Notes to the Accounts K.S.Oils 1.) Commitments and Contingent Liabilities Rs.

. in Lacs Particulars As on 31st As on 31st March 2010 March 2009

(I) Claims against the company not acknowledged as debts in respect of: (a) Excise and custom duty matters under 48.46 dispute (b) Commercial Taxes matter dispute (c) Income Tax under 237.35 19.11 48.46

32.31 4.35

(II) Estimated amount of contracts remaining to be executed on capital 3694.5 account and not provided for(Net of advances) (III) Bank/ Corporate Guarantee (IV) Export Promotion against Capital Goods. 8012.76 283.24

6575.98

255.26 15.78

2.) Preferential Issues of Equity Shares and Warrants: In order to meet the fund requirement of the Company for its (i) Expansion of refinery in India along with other allied expenditure (ii) Investment in its overseas subsidiaries for development of Greenfield palm plantations and acquisition of mature palm plantations and/or CPO mills, all in Indonesia. The Company has come out with preferential allotment of Equity Shares and Warrants to the promoters and other foreign Investors during the year at an issue price calculated under SEBI (DIP) Guidelines, 2000 on preferential basis duly approved by Shareholders and Board of Directors of the Company 3.) Share Issue Expenses To be in conformity with Accounting Standards-26 on Intangible Assets and as per provision of Section 78 of Companies Act, 1956, Share issue expenses (Including GDR/ Private Equity issue expenses) amounting to `

380.69 Lacs (Previous year - ` 27.57 Lacs) are charged off against Security Premium Account. 4.) Agricultural Activity During the Financial Year 2008-2009, Government of Madhya Pradesh has allotted a land admeasuring 2,000 hectares to the Company on a license basis for no consideration, for carrying out the agricultural activity for a period of two years; consequently this has not been recognized as a grant. 5.) Borrowing Cost Borrowing cost capitalized during the year from Rs.56.05 lacs in 2007-08 to Rs.382.36 lacs in 2008-09. Observations from Accounting Statements: Shareholders Capital almost remains constant for the past two years. The financial statements of the company and its subsidiary companies are combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intragroup transactions in accordance with Accounting Standard (AS) 21 - Consolidated Financial Statements. Inventories are valued at lower of cost or net realizable value on FIFO basis. Depreciation has been charged on SLM basis for1. Windmill 2. Plant assets (except for oil and refinery plant located at Morena) For all other assets depreciation is provided on WDV basis.

Foreign exchange transactions are recorded at the closing rate prevailing on the date of the respective transactions. Exchange difference arising on foreign exchange transactions settled during the year is recognized in the profit and loss account. Tax expenses are the aggregate of current tax and deferred tax charged or credited in the statement of profit and loss for the period. a. Current Tax- The current charge for income tax is calculated in accordance with the relevant tax regulations applicable to the Company. b. Minimum Alternate Tax (MAT)- In case the company is liable to pay income tax u/s 115JB of income tax Act,1961 (i.e. MAT), the amount of tax paid in excess of normal income tax is recognized as an asset (MAT Credit Entitlement) only if there is convincing evidence for realization of such asset during the specified period. MAT credit entitlement is reviewed at each balance sheet date. c. Deferred Tax- Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is

unabsorbed depreciation or carry forward of losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Unique Features/Highlights of the Sector:

Industry Structure Highly fragmented industry Over 600 oil extraction units, 166 vanaspathi manufacturing units

- only 10 edible oil units and 8 vanaspathi units have national reach Over 50% of the units - sick or under utilised due to surplus capacity Idle capacities among these units due to shortage in feedstock supply Major oil brands - - Sundrop, Dhara, Saffola, Sweekar, Postman

FUTURE Demand Drivers Macroeconomic factors : Population growth, per capita income, purchasing power, oilseeds crop Other factors : Prices - domestic/ international, Availability - oil, oilseeds Influence of branded products - `health message Growing preference for convenience foods. Raw material sourcing : focus on improving yields, getting better quality oilseeds , ensuring regular supplies - through symbiotic relationship with farmer Branding essential for success (Vanaspathi - Dalda, Oils - Sundrop) Better distribution network to improve reach Efficiency in operation - to become price competent and withstand overseas competition Proposed Future trading in edible oils will help curtail price volatility and lend knowledge - based assistance to farmers of eliminate unofficial markets In the next five years, the market for - edible oils will grow by 8% to 12.65 million MT

Key Success Factors

Future

- vanaspathi will grow to 1.5 million MT