DIRECTORS’ REPORT

DEAR SHAREHOLDERS,

The Directors hereby present the 82nd Annual Report and the audited accounts of the Company for the year ended 31st March, 2016.

FINANCIAL RESULTS:

Our Directors wish to inform that after a long period, the Company has been able to achieve nominal profit during the year. The financial results for the year under review are as follows:

* Inclusive of financial figures of Unn Sugar unit for the period from 01.04.2014 to 30.09.2014.

# Turnover of Unn Sugar unit for the period from 01.04.2014 to 30.09.2014. Rs. 10191.90 Lacs

DIVIDEND

In view of the previous carry forward losses, negative net worth and liquidity position, the company’s financial conditions do not permit for payment of any dividend for the year ended 31st March, 2016.

REFERENCE TO BIFR

The Company over the last few years has been incurring losses due to which its net worth has been completely eroded. At the close of F.Y ended 31st March, 2014 the company has become sick industrial company under the provisions of Sick Industrial Companies (Special Provisions) Act 1985. This fact was reported to BIFR. Consequently the company has been registered with BIFR on 3rd February, 2016 as case No.23/2016.

FINANCE

The Bankers have a view that in the absence of reasonable cane price formula which has made sugar production unviable in U.P. was mainly due to industry’s inability to pay their debts. During the year 2014-15 SBI had approved renewal cum reduction proposal to reduce the working capital limit from Rs.104 Crores to Rs.70 Crores which was to be converted into WCTL. Due to security related issues, the conversion of CC limit of Rs.70 Crores into WCTL could not be completed by 31.03.2016, therefore the amount of Rs.60.35 Crores standing in the company’s account is shown under the CC limit. The PNB has already renewed the limit of Rs.20 Crores for the year 2015-16. The District Coop. Bank, Ghaziabad have extended their CC limit of Rs.30 Crores for the season 2015-16. In this way the company got Rs.110.67 Crores as against the total requirement of Rs.160 Crores. The bankers fear about the increase in Non Performing Assets (NPA) after the Supreme Court order in October, 2014 up-holding the high Court decisions that farmers have the first right over the realization from sugar and not the bankers. After the Supreme Court verdict the bankers are virtually forced not to recon sugar as security and are asking promoters and directors of the sugar mills to give their personal guarantee or other collateral securities. Besides due to provision of NPA accounts in the bankers balance sheet, their losses are increasing and bankers are not increasing their exposures in the sugar industry.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN END OF THE FINANCIAL YEAR AND DATE OF THE REPORT

There have been no material changes and commitments affecting financial position between end of the Financial year and date of report. However, with a view to improve the financial position, the Company has entered into an MOU/Agreement with M/s. VRD Power Projects Ltd., for installation of a Power Project in the premises of Company’s sugar unit at Shamli after approval of Board and shareholders by Postal Ballot.

STATE OF THE COMPANY’S AFFAIRS

During the year under review, both the segments of your Company i.e. sugar and alcohol have shown profit after a long period.

The Sugar Industry in U.P. which has suffered heavy losses during the last five years due to combination of extraneous factors such as high sugarcane price and un-remunerative sugar price have now shown improvement due to improvement in the recovery percentage of sugar from the cane and increase in the sugar sale price realization during the season 2015-16. The all India sugar production in season

2015-16 is also expected to be around 252 Lac tonnes as against 283 Lac tonnes in the previous sugar season. The consumption of sugar in 2015-16 is expected at 256 Lac tonnes and export of 15 Lac tonnes the expected sugar stock at the close of September, 2016 is around 72 Lacs tonnes. The excess stock of sugar has come down which has also effect on the price of the sugar. The Ethanol price in distillery segment has also been increased which has positive effect on the overall results of the company.

REVIEW OF OPERATIONS

The manufacturing results of the sugar unit Upper Doab Sugar Mills for the crushing season 2015-16 as compared to the last crushing season are as under:

The recovery % Cane during the season 2015-16 is higher as compared to sugar season 2014-15 by 0.77% mainly due to increase in the early variety of cane and discourage of rejected variety cane as compared to last season and other Cane Development activities.

CANE DEVELOPMENT

Due to vigorous efforts made by the Management and action plan made for sugarcane development, area under cultivation of high sugar varieties of cane has increased from 19% to 45% in unit Upper Doab Sugar Mills. Further due to increased area under improved variety, ensuring cane crop free from insects, pests, diseases and optimum uses of fertilizers in the season 2015-16. Pol% cane has increased by 0.78% i.e. from 11.23% to 12.01% this year. We are further making efforts to increase the area under high sugar variety cane from 45% to 75% as well as replacement of rejected varieties in the next season 2016-17. With this varietal balance cane cut to crush would be improved and supply of cane would be increased from 76.31% to 78.99% at Gate. Extraneous materials such as trashes, green tops, diseased cane, mud with cane supplies were closely monitored and extraneous material % is lower by 1.80%. By these efforts the Pol% cane would further increase to 12.70% in the coming season 2016-17.

DISTILLERY UNIT

The production in the unit Shamli Distillery & Chemical Works is 5304161 AL as compared to 6060484 AL during the F.Y.2014-15. The fall in the production is mainly due to closure of distillery unit for three months from July, 2015 to September, 2015 due to rainy season and pollution and due to off-take problem of spirits. The Board have approved the expansion in the capacity of Distillery Unit from 25 KL per day to 45 KL per day which will help to improve the financial position of the Company.

Further analysis of operating performance for sugar and distillery segments are covered under “Management Discussion and Analysis” which form part of this Report.

DIRECTORS

With profound grief the board places on record the sad demise of Sh.R.L.Srivastava, Director who passed away on 23.9.2015. His association with the company in the capacity of Director and Chairman of the Audit Committee since 1998 was valuable contribution to the growth of the Company.

The term of appointment of Sh. Onke Aggarwal as Chairman of the Board of Directors was expiring on 10.3.2016. The board of directors of the company in their meeting held on 5 th February, 2016 have re-appointed Sh.Onke Aggarwal as Chairman of Board of Directors of the Company for a period of one year from 11th March 2016.

In accordance with the provisions of Companies Act, 2013 (the Act) and the Company’s Article of Association Sh.Vivek Viswanathan and Smt.Radhika Viswanathan Hoon who retire by rotation under section 152 of the Act, and being eligible offer themselves for re-appointment at the ensuing Annual General Meeting.

The required information pursuant to Regulation 36(3) of SEBI (Listing Obligations and Disclosures Requirements) Regulation, 2015 and SS-2 providing their experiences, qualifications, name of the companies in which the above directors hold directorship and membership of the committee of the board are detailed in the notice convening the annual general meeting against the relevant items of the agenda which forms part of this annual report.

Necessary resolutions for appointment/re-appointment of aforesaid directors have been included in the notice convening the ensuing Annual General Meeting.

None of the directors of the company is disqualified from being appointed as director as specified in terms of section 164(1) and (2) of the Companies Act, 2013.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The guidelines for selection of director are set out below:

The Board’s Nomination and Remuneration Committee oversees the Company’s nomination process for directors. The Committee identifies and review individual qualified candidate to serve as a director on the board. The Committee may act on its own identifying the potential candidate. The Committee review and discuss pertaining to the candidate and conduct evaluation of candidates in accordance with the process that it seems fit and appropriate. Discuss with the promoters, and send its recommendation for nomination to the board based on the following guidelines.

ATTRIBUTES

1. For Independent Directors the Committee seeks candidate who is not a nominee or related to promoter of the company. Such candidates shall posses integrity, leadership, skill, managerial qualities, foresight abilities and competency required to direct and oversee the Company’s management in the best interest of stake holders i.e. shareholders, consumers, employees and the community it serves.

2. The candidate must be willing to regularly attend the meeting of the board and develop a strong understanding of the Company, its business and its need. He must contribute his/ her time and knowledge in the Company and be prepared to exercise his/her duties with skill and care. Candidates should have understanding of governance concept and legal duties of a director.

3. The Candidate should preferably have sufficient experience on the board of a listed company.

4. For appointment of Executive Directors the Committee also seeks opinion of promoters.

KEY MANAGERIAL PERSONNEL

The Board of Directors have appointed following Key Managerial Personnel as provided under section 203 of the Companies Act, 2013.

1. Sh. Rajat Lal, Managing Director

2. Sh. Vivek Viswanathan, Jt. Managing Director

3. Sh. P.K.Goyal, Chief Financial Officer

4. Sh. Akhilesh Kr. Singh, Company Secretary

INDEPENDENT DIRECTORS MEETING

A separate meeting of the independent directors (Annual Independent Directors Meeting) was convened which reviewed the performance of Board as a whole and the non independent directors on the basis of Nomination and Remuneration Committee Report. The collective feed back of each independent director was discussed with the board covering performance of the board as a whole and performance of non independent directors.

PERFORMANCE EVALUATION OF CHAIRMAN, DIRECTORS, BOARD AND COMMITTEES

Pursuant to the provisions of Section 178 of the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the performance evaluation of Non Independent Directors, Board and Committee was undertaken by the Nomination and Remuneration Committee for the year under review. The report of non independent directors as done by the Nomination and Remuneration Committee is reviewed by Independent Directors.

The performance Evaluation of Chairman and Independent Directors is done by the board and the report of nomination and remuneration committee for non independent director as reviewed by the independent director is placed before the board of directors. The criteria for Performance and evaluation is mentioned in the Corporate Governance in Annexure 5 of this Report.

The Evaluation frame work for assessing the performance of Directors, Board and Committee is done on the following parameters:

A. Board Evaluation

1. Attendance and active participation.

2. Knowledge of working of industry, experience in related issues.

3. Leadership and initiative.

4. Independent judgments on the board discussions utilizing his knowledge and experience especially on issues related strategy, operational performance and risk management.

5. Commitment to role and fiduciary responsibility as a board member.

6. Understanding the nature in director’s role, demonstrate awareness and concern about norms related to corporate governance, disclosure and legal compliance.

7. Contribute new ideas/advise to management on business issues based on the management.

B. Committee Performance

1. The Committee is delivering on the defined objectives.

2. The Committee has the right composition to deliver its objective.

REMUNERATION POLICY

The Board on the recommendations of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report Annexure 5 of this report.

MEETINGS

The Calendar of the meeting is prepared and circulated in advance to the directors.

During the Financial Year 2015-16 Five Board Meetings were held on 29.05.2015, 25.07.2015, 28.09.2015, 30.10.2015 and 05.02.2016. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement of sub-section 134(5) of the Act with respect to Directors’ Responsibility Statement, the Directors confirm that:

i) in the preparation of the Annual Accounts for the year ended March 31, 2016 the applicable Accounting Standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same, except change in the method of calculation of cost price for valuation of closing stock of sugar.

ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for the financial year ended on that date, except change in policy of valuation of bagasse at the close of financial year.

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and;

iv) they have prepared the Annual Accounts of the Company on a “going concern” basis.

v) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

RELATED PARTIES TRANSACTIONS

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel and other designated persons which may have potential conflict with the interest of the Company at large. All related party transactions are placed before the Audit Committee and also Board for approval. The form for disclosure of particulars of Contract /arrangements entered into by the Company with related parties referred to sub section(1) of Section 188 of the Companies Act, 2013 in form AOC -2 is given below:

FORM NO. AOC -2 (Pursuant to clause (b) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Form for Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub section (1) of section 188 of the Companies Act, 2013 including certain arms length transaction under third proviso thereto.

1. Details of contracts or arrangements or transactions not at arm length basis.

2. Details of material contracts or arrangements or transactions at

arm length basis.

PARTICULARS OF LOAN, GUARANTEE AND INVESTMENTS

The Company has not made any loans or investment or given any guarantee during the year under review.

SUBSIDIARY COMPANIES

The company does not have any subsidiary, joint venture or associate Company.

CODE OF CONDUCT

Code of Conduct for the Directors as well as for the members of the Senior Management of the company was adopted in the Board Meeting held on 4th April, 2005 which was subsequently amended from time to time. The Code is intended to serve as a basis for ethical decision-making in conduct of professional work. The Code of Conduct states that each individual in the organization must know and respect existing laws, accept and provide appropriate professional views and be upright in his conduct and observe corporate discipline. The said Code of Conduct has been circulated to all the Directors and members of Senior Management and the compliance of the same has been affirmed by them in respect of the Financial Year 2015-16. A copy of Code of Conduct has been put up on the Company’s Website-www.sirshadilal.com. A declaration regarding compliance of Code of Conduct is given by the Managing Director under the head Code of Conduct that Board Members and Senior Management team have complied with the same, under Corporate Governance and forms part of this report.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has a vigil mechanism named Whistle Blower Policy/Vigil Mechanism to deal with instance of fraud and mismanagement, if any.

A Vigilance Committee has been constituted which looks into the complaints raised. The Committee reports to the audit committee and the board.

The details are given in Corporate Governance.

PREVENTION OF INSIDER TRADING

The Company has adopted Code of Practices & Procedures for Fair Disclosure of Unpublished Price Sensitive Information for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company’s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.

All Directors and the designated employees have confirmed compliance with the Code.

AUDITORS

In terms of section 139 of the Companies Act, 2013 and rules made thereunder, M/s. Basant Ram & Sons, Chartered Accountants(firm Registration No. 000569N) were appointed as Auditors of the Company from the closure of 80th Annual General Meeting of the Company held on 22nd September, 2014 for a period of three years up to 83rd Annual General Meeting of the company to be held in the year 2017. The appointment of Auditors is subject to ratification on every Annual General Meeting of the Company. M/s. Basant Ram & Sons, Chartered Accountants, New Delhi are eligible for ratification of their appointment in this Annual General Meetings. They have furnished certificate to the effect that ratification of their appointment will be within the limits specified under section 159 of the Act.

COMMENTS ON AUDITOR’S OBSERVATIONS

(i) Reply to paragraph No.1 of “Emphasis of Matters” in Auditor’s Report.

The Auditors have referred to note No.3.8 regarding other operating revenue includes reimbursement of society commission of Rs.1,60,30,339/- relating to Unn Sugar Complex, a former unit ofthe Company for the season 2012-13.

Note No. 3.8 is self-explanatory and does not require any further explanation.

2. Reply to Paragraph No.2 of “Emphasis of Matters” in Auditor’s Report regarding potential sickness of the company.

The Auditors have referred to note No.3.9 regarding potential sickness of the Company and reference to the BIFR under section 15(1) of the Sick Industrial Companies (Special Provisions)Act, 1985. The note itself is self explanatory and on the basis of revised Form “A” showing financial position of the Company as on 31st March, 2015, the Company has been registered under BIFR on 3rd February, 2016 as case No.23/2016.

3. Reply to paragraph No.3 of “Emphasis of Matters” in Auditor’s Report regarding non maintenance of accounts on accrual basis.

(i) The Company has not provided towards interest liability of late payment of cane price for the current year Rs.153314560/- and also reversed Rs.19220618/-provided during last year in this account. Based on the representation made by UP Sugar Mills Association for waiver of this liability the association is expecting positive results as the State Govt. has already waived this interest in earlier years.

(ii) As stated in Note No.3.7 of the financial statement in respect of bonus liability, due to amendment in Payment of Bonus (Amendment) Act 2015, in terms of which the ceiling of payment of bonus has been revised w.e.f.1st April 2014. Certain High Courts have stayed implementation of revision of bonus Act from retrospective effect. Indian Sugar Mills Association have also filed Writ against implementation of the order regard to retrospective effect from 1stApril, 2014. The matter is subjudice.

4. Reply to point No.1 under the head basis for qualified opinion of the Auditors Report

(i) As stated in No. 3.1 of financial statement The Company have taken legal opinion from its lawyers regarding recovery of Rs. 150.38 Lacs from M/s. Sainov Spirits Pvt. Ltd. against the sale of unit Pilkhani Distillery & Chemical Works as a going concern. As per opinion of the Solicitor there is no legal basis to construe Company’s entitlement to the said amount of Rs.150.38 Lacs as irrevocable and if the company treat it doubtful of recovery at any stage and make any treatment in the books of accounts, it may affect adversely the legal proceedings of recovery of debt. Therefore in view of the above opinion, the Company has not made any provision for bad and doubtful debts in the books.

(ii) Reply to point No. 2 of basis of qualified opinion as stated in Note No.3.3 of the aforesaid financial statements, the Company has adopted the policy of stock of sugar at “lower of cost and net realizable value”. During the year cost price of sugar is lower than prevailing market price at the close of the year, therefore stock of sugar has been valued at cost price. But while arriving the cost of production of sugar the company has loaded interest paid/accrued on CC account as part of the cost of production of sugar. This change in method has resulted in higher valuation of stock of sugar.

(iii) Reply to point No. 3, 4 & 5 of basis of qualified opinion The note itself is self explanatory

5. As stated in para (viii) of Annexure to Independent Reports as regards the unpaid balance of SBI Rs. 60.35 crores to the SBI. The bank has approved renewal cum reduction proposal of Company on 17.04.2014to reduce the working capital from Rs.104 Crore to Rs.70 Crore which was subsequently to be converted into WCTL of Rs.70 Crore. Due to security related issues the conversion of CC limit to WCTL could not be completed up to 31.03.2016 and the amount of Rs. 603545634/- could not be converted into WCTL up to 31.03.2016.

COST AUDITORS

The shareholders of the Company approved appointment of Sh.Rishi Mohan Bansal, Cost Auditor for conducting the Cost Audit for Sugar and Industrial Alcohol business for the F.Y. 2015-16.

The Cost Audit Report for the last audited accounts for the Financial Year ended 31.03.2015 was filed by the Cost Auditor with respect to Sugar and Industrial Alcohol business on 24.09.2015 which is within the due date. There is no adverse or negative remark in the Cost Audit Reports.

SECRETARIAL AUDIT REPORT

The Board of Directors of the Company appointed M/s.Sunil K. Jain and Associates, Company Secretaries (FCS4089; C.P.No.4079), to conduct the secretarial audit for the financial year ended 31st March, 2016.

The Secretarial Audit Report for the financial year ended 31st March, 2016 is annexed as “Annexure -I to the Directors’ Report.

COMMENTS ON SECRETARIAL AUDITORS’ OBSERVATIONS

1. Some of the provisions could not be complied which are of procedural nature. However the SS-1 & SS-2 are being fully implemented during the current year.

2. The uniform listing Agreement as required under Regulation 109 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been completely executed in June, 2016.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of Annual Return in form MGT -9 is annexed with “Annexure-2”

DISCLOSURE OF RATIO OF REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

As required under Section 197(12) read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules,

2014, the details of the ratio of the remuneration of each director to the median employee’s remuneration and such other details as prescribed therein are given in “Annexure-3”, which is attached hereto and forms part of the Directors’ Report.

PARTICULARS OF EMPLOYEES

The information required pursuant to section 197(12) read with Rule 5 of the Companies (Appointment and remuneration of managerial personnel) rules, 2014 in respect of the employees of the company are given in “Annexure -3” and forms part of this report.

DETAIL OF SHARES WITH DIFFERENTIAL VOTING RIGHT, SWEAT EQUITY SHARE AND ESOP SCHEME

The Company has not issued shares with differential voting right and sweat equity shares. There is no scheme of ESOP Scheme during the financial year.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operation in future.

RISK MANAGEMENT

Pursuant to section 134(3)(n) of the Companies Act, 2013 & Clause 49 of the listing agreement, the company has constituted a business risk management committee. The details of the committee and its terms of reference and risk associated and their mitigation are set out in the corporate governance report forming part of the Board’s report.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has an internal control system, commensurate with the size, scale and complexity of its operations to maintain its objectivity and independence, the Internal Audit Department reports to the Audit Committee of the Board. The details of the Internal Control System and their adequacy are given in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY

Due to continuous losses to the Company in the last five years the provisions of Corporate Social Responsibility Policy under section 135 ofthe Companies Act, 2013 are not applicable to our Company.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts), Rules, 2014 are provided in “Annexure-4” and forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The performance of both the business segments i.e. sugar and alcohol segments of the Company for the year ended 31st March, 2016 and current year prospects as required under Clause 49 of the Listing Agreement has been detailed in the “Management Discussion and Analysis Report” in the section on Corporate Governance.

CORPORATE GOVERNANCE

The Company complies with all the mandatory requirements as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges. The separate section on “Corporate Governance” including a certificate from the Practicing Company Secretary confirming compliance of the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges is given in “Annexure-5” and forms part of this Report.

LISTING ARRANGEMENT

The shares of the Company are listed with the Bombay Stock Exchange Limited. The annual listing fee for the year 2016-17 has been paid to Bombay Stock Exchange Limited.

The Delhi Stock Exchange where the equity shares were listed had advised the companies not to make payment of listing fee.

DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company confirms that there is no complaint/case has been filed/pending with the Company during the financial year 2015-16.

INDUSTRIAL RELATIONS

The Industrial relations remained cordial at both the plants of the Company during the year.

APPRECIATION:

Your Directors wish to place on record their sincere thanks and appreciation for the devoted services rendered by the employees of the Company at all levels. We also place on record our appreciation to the Financial Institutions, State Bank of India, Punjab National Bank, Zila Sahkari Bank Ltd., other Business Associates and Government Authorities for their valuable cooperation and support from time to time. We would also like to express our thanks to our Shareholders for their continued confidence in the company.

For and on behalf of the Board of

Directors of Sir Shadi Lal Enterprises Ltd

Onke Aggarwal

Place : New Delhi Chairman

Dated : 29.07.2016 (DIN-00141124)