 4. A B KAGE Shri. A. B. Kage, aged about 89 years, has joined the Board on 26 th March, He is an agriculturist and a social worker. He has received Vishweshwarayya Award from Government of Karnataka in recognition for his social service to the society. 5. B S PATIL Shri. B. S. Patil (Retd. IAS), aged about 64 years, is on the Board of the Company since 28 th March, He is a retired Chief Secretary, Government of Karnataka. He is a knowledgeable person having vast experience in administration & many other fields. 6. D B SHAH Shri. D. B. Shah, aged about 67 years, has joined the Board on 28 th March, He is an agriculturist and a social worker. 7. S N INAMDAR Shri. S. N. Inamdar, B. Com., LLB. (Spl.), aged 63 years, is on the Board of the Company since 21 st March, He is a leading High Court Advocate and Income Tax Practitioner, having vast experience in his field. 8. V. BALASUBRAMANIAN Shri. V. Balsubramanian, (Retd. IAS), aged 66 years, is on the Board of the Company since 19 th September, He is a retired Principal Secretary, Government of Karnataka. He is a knowledgeable person having vast experience in administration & many other fields. 76

80 9. M G JOSHI Shri. M. G. Joshi, aged 74 years, has joined the Board on 30 th December, Being a Sugar Technologist, he renders technical services to various sugar factories. He retired as Vice President of Walchandnagar Industries Ltd. 10. B N KALYANI Shri. Babasaheb Neelkanth Kalyani, aged 58 years, is on the Board of the Company since He is an Industrialist, Chairman of the Kalyani Group and Chairman & MD of Bharat Forge Ltd. He is a Mechanical Engineer from BITS, Pilani, Rajasthan & Masters Degree in Engineering from MIT, Boston, USA. He has a vast experience in working of all types of industries. Certainly we can say that he is a versatile personality. 11. M B KARMARKAR Shri. Madhusudan Balkrishna Karmarkar, B.Sc., L.L.B., Advocate, aged 76, is on the Board of the Company since 1 st November, He is associated with various social and educational organizations in Sangli. He has vast experience in legal matters. 12. Dr. M R DESAI Dr. Mallappa Rachappa Desai, aged 62 is a qualified Doctor, is on the Board of the Company since 16 th June He is the Chairman of National Co-operative Sugar Federation and also Chairman of Nandi Sugar Factory. He has a rich experience in the working of sugar industry. COMPENSATION OF MANAGING/EXECUTIVE/WHOLE-TIME DIRECTORS In terms of the approval of the shareholders an Agreemnts Executed with Chairman & Managing Director, Executive Director & Whole-time Director, the managerial remuneration comprising of salaries requisite allowances and commission (within the limits prescribed under the Companies Act, 1956) are paid to them. Incase of inadequacy of profits in any financial year, the company shall pay to Chairman & Managing Director, Executive Director & Whole-time Director minimum remuneration Rs. 2,00,000 per month and perquisites (but excluding commission) is payble to them. In terms of the supplementary agreement dated 24 th March, 2007 entered into by company with Mr. R.V. Shirgaokar, Chairman & Managing Director is entitled to a Salary of Rs lacs per month w.e.f 1 st April, 2007 in addition to the perquisites and allowances and commissions. In terms of the supplementary agreement dated 24 th March, 2007 entered into by company with Mr. P.V. Shirgaokar, Executive Director is entitled to a Salary of Rs lacs per month w.e.f 1 st April, 2007 in addition to the perquisites and allowances and commissions. In terms of the supplementary agreement dated 24 th March, 2007 entered into by company with Mr. S.S. Shirgaokar, Whole-time Director is entitled to a Salary of Rs lacs per month w.e.f 1 st April, 2007 in addition to the perquisites and allowances and commissions. There is no interest of promoters/directors/key managerial personnel other than reimbursement of expenses incurred or normal remuneration or benefits paid to them. None of the directors, associate bodies corporates i.e. group companies, natural persons and companies with which the directors of the issuer associated as directors or promoters, has not been prohibited/restrained from accessing the capital markets for any reason by SEBI or any authority. CORPORATE GOVERNANCE The Company has complied with SEBI Guidelines in respect of Corporate Governance specially with respect to broad basing of Board, Constituting the Committees such as shareholding/ investors Grievance Committee etc. and all manadatory requirements of Corporate Governance norms as enumerated in clause 49 of the Listing Agreement with Stock Exchange. The Board has constituted an Audit Committee, Remuneration Committee, Shareholders / Investors Grievance Committee in accordance with the Listing Agreement Audit Committee: The Audit Committee comprises of five Independent Directors under the Chairmanship of Shri. S. N. Inamdar. All the members of the Audit Committee possess financial management expertise and knowledge. During the period 1 st October, 2006 to 31 st March, 2008 audit committee meetings were conducted on following dates:. 77

81 1. November 23, 2006, 2. December 23, 2006, 3. January 23, 2007, 4. May 25, 2007, 5. July 28, 2007, 6. September 28, 2007, 7. October 31, 2007, 8. December 1, 2007, 9. December 29, 2007 and 10. January 31, 2008 The names of the Committee members are as below Name of the Directors Status 1. Shri. S. N. Inamdar Chairman 2. Shri. V. Balsubramanian Member 3. Shri. M.G. Joshi Member 4. Shri. M.B. Karmarkar Member 5. Dr. M. R. Desai Member The Audit Committee is responsible for: 1. Overseeing of the company s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. 2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees. 3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors. 4. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to: a. Matters required to be included in the Director s Responsibility Statement to be included in the Board s report in terms of clause (2AA) of section 217 of the Companies Act, 1956 b. Changes, if any, in accounting policies and practices and reasons for the same c. Major accounting entries involving estimates based on the exercise of judgment by management d. Significant adjustments made in the financial statements arising out of audit findings e. Compliance with listing and other legal requirements relating to financial statements f. Disclosure of any related party transactions g. Qualifications in the draft audit report. 5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval 5A. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer Page 40 of 51 document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter. 6. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal control systems. 7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. 8. Discussion with internal auditors any significant findings and follow up there on. 9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board. 10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. 11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors. 78

82 12. To review the functioning of the Whistle Blower mechanism, in case the same is existing. 13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. Remuneration Committee: The Remuneration Committee comprises of five Independent Directors under the Chairmanship of Shri. S. N. Inamdar. During the period 1 st October, 2006 to 31 st March, 2008 remuneration committee meetings were conducted on following dates: 1. December 23, Since there were no issues regarding remuneration changes, no meeting of Remuneration Committee was held after 23 rd December, 2006 meeting.. The names of the Committee members are as below Name of the Directors Status Terms of Reference: 1. Shri. S.N. Inamdar Chairman 2. Shri. V. Balsubramanian Member 3. Shri. M.G. Joshi Member 4. Shri. M.B. Karmarkar Member 5. Dr. M.R.Desai Member The Remuneration Committee is empowered to determine the Company s policy on specific remuneration packages for Executive Directors including pension and any other compensation related matters and issues within the framework of Company and on certain performance parameters. Remuneration Policy: A meeting of the Remuneration Committee was held on December 23 rd, 2006 to consider revision in the remuneration of Executive Directors. The revision in remuneration of Chairman & Managing Director, Executive Director and Whole time Director, as suggested by Remuneration Committee was approved by the shareholders at the 66 th Annual General Meeting held on March 24 th, The remuneration of Chairman & Managing Director was increased to Rs. 2,15,000 p.m. and remuneration of Executive Director and Whole time Director was increased to Rs. 2,00,000 p.m. each w.e.f. April 1 st,2007. The Remuneration Committee also revised the salary and designation of Mr. Niraj S. Shirgaokar a relative of Mr. Shishir S. Shirgaokar. Shareholders / Investors Grievance Committee: The Shareholders / Investors Grievance Committee comprises of Three Independent Directors under the Chairmanship of Shri. M.B. Karmarkar During the period 1 st October, 2006 to 31 st March, 2008 meetings were conducted on following dates:. Date of meeting: 1. March 24, 2007 and 2. October 31, The names of the Committee members are as below Name of the Directors Status 1. Shri. M. B. Karmarkar Chairman 2. Shri. A. B. Kage Member 3. Shri. M. G. Joshi Member 79

83 Terms of Reference: To look into all the complaints received from the shareholders regarding transfer and transmission of shares, To look into all the complaints received from the shareholders regarding non- receipt of Balance Sheet, dividend/ interest/ payments on redemption of preference shares, debentures, bonds or such other instruments which are redeemable. The Company Secretary has been designated as a Compliance Officer. During the FY ending and period ended up-to September 30, 2008, fourteen complaints were received from investors which were replied/ resolved to the satisfaction of the investors. Up-to September 30, 2008 there were no complaints / queries and pending replies. There are no share transfers pending for registration for more than 30 days as on the said date. DIRECTORS SHAREHOLDING: Details of Directors shareholding as on 30 th June, 2008: Sr. No. Name of the shareholder Number of shares Shares as a %age of total number of shares 1 Rajendra V. Shirgaokar Prafulla V Shirgaokar Shishir S Shirgaokar A B Kage Deepchand B Shah Mallapa R Desai B S Patil S N Inamdar M G Joshi V Balsubramanian B N Kalyani M B Karmarkar INTEREST OF DIRECTORS/ PROMOTERS All the Directors/ Promoters may be deemed to be interested to the extent of reimbursement of expenses, if any, payable to them under the articles. The Directors/ Promoters may also be deemed to be interested to the extent of the shares, if any, held by them or by the relatives or by firms or companies of which any of them is a partner and a Director/ Member respectively and the shares if any, out of the present Offer that may be subscribed for and allotted to them or their relatives or any Company in which they are Directors / members of firms in which they are partners. Changes in the Directors in the last three years: Sr. No Name Appointment/ Date Appointed as Secession 1 Shri. D. B. Shah Appointment 28/03/2005 Appointed as Additional Director 2 Shri. B. S. Patil Appointment 28/03/2005 Appointed to fill casual vacancy caused by death of S. S. Shirgaokar Changes in the Auditors in the last three years: There is no change in Auditors in last three years. 80

84 Borrowing Powers The Board of Directors of the Company has complied with the provisions of Section 293(1)(a) &(d) in respect of borrowing powers.the company authorizes the Board Of Directors to borrow money from time to time upto a limit not exceeding Rupees 300 crores in the aggregate, notwithstanding that the money to be borrowed, together with the monies already borrowed (apart from the temporary loans obtained from the Company s Bankers in the ordinary course of busines) is in excess of the aggregate paid up capital and free reserves of the Company. Key Managerial Personnel: All the persons mentioned under Key Managerial Personnel are in permanent employment of the Company and are on Company roll. There is no any arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any person referred to in this head, was selected as a director or member of senior management. Details of Key Managerial Personnel including shareholding are as follows: S No. Name Age Dt.of Joining Designation Qualification Remuneration paid up to (Rs.) Exp in yrs. No. of Shares Held 1 Mr.Niraj Vice President B.E.(CS) 13,11, S.Shirgaokar 2 Mr.Chandan S Vice President B.Sc,MCM 11,00, Shirgaokar 3 Mr.B.G.Kulkarni Company B.A.LLB,FCS 8,88, Nil Secretary 4 Mr.R.V.Desurkar Finance B.Com,ACA 10,21, Manager 5 Mr. R.P. Tagare Manager A& P B.Com,LLB 8,72, Nil 6 Mr M.R. Naik Works Manager D.E.C 9,02, Mr. P.D. Divekar Chief Engg. B.E.Mech 7,57, Mr S.V. Kulkarni Project Manager B.Sc ANSI 4,89, Nil 9 Mr. C.G Chief Chemist- B.Sc ANSI 5,24, Pimpalkar Sugar 10 Mr. K Cane Manager B. Sc. Botony 3,81, Nil Ravishankar 11 Mr. J.H. Kulkarni Manager R&D B.Sc Agri 4,85, Nil 12 Mr. O. B. Sirdeshpande Manager- Distillery & B.Sc. Alcohol Tech. 4,440, Nil IMFL 13 Dr. S. M Manager- Pattanshetti Environment 14 Mr. N. C. Maiti Manager- Internal Audit M.Sc Ph.D 3,80, M.Com, LLB, ICWA 5,32, Nil Mr. Niraj S. Shirgaokar, Vice President, has a Bachelors Degree in Computer Engineering from the Bombay University. He has worked for Siemens Information Systems, Bombay in the sales function, selling SAP & mysap.com to customers in India. After Siemens, he was associated with Patni Computer Systems Limited. He worked as a member of the sales team of their San Francisco, California office, selling outsourcing jobs to customers in United States. Mr. Niraj S. Shirgaokar joined The Ugar Sugar Works Limited in He is currently responsible for the German Collaboration Project- Fragies Sugar Ships (100% EOU). Additionally, he looks after the Information Technology & ISO functions of the organization. He is also spearheading the organizations market facing initiatives. Mr. Chandan S. Shirgaokar, Vice President, his academic qualifications include a Bachelor s Degree in Science as well as a Master s Degree in Computer Management. He has seven years of experience in the field of Management. He has worked with the group company of The Ugar Sugar Works Limited- S.B. Reshellers, Kolhapur for three years. He has been working with The Ugar Sugar Works since His current responsibilities include overall management of the distillery production and sales of IML products. 81

85 Mr. B.G. Kulkarni, Company Secretary, his qualifications include a Bachelor s Degree in Arts and a Bachelor s Degree in Law. He is a Fellow Member of The Institute of Company Secretaries of India. He has 23 years of experience and has been working with the Company for the last 14 years. Prior to joining USW Mr. Kulkarni was working with VXL Instruments Ltd, Bangalore. Mr. R.V. Desurkar, Manager Finance, has completed his Bachelor s Degree in Commerce. He is a Chartered Accountant and is also a Fellow Member of the Institute Of Chartered Accountants Of India. He has a total of 31 years of experience in the field of finance. He has been working with the company for more than 23 years. Prior to working with The Ugar Sugar Works Limited, Mr. Desurkar was working with Miraj Glass Works for a period of three years. Mr. Desurkar is currently handling the financial matters of the organization, which includes all the Greenfield projects also. Mr. R.P Tagare, Manager- Administration & Personnel, has Bachelor s Degrees in Arts and in Law. He has been working with the company for the past 38 years looking after Labour Law and Administration. Mr. Tagare is spearheading the Human Resources initiatives of the company. Mr. M.R. Naik, Works Manager, is a Diploma holder in Industrial Electronics & Engineering. Mr. Naik started his career with The Ugar Sugar Works Limited as a supervisor and was promoted as Works Manager. He is in-charge of the sugar & co-generation sections of the company. Mr. Naik has been working for the company for the past 29 years. He is also serving as a senior consultant for the The Ugar Power Generation & Consultancy Services Pvt. Limited (Now Ugar Consultancy Ltd). Mr. P.D. Divekar, Chief Engineer, B. E. Mechanical with Boiler proficiency. He started his career with and has been working with The Ugar Sugar Works Ltd (USW) for about 30 years. Mr. S.V. Kulkarni, Project manager, is a science graduate having completed B. Sc and Associate of National Sugar Institute (ANSI). Presently he is working as Project Manager FSS in USW. He is working with USW for more than 15 years and earlier to the current assignment, was working as Chief Chemist. Prior to joining Ugar Sugar, he was working with Madhukar Sahkari Sakhar Karkhana, Jalgaon Distt. As Chief Chemist Mr.C.G. Pimpalkar, Chief Chemist Sugar, is a science graduate having completed B. Sc and ANSI. He started his career with Ugar Sugar and presently is working as Chief Chemist in USW. He has been working with USW for more than 30 years. Mr. K. Raviskankar, Cane Manager, He is a science graduate having completed B. Sc in Botony. Presently he is working as Cane Manager in USW. He is working with USW for more than 31 years. He was with Kothari Sugars for 1 year. Mr. J.H. Kulkarni, Manager R& D, He is a science graduate having completed B. Sc in Agriculture. Presently he is working as Manager R & D in USW. He is working with USW for more than 35 years. He was with M/s Chaphalkar Trust before joining USW. Mr. O.B. Sirdeshpande, Manager Distillery and IMFL, He is a science graduate having specialization in B. Sc Alcohol Technology. Presently he is working as Manager Distillery & IMF in USW. He is working with USW for more than 25 years. He was with M/s. Birla Technical Services Ltd., before joining USW. Dr. S.M. Pattanshetti, Manager Environmental, His qualification is M. Sc., Ph. D. Presently he is working as Manager Environment in USW. He is working with USW for more than 18 years. He was with M/s Western Pacques Ltd, Pune before joining USW. Mr. N.C. Maiti, Manager Internal Audit, He possesses various qualifications in different fields. He is Master in Commerce, Graduate in Law and Member of Institute of Cost & Works Accounts. He is with USW since last 10 years He was with M/s. Birla Technical Services Ltd., before joining USW. Changes in the Key Managerial Personnel in the last three years: Sr.No Name Designation Date Reason 1 G. P. Thorushe Chief Chem. Co-gen Retired 2 R. V. Chougule Cane Manager Retired 82

86 83

87 PROMOTERS Shri. Rajendra Vinayak Shirgaokar, aged about 72 years is Bachelor of Science in Chemical Engineering from London University. He is a well known industrialist in sugar industry. He has been serving the organization since past 41 years. He has developed distillery and IMFL sections in the Company. He is actively involved in setting up new projects and setting up clean development mechanism. He has worked as a President of All India Distilliers Association. He is responsible for total administration and production. Permanent Account Number, Passport Number and Bank Account Number with Bank name of Shri. Rajendra Vinayak Shirgaokar are as under: Executive Director Shri. Prafulla Vinayak Shirgaokar, aged about 69 years is a Master in Science. He is a well known industrialist in sugar industry and has been serving the organization since past 37 years. He has keen interest in the administration, cane development activities and purchase. He has developed Ugar Niravari scheme which is the largest co-operative irrigation scheme in the country for irrigating the area allotted for cane development by the Company. He has served as President of South Indian Sugar Mills Asscociation. Permanent Account Number, Passport Number and Bank Account Number with Bank name of Shri. Prafulla Vinayak Shirgaokar are as under: Wholetime Director Shri. Shishir Suresh Shirgaokar, aged about 63 years is a Science Graduate from Fergusson College, Pune. He is an eminent industrialist in sugar industry and has been serving the organization since past 37 years. He has primary responsibility of taking care of the financials of the Company and the group. Other areas where he is mainly involved are Banking, New Projects Execution and Inventory Control. Permanent Account Number, Passport Number and Bank Account Number with Bank name of 84

88 Shri. Shishir Suresh Shirgaokar are as under: Immediate Relatives of Promoters Name of Promoter Relation Shareholding ( ) %age Mr. R. V. Shirgaokar 432, (A) Mr. P. V. Shirgaokar * Brother (B) Mrs. S. V. Dalvi* Sister 80, (C ) Mrs. M. R. Dalvi Daughter 224, (D) Mr. S. R. Shirgaokar Son 1,033, Mr. P. V. Shirgaokar 376, (A) Mr. R. V. Shirgaokar* Brother (B) Mrs. S. V. Dalvi* Sister (C) Mrs. S.N. Kumar Daughter 98, (D) Mrs. V. M. Samant , (E) Mrs. S. P. Shirgaokar Spouse 212, Mr. Shishir S. Shirgaokar 843, (A) Mrs. S. S. Shirgaokar Spouse 86, (B) Mr. N. S. Shirgaokar Son 71, (C) Smt. Puja H. Pusalkar Daughter 12, (D) Mrs. R. R. Khedekar Sister 17, (E) Mrs. C. A. Dalvi Sister 140, * The shareholding of R. V. Shirgaokar, P. V. Shirgaokar & S. V. Dalvi is given in their respective columns Companies with which Promoters have disassociated in the last three years: The Promoters have not disassociated with any group companies in past three years. Common Pursuits: The Promoters/ Promoter Group Companies have no common pursuits with our company. Declaration: The Promoters, their relatives (as per Companies Act, 1956), issuer, group companies, associate companies are not detained as wilfull defaulters by RBI/ Government Authorities and there are no violations of securities laws committed by them in the past or pending against them except those mentioned under Outstanding Litigations against Promoters. 85