Cosan Ltd. (Form: 20-F, Received: 07/31/2012 15:49:12)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2012

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-33659

COSAN LIMITED

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Bermuda

(Jurisdiction of incorporation or organization)

Av. Juscelino Kubitschek, 1327 – 4th floor

São Paulo, SP 04543-000, Brazil

(55)(11) 3897-9797

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Marcelo Eduardo Martins

(55)(11) 3897-9797

ri@cosan.com.br

Av. Juscelino Kubitschek, 1327 – 4th floor

São Paulo, SP 04543-000, Brazil

(Name, telephone, e-mail and/or facsimile number and address of Company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Class A Common Shares	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

The number of outstanding shares as of March 31, 2012 was:

Title of Class	Number of Shares Outstanding
Class A Common Shares, par value $.01 per share Class B – series 1 – Common Shares, par value $.01 per share	174,355,341 96,332,044

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x Yes o No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer x Accelerated Filer o Non-accelerated Filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP o International Financial Reporting Standards as issued by the International Accounting Standards Board x Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow.

o Item 17 o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

TABLE OF CONTENTS

	Page
PART I	4
Item 1. Identity of Directors, Senior Management and Advisers	4
Item 2. Offer Statistics and Expected Timetable	4
Item 3. Key Information	4
A. Selected Financial Data	4
B. Capitalization and Indebtedness	6
C. Reasons for the Offer and Use of Proceeds	7
D. Risk Factors	7
Item 4. Information on the Company	24
A. History and Development of the Company	24
B. Business Overview	26
C. Organizational Structure	37
D. Property, Plant and Equipment	38
Item 4A. Unresolved Staff Comments	40
Item 5. Operating and Financial Review and Prospects	40
A. Operating Results	48
B. Liquidity and Capital Resources	61
C. Research and Development, Patents, Licenses, etc.	65
D. Trend Information	65
E. Off-Balance Sheet Arrangements	65
F. Tabular Disclosure of Contractual Obligations	67
G. Safe harbor	69
Item 6. Directors, Senior Management and Employees	70
A. Directors and Senior Management	70
B. Compensation	75
C. Summary of Significant Differences of Corporate Governance Practices	75
D. Employees	77
E. Share Ownership	70
Item 7. Major Shareholders and Related Party Transactions	79
A. Major Shareholders	79
B. Related Party Transactions	83
C. Interests of Experts and Counsel	83
Item 8. Financial Information	84
A. Consolidated Statements and Other Financial Information	84
B. Significant Changes	88
Item 9. The Offer and Listing	88
A. Offer and Listing Details	88
B. Plan of Distribution	90
C. Markets	90
D. Selling Shareholders	90
E. Dilution	90
F. Expenses of the Issue	90
Item 10. Additional Information	91
A. Share Capital	91
B. Memorandum and By-laws	91
C. Material Contracts	96
D. Exchange Controls	99
E. Taxation	101
F. Dividends and Paying Agents	101
G. Statement by Experts	103
H. Documents on Display	104
I. Subsidiary Information	104
Item 11. Quantitative and Qualitative Disclosures About Market Risk	104
Item 12. Description of Securities other than Equity Securities	108

PART II	109
Item 13. Defaults, Dividend Arrearages and Delinquencies	109
Item 14. Material Modifications to the Rights of Security Holders	109
Item 15. Controls And Procedures	109
Item 16A. Audit Committee Financial Expert	110
Item 16B. Code of Business Conduct and Ethics	110
Item 16C. Principal Accountant Fees and Services	110
Item 16D. Exemptions from the Listing Standards for Audit Committees	111
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers	111
Item 16F. Change in Registrant's Certifying Accountant	111
Item 16G. Corporate Governance	111
PART III	112
Item 17. Financial Statements	112
Item 18. Financial Statements	112
Item 19. Exhibits	112

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Presentation of Financial and Other Information

Our audited consolidated financial statements at March 31, 2012 and 2011 and for each of the fiscal years ended March 31, 2012, 2011 and 2010 are included in this annual report.

We present our consolidated financial statements in accordance with International Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, for both Securities and Exchange Commission, or SEC, and Comissão de Valores Mobiliários, or CVM, filings.

The consolidated financial statements are presented in Brazilian reais . However, the functional currency of Cosan Limited, or the “Company,” is the U.S. dollar. The Brazilian real is the currency of the primary economic environment in which Cosan S.A. Indústria e Comércio, “Cosan” or “Cosan S.A.,” and its subsidiaries and jointly controlled entities, located in Brazil, operate and generate and expend cash and is the functional currency, except for the foreign subsidiaries in which U.S. dollar is the functional currency. The Brazilian Securities Commission ( Comissão de Valores Mobiliários ), or CVM, mandated that IFRS as issued by the IASB should be used as the basis for consolidated financial statements of Brazilian public companies from fiscal years ending after December 31, 2010 and onward. We have presented our consolidated financial statements for the fiscal years ended March 31, 2012, March 31, 2011 and 2010, in accordance with IFRS as issued by the IASB and our transition date was April 1, 2009. Prior to this date, our consolidated financial statements were prepared in accordance with accounting practices adopted in Brazil, or “Brazilian GAAP,” for CVM purposes and U.S. GAAP for SEC purposes. Brazilian GAAP is based on the Brazilian Corporate Law No. 6,404 of December 15, 1976, as amended, and included the provisions of Law No. 11,638/2007 and Law No. 11,941, dated May 27, 2009, the accounting standards issued by the Brazilian Federal Accounting Council ( Conselho Federal de Contabilidade ), the accounting standards issued by the Accounting Standards Committee ( Comitê de Pronunciamentos Contábeis ), or CPC, and the rules and regulations issued by the CVM. After the adoption of CPCs No.15 to 43, Brazilian GAAP presents minimal differences from IFRS as issued by the IASB, for preparation of consolidated financial statements.

On February 1, 2010, the Company announced that it, along with Royal Dutch Shell, or “Shell,” had reached a non-binding memorandum of understanding to form a Joint Venture, or “Joint Venture,” for a combined 50/50 investment. On August 25, 2010, the Company announced the conclusion of the negotiations with Shell and entered into definitive agreements. On January 4, 2011, the Company received unconditional merger clearance from the European Union to form the proposed Joint Venture in Brazil. On June 1, 2011, the Company formed two Joint Ventures under the names Raízen Combustíveis S.A. (“Raízen Combustíveis”) and Raízen Energia S.A. (“Raízen Energia”), collectively referred as Raízen. A third entity was established to assist with the management of the Joint Venture. On June 1, 2011, Cosan contributed its sugar and ethanol and its distribution assets to the Joint Venture while Shell contributed its distribution assets in Brazil, its interests on second generation ethanol research and development entities (Iogen Corp. and Codexis, Inc.) and the license to use the Shell brand in the amount of R$ 533 million. Shell is also required to make a fixed cash contribution in the amount of approximately R$1.8 billion over a two-year period, of which R$ 1,278.0 million had been contributed as of March 31, 2012. The sugar packaging, distribution and logistics and lubricants distribution business along with the investment in Radar were not contributed to the Joint Venture. During the year ended March 31, 2011, the Joint Venture did not impact Cosan’s consolidated financial statements except for the incurrence of certain costs and expenses related to its future formation. The accounting effects arising from the formation of Raizen Combustíveis and Raizen Energia included the recording of the underlying net assets of the Joint Ventures’ net assets at their estimated fair value, and recording a gain on the deconsolidation of the previous subsidiaries. Accordingly, the Company’s consolidated financial position, results of operations and cash flows for periods subsequent to the Joint Venture´s formation are not necessarily comparable to pre-formation amounts. The Joint Venture agreement remains subject to approval by the CADE (Conselho Administrativo de Defesa Econômica).

Unless the context requires otherwise, information pertaining to Raízen Energia and Raízen Combustíveis represents 100% of the operations of the businesses. As from June 1, 2011 results of Raízen Energia and Raízen Combustíveis are proportionally consolidated at 50% in the Company’s financial statements. See note 29 to our audited consolidated financial statements.

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Forward - Looking Statements

This annual report contains estimates and forward-looking statements, principally under “Item 3. Key Information—D. Risk Factors,” “Item 4. Information on the Company—B. Business Overview” and “Item 5. Operating and Financial Review and Prospects.” Some of the matters discussed concerning our business and financial performance include estimates and forward-looking statements.

Our estimates and forward-looking statements are mainly based on our current expectations and estimates on projections of future events and trends, which affect or may affect our businesses and results of operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us. Our estimates and forward-looking statements may be influenced by the following factors, among others:

general economic, political, demographic and business conditions in Brazil and in the world and the cyclicality affecting our selling prices;

the effects of the global financial and economic crisis in Brazil;

our ability to implement our expansion strategy in other regions of Brazil and international markets through organic growth acquisitions or Joint Ventures;

competitive developments in the ethanol and sugar industries;

our ability to implement our capital expenditure plan, including our ability to arrange financing when required and on reasonable terms;

our ability to compete and conduct our businesses in the future;

adverse weather conditions;

changes in customer demand;

changes in our businesses;

technological advances in the ethanol sector and advances in the development of alternatives to ethanol;

government interventions and trade barriers, resulting in changes in the economy, taxes, rates or regulatory environment;

inflation, depreciation, valuation and devaluation of the Brazilian real;

other factors that may affect our financial condition, liquidity and results of our operations; and

other risk factors discussed under “Item 3. Key Information—D. Risk Factors.”

The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements speak only as of the date they were made, and we undertake no obligation to update or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these estimates and forward-looking statements. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this annual report might not occur and our future results and our performance may differ materially from those expressed in these forward-looking statements due to but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

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Market Data

We obtained market and competitive position data, including market forecasts, used throughout this annual report from market research, publicly available information and industry publications, as well as internal surveys. We include data from reports prepared by LMC International Ltd., the Central Bank of Brazil ( Banco Central do Brasil ), or the “Central Bank,” Sugarcane Agroindustry Association of the State of São Paulo ( União da Agroindústria Canavieira de São Paulo ), or “UNICA,” Brazilian Institute of Geography and Statistics ( Instituto Brasileiro de Geografia e Estatística ), or “IBGE,” the National Traffic Agency ( Departamento Nacional de Trânsito ), or DENATRAN, the Brazilian Association of Vehicle Manufactures ( Associação Nacional dos Fabricantes de Veículos Automotores ), or “ANFAVEA,” Datagro Publicações Ltda., F.O. Licht, Czarnikow, Apoio e Vendas Procana Comunicações Ltda., the São Paulo Stock, Commodities and Futures Exchange ( BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros ), or “BM&FBOVESPA,” the International Sugar Organization, the Brazilian National Economic and Social Development Bank ( Banco Nacional de Desenvolvimento Econômico e Social ), or “BNDES,” the New York Board of Trade, or NYBOT, the New York Stock Exchange, the London Stock Exchange, the National Agency of Petroleum, Natural Gas and Biofuels ( ANP - Agência Nacional do Petróleo, Gás Natural e Biocombustíveis ), or “ANP,” and the National Union of Distributors of Fuels and Lubricants ( Sindicato Nacional das Empresas Distribuidoras de Combustíveis e Lubrificantes ), or “Sindicom.” We believe that all market data in this annual report is reliable, accurate and complete.

Terms Used in this Annual Report

In this annual report, we present information in gallons and liters. In addition, we also present information in tonnes. In this annual report, references to “ton” or “tonne” refer to the metric tonne, which is equal to 1,000 kilograms.

All references in this annual report to “TSR” are to total sugar recovered, which represents the total amount of sugar content in a given quantity of sugarcane.

All references in this annual report to “U.S. dollars,” “dollars” or “US$” are to U.S. dollars. All references to the “real,” “ reais ” or “R$” are to the Brazilian real, the official currency of Brazil.

Rounding

We have rounding adjustments to reach some of the figures included in this annual report. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

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PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A. Selected Financial Data

The following table presents selected historical financial and operating data for Cosan Limited derived from our audited consolidated financial statements. You should read the following information in conjunction with our audited consolidated financial statements and related notes, and the information under “Item 5. Operating and Financial Review and Prospects” in this annual report.

The financial data at and for the fiscal years ended March 31, 2012, 2011 and 2010, have been derived from our audited consolidated financial statements prepared in accordance with IFRS as issued by the IASB, unless otherwise stated.

	As of and For Fiscal Year Ended March 31,
	2012			2011			2010
	(in millions of reais , except where otherwise indicated)
Income Statement Data:
Net sales		24,096.9			18,063.5			15,336.1
Cost of goods sold		(21,465.0	)		(15,150.1	)		(13,271.3	)
Gross profit		2,631.9			2,913.4			2,064.8
Selling expenses		(1,136.3	)		(1,026.0	)		(862.7	)
General and administrative expenses		(646.0	)		(545.4	)		(501.7	)
Gain on tax recovery program		—			—			270.3
Gain on the de-recognition of subsidiaries to form the JVs		2,752.7			—			—
Other, net		145.5			(33.8	)		37.5
Operations income / (expenses)		1,115.9			(1,605.2	)		(1,056.5	)
Income before financial results, equity income of associates and income taxes		3,747.8			1,308.2			1,008.3
Equity income of associates		33.3			25.2			4.2
Financial results, net		(478.5	)		(151.1	)		493.4
Income before income taxes		3,302.5			1,182.3			1,505.9
Income taxes:
Current		(147.4	)		(85.4	)		(78.4	)
Deferred		(962.7	)		(329.1	)		(344.9	)
Net income for the year		2,192.3			767.8			1,082.6
Net income for the year attributable to non-controlling interests		(1.011.0	)		(296.8	)		(376.4	)
Net income for the year attributable to owners of the Company		1.181.3			470.9			706.1
Statement of Financial Position Data:
Cash and cash equivalents		1,654.1			1,271.8			1,110.8
Inventories		748.1			670.3			612.7
Biological assets		968.0			1,561.1			963.2
Property, plant and equipment		7,866.9			7,980.5			6,114.5
Intangible assets		4,932.2			3,889.6			3,825.4

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		As of and For Fiscal Year Ended March 31,
		2012			2011			2010
		(in millions of reais , except where otherwise indicated)
Total assets		22,168.1			18,614.0			16,417.2
Current liabilities		2,074.5			2,380.8			2,086.2
Non-current
Long-term debt		4,659.1			6,274.9			5,136.5
Legal proceedings		1,051.7			666.3			612.0
Equity attributable to owners of the Company		5,577.3			4,560.9			4,195.5
Equity attributable to non-controlling interests		3,904.3			2,767.8			2,296.4
Total equity		9,481.6			7,328.7			6,491.9
Other Financial Data:
Depreciation and amortization		1,142.8			1,359.0			1,127.9
Net debt (1)		3,229.1			5,285.7			4,261.7
Working capital (2)		2,679.1			1,099.8			1,312.5
Cash flow provided by (used in):
Operating activities		1,951.6			2,327.2			2,175.8
Investing activities		(2,221.1	)		(3,145.7	)		(2,435.3	)
Financing activities		636.1			980.7			317.9
Earnings per share (basic and diluted)		4.40			1.74			2.61
Number of shares outstanding		270,687,385			270,687,385			270,687,385
Dividends paid		140,998			220,125			43,981
Dividends paid (millions of US dollars)	US$	77,386		US$	135,129		US$	24,695
Dividends paid per share ( reais )	R$	0.00053		R$	0.00081		R$	0.00016
Dividends paid per share (US dollars)	US$	0.00029		US$	0.00050		US$	0.00009

Other Operating Data:
Crushed sugarcane (in million tonnes)		52.9			54.2			50.0
Sugar production (in million tonnes)		3.9			3.9			3.5
Ethanol production (in billion liters)		1.9			2.2			1.8
Volume of fuel sold (in million liters)		18,526,3			6,076,9			5,490.6
Sugar elevated (Rumo) (in million tonnes)		7.8			7.5			8.1
Packaged sugar sold (Cosan Alimentos) (in thousand tonnes)		494.3			—			—
Volume of lubricants and base oil sold (in million liters)		216.7			166.4			130.8

(1)

Net debt consists of current and non-current debt, net of cash and cash equivalents, marketable securities and CTNs (Brazilian Treasury bills) recorded in our consolidated financial statements as other non-current assets. Net debt is a non-GAAP measure.

(2)

Working capital consists of total current assets less total current liabilities.

The table below provides a reconciliation of Net debt a non-GAAP measure:

	As of and For Fiscal Year Ended March 31,
	2012			2011			2010
	(in millions of reais, except where otherwise indicated)
Current debt		540.3			957.1			839.5
Non-current debt		4,659.1			6,274.9			5,136.6
Total		5,199.4			7,232			5,976.1
Cash and cash equivalents		(1,654.1	)		(1,271.8	)		(1,110.8	)
PESA (debt)		(316.2	)		(674.5	)		(603.6	)
Net debt		3,229.1			5,285.7			4,261.7

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Exchange Rates

The Brazilian Central Bank allows the real/ U.S. dollar exchange rate to float freely and has intervened occasionally to control the exchange rate volatility. However, the exchange market may continue to be volatile, and the real may depreciate or appreciate substantially in relation to the U.S. dollar. The Brazilian Central Bank or the Brazilian government may intervene in the exchange rate market.

Since March 17, 2008, Brazilian exporters have been allowed to keep 100% of income from exports outside of Brazil. In addition, the foreign exchange mechanism was simplified to provide for the simultaneous purchase and sale of foreign currency through the same financial institution and using the same exchange rate.

On October 5, 2010, the Brazilian government announced measures to respond to the real appreciation by increasing the IOF ( Imposto sobre Operações Financeiras ) tax rate to 4% on foreign exchange transactions related to foreign investments in the financial and capital markets, except for variable income investments traded on the stock exchange, which remained at 2%. However, the increase failed to achieve its intended goal of curbing the appreciation of the Brazilian currency in comparison to the U.S. dollar.

On October 18, 2010, new increases in the IOF tax rate were announced by the Brazilian government which adopted a 6% rate for foreign exchange transactions and for the investments of foreign investors in accordance with the margin requirements for future transactions on the BM&FBOVESPA. The IOF tax rate remains at zero on exchange transactions for outflow for these funds as well as for proceeds received as a result of initial public offerings. The conversion of Brazilian currency into foreign currency for purposes of paying dividends for American Depositary Share programs is not subject to tax.

On January 6, 2011, the Central Bank of Brazil published Circular 3,520, which imposes a 60% minimum reserve deposit for any financial operations exceeding US$3 billion.

The following tables set forth the exchange rate, expressed in reais per U.S. dollar (R$/US$) for the periods indicated, as reported by the Central Bank.

	Period-end		Average for Period		Low		High
			( reais per U.S. dollar)
Fiscal Year Ended:
April 30, 2008	R$	1.687	R$	1.828	R$	1.657	R$	2.112
March 31, 2009		2.315		2.005		1.559		2.500
March 31, 2010		1.781		1.785		1.764		1.823
March 31, 2011		1.629		1.666		1.628		1.690
March 31, 2012		1.822		1.699		1.534		1.901
Month Ended:
January 2012		1.739		1.790		1.739		1.868
February 2012		1.709		1.718		1.702		1.738
March 2012		1.822		1.795		1.715		1.833
April 2012		1.892		1.855		1.826		1.892
May 2012		2.022		1.986		1.915		2.082
June 2012		2.021		2.049		2.018		2.035
July 2012 (through July 26, 2012)		2.025		2.027		1.988		2.047

Source: Central Bank.

Exchange rate fluctuation will affect the U.S. dollar equivalent of the market price of our Brazilian Depositary Receipts, or “BDRs,” on BM&FBOVESPA, as well as the U.S. dollar value of any distributions we receive from our subsidiary Cosan S.A., which will be made in reais . See “Item 3. Key Information—D. Risk Factors—Risks Related to Brazil.”

B. Capitalization and Indebtedness

Not applicable.

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C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

This section is intended to be a summary of more detailed discussion contained elsewhere in this annual report. Our business, financial condition or results of operations could be materially adversely affected by any of the risks and uncertainties described below. Additional risks not presently known to us, or that we currently deem immaterial, may also impair our financial condition and business operations.

Risks Relating to the Joint Venture

We concluded formation of the Joint Venture with Shell to further develop our sugar and ethanol and fuel distribution businesses on June 1, 2011. We cannot guarantee that the Joint Venture will be successful.

On June 1, 2011, we concluded the formation of our Joint Venture with Shell, a Joint Venture relating to the production, supply, distribution and retailing of ethanol-based fuels. The Joint Venture is subject to post-closing antitrust review by CADE, the governing Brazilian antitrust regulator. We may incur unanticipated expenses, fail to realize all anticipated benefits or synergies, disrupt relationships with current and new employees, customers and vendors or incur indebtedness. Any delays or difficulties encountered with the Joint Venture could materially adversely impact our business and results of operations.

We have not included financial information regarding Shell or the fuel distribution assets of Shell that it contributed to the Joint Venture.

The Joint Venture is a material transaction. However, we have not included any historical financial information in this annual report regarding Shell or the fuel distribution assets that Shell contributed to the Joint Venture. In addition, we have not included any pro forma financial information regarding this Joint Venture. Investors are therefore cautioned that the nature of the assets contributed by Shell to the Joint Venture and other aspects of the Joint Venture may have a material adverse effect on us.

Risks Related to Our Business, the Operations of Our Joint Venture, and Industries in Which We Operate

We operate in industries in which the demand and the market price for our products are cyclical and are affected by general economic conditions in Brazil and the world.

The ethanol and sugar industries, both globally and in Brazil, have historically been cyclical and sensitive to domestic and international changes in supply and demand.

Ethanol is marketed as a fuel additive to reduce vehicle emissions from gasoline, as an enhancer to improve the octane rating of gasoline with which it is blended or as a substitute fuel for gasoline. As a result, ethanol prices are influenced by the supply and demand for gasoline, and our business and financial performance may be materially adversely affected if gasoline demand or price decreases. The increase in the production and sale of flex fuel vehicles (hybrid vehicles, that runs with ethanol or gasoline or both combined in any proportion) has resulted, in part, from lower taxation, since 2002, of such vehicles compared to gasoline only cars. This favorable tax treatment may be eliminated and the production of flex fuel vehicles may decrease, which could adversely affect demand for ethanol.

Historically, the international sugar market has experienced periods of limited supply—causing sugar prices and industry profit margins to increase—followed by an expansion in the industry that results in oversupply—causing declines in sugar prices and industry profit margins. In addition, fluctuations in prices for ethanol or sugar may occur, for various other reasons, including factors beyond our control, such as:

fluctuations in gasoline prices;

variances in the production capacities of our competitors; and

the availability of substitute goods for the ethanol and sugar products we produce.

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The prices we are able to obtain for sugar depends, in large part, on prevailing market prices. These market conditions, both in Brazil and internationally, are beyond our control. The wholesale price of sugar has a significant impact on our profits. Like other agricultural commodities, sugar is subject to price fluctuations resulting from weather, natural disasters, harvest levels, agricultural investments, government policies and programs for the agricultural sector, domestic and foreign trade policies, shifts in supply and demand, increasing purchasing power, global production of similar or competing products, and other factors beyond our control. In addition, a significant portion of the total worldwide sugar production is traded on exchanges and thus is subject to speculation, which could affect the price of sugar and our results of operations. The price of sugar, in particular, is also affected by producers’ compliance with sugar export requirements and the resulting effects on domestic supply. As a consequence, sugar prices have been subject to higher historical volatility when compared to many other commodities. Competition from alternative sweeteners, including saccharine and high fructose corn syrup, known as “HFCS,” changes in Brazilian or international agricultural or trade policies or developments relating to international trade, including those under the World Trade Organization, are factors that can directly or indirectly result in lower domestic or global sugar prices. Any prolonged or significant decrease in sugar prices could have a material adverse effect on our business and financial performance. Sugar prices reached the highest levels in nearly 30 years during fiscal 2010, reflecting the deficit in global sugar production.

If we are unable to maintain sales at generally prevailing market prices for ethanol and sugar in Brazil and internationally, or if we are unable to export sufficient quantities of ethanol and sugar to assure an appropriate domestic market balance, our ethanol and sugar business may be adversely affected.

Ethanol prices are directly correlated to the price of sugar, so that a decline in the price of sugar will adversely affect both our ethanol and sugar businesses.

The price of ethanol generally is closely associated with the price of sugar and is increasingly becoming correlated to the price of oil. A vast majority of ethanol in Brazil is produced at sugarcane mills that produce both ethanol and sugar. Because sugarcane millers are able to alter their product mix in response to the relative prices of ethanol and sugar, this results in the prices of both products being directly correlated, and the correlation between ethanol and sugar may increase over time. In addition, sugar prices in Brazil are determined by prices in the world market, so that there is a correlation between Brazilian ethanol prices and world sugar prices.

Because flex fuel vehicles allow consumers to choose between gasoline and ethanol at the pump rather than at the showroom, ethanol prices are now becoming increasingly correlated to gasoline prices and, consequently, oil prices. We believe that the correlation among the three products will increase over time. Accordingly, a decline in sugar prices will have an adverse effect on the financial performance of our ethanol and sugar businesses, and a decline in oil prices may have an adverse effect on that of our ethanol business.

Raízen Energia may not successfully acquire or develop additional production capacity through greenfield projects or expansion of existing facilities.

Raízen Energia expects to explore greenfield projects in the future. We do not have environmental or other permits, designs or engineering, procurement and construction contracts with respect to any potential projects. As a result, we may not complete these greenfield projects on a timely basis or at all, and may not realize the related benefits we anticipate. In addition, we may be unable to obtain the required financing for these projects on satisfactory terms, or at all. For example, we may not be able to obtain all of the land for which we have obtained options in the State of Goiás or we may not have the appropriate personnel, equipment and know-how to implement projects.

The integration of greenfield projects or expansion of our existing facilities may result in unforeseen operating difficulties and may require significant financial and managerial resources that would otherwise be used for the development and ongoing expansion of our existing operations. Planned or future greenfield projects or expansion of existing facilities may not enhance our financial performance.

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Raízen Energia may not successfully implement our plans to sell energy from our cogeneration projects, and the Brazilian government’s regulation of the energy sector may affect our business and financial performance.

Our current total installed energy cogeneration capacity is approximately 793 MW, which are used to generate energy for our own industrial operations and to export surplus energy. We have one additional energy co-generation project that we expect to become operational in 2012. We estimate that by the end of calendar year 2012, we will have a total installed energy cogeneration capacity of 934 MW, from which 845MW will come from certain of our mills that will sell excess energy to the grid and a total installed energy capacity of 1,300 MW by 2016. The Brazilian government regulates the energy sector extensively. We may not be able to satisfy all the requirements necessary to acquire new contracts or to otherwise comply with Brazilian energy regulation. Changes to the current energy regulation or federal authorization programs, and the creation for more stringent criteria for qualification in future public energy auctions, may adversely affect the implementation of this element of our business strategy.

Raízen Energia may engage in hedging transactions, which involve risks that can harm our financial performance.

We are exposed to market risks arising from the conduct of our business activities—in particular, market risks arising from changes in commodity prices, exchange rates or interest rates. In an attempt to minimize the effects of volatility of sugar prices and exchange rates on our cash flows and results of operations, we engage in hedging transactions involving commodities and exchange rate futures, options, forwards and swaps. We also engage in interest rate-related hedging transactions from time to time. Hedging transactions expose us to the risk of financial loss in situations where the other party to the hedging contract defaults on its contract or there is a change in the expected differential between the underlying price in the hedging agreement and the actual price of commodities or exchange rate. We may incur significant hedging-related losses in the future. We hedge against market price fluctuations by fixing the prices of our sugar export volumes and exchange rates. Since we record derivatives at fair value, to the extent that the market prices of our products exceed the fixed price under our hedging policy, our results will be lower than they would have been if we had not engaged in such transactions as a result of the related non-cash derivative expenses. As a result, our financial performance would be adversely affected during periods in which commodities prices increase. Alternatively, we may choose not to engage in hedging transactions in the future, which could adversely affect our financial performance during periods in which commodities prices decrease.

Raízen Energia faces significant competition, which may adversely affect our market share and profitability.

The ethanol and sugar industries are highly competitive. Internationally, we compete with global ethanol and sugar producers such as Poet, Inc., Archer-Daniels-Midland Company, Cargill, Inc. and A.E. Staley Manufacturing Company (a subsidiary of Tate & Lyle, PLC). Some of our competitors are divisions of larger enterprises and have greater financial resources than our company. In Brazil, we compete with numerous small to medium-size producers. Despite increased consolidation, the Brazilian ethanol and sugar industries remain highly fragmented. Our major competitors in Brazil are Louis Dreyfus Commodities - Santelisa Vale (the second largest ethanol and sugar producer in Brazil), Tereos - Guarani (the third largest ethanol and sugar producer in Brazil), Bunge, Santa Terezinha, São Martinho, Carlos Lyra, Tercio Wanderley, Zilor, Oscar Figueiredo, Da Pedra, and Irmãos Biagi and other ethanol and sugar producers in Brazil market their ethanol and sugar products through the Cooperative of Sugarcane, Sugar and Ethanol Producers of the State of São Paulo ( Cooperativa de Produtores de Cana-de-açúcar, Açúcar e Álcool do Estado de São Paulo ), or “Copersucar.” During the 2011/2012 harvest, Copersucar was comprised of producers in the states of São Paulo, Minas Gerais and Paraná. We are not a member of Copersucar.

We face strong competition from international producers – in particular, in highly regulated and protected markets, such as the United States and the European Union. Historically, imports of sugar have not provided substantial competition for us in Brazil due to, among other factors, the production and logistical cost-competitiveness of sugar produced in Brazil. If the Brazilian government creates incentives for sugar imports, we could face increased competition in the Brazilian market by foreign producers. Many factors influence our competitive position, including the availability, quality and cost of fertilizer, energy, water, chemical products and labor. Some of our international competitors have greater financial and marketing resources, larger customer bases and broader product ranges than we do. If we are unable to remain competitive with these producers in the future, our market share may be adversely affected.

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The fuel distribution and lubricant market in Brazil is highly competitive. We compete with domestic fuel distributors who purchase substantially all of their fuels from Petrobras. There are very few domestic competitors, like us, who import certain products into Brazil. In addition, we compete with producers and marketers in other industries that supply alternative forms of energy and fuels to satisfy the requirements of our industrial, commercial and retail consumers. Certain of our competitors, such as Petrobras, have larger fuel distribution networks and vertically integrated oil refineries, and may be able to realize lower per-barrel costs or higher margins per barrel of throughput. Our principal competitors are larger and have substantially greater resources than we do. Because of their integrated operations and larger capitalization, these companies may be more flexible in responding to volatile industry or market conditions, such as shortages of crude oil and other feedstocks or intense price fluctuations. The actions of our competitors could lead to lower prices or reduced margins for the products we sell, which could have a material and adverse effect on our business or results of operations.

A reduction in market demand for ethanol or a change in governmental policies that ethanol be added to gasoline may materially adversely affect our business.

Governmental authorities of several countries, including Brazil and certain states of the United States, currently require the use of ethanol as an additive to gasoline. Since 1997, the Brazilian Sugar and Alcohol Interministerial Council ( Conselho Interministerial do Açúcar e Álcool ) has set the percentage of anhydrous ethanol that must be used as an additive to gasoline (currently, at 20% by volume). Approximately one-half of all fuel ethanol in Brazil is used to fuel automobiles that run on a blend of anhydrous ethanol and gasoline; the remainder is used in either flex fuel vehicles or vehicles powered by hydrous ethanol alone. Five districts in China require the addition of 10% ethanol to gasoline. Japan is discussing the requirement the addition of 3% of ethanol to gasoline, increasing such requirement to 20% in 2030 and nine states and four union territories in India require the addition of 5% of ethanol to gasoline. Other countries have similar governmental policies requiring various blends of anhydrous ethanol and gasoline. In addition, flex fuel vehicles in Brazil are currently taxed at lower levels than gasoline-only vehicles, which has contributed to the increase in the production and sale of flex fuel vehicles. Any reduction in the percentage of ethanol required to be added to gasoline or increase in the levels at which flex fuel vehicles are taxed in Brazil, as well as growth in the demand for natural gas and other fuels as an alternative to ethanol, lower gasoline prices or an increase in gasoline consumption (versus ethanol), may cause demand for ethanol to decline and affect our business. In addition, ethanol prices are influenced by the supply and demand for gasoline; therefore, a reduction in oil prices resulting in a decrease in gasoline prices and an increase in gasoline consumption (versus ethanol), may have a material and adverse effect in our business.

Government policies and regulations affecting the agricultural and fuel sectors and related industries could adversely affect our operations and profitability.

Agricultural production and trade flows are significantly affected by Brazilian federal, state and local, as well as foreign, government policies and regulations. Governmental policies affecting the agricultural industry, such as taxes, tariffs, duties, subsidies and import and export restrictions on agricultural commodities and commodity products, may influence industry profitability, the planting of certain crops versus others, the uses of agricultural resources, the location and size of crop production, the trading levels for unprocessed versus processed commodities, and the volume and types of imports and exports.

Future government policies in Brazil and elsewhere may adversely affect the supply, and demand for, and prices of, our products or restrict our ability to do business in our existing and target markets, which could adversely affect our financial performance. Sugar prices, like the prices of many other staple goods in Brazil, were historically subject to controls imposed by the Brazilian government. Sugar prices in Brazil have not been subject to price controls since 1997. However, additional measures may be imposed in the future. In addition, our operations are currently concentrated in the State of São Paulo. Any changes affecting governmental policies and regulations regarding ethanol, sugar or sugarcane in the State of São Paulo may adversely affect our company.

In addition, petroleum and petroleum products have historically been subject of price controls in Brazil. Currently there is no legislation or regulation in force giving the Brazilian government power to set prices for petroleum, petroleum products, ethanol or NGV. However, given that Petrobras, the only supplier of oil-based fuels in Brazil, is a state-controlled company, prices of petroleum and petroleum products are subject to government influence, resulting in potential inconsistencies between international prices and internal oil derivative prices that affect our business and our financial results, which are not linked to international prices.

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We may not be successful in reducing operating costs and increasing operating efficiencies.

As part of our strategy, we continue to seek to reduce operating costs and increase operating efficiencies to improve our future financial performance. For example, we are purchasing new harvesters and increasing our mechanical harvesting with the goal of reducing sugarcane burning according to the Agri-Environmental Sugarcane Protocol. In areas that are suitable for the replacement of a manual harvest with a mechanical harvest, the burning of sugarcane must be reduced as follows: (1) 70% of the harvested area by 2010; and (2) 100% of the harvested area by 2014. For areas that do not technically allow the replacement of a manual harvest with a mechanical harvest, the burning of sugarcane must be reduced as follows: (1) 30% of the harvested area by 2010; and (2) 100% of the harvested area by 2017. We may not be able to achieve the cost savings that we expect to realize from this and other initiatives. Any failure to realize anticipated cost savings may adversely affect our competitiveness and financial performance.

Government laws and regulations governing the burning of sugarcane could have a material adverse impact on our business or financial performance.

Approximately 35% of our sugarcane is currently harvested by burning the crop, which removes leaves and destroys insects and other pests. The State of São Paulo and some local governments have established laws and regulations that limit our ability to burn sugarcane or that reduce and/or entirely prohibit the burning of sugarcane. We currently incur significant costs to comply with these laws and regulations, and there is a likelihood that increasingly stringent regulations relating to the burning of sugarcane will be imposed by the State of São Paulo and other governmental agencies in the near future. As a result, the costs to comply with existing or new laws or regulations are likely to increase, and, as a result, our ability to operate our own mills and harvest our sugarcane crops may be adversely affected.

Any failure to comply with these laws and regulations may subject us to legal and administrative actions. These actions can result in civil or criminal penalties, including a requirement to pay penalties or fines, which may range from R$50.00 to R$50,000 million and can be doubled or tripled in case of recidivism, an obligation to make capital and other expenditures or an obligation to materially change or cease some operations.

Adverse weather conditions may reduce the volume and sucrose content of sugarcane that we can cultivate and purchase in a given harvest, and we are affected by seasonality of the sugarcane growing cycle.

Our sugar production depends on the volume and sucrose content of the sugarcane that we cultivate or that is supplied to us by growers located in the vicinity of our mills. Crop yields and sucrose content depend primarily on weather conditions such as rainfall and temperature, which vary and may be influenced by global climate change. Weather conditions have historically caused volatility in the ethanol and sugar industries and, consequently, in our results of operations by causing crop failures or reduced harvests. Flood, drought or frost, which may be influenced by global climate change, can adversely affect the supply and pricing of the agricultural commodities that we sell and use in our business. Future weather patterns may reduce the amount of sugar or sugarcane that we can recover in a given harvest or its sucrose content. In addition, our business is subject to seasonal trends based on the sugarcane growing cycle in the Center-South region of Brazil. The annual sugarcane harvesting period in the Center-South region of Brazil begins in April/May and ends in November/December. This creates fluctuations in our inventory, usually peaking in November to cover sales between crop harvests (i.e., December through April), and a degree of seasonality in our gross profit, with ethanol and sugar sales significantly lower in the last quarter of the fiscal year. Seasonality and any reduction in the volumes of sugar recovered could have a material adverse effect on our business and financial performance.

We may be adversely affected by a shortage of sugarcane or by high sugarcane costs.

Sugarcane is our principal raw material used for the production of ethanol and sugar. In fiscal year 2012, sugarcane purchased from suppliers accounted for 49.9% of our total sugarcane crushed. Historically, approximately 80% of the sugarcane purchased by us has been under medium- and long-term contracts with sugarcane growers, 5% on a spot basis and the remaining 15% from sugarcane growers with whom we have long-term relationships but no contractual arrangements. We generally enter into medium- and long-term supply contracts for periods varying from three and one-half to seven years. As of March 31, 2012, we also leased 68,291 hectares under 10 land lease contracts with an average term of fourteen years. Any shortage in sugarcane supply or increase in sugarcane prices in the near future, including as a result of the termination of supply contracts or lease agreements representing a

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material reduction in the sugarcane available to us for processing or increase in sugarcane prices may adversely affect our business and financial performance.

Social movements may affect the use of our agricultural properties or cause damage to them.

Social movements such as the Landless Rural Workers’ Movement ( Movimento dos Trabalhadores Rurais Sem Terra ) and the Pastoral Land Commission ( Comissão Pastoral da Terra ) are active in Brazil and advocate land reform and property redistribution by the Brazilian Government. Invasion and occupation of agricultural land by large numbers of people is a common practice among the members of such movements, and in certain regions, including those where we currently invest, remedies such as police protection or eviction procedures are inadequate or non-existent. As a result, we cannot assure you that our agricultural properties will not be subject to invasion or occupation by any of such social movements. Any invasion or occupation may materially impair the use of our lands and adversely affect our business, financial condition, and results of operations.

Alternative sweeteners have negatively affected demand for our sugar products in Brazil and other countries.

We believe that the use of alternative sweeteners, especially artificial alternative sweeteners such as aspartame, saccharine and HFCS, has adversely affected the growth of the overall demand for sugar in Brazil and the rest of the world. Soft drink bottlers in many countries have switched from sugar to, or increased consumption of, alternative sweeteners. In addition, the use of alternative sweeteners by sugar consumers, including soft drink bottlers, may also reduce the demand for sugar in Brazil. A substantial decrease in sugar consumption, or the increased use of alternative or artificial sweeteners, would decrease demand for our sugar products and could result in lower growth in our net sales and overall financial performance.

Raízen Energia sugar and ethanol products are sold to a small number of customers which may be able to exercise significant bargaining power concerning pricing and other sale terms.

A substantial portion of Raízen Energia´s sugar and ethanol production is sold to a small number of customers that acquire large portions of our production and thus may be able to exercise significant bargaining power concerning pricing and other sale terms. In addition, intensive competition in the ethanol and sugar industries further increases the bargaining power of customers.

Raízen Energia export sales are subject to a broad range of risks associated with international operations.

In fiscal year 2012, our net sales from exports represented 7.4% of our total net sales, while in fiscal year 2011, our net sales from exports represented 15.0% of our total net sales.

In fiscal year 2011, our net sales from exports were R$ 2,711.0 million, representing 15.0% of our total net sales. In fiscal year 2012, our net sales from exports were R$ 1,781.7 million, representing 7.4% of our total net sales. During this same period, our net sales from sugar exports were R$ 1,457.6 million, representing 0.006% of our total net sales, and our net sales from exports of ethanol were R$ 319.4 million, representing 0.001% of our total net sales.

We expect to expand our ethanol exports in the future. Expansion of ethanol exports depends on factors beyond our control, including liberalization of existing trade barriers and the establishment of distribution systems for hydrous ethanol in countries outside of Brazil. Our future financial performance will depend, to a significant extent, on economic, political and social conditions in our main export markets.

Most ethanol and/or sugar producing countries, including the United States and member countries of the European Union, protect local producers from foreign competition by establishing government policies and regulations that affect ethanol and sugar production, including quotas, import and export restrictions, subsidies, tariffs and duties. As a result of these policies, domestic ethanol and sugar prices vary greatly in individual countries. We have limited or no access to these large markets as a result of trade barriers. If these protectionist policies continue, we may not be able to expand our export activities at the rate we currently expect, or at all, which could adversely affect our business and financial performance. Also, if new trade barriers are established in our key export markets, we may face difficulties in reallocating our products to other markets on favorable terms, and our business and financial performance may be adversely affected.

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Fire and other disasters could affect our agricultural and manufacturing properties, which would adversely affect our production volumes and, consequently, financial performance.

Our operations will be subject to risks affecting our agricultural properties and facilities, including fire potentially destroying some or our entire yield and facilities. In addition, our operations are subject to hazards associated with the manufacture of inflammable products and transportation of feed stocks and inflammable products. Our insurance coverage may not be sufficient to provide full protection against these types of casualties.

Disease and pestilence may strike our crops which may result in destruction of a significant portion of our harvest. Crop disease and pestilence can occur from time to time and have a devastating effect on our crops, potentially rendering useless or unusable all or a substantial portion of affected harvests. Even when only a portion of the crop is damaged, our business and financial performance could be adversely affected because we may have incurred a substantial portion of the production cost for the related harvest. The cost of treatment of crop disease tends to be high. Any serious incidents of crop disease or pestilence, and related costs, may adversely affect our production levels and, as a result, our net sales and overall financial performance.

Anticompetitive practices in the fuel and lubricants distribution market may distort market prices.

In the last few years, anticompetitive practices have been one of the main problems affecting fuel distributors in Brazil. Generally these practices have involved a combination of tax evasion and fuel adulteration, such as the dilution of gasoline by mixing solvents or adding anhydrous ethanol in an amount greater than the 25% permitted by applicable law (the overall taxation of anhydrous ethanol is lower than hydrated ethanol and gasoline). Taxes constitute a significant portion of the cost of fuels sold in Brazil. For this reason, tax evasion on the part of some fuel distributors has been prevalent, allowing them to lower the prices they charge. These practices have enabled certain distributors to supply large quantities of fuel products at prices lower than those offered by the major distributors, including us, which has resulted in a considerable increase in the sales volumes of the distributors who have adopted these practices. The final prices for fuels are calculated based on the taxes levied on their purchase and sale, among others factors. As a result, anticompetitive practices as such tax evasion may affect our sales volume, which could have a material and adverse effect on our business. If such practices become more prevalent, it could lead to lower prices or reduced margins for the products we sell, which could have a material and adverse effect on our business or results of operations.

Petrobras is our principal supplier of our base oils and of our fuel distribution business unit.

Significant disruption to our fuels and lubricant sales may occur, in the event of an interruption of supply from Petrobras. Any interruption would immediately affect our ability to provide fuel and lubricant products to our customers. If we are not able to obtain an adequate supply of fuel and base oil products from Petrobras under acceptable terms, we may seek to meet our demands through purchases on the international market. The cost of fuel and base oil products on the international market may be more expensive than the price we obtain through Petrobras.

The production of lubricants and the storage and transportation of fuel products, lubricant products are inherently hazardous.

The complex manufacturing operations we perform at our Lubricants Oil Blending Plant, or LOBP, involve a variety of safety and other operating risks, including the handling, production, storage and transportation of toxic materials. These risks could result in personal injury and death, severe damage to or destruction of property and equipment and environmental damage. A material accident at one of our plants, service stations or storage facilities could force us to suspend our operations and result in significant remediation costs and lost revenue. In addition, insurance proceeds, if available, may not be received on a timely basis and may be insufficient to cover all losses, including lost profit. Equipment breakdowns, natural disasters, and delays in obtaining supplies or required replacement parts or equipment could also materially adversely affect our manufacturing operations and consequently our results of operations.

We may not be able to maintain rights to use blending formulas and brands supplied by ExxonMobil.

We, through our subsidiary CLE (previously CCL) are the exclusive manufacturer and distributor of lubricants products in Brazil based on formulas provided to us under a license from ExxonMobil under the Master Lubricants Agreement, which expires on December 1, 2018. We have also been granted a license to use the ExxonMobil brand to market fuels under the Fuels Trademark License Agreement, which expires on December 1, 2013. The

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termination or failure to renew any of these licenses, or the failure by ExxonMobil to adequately maintain and protect its intellectual property rights, could materially and adversely affect our results of operations or could require significant unplanned investments by us if we are forced to develop or acquire alternative technology. In the future, it may be necessary or desirable to obtain other third-party technology licenses relating to one or more of our products or relating to current or future technologies to enhance our product offerings. However, we may not be able to obtain licensing rights to the needed technology or components on commercially reasonable terms or at all.

Our subsidiary’s port concession is subject to termination by the granting authority.

We own and operate a sugar-loading terminal at the Port of Santos in the State of São Paulo through our subsidiary Rumo Logística S.A., or “Rumo Logística.” This port terminal is a result of the association of two previous terminals, Cosan Operadora Portuária S.A., or “Cosan Portuária,” and Teaçu Armazéns Gerais S.A., or “Teaçu” (previously owned by Nova América). The close proximity of our mills to the port enables us to benefit from lower transportation costs. Pursuant to the port concession agreement with the State of São Paulo’s Port Authority ( Companhia de Docas do Estado de São Paulo – CODESP ), or “CODESP,” Cosan Portuária’s concession to operate this terminal will expire on 2016, and it may be renewed for an additional 20 years if Cosan Portuária meets its obligations under the port concession agreement. We are already discussing with the CODESP the renewal of this concession, but we cannot provide assurances that we will be able to renew the concession at all or on favorable terms. The South Terminal concession (formerly Teaçu) was initially scheduled to expire in 2016, but has been extended until 2036. All port concessions may be unilaterally terminated by the granting authority prior to that time upon:

expropriation of the port concession in the public interest;

default by Rumo Logística in the performance of its obligations under the port concession agreement, including the payment of concession fees or failure to comply with other legal and regulatory obligations;

Rumo Logística’s failure to comply with determinations by the granting authority; or

bankruptcy or dissolution of Rumo Logística.

Termination of the port concession agreement may adversely impact our transportation costs and the turn-around time for the export of our products as well as our revenues from service agreements related to our port facilities.

Our subsidiary Rumo Logística may not obtain the expected return on its contracts with ALL América Latina Logística S.A..

Our subsidiary Rumo Logística entered into long term contracts with ALL – América Latina Logística S.A., or “ALL,” providing that Rumo Logística will make investments to expand ALL’s rail transport capacity in exchange for ALL transporting raw sugar and other derivatives. The contracts provide that Rumo Logística will invest approximately R$1.3 billion as of March 31, 2012 the remain balances amount of R$ 535.7 million in a rail transport system, to be supported by ALL’s operations, with investments in (1) the duplication, expansion and improvements to the railway line and the yards in the Bauru-Santos/São Paulo railway corridor, sharply increasing its operating capacity; (2) the acquisition of locomotives and hopper railcars; and (3) the construction and expansion of terminals. In return, ALL will provide transport services, guaranteeing (1) a minimum volume curve; (2) competitive tariffs in comparison with road transport; (3) management of locomotive and wagon suppliers; and (4) payment of rent on equipment in proportion to the actual volume of the product transported. In the event Rumo Logística is not able to originate the volume of sugar to the transported, we may not receive the contractual fees, which could impact negatively the return of invested capital.

The expansion of our business through acquisitions and strategic alliances creates risks that may reduce the benefits we anticipate from these transactions.

We have grown substantially through acquisitions. We plan to continue to acquire, from time to time, other ethanol or sugar producers or facilities in Brazil or elsewhere that complement or expand our sugar and ethanol existing operations. Moreover, we plan to acquire and build, from time to time, fuel terminals, lubricant production assets, retail distribution stations and other assets that complement and expand our fuel and lubricants existing

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operations and also intend to expand our network of service stations through increased branding. We also may enter into strategic alliances to increase our competitiveness. However, our management is unable to predict whether or when any prospective acquisitions or strategic alliances will occur, or the likelihood of any particular transaction being completed on favorable terms and conditions. Our ability to continue to expand our business through acquisitions or alliances depends on many factors, including our ability to identify acquisitions or access capital markets on acceptable terms. Even if we are able to identify acquisition targets and obtain the necessary financing to make these acquisitions, we could financially overextend ourselves, especially if an acquisition is followed by a period of lower than projected ethanol and sugar prices.

Acquisitions, especially involving sizeable enterprises, may present financial, managerial and operational challenges, including diversion of management attention from existing business and difficulties in integrating operations and personnel. Any failure by us to integrate new businesses or manage any new alliances successfully could adversely affect our business and financial performance. Some of our major competitors may be pursuing growth through acquisitions and alliances, which may reduce the likelihood that we will be successful in completing acquisitions and alliances. In addition, any major acquisition we consider may be subject to antitrust and other regulatory approvals. We may not be successful in obtaining required approvals on a timely basis or at all.

Acquisitions also pose the risk that we may be exposed to successor liability relating to prior actions involving an acquired company, or contingent liabilities incurred before the acquisition. Due diligence conducted in connection with an acquisition, and any contractual guarantees or indemnities that we receive from sellers of acquired companies, may not be sufficient to protect us from, or compensate us for, actual liabilities. A material liability associated with an acquisition, such as labor- or environmental-related liabilities, could adversely affect our reputation and financial performance and reduce the benefits of the acquisition.

We have recently concluded formation of our Joint Venture with Shell. See “Item 5. Operating and Financial Review and Prospects—Principal Factors Affecting Our Results of Operations—Acquisitions, Partnerships and Corporate Restructuring.” We have also recently entered into agreements to acquire additional companies. See “Item 4. Information on the Company—A. History and Development of the Company.”

We are subject to extensive environmental regulation.

Our business activities in Brazil are subject to extensive federal, state and municipal laws and regulations concerning environmental protection, which impose on us various environmental obligations, such as environmental licensing requirements, minimum standards for the release of effluents, use of agrochemicals, management of solid waste, protection of certain areas (legal reserve and permanent preservation areas), and the need for a special authorization to use water, among others. The failure to comply with such laws and regulations may subject the violator to administrative fines, mandatory interruption of activities and criminal sanctions, in addition to the obligation to cure and pay environmental and third-party damage compensation, without any caps. In addition, Brazilian environmental law adopts a joint and several and strict liability system for environmental damages, which makes the polluter liable even in cases where it is not negligent and would make us jointly and severally liable for the obligations of our producers or off-takers. If we become subject to environmental liabilities, any costs we may incur to rectify possible environmental damage would lead to a reduction in the financial resources which would otherwise remain at our disposal for current or future strategic investment, thus causing an adverse impact on us.

As environmental laws and their enforcement become increasingly stringent, our expenses for complying with environmental requirements are likely to increase in the future. Furthermore, the possible implementation of new regulations, changes in existing regulations or the adoption of other measures could cause the amount and frequency of our expenditures on environmental preservation to vary significantly compared to present estimates or historical costs. Any unplanned future expenses could force us to reduce or forego strategic investments and as a result could materially and adversely affect us.

We incur substantial costs to comply with environmental regulations and may be exposed to liabilities in the event we fail to comply with these regulations or as a result of our handling of hazardous materials.

We are subject to various Brazilian federal, state and local environmental protection and health and safety laws and regulations governing, among other matters:

the generation, storage, handling, use and transportation of hazardous materials;

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the emission and discharge of hazardous materials into the ground, air or water; and

the health and safety of our employees.

We are also required to obtain permits from governmental authorities for certain aspects of our operations. These laws, regulations and permits often require us to purchase and install expensive pollution control equipment or to make operational changes to limit actual or potential impacts on the environment and/or health of our employees. Currently, we do not anticipate any material claims or liabilities resulting from a failure to comply with these laws and regulations. However, any violations of these laws and regulations or permit conditions can result in substantial fines, criminal sanctions, revocations of operating permits and/or shutdowns of our facilities.

Due to the possibility of changes to environmental regulations and other unanticipated developments, the amount and timing of future environmental expenditures may vary substantially from those currently anticipated. Under Brazilian environmental laws, we could be held strictly liable for all of the costs relating to any contamination at our or our predecessors’ current and former facilities and at third-party waste disposal sites used by us or any of our predecessors. We could also be held responsible for any and all consequences arising out of human exposure to hazardous substances, such as pesticides and herbicides, or other environmental damage.

We are party to a number of administrative and judicial proceedings for alleged failures to comply with environmental laws which may result in fines, shutdowns, or other adverse effects on our operations. We have not recorded any provisions or reserves for these proceedings as we do not currently believe that they will result in liabilities material to our business or financial performance. Our costs of complying with current and future environmental and health and safety laws, and our liabilities arising from past or future releases of, or exposure to, hazardous substances could adversely affect our business or financial performance.

The imposition of restrictions on acquisitions of agricultural properties by non-Brazilian nationals may materially restrict the development of our business.

In August 2010, the president of Brazil approved the opinion of the Attorney General of the federal government affirming the constitutionality of Brazilian Law No. 5,709/71 which imposes important limitations on the acquisition and lease of land in Brazil by foreigners and by Brazilian companies controlled by foreigners. Under this legislation, companies that are majority-owned by foreigners may not acquire agricultural properties in excess of 100 indefinite exploration modules (which are measurement units adopted within different Brazilian regions and range from five to 100 hectares). In addition, agricultural, livestock and industrial projects to be developed require approval of the National Congress. In addition, any purchase of agricultural properties beyond the limits mentioned above also requires authorization from the National Congress. The Attorney General’s opinion states that the sum of agricultural areas that may be owned by foreigners or companies controlled by foreigners may not exceed 25% of the surface of the relevant municipality, of which area up to 40% may belong to foreigners or companies controlled by foreigners of the same nationality, meaning that the sum of agricultural areas that belong to foreigners or companies controlled by foreigners of the same nationality may not exceed 10% of the surface area of the relevant municipality. The implementation of Law No. 5,709/71 is likely to impose on us additional procedures and approvals in connection with our proposed acquisitions of land, which may result in material delays and/or our inability to obtain needed approvals. In addition, we may need to modify our business strategy and intended practices in order to be able to acquire agricultural properties, including giving up our right to exercise control over the entities acquiring such properties. Any regulatory limitations and restrictions could materially limit our ability to acquire agricultural properties or increase the investments or complicate the regulatory procedures required to do so, any of which could materially and adversely affect us and our ability to successfully implement our business strategy.

We are expos e d to the credit and other counterparty risk of our customers in the ordinary course of our business.

We have various credit terms with virtually all of our wholesale and retail industrial customers, and our customers have varying degrees of creditworthiness which exposes us to the risk of nonpayment or other default under our contracts and other arrangements with them. In the event that a significant number of material customers default on their payment obligations to us, our financial condition, results of operations or cash flows, could be materially and adversely affected.

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Our business would be materially adversely affected if operations at our transportation, terminal and storage and distribution facilities experienced significant interruptions. Our business would also be materially adversely affected if the operations of our customers and suppliers experienced significant interruptions.

Our operations are dependent upon the uninterrupted operation of our terminal and storage facilities and various means of transportation. We are also dependent upon the uninterrupted operation of certain facilities owned or operated by our suppliers and customers. Operations at our facilities and at the facilities owned or operated by our suppliers and customers could be partially or completely shut down, temporarily or permanently, as the result of any number of circumstances that are not within our control, such as:

catastrophic events, including hurricanes;

environmental remediation;

labor difficulties; and

disruptions in the supply of our products to our facilities or means of transportation.

Any significant interruption at these facilities or inability to transport products to or from these facilities or to or from our customers for any reason would materially adversely affect our results of operations and cash flow.

Disruption of transportation and logistics services or insufficient investment in public infrastructure could adversely affect our operating results.

One of the principal disadvantages of Brazilian agriculture sector is that key growing regions lie far from major ports. As a result, efficient access to transportation infrastructure and ports is critical to the growth of Brazilian agriculture as a whole and of our operations in particular. As part of our business strategy, we are investing in areas where existing transportation infrastructure is under developed. Improvements in transportation infrastructure are likely to be required to make more agricultural production accessible to export terminals at competitive prices. A substantial portion of Brazilian agricultural production is currently transported by truck, a means of transportation significantly more expensive than the rail transportation available to U.S. and other international producers. Our dependence on truck transport may affect our position as low-cost producer, so that our ability to compete in world markets may be impaired.

Even though road and rail improvement projects have been considered for some areas of Brazil, and in some cases implemented, substantial investments are required for road and rail improvement projects, which may not be completed on a timely basis – if at all. Any delay or failure in developing infrastructure systems could hurt the demand for our products, impede our delivery of products or impose additional costs on us. We currently outsource the transportation and logistics services necessary to operate our business. Any disruption in these services could result in supply problems at our processing plants and impair our ability to deliver processed products to our customers in a timely manner. In addition, a natural disaster or other catastrophic event could result in disruption in regional transportation infrastructure systems affecting our third-party transportation providers.

We depend on third parties to provide our customers and us with facilities and services that are integral to our business.

We have entered into agreements with third-party contractors to provide facilities and services required for our operations, such as the transportation and storage of ethanol and sugar. The loss or expiration of our agreements with third-party contractors or our inability to renew these agreements or to negotiate new agreements with other providers at comparable rates could harm our business and financial performance. Our reliance on third parties to provide essential services on our behalf also gives us less control over the costs, efficiency, timeliness and quality of those services. Contractors’ negligence could compromise the safety of the transportation of ethanol from our production facilities to our export facilities. We expect to be dependent on such agreements for the foreseeable future, and if we enter any new market, we will need to have similar agreements in place.

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Technological advances could affect demand for our products or require substantial capital expenditures for us to remain competitive.

The development and implementation of new technologies may result in a significant reduction in the costs of ethanol production. We cannot predict when new technologies may become available, the rate of acceptance of new technologies by our competitors or the costs associated with such new technologies. Advances in the development of alternatives to ethanol also could significantly reduce demand or eliminate the need for ethanol as a fuel oxygenate. Any advances in technology which require significant capital expenditures to remain competitive or which otherwise reduce demand for ethanol will have a material adverse effect on our business and financial performance.

We may be adversely affected by unfavorable outcomes in pending legal proceedings.

We are involved in a significant number of tax, civil and labor proceedings, which we estimate involve claims against us totaling R$ 7,237.6 million, and as to which, at March 31, 2012, we recorded a provision totaling R$1,051.7 million and net of judicial deposits totaling R$509.2 million. We cannot predict whether we will prevail in these or other proceedings, or whether we will have to pay significant amounts, including penalties and interest, as payment for our liabilities, which would materially and adversely impact our business and financial performance.

Funding, especially on terms acceptable to us, may not be available to meet our future capital needs.

Global market and economic conditions have been, and continue to be, disruptive and volatile. The debt capital markets have been impacted by significant write-offs in the financial services sector and the re-pricing of credit risk, among other things. These events have negatively affected general economic conditions. In particular, the cost of raising money in the debt capital markets has increased substantially while the availability of funds from those markets has diminished significantly. Also, as a result of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining money from the credit markets has increased as many lenders and institutional investors have increased interest rates, enacted tighter lending standards and reduced and, in some cases, ceased to provide funding to borrowers on commercially reasonable terms or at all.

If funding is not available when needed, or is available only on unfavorable terms, meeting our capital needs or otherwise taking advantage of business opportunities or responding to competitive pressures may become challenging, which could have a material and adverse effect on our revenue and results of operations.

We are not insured against business interruption for our Brazilian operations and most of our assets are not insured against war or sabotage. In addition, our insurance coverage may be inadequate to cover all losses and/or liabilities that may be incurred in our operations.

We do not maintain coverage for business interruptions of any nature for our Brazilian operations, including business interruptions caused by labor disruptions. If, for instance, our workers were to strike, the resulting work stoppages could have a material and adverse effect on us. In addition, we do not insure most of our assets against war or sabotage. Therefore, an attack or an operational incident causing an interruption of our business could have a material and adverse effect on our financial condition or results of operations. Our operations are subject to a number of hazards and risks. We maintain insurance at levels that are customary in our industry to protect against these liabilities; however, our insurance may not be adequate to cover all losses or liabilities that might be incurred in our operations. Moreover, we will be subject to the risk that we may not be able to maintain or obtain insurance of the type and amount desired at reasonable rates. If we were to incur a significant liability for which we were not fully insured, it could have a materially adverse effect on our business, financial condition and results of operations.

We are highly dependent on our chairman and other members of our management to develop and implement our strategy and to oversee our operations.

We are dependent upon Mr. Rubens Ometto Silveira Mello, our chairman, other members of senior management and certain members of our board of directors, especially with respect to business planning, strategy and operations. If any of these key members of our management leaves our company, our business and financial performance may be negatively affected. Our business is particularly dependent on Mr. Rubens Ometto Silveira Mello, who is also our controlling shareholder. We currently do not carry any key man insurance.

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We are indirectly controlled by a single individual who has the power to control us and all of our subsidiaries.

Mr. Rubens Ometto Silveira Mello, our controlling shareholder and chairman, has the power to indirectly control us, including the power to:

elect a majority of our directors and appoint our executive officers, set our management policies and exercise overall control over our company and subsidiaries;

agree to sell or otherwise transfer his controlling stake in our company; and

determine the outcome of substantially all actions requiring shareholder approval, including transactions with related parties, corporate reorganizations, acquisitions and dispositions of assets, and dividends.

Our class B common shares have ten votes per share and our class A common shares have one vote per share. Currently, because of our share capital structure, our controlling shareholder is able to control substantially all matters submitted to our shareholders for a vote or approval even if the controlling shareholder comes to own less than 50% of the issued and outstanding share capital in the company. The concentrated control will limit your ability to influence corporate matters and, as a result, we may take actions that our shareholders do not view as beneficial. As a result, the market price of our class A common shares could be adversely affected.

We may face conflicts of interest in transactions with related parties.

We engage in business and financial transactions with our controlling shareholder and other shareholders that may create conflicts of interest between our company and these shareholders. For example, we enter into land leasing agreements with our affiliates, including Amaralina Agrícola Ltda., or “Amaralina,” Santa Bárbara Agrícola S.A., or “Santa Bárbara” and São Francisco S.A., or “São Francisco.” The accounts payable balances result mainly from the lease of agriculture land, which are at prices and on terms equivalent to the average terms and prices of transactions that we enter into with third parties. Commercial and financial transactions between our affiliates and us, even on if entered into on an arm’s length basis, create the potential for, or could result in, conflicts of interests.

Risks Related To Brazil

Brazilian economic, political and other conditions, and Brazilian government policies or actions in response to these conditions, may negatively affect our business and financial performance and the market price of our class A common shares.

The Brazilian economy has been characterized by frequent and occasionally extensive intervention by the Brazilian government and unstable economic cycles. The Brazilian government has often changed monetary, taxation, credit, tariff and other policies to influence the course of Brazil’s economy. For example, the government’s actions to control inflation have at times involved setting wage and price controls, blocking access to bank accounts, imposing exchange controls and limiting imports into Brazil. We have no control over, and cannot predict, what policies or actions the Brazilian government may take in the future.

Our business, financial performance and prospects, as well as the market prices of our class A common shares, may be adversely affected by, among others, the following factors:

exchange rate movements;

exchange control policies;

expansion or contraction of the Brazilian economy, as measured by rates of growth in gross domestic product, or “GDP;”

inflation;

tax policies;

other economic, political, diplomatic and social developments in or affecting Brazil;

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interest rates;

liquidity of domestic capital and lending markets; and

social and political instability.

These factors, as well as uncertainty over whether the Brazilian government may implement changes in policy or regulations relating to these factors, may adversely affect us and our business and financial performance and the market price of our class A common shares.

Cosan S.A., its subsidiaries and jointly controlled entities generally invoices its sales in Brazilian reais , but a substantial portion of Cosan S.A.’s, its subsidiaries and jointly controlled entities net sales are from export sales that are billed in U.S. dollars. At the same time, the majority of Cosan S.A.’s, its subsidiaries and jointly controlled entities costs are denominated in reais . As a result, our operating margins are negatively affected when there is an appreciation of the real to the U.S. dollar. Additionally, we have indebtedness with fixed and floating rates, and we are thus exposed to the risk of fluctuations in interest rates. If there is an increase in interest rates, our financial results may be affected.

Events in other countries may have a negative impact on the Brazilian economy and the market value of our common shares

Economic conditions and markets in other countries, including United States, Latin American and other emerging market countries, may affect the Brazilian economy and the price of our common shares. Although economic conditions in these countries may differ significantly from those in Brazil, investor´s reactions to developments in these other countries may have an adverse effect on the market value of securities of Brazilian issuers. Crises in other countries and the “contagion” as demonstrated by the recent European economic and financial crises could dampen investor enthusiasm for securities of issuers, including ours, which could adversely affect the market price of our common shares.

Inflation and government measures to curb inflation, may adversely affect the Brazilian economy, the Brazilian securities market, our business and operations and the market prices of our class A common shares.

At times in the past, Brazil has experienced high rates of inflation. According to the General Market Price Index ( Índice Geral de Preços – Mercado ), or “IGP-M,” a general price inflation index, the inflation rates in Brazil were 7.7% in 2007, 9.8% in 2008, deflation of 1.7% in 2009, 11.3% in 2010 and 5.1% in 2011. In addition, according to the National Extended Consumer Price Index ( Índice Nacional de Preços ao Consumidor Amplo ), published by the IBGE, the Brazilian price inflation rates were 4.5% in 2007, 5.9% in 2008, 4.3% in 2009, 5.9% in 2010 and 6.5% in 2011. The Brazilian government’s measures to control inflation have often included maintaining a tight monetary policy with high interest rates, thereby restricting availability of credit and reducing economic growth. Inflation, actions to combat inflation and public speculation about possible additional actions have also contributed materially to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets.

Brazil may experience high levels of inflation in future periods. Periods of higher inflation may slow the rate of growth of the Brazilian economy, which could lead to reduced demand for our products in Brazil and decreased net sales. Inflation is also likely to increase some of our costs and expenses, which we may not be able to pass on to our customers and, as a result, may reduce our profit margins and net income. In addition, high inflation generally leads to higher domestic interest rates, and, as a result, the costs of servicing any floating-rate real-denominated debt may increase, resulting in lower net income. Inflation and its effect on domestic interest rates can, in addition, lead to reduced liquidity in the domestic capital and lending markets, which could affect our ability to refinance our indebtedness in those markets. Any decline in our net sales or net income and any deterioration in our financial performance would also likely lead to a decline in the market price of our class A common shares.

Significant volatility in the value of the real in relation to the U.S. dollar could harm our ability to meet our U.S. dollar-denominated liabilities.

The Brazilian currency has historically suffered frequent devaluations. In the past, the Brazilian government has implemented various economic plans and exchange rate policies, including sudden devaluations and periodic mini-devaluations, during which the frequency of adjustments has ranged from daily to monthly, floating exchange rate

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systems, exchange controls and dual exchange rate markets. There have been significant fluctuations in the exchange rate between the Brazilian currency and the U.S. dollar and other currencies. On March 31, 2012, the exchange rate was R$1.822 per US$1.00.

Because Cosan S.A., its subsidiaries and jointly controlled entities generally invoices its sales in Brazilian reais , devaluation of the real against foreign currencies may generate losses in our foreign currency-denominated liabilities as well as an increase in our funding costs with a negative impact on our ability to finance our operations through access to the international capital markets and on the market value of the class A common shares. A strengthening of the real in relation to the U.S. dollar generally has the opposite effect. Further devaluations of the Brazilian currency may occur and impact our business in the future. These foreign exchange and monetary gains or losses can be substantial, which can significantly impact our earnings from one period to the next. In addition, depreciation of the real relative to the U.S. dollar could (1) result in additional inflationary pressures in Brazil by generally increasing the price of imported products and services and requiring recessionary government policies to curb demand and (2) weaken investor confidence in Brazil and reduce the market price of the class A common shares. On the other hand, further appreciation of the real against the U.S. dollar may lead to a deterioration of the country’s current account and the balance of payments and may dampen export-driven growth.

Because a substantial portion of our indebtedness is, and will continue to be, denominated in or indexed to the U.S. dollar, our foreign currency exposure related to our indebtedness as of March 31, 2012 was R$ 2,915.4 million. We manage a portion of our exchange rate risk through foreign currency derivative instruments, but our foreign currency debt obligations are not completely hedged. In addition, a devaluation of the real would effectively increase the interest expense in respect of our U.S. dollar-denominated debt.

Changes in tax laws may increase our tax burden and, as a result, adversely affect our profitability.

The Brazilian government regularly implements changes to tax regimes that may increase the tax burden on Cosan S.A., its subsidiaries and jointly controlled entities and its customers. These changes include modifications in the rate of assessments and, on occasion, enactment of temporary taxes, the proceeds of which are earmarked for designated governmental purposes. In April 2003, the Brazilian government presented a tax reform proposal, which was mainly designed to simplify tax assessments, to avoid internal disputes within and between the Brazilian states and municipalities, and to redistribute tax revenues. The tax reform proposal provided for changes in the rules governing the federal Social Integration Program ( Programa de Integração Social ), or “PIS,” the federal Contribution for Social Security Financing ( Contribuição para Financiamento da Seguridade Social ), or “COFINS,” the federal Tax on Bank Account Transactions ( Contribuição Provisória sobre Movimentação ou Transmissão de Valores e de Créditos e Direitos de Natureza Financeira ), the state Tax on the Circulation of Merchandise and Services ( Imposto Sobre a Circulação de Mercadorias e Serviços ), or “ICMS,” and some other taxes. The effects of these proposed tax reform measures and any other changes that result from enactment of additional tax reforms have not been, and cannot be, quantified. Moreover, as a measure to avoid unfair competitive practices in the ethanol business, the federal government has enacted Law No. 11,727/08. According to this law, the collection of PIS and COFINS has shifted from the distributors to distilleries, thereby increasing the burden of these taxes collected at the distilleries from 25% to 40%. The law further requires the installation of flow meters at distilleries to control the output of ethanol. Some of these measures may result in increases in our overall tax burden, which could negatively affect our overall financial performance.

Risks Related to Our Common Shares

We are a Bermuda company, and it may be difficult for you to enforce judgments against us or our directors and executive officers.

We are a Bermuda exempted company, so that the rights of holders of our shares will be governed by Bermuda law and our by-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in other jurisdictions. All of our directors and some of the experts referred to in this annual report are not citizens or residents of the United States, and all of our assets are located outside the United States. As a result, it may be difficult for investors to effect service of process on those persons in the United States or to enforce judgments obtained in U.S. courts against us or those persons based on the civil liability provisions of the U.S. federal or state securities laws. We have been advised by our Bermuda counsel, Attride-Stirling & Woloniecki, that uncertainty exists as to whether courts in Bermuda will enforce judgments obtained in other jurisdictions, including the United States, against us or our directors or officers under the securities laws of those jurisdictions or

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entertain actions in Bermuda against us or our directors or officers under the securities laws of other jurisdictions. The United States and Bermuda do not currently have a treaty providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not based solely on U.S. federal or state securities laws, may not necessarily be enforceable in Bermuda.

Bermuda law differs from the laws in effect in the United States and Brazil and may afford less protection to shareholders.

Our shareholders may have more difficulty protecting their interests than shareholders of a company incorporated in the United States or Brazil. As a Bermuda company, we are governed by the Companies Act 1981. The Companies Act 1981 differs in material respects from laws generally applicable to U.S. or Brazilian corporations and their shareholders, including the provisions relating to interested directors, amalgamations, takeovers, shareholder lawsuits and indemnification of directors.

Under Bermuda law, directors and officers of a company generally owe fiduciary duties to the company and not to individual shareholders. Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts may, however, in certain circumstances permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company’s memorandum of association or by-laws. Consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for example, where an act requires the approval of a greater percentage of the company’s shareholders than that which actually approved it. The Companies Act 1981 imposes a duty on directors and officers to act honestly and in good faith with a view to the best interests of the company and to exercise the care and skill that a reasonably prudent person would exercise in comparable circumstances. Directors of a Bermuda company have a duty to avoid conflicts of interest. However, if a director discloses a direct or indirect interest in any contract or arrangement with us as required by Bermuda law, our by-laws provide that such director is entitled to be counted for quorum purposes, but may not vote in respect of any such contract or arrangement in which he or she is interested. In addition, the rights of our shareholders and the fiduciary responsibilities of our directors under the Companies Act 1981 are not as clearly established as under statutes or judicial precedent in jurisdictions in the United States, particularly in the State of Delaware.

Provisions in our by-laws may discourage takeovers, which could affect the return on the investment of our shareholders.

Our by-laws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors. These provisions provide, among other things, for:

a classified board of directors with staggered three-year terms;

restrictions on the time period in which directors may be nominated;

the affirmative vote of a majority of our directors in office and the resolution of the shareholders passed by a majority of votes cast at a general meeting or, if not approved by a majority of the directors in office, the resolution of the shareholders at a general meeting passed by 66- 2/3% of all votes attaching to all shares then in issue for amalgamation and other business combination transactions; and

the tag-along rights described under “Item 10. Additional Information—B. Memorandum and By-laws—Tag-along Rights.”

These by-laws provisions could deter a third party from seeking to acquire us, even if the third party’s offer may be considered beneficial by many shareholders.

As a holding company, we may face limitations on our ability to receive distributions from our subsidiaries.

We conduct all of our operations through subsidiaries and are dependent upon dividends or other intercompany transfers of funds from our subsidiaries to meet our obligations. For example, Brazilian law permits the Brazilian government to impose temporary restrictions on conversions of Brazilian currency into foreign currencies and on remittances to foreign investors of proceeds from their investments in Brazil, whenever there is a serious imbalance in Brazil’s balance of payments or there are reasons to expect a pending serious imbalance.

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The Brazilian government last imposed remittance restrictions for approximately six months in 1989 and early 1990. The Brazilian government may take similar measures in the future. Any imposition of restrictions on conversions and remittances could hinder or prevent us from converting into U.S. dollars or other foreign currencies and remitting abroad dividends, distributions or the proceeds from any sale in Brazil of common shares of our Brazilian subsidiaries. We currently conduct all of our operations through our Brazilian subsidiaries. As a result, any imposition of exchange controls restrictions could reduce the market prices of the class A common shares.

Our by-laws restrict shareholders from bringing legal action against our directors and officers and also provide our directors and officers with indemnification from their actions and omissions, although such indemnification for liabilities under the Securities Act is unenforceable in the United States.

Our by-laws contain a broad waiver by our shareholders of any claim or right of action, both individually and on our behalf, against any of our officers or directors. The waiver applies to any action taken by an officer or director, or the failure of an officer or director to take any action, in the performance of his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or director. This waiver limits the right of shareholders to assert claims against our officers and directors unless the act or failure to act involves fraud or dishonesty. Our by-laws also indemnify our directors and officers in respect of their actions and omissions, except in respect of their fraud or dishonesty. The indemnification provided in our by-laws is not exclusive of other indemnification rights to which a director or officer may be entitled, provided these rights do not extend to his or her fraud or dishonesty. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we understand that, in the opinion of the staff of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable in the United States.

The sale, or issuance, of a significant number of our common shares may adversely affect the market value of our class A common shares.

The sale of a significant number of our common shares, or the perception that such a sale could occur, may adversely affect the market price of our class A common shares. We have an authorized share capital of 1,000,000,000 class A common shares and 188,886,360 class B common shares, of which 174,355,341 class A common shares are issued and outstanding and 96,332,044 class B series 1 common shares are issued and outstanding as of March 31, 2012. Our by-laws establish that our board of directors is authorized to issue any of our authorized, but unissued share capital. Our shareholders at a shareholders general meeting may authorize the increase of our authorized share capital. As a result, we will be able to issue a substantial number of new shares after the lock-up period, which, if we decided to do so, could dilute the participation of our shareholders in our share capital.

Actual dividends paid on our shares may not be consistent with the dividend policy adopted by our board of directors.

Our board of directors will adopt a dividend policy that provides, subject to Bermuda law, for the payment of dividends to shareholders equal to approximately 25% of our annual consolidated net income (as calculated in accordance with IFRS as issued by IASB). Our board of directors may, in its discretion and for any reason, amend or repeal this dividend policy. Our board of directors may decrease the level of dividends provided for in this dividend policy or entirely discontinue the payment of dividends. Future dividends with respect to our common shares, if any, will depend on, among other things, our results of operations, cash requirements, financial condition, distribution of dividends made by our subsidiaries, contractual restrictions, business opportunities, provisions of applicable law and other factors that our board of directors may deem relevant.

To the extent we pay dividends to our shareholders, we will have less capital available to meet our future liquidity needs.

Our business strategy contemplates substantial growth over the next several years, and we expect that such growth will require considerable liquidity. To the extent that we pay dividends in accordance with our dividend policy, the amounts distributed to our shareholders will not be available to us to fund future growth and meet our other liquidity needs.

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We may require additional funds in the future, which may not be available or which may result in dilution of the interests of shareholders in our company.

We may need to issue debt or equity securities in order to obtain additional public or private financing. The securities that we issue may have rights, preferences and privileges senior to those of our shares. If we decide to raise additional capital through an offering of common shares, the participation of our shareholders in our share capital may be diluted. Moreover, additional funding that may be required in the future may not be available under favorable terms.

The price of our class A common shares is subject to volatility.

The market price of our class A common shares could be subject to significant fluctuations due to various factors, including actual or anticipated fluctuations in our financial performance, losses of key personnel, economic downturns, political events in Brazil or other jurisdictions in which we operate, developments affecting the ethanol and sugar industries, changes in financial estimates by securities analysts, the introduction of new products or technologies by us or our competitors, or our failure to meet expectations of analysts or investors.

Item 4. Information on the Company

A. History and Development of the Company

We are a limited liability exempted company incorporated under the laws of Bermuda on April 30, 2007 for an indefinite term. Cosan Limited is registered with the Registrar of Companies in Bermuda under registration number EC 39981. Our registered office is located at Crawford House, 50 Cedar Avenue, Hamilton HM11, Bermuda. Our principal executive office is located at Av. Juscelino Kubitschek, 1327 – 4th floor, São Paulo – SP, 04543-011, Brazil and our general telephone and fax numbers are 55 11 3897-9797 and 55 11 3897-9799, respectively.

Our history dates back to 1936 when the Costa Pinto mill was established by the Ometto family in the city of Piracicaba in the State of São Paulo, with annual sugarcane crushing capacity of 4.0 million tonnes. As of the mid 1980s, we began to expand our operations through the acquisition of various milling facilities in the State of São Paulo.

In 2004, Cosan S.A. conducted its first issuance of bonds in the international capital markets, raising US$200 million in 5-year bonds, which matured in 2009. In the following year, it made the first public offering of shares by a producer of sugar and ethanol on the São Paulo Stock Exchange (BM&FBovespa).

In 2007, our Class A common shares were listed on the New York Stock Exchange (NYSE), and Cosan Limited become the first Brazilian controlled company with shares traded directly on the US exchange.

In 2008, Cosan S.A. began operating as a fuel distributor and lubricants producer following its acquisition of Esso Brasileira de Petroleo Ltda or “Essobras,” which are Exxon Mobil’s assets in Brazil. Essobras is a distributor and seller of fuels and producer and seller of lubricants and specialty petroleum products of ExxonMobil in Brazil and.

In 2008, Cosan S.A. also announced the creation of an affiliate named Radar Propriedades Agrícolas S.A., or “Radar,” which principally makes real estate investments in Brazil identifying and acquiring rural properties with high appreciation potential for subsequent leasing and/or sale.

In 2009, Cosan S.A. acquired Nova América S.A. Agroenergia, or “Nova América.” Nova América was a producer of sugar, ethanol and energy co-generation which also operated in trading and logistics, and also controlled a port terminal in Santos called Teaçu. The acquisition of NovaAmérica’s assets included the “União” brand, which commenced our sugar retail business, which we now call Cosan Alimentos.

Also in 2009, Cosan S.A. integrated its existing port terminal called Cosan Operadora Portuária with Teaçu Port Terminal, initiating our logistics business through Rumo.

In 2011, Cosan S.A. and Shell established our Joint Venture, Raízen, to produce sugar and ethanol and to distribute fuel. See “Item 4. Information on the Company—C. Organizational Structure,” for further information on the Joint Venture.

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In February 2012, Cosan S.A. entered into an agreement with GMI – Global Market Investments L.P. and other individual sellers to acquire 5.7% of outstanding shares, 49% of bound shares, in ALL – América Latina Logística S.A., or ALL subject to (i) obtaining approval from the other signatories of the Shareholders Agreement, (ii) other certain customary closing conditions and (iii) regulatory regime of the Brazilian antitrust regulator, or CADE.

In March 2012, Cosan S.A. entered into an agreement to acquire Comma Oil & Chemicals Limited,or Comma, a wholly-owned subsidiary of Esso Petroleum Company, Limited to enter into the European lubricants & specialties market. Comma is located in England and manufactures and supplies lubricants, seasonal and car care products to the United Kingdom and other export markets in Europe and Asia, primarily under the Comma brand. The acquisition of Comma by Cosan includes finished lubricants and chemicals manufacturing and sales to third parties; all assets located at Comma’s Gravesend site in Kent, England; and ownership of the Comma trademarks and brands. In addition, agreements will be in place to allow Comma to continue to distribute select Mobil-branded lubricants through certain United Kingdom channels and to continue to manufacture and supply ExxonMobil companies with a range of seasonal and ancillary automotive products. The transaction was concluded on July 1, 2012.

In May 2012, Cosan and its subsidiary Handson Participações S.A.,or Handson, entered into an Association and Other Covenants Agreement with Arfei Comercio e Participações S.A., or Arfei and GIF Codajas Participações S.A., or GIF Codajas, a company controlled by an investment fund managed by Gávea Investimentos Ltda, for the merger of the activities of Camil Alimentos S.A., or Camil and Docelar Alimentos e Bebidas S.A., or Docelar also known as Cosan Alimentos, the sugar retail business of Cosan. The transaction puts together strong brands in their respective segments, creating a market leader in sugar, rice and canned fish. Cosan will receive an 11.72% stake in Camil and R$345 million, subject to certain adjustments Cosan will have a seat on the new entity’s Board of Directors. The controlling shareholders of the company will be the present controlling shareholders of Camil, who have proven expertise in its business segments. Cosan will enter into a shareholders agreement with Arefei and GIF Codajas. The Association is subject to customary closing conditions, and is subject to the regulatory regime of CADE.

Also in May 2012, Cosan, through its subsidiary Provence Participações S.A., or Provence, entered into a Stock Purchase Agreement to acquire 60.1% for R$3.4 billion of Companhia de Gás de São Paulo – Comgás, or Comgás from BG Group. Comgás is Brazil’s largest distributor of piped natural gas. Its network reaches over eight thousand kilometers delivering natural gas to more than one million customers in the residential, commercial and industrial segments. The acquisition of Comgás’ controlling stake is part of Cosan’s strategy to expand its presence in the energy business. The closing of the transaction is subject to the prior approval of São Paulo State’s Sanitation and Energy Regulatory Agency, or ARSESP. The transaction will also be submitted to the analysis of CADE and Cosan will enter into a shareholders´ agreement. Itaú and Bradesco will finance up to R$3.3 billion of the total acquisition price in a term loan with an eight year maturity, and a grace period of two years for principal payment. Within 30 days of closing, Cosan will submit to the Brazilian Securities and Exchange Commission a request to undertake a public tender offer. Shell Gas BV, whose interest will remain 18.22% of Comgás following the acquisition, has been granted an option to convert its current stake of 21,805,645 Comgás’ common shares into 30,917,231 of Cosan S.A. shares. The exercise of this option is expected to occur during a period of approximately 30 (thirty) days at the third, fourth or fifth years from the closing date.

Capital Expenditures

For more information concerning our principal capital expenditures currently in progress, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.”

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B. Business Overview

Cosan focuses on production, transportation and distribution of renewable energy sources. Over the years, Cosan has acquired new skills and expanded its product portfolio. Today, Cosan prospects land, grows and processes sugarcane, distributes fuels, transports and sells sugar on the domestic and international markets and manufactures and sells lubricants. It is the world’s first vertically integrated bioenergy company.

As of the conclusion of the Joint Venture on June 1, 2011, the Company presents five reportable segments:

(1) Raízen Energia, our upstream sugar and ethanol Joint Venture company which produces, markets and exports sugar and ethanol and cogenerates electricity from sugarcane bagasse;

(2) Raízen Combustíveis, our downstream Joint Venture company which distributes fuels in the Brazilian market;

(3) Rumo, our subsidiary which provides logistics services for the transportation of sugar and other commodities, including truck and rail transportation, as well as port loading services;

(4) Cosan Alimentos which conducts sugar retail sales; and

(5) our Other Businesses which principally comprise the manufacturing and distribution of lubricants, and agricultural land development through our investment in Radar Propriedades Agrícolas S.A. (“Radar”).

Our business segments are set forth in the chart below:

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Raízen Energia (Sugar & Ethanol)

Overview

Through Raízen Energia, our upstream Joint Venture company, we produce sugar and ethanol from sugarcane, as well as energy from sugarcane bagasse. As of March 31, 2012 we operate 24 mills with 65 million tonnes of crushing capacity and 900 MW of electricity generation capacity. All of these facilities are located in the Center-South region of Brazil, which is one of the world’s most productive sugarcane regions primarily because of its favorable soil, topography and climate, nearby research and development organizations and logistics infrastructure facilities.

Raízen Energia Highlights	For Fiscal Year Ended March 31,
		2012	(*)	2011	2010
Crushed sugarcane (million tonnes)		52.9		54.3	50.3
Sugar volume sold (thousand tonnes)		3,987.5		4,290.9	4,134.6
Ethanol volume sold (million liters)		2,215.5		2,247.3	2,147.5
Energy sold (MWh)		1,491.3		1,254.0	605.9
N et sugar sales (R$ millions)		3,912.8		3,853.4	3,377.8
Domestic market		1,217.4		1,387.3	1,062.3
Foreign market		2,695.4		2,466.2	2,315.5
N et ethanol sales (R$ millions)		2,871.5		2,203.7	1,747.6
Domestic market		2,245.1		1,958.9	1,325.9
Foreign market		626.5		244.8	421.8
Net energy cogeneration sales (R$ million)		235.1		194.9	93.6
Other products and services (R$ millions)		228.2		137.1	161.0
Raízen Energia n et operating revenue (R$ millions)		7,247.7		6,389.2	5,380.1

(*) Raízen Energia’s results are presented before they are proportionally consolidated into our financial statements. As of June 1, 2012 we consolidate 50% of Raízen Energia’s results.

Our production is based on sugarcane, the most competitive and viable feedstock for sugar and ethanol because of its low production cost and high energy efficiency ratio relative to other energy sources, such as corn and sugar beet. Sugarcane is our principal raw material. It is a tropical grass that grows best in locations with stable warm temperatures and high humidity, although cold and dry winters are an important factor for the sucrose concentration of sugarcane. The climatic conditions of the Center-South region of Brazil are ideal for growing sugarcane.

Raízen Energia´s sources sugarcane production is sourced from leased lands, as well as from third-party suppliers. The following table compares the amount of sugarcane grown on owned or leased land with the amount purchased from third parties during the last three fiscal years

	For Fiscal Year Ended March 31,
	2012		%		2011		%		2010		%
	(millions of tonnes, except percentages)
Sugarcane harvested from owned (only in 2010 and 2011)/leased land		26.5		50.1		27.4		50.6		23.4		46.6
Sugarcane purchased from third-parties		26.4		49.9		26.8		49.4		26.9		53.4
Total		52.9		100.0		54.2		100.0		50.3		100.0

In accordance with the land lease contracts, we pay the lessors a certain fixed number of tonnes of sugarcane per hectare as consideration for the use of the land, and a certain fixed productivity per tonne of sugarcane in terms of TSR. The overall volume of TSR is obtained by multiplying the number of hectares leased by the committed tonnes of sugarcane per hectare by the TSR per tonne of sugarcane. The price that we pay for each kilogram of TSR is set by CONSECANA ( Conselho dos Produtores de Cana-de-açúcar, Açúcar e Álcool do Estado de São Paulo ). The price that we pay to third-party sugarcane growers is based on the total amount of sugar content in the sugarcane, measured by the amount of sugar recovered and on the prices of ethanol and sugar sold by each mill.

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Our mills have the capacity to crush 65 million tonnes of sugarcane per year and i n fiscal year 2012, we crushed 52.9 million tonnes of sugarcane, or approximately 10.7% of Brazil’s center south region total sugarcane production. For further information on our sugarcane mills see “Item 4. Information on the Company—D. Property, Plant and equipment.” The mills that are prepared to produce both sugar and ethanol can typically adjust their proportion of output from anywhere between 55% sugar and 45% ethanol to 45% sugar and 55% ethanol. We track the current and future prices of each product relative to the other, as well as forecasts of global output volumes of each product, to decide on the production mix to be set across our mills in order to maximize our sales revenue. All of our mills are energy self-sufficient from burning sugarcane bagasse at very high temperatures in boilers, to heat water that is transformed into steam. Eleven of our mills generate surplus electrical energy that we sell to the Brazilian energy grid.

Raízen Energia is subject to the seasonality of the annual sugarcane harvesting period in the Center-South region of Brazil, which begins in April or May and ends in November or December. This creates fluctuations in our inventory, usually peaking in December to cover sales between crop harvest ( i.e. , January through March), and a degree of seasonality in our gross profit.

We produce and sell a wide variety of standard sugars, including raw sugar (also known as VHP – Very High Polarized sugar), crystal sugar and organic sugar, and refined sugars, including granulated refined white sugar, amorphous refined sugar, refined sucrose liquid sugar and refined inverted liquid sugar.

Standard sugars . VHP sugar, a raw sugar with approximately 99% sucrose content, is similar to the type of sugar traded in major commodities exchanges, including through the standard NY11 contract. The main difference between VHP sugar and the sugar that is typically traded in the major commodities exchanges is the sugar content of VHP sugar and the price premium that VHP sugar commands in comparison to most sugar traded in the commodities exchanges. We export VHP sugar in bulk, to be refined at its final destination. We also sell a small amount of VHP sugar to the Brazilian market. Crystal sugar is a non-refined sugar produced directly from sugarcane juice and sold to industrial companies in Brazil to be used as an ingredient for food products. We also sell a small amount of crystal sugar to the Brazilian retail market and to export markets. Organic sugar is a kind of raw sugar produced from organic sugarcane and is not submitted to any chemical treatments during its manufacturing process. We sell organic sugar in the international and Brazilian markets.

Refined sugars . We refine VHP sugar and crystal sugar into both granulated and amorphous (non-crystallized) sugar. We sell refined sugar in the Brazilian and export retail and industrial markets. Refined sugar is used as an ingredient in processed food products such as milk and chocolate powders, bakery products, powder refreshments, and pharmaceutical syrups.

Liquid sugars . We refine crystal sugar to produce sucrose liquid sugar and inverted liquid sugar, which has a higher percentage of glucose and fructose than sucrose liquid sugar. We sell both types of sugar for industrial use, mainly for the production of soft drinks.

We sell sugar to a wide range of customers in Brazil and in the international markets. Our customers in Brazil include Docelar and food manufacturers, for which we primarily sell refined and liquid sugar. We primarily sell raw sugar in the international markets through international commodities trading firms and Brazilian trading companies. In fiscal year 2012 we exported 71.7%, by volume, of the sugar we sold. Rumo Logística handles most of the transportation by rail and logistics of our sugar exports to their sugar loading terminals at the Port of Santos.

Prices for raw sugar are established in accordance with the NY11 futures contracts. Prices for refined sugar are established in accordance with the London# 5 futures contract, traded on the LIFFE. Prices for sugar we sell in Brazil are set in accordance with Brazilian market prices, using an index calculated by the Agriculture School of the University of São Paulo ( Escola Superior de Agricultura Luiz de Queiroz ), or “ESALQ.”

We produce and sell three different types of ethanol: hydrous ethanol and anhydrous ethanol for fuel and industrial ethanol. The primary type of ethanol consumed in Brazil is hydrous ethanol, which is used as an alternative to gasoline for flex fuel vehicles (as opposed to anhydrous ethanol which is used as an additive to gasoline). As a result, hydrous ethanol represented approximately 68.8% of our ethanol production in fiscal year 2011 and 64.2% in fiscal year 2012. Our sales are mainly to fuel distributors in Brazil, of which the three largest are Petrobras Distribuidora S.A., Raízen Combustíveis S.A. and Cia. Brasileira de Petróleo Ipiranga. We also sell industrial alcohol, which is used in the chemical and pharmaceutical sectors. In fiscal year 2012, our largest ethanol

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customer was Raízen Combustíveis. In fiscal year 2012, we exported 20.1%, by volume, of the ethanol we sold. Our main export customers are trading companies which distribute our products mainly to the United States, Japan and Europe. Our exports are conducted through TEAS, an ethanol loading terminal at the Port of Santos.

Ethanol Production Process

We produce ethanol through a chemical process called yeasting, which is a process of fermenting the sugars contained in both sugarcane juice and molasses. Initially, we process the sugarcane used in ethanol production the same way that we process sugarcane for sugar production. The molasses resulting from this process is mixed with clear juice and then with yeast in tanks, and the by-product resulting from the yeasting process, called “yeasted wine,” has an ethanol content of approximately 7% to 9%. After the yeasting process, which takes approximately 10 hours, the yeasted wine is centrifuged, so that we can separate the yeast from the liquid. We use the separated yeast in the ethanol production process. We then boil the yeasted wine at different temperatures, which causes the ethanol to separate from other liquids. Hydrous ethanol is produced after different distillation stages. In order to produce anhydrous ethanol, hydrous ethanol undergoes a dehydration process. The liquid remaining after these processes is called vinasse, a by-product we use as fertilizer in our sugarcane fields. After the distillation and dehydration processes, we produce hydrous, anhydrous, neutral and industrial ethanol, and store the ethanol in large tanks.

The ethanol production flow can be summarized as follows:

Preparation of the juice . The fermentation is fed with a juice composed by approximately 20% of sugar, which is prepared with juice (from the treatment), molasses (from sugar production) and water. This juice must be cooled to approximately 30°C.

Fermentation . The fermentation of the juice is the result of the action of yeast, which firstly inverts the sucrose to glucose and fructose (monosaccharide), and then converts the monosaccharide into ethanol and carbon dioxide. This reaction occurs in a fermenter, which is fed with juice and yeast.

Centrifuging . After the fermentation, the resulting product is carried to centrifuges that separate the yeast from the beer, a solution of approximately 9%v/v (oGL) of ethanol.

Treatment of the yeast . The yeast that comes from the centrifuges is treated with sulfuric acid and returned to the fermenter tank to be utilized again.

Distillation . The beer is distillated in a sequence of distillation columns, which separate the water from the ethanol. This process occurs basically due to the differences of ethanol’s and water’s ebullition temperatures. In order to produce hydrous ethanol, two columns are used to achieve the concentration of 94%v/v (oGL) ethanol. From the first column, a slop called vinasse is obtained, which is used as a fertilizer in the sugarcane fields.

Dehydration . In order to produce anhydrous ethanol, two more columns are used to achieve the concentration of 99%v/v (oGL) ethanol. In the first column, the excess of water is separated with the aid of cycle-hexane.

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The following diagram presents a schematic summary of the above-described ethanol production flow:

Ethanol Production Capacity and Output

Our current annual ethanol production capacity is approximately 2.6 billion liters. All of our mills produce ethanol except for the São Francisco and Bonfim mills. We were the largest producer of ethanol in Brazil in fiscal year 2011, producing approximately 1.9 billion liters of ethanol, representing 9.3% of Brazil’s Center-South region total ethanol production, according to UNICA. We are one of the largest exporters of ethanol in the world, having traded 2.2 billion liters in fiscal year 2012 and 2011, and exported 0.4 billion liters and 0.3 billion liters in the same periods, respectively.

Cogeneration

Raízen Energia, is the world’s largest producer of energy from sugarcane bagasse. We currently have an installed energy capacity of 900 MW per year from our 24 mills, out of which 11 sold energy to the Brazilian energy grid in fiscal year 2012. We have two additional energy cogeneration projects that we expect to become operational in 2012. We estimate that by the end of 2012, we will have a total installed energy capacity of 934 MW, from which 845 MW will come from certain of our mills that will sell excess energy to the grid and a total installed energy capacity of 1,300 MW by 2016. We view our cogeneration business as strategic since it generally allows for a stable cash flow stream across commodity cycles, helping to reduce the volatility of our cash flows and operations.

Energy Cogeneration Highlights :	For Fiscal Year Ended March 31,
	2012		2011		2010
Energy sold (MWh)		1,491.3		1,254.0		605.9
Net sales (R$ million)		235.1		194.9		93.6

Alternative sources of electricity, such as cogeneration from sugarcane bagasse, have become increasingly important within the Brazilian hydro-dependent energy matrix, particularly because the harvest period for sugarcane coincides with generally drier periods for hydraulic energy, when the overall energy supply is, therefore, more constricted. We are self-sufficient for our energy needs. In fiscal years 2012, 2011 and 2010, we sold 1,491 MWh, 1,254 MWh and 605.9 MWh, respectively, of energy to third parties. Our principal customers, besides the energy sold to the Brazilian grid, are utility companies, which together accounted for approximately 36% of our cogeneration sales in fiscal year 2012, 35% of our cogeneration sales in fiscal year 2011 and 41.7% in fiscal year 2010. We sold our remaining excess electric energy through energy auctions.

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Regulation

Raízen Energia is subject to various Brazilian federal, state and local environmental protection and health and safety laws and regulation governing, among other things, the generation, storage, handling, use, transportation and discharge of hazardous materials into the ground, air and water.

Permits. Certain environmental laws require us to obtain from governmental authorities permits, licenses and authorizations to install and operate our mills, to burn sugarcane and to perform other operations.

We are subject to the regulations of the pollution control and remediation agencies of three Brazilian states:

Environmental Company of the State of São Paulo ( Companhia Ambiental do Estado de São Paulo ), or CETESB;

Environmental Agency of the State of Goiás ( Agência Goiana do Meio Ambiente ), or AGMA;

Environmental Institute of the State of Mato Grosso do Sul ( Instituto de Meio Ambiente do Mato Grosso do Sul ), or IMASUL.

Environmental Licensing of Raízen: We operate mills, port facilities and numerous warehouses. All mills have environmental operating licenses. The National Environmental Council ( Conselho Nacional do Meio Ambiente ), or CONAMA, is the principal government body responsible for approving environmental licensing.

Sugarcane Burning: São Paulo state and certain local governments have established laws and regulations that limit our ability to burn sugarcane or that reduce and/or eliminate the burning of sugarcane entirely. We have voluntarily signed the Agro-Environmental Sugar Cane Protocol, which establishes accelerated deadlines for the reduction of sugarcane burning.

Brazilian Forestry Code: We are subject to the Brazilian Forestry Code, which prohibits land use in certain permanently protected areas, and obligates us to maintain and register a forestry reserve in each of our rural landholdings covering at least 20% of the total area of such land.

Environmental Proceedings: We are party to a number of administrative and judicial proceedings for alleged failure to comply with environmental laws and regulations. Non-compliance with environmental law is subject to administrative, civil and/or criminal sanctions.

Raízen Combustíveis (Fuel Distribution)

Overview

Through Raízen Combustíveis, our downstream Joint Venture company , we are engaged in sourcing, storing, blending and distributing gasoline, ethanol, diesel, fuel oil and aviation fuel through our network of approximately 4,600 Esso and Shell-branded retail service stations, 52 depots and distribution assets at 53 airports. Following the close of the Joint Venture on June 1, 2011, we are currently among the three largest Brazilian fuel distributors, with approximately 23% market share in Brazil in terms of volume of fuel sold in 2011, according to Sindicom.

Raízen Combustíveis Highlights	For Fiscal Year Ended March 31,
		2012	(*)	2011	2010
Service stations		4,549		1,710	1,710
Fuel sold (billion liters)		18.5		6.1	5.5
Ethanol sales (R$ million)		2,117.9		814.6	757.0
Gasoline sales (R$ million)		14,674.4		4,656.9	4,111.0
Diesel sales (R$ million)		14,051.4		5,325.3	4,338.5
Jet Fuel sales (R$ million)		3,632.0		―	―
Others (R$ million)		603.3		111.5	230.9
Other services (R$ million)		16.9		57.9	69.2
Net sales (R$ million)		35,096.1		10,966.2	9,506.6

(*)	Raízen Combustíveis results are presented before they are proportionally consolidated into our financial statements. As of June 1, 2012 we consolidate 50% of Raízen Combustíveis results.

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Currently, Raízen Combustíveis and its competitors purchase all or nearly all oil-derivative fuels from Petrobras under a formal supply contract that establishes the volume and the terms for supply. The contract is renewed periodically and the volume contracted for is based on the volume purchased in the previous year. There have been no significant interruptions in the supply of fuels by Petrobras to the distributors.

Ethanol is sourced from various third party suppliers and from Raízen Energia as well. The prices of ethanol supplied are generally determined by the ESALQ index. The prices of oil-derivative fuels supplied to us by Petrobras generally vary according to international oil prices, however Petrobras often delays passing on variations in market oil prices to its customers, thereby smoothing out some of the volatility of oil price changes experienced in international markets.

All of our fuel distribution operations are in our domestic Brazilian market. Our operations are not subject to significant seasonality; however, the price of hydrous ethanol at the pump is typically more volatile than the prices of gasoline or diesel, as a result of the seasonality of the sugarcane harvest and limited storage facilities for ethanol in Brazil. This in turn impacts the proportion of our revenue mix that is derived from either gasoline or ethanol throughout the year, as consumers who own flex fuel vehicles switch between the two fuels according to the relative price of each.

As hydrous ethanol is less energy intense than gasoline, consumers will usually only switch to ethanol if the price is significantly lower than gasoline. When hydrous ethanol is retailed at 70% of the price of gasoline, the two fuels are considered to be at price parity with each other. At a level below 70%, the demand for ethanol will significantly increase at the expense of gasoline.

We supply aviation fuel at 53 airports across Brazil, including at the major hubs of Congonhas and Guarulhos airports in São Paulo, and Brasília airport in the Federal District, to Brazilian and foreign airlines.

Regulation

The National Agency of Petroleum, Natural Gas and Biofuels, or ANP, is responsible for the control, supervision and implementation of the government’s oil, gas and biofuel policies. The ANP regulates all aspects of the production, distribution and sale of oil products in Brazil, including product quality standards and minimum storage capacities required to be maintained by distributors and is also responsible for establishing the limits of oil-based fuel volume purchased by distributors based on their storage capacity.

Environmental health and safety standards. Fuel distributors are subject to Brazilian federal, state and local laws and regulations relating to environmental protection, safety and occupational health and safety licensing by fire departments and transport authorities. The National Environmental Council, or CONAMA, is the principal government body responsible for approving environmental licensing. Environmental state agencies and municipal departments are also responsible for establishing and supervising complementary laws and regulations within their areas of operation.

Fuel distributors must obtain authorizations and/or licenses from federal, state and/or municipal environmental agencies and fire departments to implement and operate their facilities. They are required to develop programs to control air and water pollution and hazardous waste.

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Rumo (Logistics)

Overview

Our logistics operations are operated through Rumo, which offers an integrated logistics solution to agricultural commodity producers located in the Center-South of Brazil by transporting produce from the mills and depots by truck or rail to be loaded and stored in our two bulk sugar and grain terminals at the Port of Santos. Rumo also offers warehousing services.

Rumo Highlights :	For Fiscal Year Ended March 31,
	2012		2011		2010
Port elevation volume (thousand tonnes)		7,759		7,481		8,124
Transportation sales (R$ million)		413.4		305.8		16.1
Loading sales (R$ million)		141.0		118.1		140.1
Other sales (R$ million)		17.6		24.1		―
Net sales (R$ million)		572.0		448.0		158.2

Rumo has a long-term agreement with América Latina Logística S.A., or ALL, a railroad concession operator which manages the principal railroads between the sugar producing areas of the Center-South of Brazil and the Port of Santos. This agreement provides for the exclusive transportation of raw sugar and other sugar derivatives and the expansion of ALL’s rail transport capacity through investments in ALL’s rail network.

Rumo is the concessionaire of two bulk sugar port terminals at the Port of Santos, which, on a combined basis, is the largest bulk sugar port terminal in the world, with a current annual combined loading capacity of 13 million tonnes, having loaded 7.8 million tonnes in fiscal year 2012. We are currently investing in this sugar port terminal to add an additional wharf to increase its capacity from the present capacity of 13 million tonnes to 18 million tonnes by 2015. After this expansion, this port terminal will have the capacity to support 70% of the volume exported by the sugar producers of the Center-South region of Brazil. The terminal also has the capacity to store approximately 550,000 tonnes of sugar. The port facility serves clients, including Raízen Energia, EDF&Man, Sucden, Bunge, Coimex, Cargill, Louis Dreyfus Commodities and Noble among others, for their transport and export of sugar and soy products. Pursuant to the Port Concession Agreement with the State of São Paulo’s Port Authority, the concession granted to operate the south terminal (Cosan Portuária) will expire in 2036 and the concession granted to the north terminal (Teaçu), acquired in 2009, expires in 2016, and the renewal for an additional 20 years has already been requested.

Rumo is subject to the seasonality that influences the sugarcane harvest. During the peak months of the sugarcane harvest, there is higher demand for transport and logistics operations. Rumo is also subject to the risk that sugarcane mills may change their production mix in favor of ethanol if the relative prices of the two products swing that way. This could reduce the demand for sugar logistics and transport.

Regulation

Rumo is qualified as a port operator under the Port Modernization Law (Law no. 8630/93) and is subject primarily to the regulation of CODESP, the Docks Company of the State of São Paulo, which acts under the regulation of the National Agency for Waterway Transportation ( Agência Nacional de Transportes Aquaviários ) or ANTAQ, which is the regulatory body responsible for overseeing, guiding and coordinating the acts of granting, monitoring, developing and regulating the ports and terminals of Brazil.

Through our agreement with ALL, we are indirectly subject to the regulation of the National Land Transport Agency ( Agência Nacional de Transportes Terrestres ) or ANTT, which is responsible for monitoring road and rail transport operations and the federal concessions of road and rail infrastructure in Brazil.

Cosan Alimentos (Sugar Retail)

Overview

Our sugar retail and distribution business is conducted through Cosan Alimentos which owns “União,” “Da Barra” and other brands. We are the largest seller of retail sugar in Brazil with leading market positions in several categories through our brands. Cosan Alimentos has approximately 70 thousand tonnes per month of refining

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capacity through its own sugar refinery and long-term purchase agreements with Raízen Energia and third parties. The prices of sugar purchases vary in accordance with Brazilian market prices, principally determined by the ESALQ index.

Cosan Alimentos Highlights :

For Fiscal Year Ended March 31,

2012

2011

2010

Volume of sugar sold (thousand tonnes)

494.3

―

Refined sugar sales (R$ million)

631.5

―

Crystal sugar sales (R$ million)

39.0

―

Special sales (R$ million)

35.9

―

Net sales (R$ million)

706.4

―

Cosan Alimentos has four packaging plants, two of which are located in Raízen Energia’s São Francisco mill and the Da Barra mill, which produce refined sugar. From these plants, our packaged and branded sugar is distributed through our seven distribution centers to Brazil’s largest groceries retail chain; Companhia Brasileira de Distribuição, Carrefour, and Wal-Mart amongst others, and through third party distributors to over 80,000 points of sale across Brazil.

We produce and sell refined sugar, crystal sugar and special sugars, which includes a variety of sugar products and packaging sizes, including “União Fit,” “Orgânico,” “Premium” and sugar sachets among others. União is the leading domestic brand in sales of refined sugar, according to Kantar World Panel, with a 100-year history. The strength of this brand allows us to charge premium prices for our products. Our other brands are more price-competitive

Cosan Alimentos’ operations are not subject to significant seasonality. Cosan Alimentos’ brands are all owned following the merger with Novamerica Agroenergia in 2009. Our principal brands, União and Da Barra, are registered with the National Intellectual Property Institute, or INPI, in multiple classes, which allows us to use these trademarks in the sugar, chocolate and various other markets.

Regulation

Cosan Alimentos is subject to the regulation of the National Institute of Metrology, Quality and Technology ( Instituto Nacional de Metrologia, Normalização e Qualidade Industrial ), or INMETRO, which monitors the standardization of consumer goods packaging, content, weights and measures, as well as monitoring communication with customers regarding such issues. In line with INMETRO we are also subject to the regulation of the National Health Surveillance Agency ( Agência Nacional de Vigilância Sanitária ) or ANVISA, which has several functions, one of which is to authorize and register consumer foods according to relevant norms, legislation and guidelines.

Other Businesses

Our other businesses comprise the manufacturing and distribution of lubricants, through our subsidiary Cosan Lubrificantes e Especialidades , or CLE, and agricultural land development of our own land and through our investment in Radar.

Cosan Lubricants and Specialties

Our lubricants business, CLE, manufactures and se lls passenger vehicle lubricants, commercial vehicle lubricants and industrial lubricants in addition to special application products such as greases and cutting oils, under the Mobil brand, among others, both of which are licensed to us until 2018 by ExxonMobil.

Lubricants Highlights :	For Fiscal Year Ended March 31,
	2012		2011		2010
Volume of lubricants sold (thousand liters)		216.7		166.4		130.8
Lubricants sales (R$ million)		1,018.8		829.0		634.0
Others sales (R$ million)		46.7		―		―
Net sales (R$ million)		1,065.5		829.0		634.0

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We have a wholly-owned lubricants oil blending plant, located in Rio de Janeiro, with an annual production capacity of 1.7 million barrels of lubricants per year, and a pier facility that allows us to import base stocks. We produce over 600 different lubricants, and purchase more than 400 raw materials, including basic oils and additives.

We sell our lubricants products, mainly through distributors and direct sales to industrial customers, as well as to wholesale customer accounts and car and motorcycle dealerships. We also produce and sell lubricants for partners such as Toyota, John Deere, Caterpillar, Honda and SKF.

CLE also has exclusive distribution rights for Mobil brand products in Bolivia, Paraguay and Uruguay following the purchase of ExxonMobil’s lubricant distribution business in these three countries in 2011.

Our lubricants business is not subject to significant seasonality. However a significant proportion of our raw material purchases are invoiced in US dollars and we hedge part of our shipments of base oils against variations in exchange rates.

Regulation

CLE is subject to substantially the same regulation by the same regulatory bodies that our fuel distribution business, Raízen Combustíveis, is subject to. See “Item 4. Information on the Company—B. Business Overview—Raízen Combustíveis (Fuel Distribution).”

Radar (Agricultural Land Development)

Our agricultural land development operations are run through our investment in Radar, a company focused on maximizing earnings from agricultural real estate assets by leveraging market intelligence to acquire rural properties with high expected appreciation potential for subsequent leasing and/or resale. Radar is one of the largest private landowners in Brazil, with a portfolio of approximately 106,000 hectares owned as of March 31, 2012.

Radar’s land can be leased for the cultivation of sugarcane, soybeans, corn and cotton. In partnership with Unicamp (State University of Campinas), Radar uses a satellite monitoring system which provides a detailed analysis of terrain relief, soil, climate regime, and history.

Regulation

Radar is subject to various Brazilian federal, state and local environmental protection and real estate laws and regulation governing, among other things, the acquisition, lease and disposal of farmland investments.

Permits: Certain environmental laws require the tenants of Radar´s properties to obtain permits, licenses and approvals from governmental authorities in order to conduct agricultural activities and operate storage facilities. Although Radar is a real estate investor, there is a nonetheless an effect on Radar’s revenues from tenants who are unable to or who are required to obtain the appropriate licenses and approvals in order to use the land.

We are subject to regulations by the following principal governmental agencies:

Instituto Nacional de Colonização e Reforma Agrária or INCRA: Responsible for regulating the ownership of agricultural properties. This agency monitors the operation of the agricultural properties

Georeferencing Process : Georeferencing is an important procedure, necessary for registering any title of an acquired agricultural property. This procedure must be approved by INCRA and eliminates risks of overlap in property titles. INCRA is the primary regulator for approving georeferencing for any agricultural properties in the country.

IBAMA: is a regulator, responsible for environmental licenses relating to operations;

Local environmental agencies: The Secretarias de Meio Ambiente Estaduais (Secretary of the Environment), Secretaria do Meio Ambiente or SEMA – MT, Secretaria do Meio Ambiente or SMA and Instituto do Meio Ambiente e Recursos Hídricos or INEMA.

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Land Ownership: The Constitution defines land ownership rights for companies and Radar’s business are under subject such rights.

Brazilian Forestry Code: We are subject to the Brazilian Forestry Code, which prohibits land use in certain permanently protected areas, and obliges us to maintain and register a forestry reserve in each of our rural landholdings covering at least 20% of the total area of such land. The responsibility of maintaining the legal reserve and permanent preservation areas are both the land owner’s (Radar) and the land operators responsibilities (tenants).

Competition

The sugar industry in Brazil has experienced increased consolidation through merger and acquisition activity during the last several years. Most of this activity has involved companies and facilities located in the Center-South region of Brazil, one of the most productive sugar producing regions in the world. Despite this recent wave of consolidation, the industry remains highly fragmented with more than 320 sugar mills and 100 company groups participating.

Many ethanol and sugar producers in Brazil market their ethanol and sugar products through the Copersucar. Copersucar is a private cooperative that was created in 1959 by 10 sugar mills in the State of São Paulo in order to provide a shared commercial distribution for their ethanol and sugar production. Currently, Copersucar is comprised of 48 producers in the states of São Paulo, Minas Gerais and Paraná. Copersucar’s affiliated mills have a crushing capacity of approximately 115 million tonnes of sugarcane.

We also face competition from international sugar producers. We are the largest sugar producer in Brazil and one of the largest sugar producers in the world with 4.0 million tonnes of sugar produced in the 2011/2012 harvest, compared to British Sugar (1.2 million tonnes of sugar produced in the 2011/2012 harvest) and Südzucker AG of Germany (with 5.4 million tonnes of sugar produced in the same period). These producers, however, are the beneficiaries of considerable governmental subsidies in their principal sales markets.

In the fuel distribution business, we are subject to competition, both from companies in the industries in which we operate and from companies in other industries that produce similar products. Our competitors include service stations of large integrated oil companies, independent gasoline service stations, convenience stores, fast food stores, and other similar retail outlets, some of which are well-recognized national or regional retail systems. The Brazilian fuel distribution industry has consolidated significantly in recent years, with the five major distributors increasing their combined market share from 65.2% in 2000 to 76.1% in 2009. The top-four distributors in Brazil are: Petrobras, operating through the BR Distribuidora brand, Ultrapar S.A., through the Ipiranga and Texaco brands, Raízen, through Shell and Esso brands and AleSat Combustíveis S.A., a domestic Brazilian fuels distribution. The principal competitive factors affecting the retail marketing operations include site location, product price, selection and quality, site appearance and cleanliness, hours of operation, store safety, customer loyalty and brand recognition. We believe that we are in a strong position to compete effectively on ethanol due to the synergies that further integration with Cosan will bring.

We also face competition from international ethanol producers that use other ethanol sources, such as corn and sugar beet for the generation of fuel ethanol.

Research and Development

Our principal research and development activities are currently concentrated in the following key areas:

We have agreements with the Sugarcane Technology Center ( Centro de Tecnologia Canavieira ), or “CTC,” a private institution in which Raízen is a major shareholder, for the development of new varieties of sugarcane. CTC has already developed biological ways for controlling pests and biodegradable plastic ( PHB ), and also created a VVHP-type ( very, very high polarization ) sugar that requires less energy to be processed, as well as improvements in cogeneration technology.

We engage CanaVialis S.A., or “CanaVialis,” to provide us with access to its sugarcane genetic improvement program specifically tailored to Raízen Energia’s mills. CanaVialis, which is affiliated with Monsanto, is Brazil’s only privately-owned firm focused on the genetic improvement of sugarcane. We benefit from their support services and use of their biofactory (the largest in Brazil), which allows us to decrease the amount of time required for seedling production and grant us access to new, improved sugarcane varieties through their genetic improvement

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program. CanaVialis also conducts field trials and region-specific genetic selection programs to develop sugarcane varieties for our greenfield projects where we are building new sugarcane mills.

Raízen also invest in innovation in the ethanol manufacturing process. Raízen has a 16.3% stake in Codexis and in Shell’s commercialization rights of Iogen Energy. The two companies - Codexis and Iogen – conduct research into advanced fuels, including ethanol extracted from the cellulose of sugarcane and other plants.

We conduct research and development into renewable base oils through Novvi S.A., a Joint Venture between Cosan and Amyris formed in 2011. Novvi was established for the worldwide development, production and commercialization of renewable base oils made from Biofene, Amyris’ renewable farnesene.

C. Organizational Structure

_______________

(*)	Cosan S.A. only issues ordinary shares with voting rights. Ownership (economic) and voting interests in Cosan S.A. are therefore equal.

A list of the Company’s subsidiaries is included in note 2 of our audited consolidated financial statements for fiscal years 2012, 2011 and 2010 attached hereto. See also Exhibit 8.1 to this Annual Report.

The Joint Venture consists of three separate legal entities:

Raízen Energia Participações S.A . : a sugar and ethanol company, which, among other things, conducts the production of sugar and ethanol, as well as all cogeneration activities. Cosan and its subsidiaries and Shell and its affiliates each own 50% common equity interest in this entity. In addition, Cosan and its subsidiaries own 50% plus one share of the voting shares (and preferred shares bearing preferential dividend rights in certain circumstances), whereas Shell and its affiliates own 50% minus one of this entity’s voting shares.

Raízen Combustíveis S.A.: a downstream company, which conducts the supply, distribution and sale of fuels in Brazil. The resulting company has a network of approximately 4,600 fuel stations throughout Brazil. Cosan and its subsidiaries and Shell and its affiliates likewise each own 50% common equity interest in this entity. In this entity, however, Cosan and its subsidiaries own 50% min us one of the voting

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shares, whereas Shell and its affiliates own 50% plus one of the voti ng shares. Cosan and its subsidiaries and Shell and its affiliates also hold preferred shares bearing preferential dividend rights in certain circumstances if certain contingent targets are met.

Raízen S.A.: a management company, which is the Joint Venture’s face to the market and facilitates the building of a unified corporate culture. Cosan and its subsidiaries and Shell and its affiliates each own 50% of the equity and voting interests in this company.

D. Property, Plant and Equipment

For more information related to property, plant and equipment see note 13 of our audited consolidated financial statements for fiscal years 2012, 2011 and 2010 attached hereto.

We present a summary below of our material tangible fixed assets, by segment:

Raízen Energia

The following table sets forth the types of products produced by and the production capacity and production volumes of each of our mills for the periods indicated:

Name (1)

Products

Annual Crushing Capacity

Sugarcane Volume Processed

			For Fiscal Ended March 31,
			2012 (2)	2011	2010
		(in millions of tonnes)
Da Barra	sugar, ethanol and cogeneration	7.10	6.47	6.37	7.10
Bonfim	sugar, ethanol and cogeneration	5.23	4.42	4.30	4.22
Costa Pinto	sugar, ethanol and cogeneration	4.58	3.63	4.05	4.53
Junqueira	sugar, ethanol and cogeneration	2.93	2.59	2.86	2.95
Rafard	sugar, ethanol and cogeneration	2.52	2.11	2.21	2.45
Univalem	sugar, ethanol and cogeneration	2.33	1.66	2.33	2.11
Santa Helena	sugar, ethanol and cogeneration	2.05	1.69	1.81	2.04
Ipaussu	sugar, ethanol and cogeneration	2.61	1.79	1.95	2.03
Diamante	sugar, ethanol and cogeneration	2.05	1.69	2.06	2.05
Serra	sugar, ethanol and cogeneration	1.87	1.56	1.91	1.91
Tamoio	sugar and cogeneration	1.36	1.06	1.28	1.30
São Francisco	sugar and cogeneration	1.57	1.33	1.41	1.54
Dois Córregos	sugar, ethanol and cogeneration	1.40	1.27	1.44	1.39
Destivale	sugar, ethanol and cogeneration	1.53	1.13	1.42	1.41
Mundial	sugar, ethanol and cogeneration	1.49	1.02	1.44	1.27
Gasa	sugar, ethanol and cogeneration	3.83	2.98	3.34	2.95
Bom Retiro	sugar, ethanol and cogeneration	1.31	1.05	1.17	1.32
Benálcool	sugar, ethanol and cogeneration	1.31	0.82	1.08	1.02
Jataí	sugar, ethanol and cogeneration	4.11	2.60	1.94	0.34
Caarapó	sugar, ethanol and cogeneration	2.27	2.23	1.86	0.14
Tarumã	sugar, ethanol and cogeneration	4.20	3.90	3.89	3.07
Maracaí	sugar, ethanol and cogeneration	3.27	2.97	3.27	2.36
Paralcool	sugar, ethanol and cogeneration	1.12	1.10	1.09	0.81
Araraquara	sugar, ethanol and cogeneration	2.60	1.82	(3)	(3)

(1)

All the mills are located in the state of São Paulo, Brazil, except for Caarapó and Jataí located in the states of Mato Grosso do Sul and Goiás, respectively.

(2)

As of March 31, 2012, Raízen Energia did not own any agricultural properties.

(3)

Mill acquired in March 2011.

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Raízen Combustíveis

Raízen Combustíveis distributes fuels through 52 distribution terminals to approximately 4,600 service stations throughout Brazil under the Shell and Esso brands and also has 53 airport terminals supplying jet fuel.

Rumo

We operate various facilities and equipment to support our transportation system, including our infrastructure and 50 locomotives and 729 freight cars.

Rumo can ship more than 11 million tonnes of sugar and other bulk goods per year, with storage capacity for 470,000 tonnes of bulk goods and 40,000 tonnes of bagged sugar. At its four terminals in upstate São Paulo (in Sumaré, Barretos, Jáu and Itirapina), it has an additional static storage capacity of 1 million tonnes of sugar and other commodities.

Rumo has two terminals located in the Port of Santos, the largest sugar port in the world, with 2 wharves and 10 discharging grids

Cosan Alimentos

Cosan Alimentos holds industrial assets including 5 packing facilities, 2 distribution centers and 1 sugar refinery.

Other Businesses

Cosan Lubricants and Specialties (CLE)

CLE has a production plant located on the Ilha do Governador, Rio de Janeiro, storage capacity for base oils and lubricants (195,000 barrels) and a pier facility for docking ships of up to 20,000 tonnes.

Capital Expenditures

Our capital expenditure program is currently focused on the following areas:

Raízen Energia

Brownfield Projects

Raízen has brownfield projects under review until 2015/16 harvest on the following mills, totaling R$3.4 billion which we estimate will expand our annual sugarcane crushing capacity by 6.5 million tonnes:

Mill	Estimated completion date	Current crushing capacity	Future crushing capacity	Increase
		(in million tonnes per year)
Ipuassu	2012	2.6	3.1	0.5
Da Barra	2012	7.1	7.5	0.4
Univalem	2013	2.4	3.2	0.8
Tarumã	2013	4.2	4.6	0.4
Junqueira	2014	2.9	3.1	0.2
Caarapó	2014	2.3	4.4	2.1
Gasa	2014	3.8	4.5	0.7
Paraalcool	2015	1.1	2.6	1.5
				6.5

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Logum - ethanol pipeline

Logum Logística S.A. is the company responsible for construction and operation of the Ethanol System Logistics (logistics, loading, unloading, handling and storage, operation of ports and terminals and inland waterway) that involve multimodal transport: pipelines, waterways (barges), highways (tankers) and coastal (vessels). With major investments, Logum will cross 45 municipalities, linking the main ethanol producing regions in the states of São Paulo, Minas Gerais, Goiás and Mato Grosso do Sul to the main points of storage and distribution in Paulínia (upstate São Paulo). Part of this integrated system will consist of a long distance runner, of about 1,300 km (880 miles), which will connect the regions of Jataí (Goías) and Paulínia (São Paulo). The investment for construction is R$ 7.0 billion and the first phase of the project is expected to start operating in 2013. The expected annual capacity is 21 billion liters of ethanol.

Raízen owns 20% of Logum along with 5 other companies as follows: Copersucar (20%), Odebrecht (20%), Petrobras (20%), Camargo Correa (10%) and Uniduto (10%).

Raízen Combustíveis

Raízen is in the process of rebranding 1,700 Esso-branded service stations to the Shell brand until the end of 2013 at an estimated total cost of R$ 160 million. As at March 31, 2012, approximately 800 stations had already been rebranded, principally financed from our own resources.

Rumo

Itirapina Terminal

Rumo is investing R$ 200 million for the construction of the Itirapina Terminal in the upstate of São Paulo. Located close to all of the railway lines in the region, it will be the most modern logistics complex in Brazil with a total static storage capacity of 400 thousand tonnes and loading capacity of 12 million tonnes/year, after the project is concluded in 2013. This project is principally financed by loans from BNDES.

Port Terminal Cover

One of Rumo’s most innovative projects is the construction of a roof for the South Terminal of the Port of Santos. Every year, the rainy season forces the suspension of logistical operations for about 120 days. Ships are forced to wait, and lines of waiting trucks cause congestion on the region’s highways. To resolve this problem, the project calls for the construction of a metal roof 138 meters long and 76 meters high that will be able to shelter today’s largest cargo loads, dramatically reducing the cost of demurrage, the fee for over-stay of a ship moored in the company’s terminals. The project is expected to be concluded by the end of 2012, at a total estimated completion cost of R$56 million. This project is principally financed by loans raised from the BNDES.

Item 4A. Unresolved Staff Comments

None.

Item 5. Operating and Financial Review and Prospects

The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements as of March 31, 2012 and 2011 and for each of the fiscal year ended March 31, 2012, 2011 and 2010, which are included in this annual report, as well as with the information presented under the sections entitled “Presentation of Financial and Other Information” and “Item 3. Key Information—Selected Financial Information.”

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in “Forward-Looking Statements” and “Item 3. Key Information—D. Risk Factors.”

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The following discussion and analysis of our financial condition and results of operations presents the following:

a brief overview of our company and the principal factors that influence our results of operations, financial condition and liquidity;

a review of our financial presentation and accounting policies, including our critical accounting policies;

a discussion of the principal factors that influence our results of operations;

a discussion of developments since the end of fiscal year 2012 that may materially affect our results of operations, financial condition and liquidity;

a discussion of our results of operations for the years ended March 31, 2012, 2011 and 2010;

a discussion of our liquidity and capital resources, including our working capital at March 31, 2012, our cash flows for the years ended March 31, 2012, 2011 and 2010, and our material short-term and long-term indebtedness at March 31, 2012; and

a discussion of our contractual commitments.

Financial Presentation and Accounting Policies

Presentation of Financial Statements

The discussion in this section is based on our audited consolidated financial statements at March 31, 2012, March 31, 2011 and for the fiscal years ended at March 31, 2012, 2011 and 2010. We use IFRS as issued by the IASB for financial reporting purposes. Our audited consolidated financial statements include the financial statements of the Company and its subsidiaries and jointly controlled entities. Investments in entities in which the Company does not have control but has significant influence over managing the business, are accounted for using the equity method. The results of operations of Raízen Energia and Raízen Combustíveis, our Joint Venture, are accounted for using the proportionate consolidation method, under IAS 31, which will be replaced by IFRS 11, Joint Arrangements, as for annual periods beginning on or after January 1, 2013. For further details on the impacts of adopting IFRS 11, see note 2.4 of our financial statements. Intercompany accounts and transactions are eliminated upon consolidation.

Business Segments and Presentation of Segment Financial Data

In connection with the changes to our business brought about principally by the closing of the Joint Venture with Shell and Raízen, on June 1, 2011, the Company now presents five reportable segments:

(1) Raízen Energia, our sugar and ethanol Joint Venture company;

(2) Raízen Combustíveis, our fuel distribution Joint Venture company;

(3) Rumo;

(4) Cosan Alimentos; and

(5) Other Businesses which principally comprise the manufacturing and distribution of lubricants, and agricultural land development of our own land and through our equity investment in Radar.

Our discussion and analysis of the results of fiscal year 2012 in comparison to fiscal year 2011 and fiscal year 2011 in comparison to fiscal year 2010 have been performed based on the new segmentation of the Company in place since June 1, 2011. For this, the presentation of financial segment data for fiscal year 2011 and 2010 has been reclassified in accordance with IFRS 8 to allow for greater comparability. Our lubricants business, CLE, was previously reported as part of the former fuel and lubricants, or CCL segment and is now reported under “other businesses.” Our sugar retail business, Cosan Alimentos, was previously not segregated from the sugar and ethanol,

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or S&E segment, and as from July 1, 2011 is with the segregation of assets and formation of the business it began to be reported as a separate segment.

We evaluate and manage business segment performance based on information prepared in accordance with IFRS as issued by the IASB, and, accordingly, the segment data included in this annual report is presented under IFRS as issued by the IASB.

With respect to the results of Raízen our chief operating decision-makers evaluate the results of Raízen Energia and Raízen Combústiveis on the same basis that they are evaluated by the management and chief operating decision-makers of Raízen, and thus we present our discussion and analysis of the results of these segments on Raízen’s results before they are proportionally consolidated into Cosan’s consolidated financial statements. In our consolidated financial statements, we eliminate 50% of the results of Raízen Energia and Raízen Combustíveis. This presentation is consistent with Note 29 of our consolidated financial statements attached hereto.

Critical Accounting Policies and Estimates

The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the end of the reporting period. Such estimates and assumptions are reviewed on a continuous basis and changes are recognized in the period in which the estimates are revised and in any future periods affected.

A significant change in the facts and circumstances on which judgments, estimates and assumptions are based, may cause a material impact on the results and financial condition of the Company. The significant judgments, estimates and assumptions under IFRS as issued by the IASB are as follows:

Deferred income taxes and social contribution . Deferred tax assets are recognized for all unused tax losses and temporary differences between the accounting and tax books to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. For further detail on deferred income taxes see Note 17 of our consolidated financial statements attached hereto.

Biological Assets. Before harvest, our crops are biological assets. Subsequent to harvest, biological transformation ceases and the harvested crops meet the definition of agricultural produce under IAS 41 “Biological Assets.” As prescribed by IAS 41, we initially recognize planted crops at fair value. We capitalize expenses incurred for the initial planting and immediately adjust this to fair value, recognizing any gain or loss in cost of sales. Capitalized expenses for growing crops include land preparation expenses and other direct production expenses incurred during the sowing period including costs of labor, fuel, seeds, agrochemical and fertilizer, among others. We re-measure biological assets at each subsequent measurement reporting date and at the point of harvest at fair value less selling costs. The objective of the fair value model under IAS 41 is to recognize gains and losses arising from such measurements gradually over the asset’s life rather than only on sale or realization. IAS 41 prescribes, among other things, the accounting treatment for biological assets during the period of growth, degeneration, production and procreation, and for the initial measurement of agricultural produce at the point of harvest.

The fair value is determined based on the discounted cash flow method, taking into consideration expected future harvest volumes, market prices, sugarcane productivity or harvest yields, discount rates, as well as other assumptions.

The discounted cash flow method requires the input of highly subjective assumptions, including observable and unobservable data. Changes in the assumptions underlying such subjective inputs can materially affect the fair value estimate and impact our results of operations and financial condition from period to period.

As of March 31, 2012, the impact of a reasonable 10% increase (decrease) in estimated market prices, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of R$ 652 million for sugarcane.

A reasonable 10% increase (decrease) in estimated costs, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of R$(547)million for sugarcane.

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A reasonable 10% increase (decrease) in estimated yields, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of R$331 million for sugarcane.

A reasonable 100 basis points increase (decrease) in discount rates, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of R$(38) million for sugarcane.

Intangible assets and Property, Plant and Equipment, or “P,P&E . The calculation of depreciation and amortization of intangible assets and P,P&E includes the estimation of the useful lives. Also, the determination of the acquisition date fair value of intangible assets and P,P&E acquired in business combinations is a significant estimate. The Company annually performs a review of impairment indicators for intangible assets and P,P&E. Also, an impairment test is undertaken for goodwill. An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The key assumptions used to determine the recoverable amount for the different cash generating units for which goodwill is allocated are further explained in Note 14 of our consolidated financial statements attached hereto.

Business Combinations. Accounting for business combinations requires the allocation of our purchase price to the various assets and liabilities of the acquired business at their respective fair values. We use all available information to make these fair value determinations. In some instances, assumptions with respect to the timing and amount of future revenues and expenses associated with an asset might have to be used in determining its fair value. Actual timing and amount of net cash flows from revenues and expenses related to that asset over time may differ materially from those initial estimates, and if the timing is delayed significantly or if the net cash flows decline significantly, the asset could become impaired. Contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date.

On the formation of our Joint Venture we measured both the consideration transferred (our sugar and ethanol business, as well as our Esso branded fuel stations) and the proportion of assets received and liabilities assumed (50% of the Joint Venture including Shell’s fuel stations and distribution terminals) at fair value. The accounting for business combination generated a significant gain from the bargain purchase which we recognized in our results of operations in fiscal year 2012. Had the assumptions and determinations used in measuring fair values been different, our gain recorded on bargain purchase could have been materially higher or lower, and significantly affected our results of operations recorded in fiscal year 2012.

Fair value of financial instruments. When the fair value of financial assets and liabilities recorded in the statement of financial position cannot be derived from active markets, their fair value is determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. For further details on financial instruments refer to Note 26 of our consolidated financial statements attached hereto.

Contingent liabilities. We are currently involved in certain legal and administrative proceedings that arise from our normal course of business as described in Note 18 to our consolidated financial statements. We believe that the extent to which these contingencies are recognized in our consolidated financial statements is adequate. It is our policy to record accrued liabilities in regard to contingencies when the probability of an existing obligation is considered more likely than not to occur in the opinion of our management, based on information available to the company, including information obtained from our internal and external legal advisors. Future results of operations could be materially affected by changes in our assumptions, by the effectiveness of our strategies relating to these proceedings, by future developments in each matter being discussed or by changes in approach, such as a change in settlement in dealing with these matters.

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Share based payments. We measure the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The estimation of fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the assumption of the expected life of the share option, volatility and dividend yield. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 28.

Pension benefits. The cost of defined benefit pension plans and other post-employment medical benefits and the present value of the pension obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions which may differ from actual results in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. A defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Further details about the assumptions used are included in Note 27.

Principal Factors Affecting Our Results of Operations

In addition to the factors that are described in “Item 4. Information on the Company—B. Business Overview,” our results of operations have been influenced and will continue to be influenced by the following key factors:

Acquisitions, Partnerships and Corporate Restructurings

Our strategy is to be a leading Brazilian group in the Energy and Infrastructure businesses, for this reason since May 2004, we have expanded our annual sugarcane crushing capacity by approximately 162.0% from 24.8 million tonnes to approximately 65 million tonnes as of March 31, 2012, primarily through acquisitions, partnerships and corporate restructurings. We have also diversified into other operations along the sugarcane value chain to become a vertically integrated company. As a result, our net sales and gross profit have increased significantly.

Sugar

The profitability of our sugar products is principally affected by fluctuations in the international price of raw sugar and in the real /dollar exchange rate. International raw sugar prices are determined based on the New York Board of Trade Futures Contract No. 11, or “NY11.” Refined sugar trades at a premium to raw sugar, known as the “white premium,” and its price is determined based on the London International Financial Futures and Options Exchange Contract No. 5, or “LIFFE No. 5.” Prices are affected by the perceived and actual supply and demand for sugar and its substitute products. The supply of sugar is affected by weather conditions, governmental trade policies and regulations and the amount of sugarcane and sugar beet planted by farmers, including substitution by farmers of other agricultural commodities for sugarcane or sugar beet. Demand is affected by growth in worldwide consumption of sugar and the prices of substitute sugar products. From time to time, imbalances may occur between overall sugarcane and sugar beet processing capacity, sugarcane and sugar beet supply and the demand for sugar products. Prices of sugar products are also affected by these imbalances, which, in turn, impact our decisions regarding whether and when to purchase, store or process sugarcane, to produce sugar or whether to produce more ethanol.

The table below sets forth the prices for raw sugar NY11 for the periods indicated:

	Sugar NY11 (US$/lb)
	For Fiscal Year Ended March 31,
	2012		2011		2010
Initial quote		0.2744		0.1670		0.1273
Closing quote		0.2471		0.2711		0.1659
Daily average quote		0.2563		0.2376		0.2080
Monthly average quote		0.2542		0.2391		0.2138
High quote		0.3134		0.3531		0.2990
Low quote		0.2047		0.1367		0.1222

Source : NYBOT; prices from the 1 st Generic Future

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The table below sets forth the prices for refined sugar LIFFE for the periods indicated:

	Sugar LIFE (US$/ton)
	For Fiscal Year Ended March 31,
	2012		2011		2010
Initial quote		713.20		481.60		399.20
Closing quote		643.60		711.70		504.00
Daily average quote		678.13		639.66		557.03
Monthly average quote		672.42		643.84		569.97
High quote		876.30		844.50		759.00
Low quote		582.00		437.80		392.70

Source : LIFFE; prices from the 1 st Generic Future

Ethanol

Our ethanol products are affected by domestic Brazilian and international prices of ethanol, competition, governmental policies and regulations and market demand for ethanol as an alternative or additive to gasoline. The price for ethanol we sell in Brazil is set in accordance with market prices, using indices published by the Agriculture School of the University of São Paulo (Escola Superior de Agricultura Luiz de Queiroz—ESALQ ) and BM&FBOVESPA as a reference. Prices for ethanol we export are set based on international market prices, including the New York Board of Trade’s recently-launched ethanol futures contract. Prices for the industrial alcohol and bottled alcohol products we sell are also set based on market prices and have been historically higher than market prices for ethanol.

The table below sets forth the prices for hydrous ethanol in the Brazilian market for the periods indicated:

	Hydrous Ethanol Esalq (US$/thousand liters)
	For Fiscal Year Ended March 31,
	2012		2011		2010
Initial quote		890.30		431.10		248.60
Closing quote		667.40		982.20		420.11
Daily average quote		705.80		557.85		453.91
Monthly average quote		703.07		576.16		454.97
High quote		922.80		982.20		677.10
Low quote		597.50		381.10		248.40

Source: ESALQ.

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The table below sets forth the prices for anhydrous ethanol in the Brazilian market for the periods indicated:

	Anhydrous Ethanol Esalq (US$/thousand liters)
	For Fiscal Year Ended March 31,
	2012		2011		2010
Initial quote		1,219.70		495.70		286.40
Closing quote		709.40		1,157.20		489.20
Daily average quote		840.11		636.49		518.70
Monthly average quote		832.68		638.69		520.14
High quote		1,726.50		1.157.20		734.10
Low quote		666.00		435.60		286.40

Source: ESALQ.

The following table sets forth our average selling prices (in R$ per thousand liters) for ethanol in the export market for the periods indicated:

	Ethanol (R$/thousand liters)
	For Fiscal Year Ended March 31,
	2012		2011		2010
Average Unitary Price		1,406		950		717

Source: Cosan/Raízen

Demand for Fuels

Demand for gasoline, ethanol and diesel is susceptible to volatility related to the level of economic activity in Brazil and may also fluctuate depending on the performance of specific industries in the Brazilian market. We expect that a decrease in economic activity would adversely affect demand for fuels.

Currency Fluctuations

A significant proportion of the sales of sugar of Raízen Energia and a significant proportion of the base oil purchases of CLE are conducted in US dollars. Therefore a depreciation of the Brazilian real against the US dollar would have the effect of increasing our sales in Raízen Energia, and increasing our costs of sales in CLE. An appreciation of the Brazilian real against the US dollar would have the opposite effect.

A significant proportion of our debt is denominated in US dollars. A depreciation of the Brazilian real against the US dollar would increase our debt burden and our related financial expenses. However, we have receivables and other financial assets denominated in US dollars, which would partially offset the impact that a depreciation of the real would have on our financial position. An appreciation of the Brazilian real against the US dollar would have the opposite effect.

Seasonality

Raízen Energia is subject to seasonal trends based on the sugarcane growing cycle in the Center-South region of Brazil. The annual sugarcane harvesting period in the Center-South region of Brazil begins in April and ends in December. This creates fluctuations in our inventory, usually peaking in December to cover sales between crop harvest ( i.e. , January through March), and a degree of seasonality in our gross profit. This seasonality also impacts our sugar logistics segment, Rumo, by concentrating demand for transport to the Port of Santos during the peak months of the sugarcane harvest. None of our other business segments are subject to significant seasonal trends.

Inflation

Inflation rates in Brazil were 4.3% in 2009, 5.9% in 2010 and 6.5% in 2011 as measured by the Broad Consumer Price Index ( Índice Nacional de Preços ao Consumidor Ampliado ), or IPCA, published by the Brazilian Institute for Geography and Statistics ( Instituto Brasileiro de Geografia e Estatística ), or IBGE. Inflation affects our

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financial performance by increasing certain of our operating expenses denominated in reais (and not linked to the U.S. dollar). These operating expenses include labor costs, leases, selling and general administrative expenses. However, inflation did not have a material impact on our business for the periods presented.

Other Factors

Other factors that will impact the results of our operations include:

Hedging transactions (as discussed under “Hedging Transactions and Exposures”);

Trade barriers in U.S., European and other markets that currently limit access to their domestic sugar industry through quotas, subsidies and restrictions on imports;

The evolving use of ethanol derivatives as an alternative to oil derivatives and as a cleaner-burning fuel, derived from renewable sources;

The use of ethanol as a cleaner-burning fuel, derived from renewable sources;

Changes in international prices of oil (denominated in U.S. dollars) and related changes in the domestic prices of oil (denominated in reais );

The growth rate of the global economy and its resulting corresponding growth in worldwide sugar consumption;

The growth rate of Brazil´s gross domestic product, which impacts the demand for our products and, consequently, our sales volume in Brazil; and;

The tax policies adopted by the Brazilian federal government and the governments of the Brazilian states in which we operate, and our resulting tax obligation.

Cost Structure

Our cost structure for Raízen Energia may be divided into costs that are linked to the prices of our products and costs that are not linked to the prices of our products. Two of our principal cost components, raw materials and land leases, are linked to the prices of our products. Accordingly, we adjust the prices of our products to follow fluctuations in the cost of our raw materials and leased land, substantially minimizing the impact of this cost volatility on our results of operations. In addition, another relevant portion of our costs is represented by agricultural and industrial inputs, some of which are imported and which are also subject to price fluctuations primarily as a result of exchange rate variations. As 45.8% of our net sales are derived from exports, a portion of fluctuations in the costs of these inputs is offset by similar fluctuations in our Brazilian and international prices, minimizing the impact of this cost volatility on our results of operations.

Our cost structure for Rumo is affected by fixed and variable costs. Costs related to our property, plant & equipment incur fixed depreciation charges which increase in line with our capital expenditure. Costs relating to the transportation of sugar and other commodities are partially dependent on sales volumes.

Hedging Transactions and Exposures

Raízen Energia hedges part of the future price risk of its sugar production estimated to be exported and exchange rate derivative transactions, using future contracts, options and swaps.

Raízen Energia’s hedging strategy seeks to protect it from cash flow risks caused by commodities price and exchange rates fluctuations and as most of the derivative instruments have been designated for hedge accounting, Raízen Energia has not experienced material gains or losses in their financial results.

See note 26 of our consolidated financial statements attached hereto for further information.

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A. Operating Results

The following discussion of our results of operations is based on the financial information derived from our audited consolidated financial statements prepared in accordance with IFRS as issued by the IASB, unless otherwise stated. In the following discussion, references to increases or decreases in any year are made by comparison with the corresponding prior year, as applicable, except as the context otherwise indicates.

Fiscal Year Ended March 31, 2012 compared to Fiscal Year Ended March 31, 2011

Consolidated Results

The following table sets forth our consolidated income statement for the fiscal years ended March 31, 2012 and 2011:

	For Fiscal Year Ended March 31,
	2012			2011			% Variation
	(in millions of reais , except percentages)
Consolidated Income Statement
Net sales		24,096.9			18,063.5			33.4
Cost of goods sold		(21,465.0	)		(15,150.1	)		41.7
Gross profit		2,631.9			2,913.4			(9.7	)
Selling expenses		(1,136.3	)		(1,026.0	)		10.8
General and administrative expenses		(646.0	)		(545.4	)		18.4
Other, net		145.5			(33.8	)		—
Gain on the de-recognition of subsidiaries to form the JVs		2,752,7			—			—
Operations income / (expenses)		1,115.9			(1,605.2	)		169.5
Income before financial results, equity income of associates and income taxes		3,747.8			1,308.2			186.5
Equity income of associates		33.3			25.2			32.1
Financial results, net		(478.5	)		(151.1	)		216.7
Income before income taxes		3,302.5			1,182.3			179.3
Income taxes (Current)		(147.4	)		(85.4	)		72.6
Income taxes (Deferred) -		(962.7	)		(329.1	)		192.5
Net income for the year		2,192.3			767.8			185.5
Net income attributable to non-controlling interests		(1,011.0	)		(296.8	)		440.7
Net income attributable to owners of the Company		1,181.3			470.9			150.9

Net Sales

We report net sales after deducting Brazilian federal and state taxes assessed on gross sales (ICMS, PIS, COFINS, IPI (a federal value-added tax assessed on our gross sales in the Brazilian market at rates that vary by product) and INSS (federal social contribution taxes assessed on our gross sales in the Brazilian market of our agribusiness entities at a rate of 2.85%). Deductions from gross sales in the Brazilian domestic market, which are subject to these taxes, are significantly greater than our deductions from gross sales in export markets.

Net sales increased by 33.4% to R$24,096.9 million during the fiscal year ended March 31, 2012, from R$18,063.5 million during the fiscal year ended March 31, 2011, primarily as a result of:

an increase of 13.4% to R$7,247.7 million in net sales in the Raízen Energia (Sugar and Ethanol), despite a difficult harvest;

an increased in the net sales of Raízen Combustíveis (Fuel Distribution) by 220.0% to R$35,096.0 billion, primarily due to the formation of the Joint Venture; and

in Rumo Logística, an increased in the transportation and loading operations due to our contractual agreement with America Latina Logística S.A., or ALL, which is primarily responsible for the increase of 27.7% in its net sales to R$572.0 million.

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The table below presents a breakdown of our net sales for the fiscal years ended 2012 and 2011:

	For Fiscal Year Ended March 31, (1)
	2012			2011			% Variation
	(in millions of reais , except percentages)

Raízen Energia (Sugar and Ethanol) net sales (1)		7,247.7			6,389.1			13.4
Sugar		3,912.8			3,853.4			1.5
Ethanol		2,871.5			2,203.7			30.3
Energy cogeneration		235.1			194.9			20.6
Other products and services		228.2			137.1			66.4

Raízen Combustíveis (fuel distribution) net sales (1)		35,096.0			10,966.2			220.0
Fuels		35,032.8			10,895.6			221.6
Other services		63.2			70.6			(70.8	)

Rumo (logistics) net sales		572.0			448.0			27.7
Transportation		413.4			305.8			35.2
Loading		141.0			118.1			19.4
Other		17.6			24.1			(27.0	)

Cosan Alimentos (Sugar Retail) net sales		706.4			―			100
Refined sugar		631.5			―			100
Crystal sugar		39.0			―			100
Special sugars		35.9			―			100

Other businesses net sales		1,065.5			829.0			28.5
Lubricants (CLE)		1,018.8			829.0			22.9
Other products and services		46.7			―			100

Eliminations (1):		(20,590.7	)		(568.9	)		3,519.4

Net sales		24,096.9			18,063.4			33.4

_________

(1)

The information of Raízen Energia and Raízen Combustíveis and the discussion herein represents 100% of the revenues generated by the businesses. As from June 1, 2011 results of Raízen Energia and Raízen Combustíveis are proportionally consolidated at 50% in the Company´s financial statements. See note 29 to our audited consolidated financial statements.

Raízen Energia (Sugar and Ethanol)

Sugar sales totaled R$3,912.8 billion in fiscal year 2012, an increase of 1.5% in relation to the prior period. The main factors contributing to the increase of R$59.4 million were:

the 7.1% decline in the volume of sugar sold in fiscal year 2012 as compared to fiscal year 2011, which was offset by the higher average sugar price per ton, which increased 9.3% to R$ 981.3 from R$ 898.0 over the same periods.

Higher volume sold in the foreign market due to more attractive prices, which resulted in a R$ 229.2 million increase in total net sales. Lower volumes were sold in fiscal year 2012.

The increase in net results were obtained despite adverse weather conditions that severely affected the Central-South region of Brazil, resulting in a decrease of 2.4% in the amount of sugarcane crushed in fiscal year 2012 compared to fiscal year 2011, mitigated by improvements in harvesting mechanization, with 85.9% of production mechanized in fiscal year 2012, as compared to 79.5% in fiscal year 2011, an improvement of 6.4%.

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Ethanol sales in fiscal year 2012 totaled R$2,871.5 billion, increasing 30.3% or R$667.8 million when compared to fiscal year 2011 primarily due to:

sales of R$334.1 million, due to a 32.2% increase in the average price of ethanol in the domestic and international markets; and

an increase of 72.8% of ethanol sold in the international markets and a 48.0% increase on the average price per cbm into the international markets, when compared with fiscal year 2011.

Energy cogeneration sales totaled R$235.1 million through the sale of 1,491.3 thousand MWh of energy at an average price of R$157.7/MWh. The growth of 18.9% in the volume sold is principally due to operations at the cogeneration plants at the Jataí, Barra, Univalem and Ipaussu units coming online that added 258 MW to Raízen Energia’s total capacity resulting in 11 out of Raízen Energia’s 24 mills selling energy from cogeneration.

Other products and services, comprising principally of sales of steam, molasses and raw materials to service providers in the agricultural industry, increased 66.4% to R$228.2 million from $137.1 million.

Raízen Combustíveis (Fuel distribution)

Revenues increased from R$ 10,966.2 million in fiscal year 2011 to R$ 35,096 million (prior to elimination for proportionate consolidation) in fiscal year 2012 primarily due to the formation of the Joint Venture between Cosan and Shell on June 1, 2011, increasing the volume of fuels sold. This resulted in:

an expansion in the service stations network to 4,545 locations in fiscal year 2012 from 1,710 (Cosan service station only) in fiscal year 2011;

an increase of 201% in the volume of gasoline sold representing revenues of R$ 14,674.4 million;

an increase of 5.5% in the volume of jet fuel sold resulting in revenues of R$3,632 million in fiscal year 2012 compared to fiscal year 2011; and

Ethanol sales in fiscal year 2012 totaled R$2,117.9 million, resulting in an increase of 160.0% when compared to fiscal year 2011.

Rumo (Logistics)

Rumo´s sales in fiscal year 2012 were 27.7% higher than fiscal year 2011, totaling R$572.0 million primarily due to increased transportation volume.

Revenue from transportation increased by R$107.6 million or 35.2% to R$413.4 million primarily as a result of. the increase of 52.2% in the volume of sugar transported in fiscal year 2012 compared to fiscal year 2011, and higher prices due to longer routes in the mix operated in fiscal year 2012.

Loading sales revenue increased as compared to with the previous fiscal year, at R$141.0 million in fiscal year 2012; Revenue per loaded tonne increased 23.0% in fiscal year 2012 as compared to fiscal year 2011 to R$74.0 per ton. Loading volume increased to 7,759 tonnes in fiscal year 2012, representing an increase of 3.7% as compared to fiscal year 2011. The effects of the lower sugar exported volumes were partially offset by the loading and elevation of other products such as soybeans and soybean meal in the off-season period (November 2011 to March 2012).

Cosan Alimentos (Sugar retail)

Cosan Alimentos net sales in fiscal year 2012 totaled R$706.4 million. As this Company was formed on July 1, 2011 there is no comparable information.

Other Businesses

Our other businesses comprise of our lubricants and specialties business and other operations, including agricultural land development through Radar.

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The net revenue of Cosan Lubrificantes e Especialidades was R$1.1 billion in fiscal year 2012 resulting in an increase of 23.1% compared to fiscal year 2011, primarily due to sales volume increasing by 30.2% in fiscal year 2012, reaching 216.7 million liters as compared to fiscal year 2011.

This increase is due to a larger volume of premium lubricants sold, which are higher margin products, and to the start of our base oil distribution operations. Base oil is a raw material used in manufacturing lubricants and was added to Cosan Lubrificantes e Especialadades’ distribution portfolio in the first quarter of 2012. In addition, CLE began distributing lubricants in three countries in January 2012—Bolivia, Uruguay and Paraguay.

Sales volume increased 39.5% in fiscal year 2012 to 216.7 million liters. In spite of the increase in the volume sold and product revenues and the addition of base oil to the mix contributed to the reduction in the average unit price, which averaged R$ 4,702/thousand liters in 2012, compared to R$ 4,942/thousand liters in fiscal year 2011.

Revenue from other products and services consists of land leased by Cosan to Raízen Energia, as well as revenues from the sale of base oils amounted to R$56.7 million in fiscal year 2012.

Cost of Goods Sold

	For Fiscal Year Ended March 31,
	2012			2011			% Variation
	(in millions of reais , except percentages)

Raízen Energia cost of goods sold (1)		(5,578.3	)		(4,400.5	)		26.8
Sugar		(2,802.1	)		(2,609.1	)		7.4
Ethanol		(2,454.0	)		(2,016.1	)		21.7
Energy cogeneration		(86.1	)		(102.3	)		(15.8	)
Other products and services		(236.0	)		327.1			(172.1	)

Raízen Combustíveis cost of goods sold (1)		(33,144.5	)		(10,499.3	)		215.7

Rumo (logistics) cost of services provided		(394.1	)		(316.4	)		24.6

Cosan Alimentos cost of goods sold		(577.3	)		―			100

Other businesses cost of goods sold		(732.9	)		(514.9	)		42.3

Eliminations(1):		18,955.3			581.1			3,161.9

Cost of goods sold		(21,465.0	)		(15,150.1	)		41.7

_________

(1)

The information of Raízen Energia and Raízen Combustíveis represents 100% of the cost incurred by the businesses. As from June 1, 2011 results of Raízen Energia and Raízen Combustíveis are proportionally consolidated at 50% in the Company´s financial statements. See note 29 to our audited consolidated financial statements.

We divide Raízen Energia’s sugar and ethanol cost of goods sold into two major categories: agricultural costs and industrial costs. Agricultural costs include costs related to the production of sugarcane, acquiring sugarcane from suppliers, fertilizers, personnel costs, delivery and logistical services, land and equipment leases, depreciation and third-party services. Industrial costs include the purchase of raw materials (other than sugarcane), personnel costs, depreciation and other chemical and maintenance expenses. Raízen Combustíveis cost of goods sold includes petroleum derived products and feedstock purchased from Petrobras and ethanol from distilleries, freight costs between our terminals in our fuel distribution business and additives. Rumo Logística’s cost of services includes personnel costs, equipment and port lease agreements, electricity and maintenance costs. Cosan Alimentos’ costs of goods sold principally comprises of raw sugar. Its long-term requirements are generally guaranteed through long-term contracts with its principal supplier – Raízen Energia, which increases stability and limits spot purchases where prices have generally been more volatile. Other Businesses’ costs of goods sold principally includes costs associated with Cosan’s corporate structure and packaging materials, raw material and feedstock purchased from third parties in our lubricants business.

Cost of goods sold increased by 41.7% to R$21.4 billion during the fiscal year ended March 31, 2012, from R$15.1 billion during the fiscal year ended March 31, 2011.

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Raízen Energia (Sugar and Ethanol)

The cost of goods sold amounted to R$5.6 billion in fiscal year 2012, representing an increase of 26.8%, compared to the previous fiscal year. Costs of goods sold is reported together with the average unit costs, net of effects of depreciation and amortization (cash and cost). This increase was mainly due to the rise in the average price of goods sold in the period, which increased by 5.6% for sugar and 21.5% for ethanol as compared to fiscal year 2011. The main factors that contributed to this increase in the cost of goods sold by Raízen Energia are:

A 24.8% increase in the TSR/kg cost, up from R$ 0.4022 in fiscal year 2011 to R$0.5018 in fiscal year 2012, directly impacting the cost of sugarcane from suppliers and the cost of land leases;

An increase in the cost of proprietary sugarcane due to the rise in leasing costs—up from R$10.4 per tonne of sugarcane in fiscal year 2011 to R$17 per tonne in fiscal year 2012;

A decrease in the TSR level to 136.5 kg/tonne in fiscal year 2012, compared to 138.5 kg/ton in fiscal year 2011.

This was partially offset by the improved productivity of the sugarcane fields, represented by a higher TCH level (tonne of cane per hectare), which was 76.0 fiscal year 2012, up from 73.8 in fiscal year 2011.

Raízen Combustíveis (Fuel distribution)

The cost of goods sold was primarily impacted by the formation of the Joint Venture on June 1, 2011 which added additional volumes sold (as described above) due to the increase in the number of service station in its portfolio.

Rumo (Logistics)

The cost of Rumo´s services provided in fiscal year 2012 increased 24.6% in fiscal year 2012 to R$394 million as compared to fiscal year 2011 due to an increase in volume transported.

Cosan Alimentos (Sugar retail)

The cost of goods sold by Cosan Alimentos totaled R$ 577.3 million in fiscal year 2012 . As this Company was formed in July 1, 2011 there is no comparable information.

Selling Expenses

Selling expenses are primarily related to transportation costs, including freight and shipping costs for ethanol, sugar, fuel and lubricant sold in Brazil and exported, as well as storage and loading expenses of ethanol and sugar for export at our and third parties´ port facilities. The major portion of our sales of ethanol in Brazil is sold at the mill to distribution companies, and therefore there are no shipping costs. CLE´s lubricant marketing expenses, as well as fuel storage expenses, are also included as selling expenses.

	For Fiscal Year Ended March 31,
	2012			2011			% Variation
	(in millions of reais , except percentages)

Raízen Energia (1)		(511.4	)		(568.3	)		(10.0	)
Raízen Combustíveis (1)		(1,095.6	)		(280.9	)		290.0
Rumo		―			―			―
Cosan Alimentos		(82,8	)		―			100
Other businesses		(187.5	)		(176.8	)		6,0
Eliminations (1):		741			―			100
Selling expenses		(1,136.3	)		(1,026.0	)		10.8

_________

(1)

The information of Raízen Energia and Raízen Combustíveis represents 100% of the revenues, costs and expenses of the businesses. As from June 1, 2011 results of Raízen Energia and Raízen Combustíveis are proportionally consolidated at 50% in the Company’s financial statements. See note 29 to our audited consolidated financial statements.

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Selling expenses increased by 10.8% to R$1,136.3 million during the fiscal year ended March 31, 2012 from R$1,026.0 million during the fiscal year ended March 31, 2011.

Raízen Energia (Sugar and Ethanol)

Raízen Energia’s selling expenses amount decreased 10.0% to R$511.4 million in fiscal year 2012 as compared to fiscal year 2011, due to savings resulting from lower freight and commissions following the transfer of the sugar trading activities in the domestic retail market to Cosan Alimentos that in fiscal year 2012 was R$ 82.2 million.

Raízen Combustíveis (Fuel distribution)

Raízen Combustíveis selling expenses increased by 290.0% to R$1,095.6 million in fiscal year 2012 as compared to fiscal year 2011. This was principally due to the formation of Raízen in June 1, 2011., A portion of the depreciation referring to the fair value of assets contributed to the formation of Raízen Combustíveis has increased selling expenses by approximately R$52 million.

Rumo (Logistics)

Due to the nature of its business, no selling expenses are recorded for Rumo Logística.

Cosan Alimentos (Sugar retail)

Selling expenses totaled R$82.8 million in fiscal year 2012, composed basically by payroll, depreciation and amortization, logistics expenses, freights, commissions on sales, allowance for doubtful accounts and others.

Other businesses

Selling expenses increased 7.0% in fiscal year 2012 to R$187.5 million as compared to R$176.8 million in fiscal year 2011, primarily due to an increase in marketing and promotional activities.

General and Administrative Expenses

	For Fiscal Year Ended March 31,
	2012			2011			% Variation
	(in millions of reais , except percentages)

Raízen Energia (1)		(454.0	)		(393.0	)		15.5
Raízen Combustíveis (1)		(349.8	)		(91.5	)		282.3
Rumo		(41.6	)		(29.1	)		43.0
Cosan Alimentos		(13.1	)		-			100
Other businesses		(132.8	)		(31.8	)		317.6
Eliminations (1):		345.3			-			100

General and administrative expenses		(646.0	)		(545.4	)		18.4

_________

(1)

The information of Raízen Energia and Raízen Combustíveis represents 100% of the cost incurred by the businesses. As from June 1, 2011 results of Raízen Energia and Raízen Combustíveis are proportionally consolidated at 50% in the Company’s financial statements. See note 29 to our audited consolidated financial statements.

General and administrative expenses consist of salaries and benefits paid to employees, taxes, expenses related to third-party services, rentals and other expenses.

Raízen Energia (Sugar and Ethanol)

General and administrative expenses were R$454.0 million in fiscal year 2012, an increase of 15.5% when compared to fiscal year 2011. This increase is a result of expenses associated with the new corporate structure of Raízen Energia and expenses with services provided by the CSC – Shared Service Center.

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Raízen Combustíveis (Fuel distribution)

General and administrative expenses totaled R$349.8 million in fiscal year 2012, an increase of 282.3% compared to fiscal year 2011, reflecting the new structure to support Raízen Combustíveis as well as costs related to the JV formation such as headcount reallocation among others.

Rumo (Logistics)

General and administrative expenses totaled R$41.6 million in fiscal year 2012, an increase of 43.0% compared to fiscal year 2011. This increase in expenses was due to the restructuring of Rumo’s managerial staff in fiscal year 2012 as well as expenses related to the Shared Services Center which were not present in fiscal year 2011.

Cosan Alimentos (Sugar retail)

General and administrative expenses totaled R$13.1 million in fiscal year 2012.

Other businesses

General and administrative expenses totaled R$132.8 million in fiscal year 2012, an increase of 386.4% when compared to R$31,8 million in fiscal year 2011, due to expenses associated with Cosan’s corporate structure.

Other, net

Other, net comprises of other income and expenses. Income increased from a net expense of R$(33.8 million) to R$145.6 million in fiscal year 2012, principally reflecting increased gain on the disposal of property plant and equipment, and increased rental and leasing income, a reversal of allowances for doubt accounts, and revenue from royalties and customer base and other income. This was partly offset by a provision for judicial demands, and other expenses. See Note 25 to our audited consolidated financial statements for more information.

Gain on the de-recognition of subsidiaries to form the Joint Ventures

Due to the formation of the Raízen Energia and Raízen Combustíveis Joint Ventures, Cosan contributed its sugar and ethanol businesses, which resulted in a deconsolidation of the related assets and liabilities and recording the remaining interest at fair value, resulting in a gain of R$2,752.7 million, before income tax and social contribution. See Note 21 to our audited consolidated financial statements for more information.

Equity income of associates

Equity income of associates includes our interests in Radar Propriedades Agrícolas S.A. (18.9%), Codexis Inc (15.5%), Logum Logística S.A. (20.0%) and other investments. Equity income increased by 32.1% to R$33.3 in fiscal year 2012.

Financial Results, Net

Financial results, net in fiscal year 2012 totaled a net expense of R$478.5 million compared to financial results, net of R$151.1 million in fiscal year 2011.

	For Fiscal Year Ended March 31,
	2012			2011
	(in millions of reais)
Financial expenses		(588.1	)		(677.3	)
Financial income		207.8			188.8
Foreign exchange variation, net		(93.9	)		282.7
Derivatives, net		(4.4	)		54.7
		(478.5	)		(151.1	)

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Financial Expenses . Our financial expenses primarily consist of: (1) accrued interest on our indebtedness; (2) losses on monetary variation related to our financial investments; (3) losses on foreign exchange variations related to our foreign currency-denominated indebtedness; (4) losses on derivatives (swaps, futures, forwards and options); and (5) fees, commissions and other charges paid to financial institutions.

Financial expenses totaled R$588.1 million as compared to R$677.3 million in fiscal year 2011.

Expenses of debt charges, net of financial investments yields, represented a decrease of 6.8%, when compared to the previous fiscal year, mainly due to the greater average indebtedness. The reduction is mainly due to the change in the debt profile, as well as the effects of proportional consolidation of debt Raízen, recorded in the first quarter of 2012.

Financial Income . Our financial income primarily consists of: (1) gains on monetary variation related to our financial investments; (2) gains on foreign exchange variations related to our foreign currency-denominated indebtedness; (3) gains on derivatives (swaps, futures, forwards and options); (4) income from financial investments; and (5) financial income related to compensation awarded in a legal proceeding against the Brazilian federal government.

Financial income during the fiscal year ended March 31, 2012 totaled R$207.8 million, compared to financial income of R$188.8 million during the fiscal year ended March 31, 2011.

Foreign exchange variation, net . Foreign exchange variation, net resulted in a loss of R$93.9 million in fiscal year 2012 compared to a net gain of R$282.7 million in fiscal year 2011. The negative effects from exchange variation occurred due to the impacts on assets and liabilities denominated in foreign currency and the fluctuation in the reais dollar exchange rate. Our gross indebtedness denominated in U.S. dollars was R$3,618.2 million and R$ 3,750.8 million at March 31, 2011 and March 31, 2012, respectively.

Derivatives, net . Derivatives, net resulted in a loss of R$4.4 million in fiscal year 2012 compared to R$54.7 million in fiscal year 2011.

Income Taxes

Current income tax expense increased to R$147.4 million in fiscal year 2012, compared to an expense of R$85.4 million in fiscal year 2011, mainly resulting from the earnings in fiscal year 2011 compared to fiscal year 2012. Deferred income tax expense increased from R$329.1 million in fiscal year 2011 to R$962.7 million in fiscal year 2012, mainly due to the formation of the Joint Venture.

Net Income for the year

As a result of the foregoing, net income for the year increased 440.7% to R$2,192.3 million in fiscal year 2012, compared to a net income of R$767.7 million in fiscal year 2011.

Net income attributable to owners of the Company

Net income attributable to owners of the Company was R$1,181.3 million in fiscal year 2012 an increase of 150.9% as compared to R$470.9 million in fiscal year 2011, after deducting net income attributable to non-controlling interests of R$1,011.0 and R$296.8 million in fiscal years 2012 and 2011 respectively.

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Fiscal Year Ended March 31, 2011 compared to Fiscal Year Ended March 31, 2010

Consolidated Results

The following table sets forth our condensed consolidated income statement for the fiscal years ended March 31, 2011 and 2010, on the basis of our former business segment structure, in place prior to June 1, 2011:

	For Fiscal Year Ended March 31,
	2011			2010			% Variation
	(in millions of reais , except percentages)
Consolidated Income Statement
Net sales		18,063.5			15,336.1			17.8
Cost of goods sold		(15,150.1	)		(13,271.3	)		14.2
Gross profit		2,913.4			2,064.7			41.1
Selling expenses		(1,026.0	)		(862.7	)		18.9
General and administrative expenses		(545.4	)		(501,6	)		8.7
Other, net		(33.8	)		37.5			(190.1	)
Gain on tax recovery program		—			270.3			—
Operations income / (expenses)		(1,605.2	)		(1,056.5	)		51.9
Income before financial results, equity income of associates and income taxes		1,308.2			1,008.2			29.7
Equity income of associates		25.2			4.2			500.0
Financial results, net		(151.1	)		493.4			(130.6	)
Income before income taxes		1,182.3			1,505.8			(21.5	)
Income taxes:
Current		(85.4	)		(78.4	)		8.9
Deferred -		(329.1	)		(344.9	)		4.6
Net income for the year		767.8			1,082.5			(29.1	)
Net income attributable to non-controlling interests		(296.8	)		(376.4	)		—
Net income attributable to owners of the Company		470.9			706.1			33.3

Net Sales

Net sales increased by 17.8% to R$18,063.5 million during the fiscal year ended March 31, 2011, from R$15,336.1 million during the fiscal year ended March 31, 2010, primarily as a result of:

an increase of 18.8% to R$6.4 billion in net sales in the Raízen Energia segment. Despite a difficult harvest due to unfavorable weather conditions that affected the sugarcane, our production increased due to (1) the increase in the use of the installed capacity of two greenfields (Jataí and Caarapó), (2) expansion of our sugar plants and (3) the commencing of operations of other co-generation projects, coupled with better prices of sugar and ethanol;

an increase in the net sales of Raízen Combustíveis by 15.4% to R$10.9 billion, primarily because of the increase of 22.7% in the revenue of diesel and 13.3% of gasoline;

in Rumo Logística, an increase in the transportation operations because of our contractual agreement with America Latina Logística S.A., or ALL, primarily responsible for the increase of 183.2% in its net sales to R$448.0 million; and

in Other businesses, an increase of 29.7% to R$ 829 million in the lubricants.

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The table below presents a breakdown of our net sales for the fiscal years ended 2011 and 2010:

	For Fiscal Year Ended March 31,
	2011			2010			% Variation
	(in millions of reais , except percentages)


Raízen Energia net sales		6,389.2			5,380.1			18.8
Sugar sales		3,853.4			3,377.8			14.1
Ethanol sales		2,203.7			1,747.6			26.1
Energy cogeneration		194.9			93.6			108.3
Other sales		137.1			161.1			(14.9	)

Raízen Combustíveis net sales		10,966.3			9,506.5			15.4
Fuels		10,895.7			9,437.3			15.5
Other		70.6			69.1			(2.2	)

Rumo Logística (sugar logistics) net sales		448.0			158.2			183.2
Port lifting		118.1			142.1			(16.9	)
Logistics		305.8			16.1			1,799.4
Other		24.1			—			—
Other Businesses net sales		829.0			638.6			29,7
Lubricants		829.0			634.0			29.7
Others		—			4.6			100
Eliminations:		(569.0	)		(347.3	)		(63.8	)
Net sales		18,063.5			15,336.1			17.8

Raízen Energia

Sugar sales totaled R$3.85 billion in fiscal year 2011, an increase of 14.1% in relation to the prior period. The main factors contributing to the increase of R$475.6 million were:

an increase of R$128 million arising from higher volumes sold which were 3.8% higher than the previous fiscal year. Sales in the domestic market increased 17.4%, with 1,238.2 thousand tonnes reflecting the effect of 12 months of sales as compared to approximately ten months of sales in fiscal year 2010 following the acquisition of Cosan Alimentos in June 2009, and the greater concentration of total sugar recovered, or TSR, in the sugarcane (139.0 kg / tonne of sugarcane compared to 129.8 kg / tonne of sugarcane in the 2009/10 crop). However, the lower than expected harvest affected sugar production and exports of sugar decreased 1% in comparison to the previous fiscal year amounting to 3,052.6 thousand tonnes;

an increase of R$335 million due to a 10% increase in the price of sugar; prices in the domestic market increased by 11.2% in fiscal year 2011 and price in the foreign market increased by 7.4% in fiscal year 2011 when compared to the same previous fiscal year period, due to the effect of hedge accounting, which had a negative impact of R$160.3 million; and

a higher mix of sugar sold in the domestic market at 29.0% for fiscal year 2011 as compared to 25.0% in the prior fiscal year resulted in a R$13 million increase in sales.

Ethanol sales in fiscal year 2011 totaled R$2.2 billion, increasing 26.1% or R$456.1 million when compared to fiscal year 2010 primarily due to:

sales of R$81.2 million arising from the increase in the volume of ethanol sold primarily due to: (1) the acquisition of Cosan Alimentos mills in June 2009 which provided us with increased crushing capacity for the full fiscal year when compared to fiscal year 2010; (2) the greater concentration of TSR and (3) the ramp-up of the greenfields in Jataí and Caarapó;

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sales of R$358.3 million, due to a 20.5% increase in the average price of ethanol in the domestic and international markets; and

sales of R$16.6 million due to increased sales in the domestic market and lower sales in the foreign market, which presented lower average prices than the domestic market.

Cogeneration sales totaled R$194.9 million through the sale of R$8.9 million in steam and 1,254.0 thousand MWh of energy at an average price of R$148.3/MWh. The growth of 107.0% in the volume sold due to the period from the beginning of operation of new cogeneration units (totaling ten this year, compared to six in the previous fiscal year) and to the ramp-up of the others.

Raízen Combustíveis

Net sales from Raízen Combustíveis for fiscal year 2011 increased by 15.4% to R$10.9 billion, from R$9.5 billion during the fiscal year ended March 31, 2010, primarily due to:

an increase of 21.6% in the volume of diesel sold in fiscal year 2011 when compared to fiscal year 2010. This increase occurred due to the following factors:

an increase of 9.0% in the domestic consumption of diesel according to the ANP, due to the increase in the demand from industrial clients and transportation activities due to the economic recovery in Brazil; and

gains of market-share in the retail market and in the industrial segment;

an increase of 11.3% in the volume of gasoline C in fiscal year 2011 as compared to fiscal year 2010, primarily due to increased sales of gasoline C, and the increase in the percentage of flex fuel vehicles users that opted for gasoline C instead of hydrous ethanol; and

an increase in the average unit prices of ethanol, gasoline and diesel, and of higher sales of diesel and gasoline C in the sales mix, which present higher prices than ethanol.

Rumo Logística (sugar logistics) . Rumo Logística’s sales in fiscal year 2011 were 183.2% higher than fiscal year 2010, totaling R$448.0 million, primarily due to transportation operations with ALL, contributing R$305.9 million in sales.

Loading sales revenue was broadly in line with the previous fiscal year, at R$142.2 million in fiscal year 2011; despite an 8.0% reduction in volume, revenues benefited from a 10.4% increase in the loading price.

The lower loaded volume was partly due to the lower than expected harvest, which reduced the amount of sugar available to be exported at the end of the harvest. This effect was partially offset by the increase in prices.

As a result of high transportation volume, revenue per loaded tonne in fiscal year 2011 was 3.1 times higher than fiscal year 2010.

Other businesses

An increase of 29.7% in the net sales of lubricants, to R$829 million for fiscal year 2011, due to increased sales of premium products, which are higher margin products, and a strong increase in sales volume, which reached 166.4 million liters resulting from the increase of approximately 9.0% in domestic consumption and gains of market share, following increased marketing.

Adjustments and Eliminations . The components of our net sales are prepared in accordance with IFRS as issued by the IASB. Accordingly, we have to perform certain eliminations and adjustments in order to consolidate and prepare our IFRS as issued by the IASB consolidated financial statements. These adjustments corresponded to R$569.0 million in the fiscal year ended March 31, 2011, as compared to R$347.4 million in the fiscal year ended March 31, 2010.

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Cost of Goods Sold

Cost of goods sold increased by 14.2% to R$15.1 billion during the fiscal year ended March 31, 2011, from R$13.3 billion during the fiscal year ended March 31, 2010.

Raízen Energia

The cost of Raízen Energia goods sold and services rendered amounted to R$4.4 billion, representing an increase of 9.0%, or R$362 million, compared to the previous fiscal year. The main factors that explain this increase, in addition to the adjustments related to the adoption of IFRS as issued by the IASB, described in “Presentation of Financial And Other Information,” are:

the higher volume of sugar and ethanol sold, which was responsible for the increase of R$161.1 million;

R$360.0 million from sugar origination, characterized by the purchase of raw materials for refining and finished products for later resale and distribution in the domestic market;

R$54.2 million of ethanol origination in order to benefit from market opportunities;

an increase of R$234.9 in the average value of total sugar recovered, which represents the total amount of sugar content in the sugarcane, or TSR, calculated by the CONSECANA, which increased from R$0.3492/kg in fiscal year 2010 to R$0.4022/kg in fiscal year 2011, giving rise to a higher cost of leasing of land and of sugarcane from suppliers, resulting in an additional cost of approximately R$234.9 million in fiscal year 2011; and

these effects were partially offset by the increase in the amount of TSR, from 131.1 kg/ton of sugarcane to 139.9 kg/ton due to more adequate weather conditions reducing the cost to R$187.9 million in the fiscal year 2011.

Raízen Combustíveis

The cost of goods sold of Raízen Combustíveis increased by 16.3% in fiscal year 2011 compared to fiscal year 2010. Excluding the volume factor, the unit cost of R$1,764/cbm in the fiscal year 2011 was 4.9% higher than the previous fiscal year, primarily due to:

an increase in the cost of ethanol, which impacts not only the hydrous ethanol that will be used in the flex fuel vehicles, but also the anhydrous ethanol that is blended into gasoline C (25% mandatory blend);

a 1.7% increase in the unit cost of diesel in fiscal year 2011; and

increased sales of gasoline and diesel which present higher per unit costs than ethanol.

Rumo Logística

The cost of Rumo Logística’s goods sold in fiscal year 2011 of R$316.5 million represented an increase of 147.0% in fiscal year 2011 compared to fiscal year 2010, due to the commencement of transportation, transfer, storage operations in the interior and contracting of railway freights. On the other hand, loading costs, which already occurred in the previous fiscal year, presented a slight reduction due to the lower loaded volume of bulk and bagged sugar, the latest presenting higher costs.

Selling Expenses

Selling expenses increased by 18.9% to R$1,026.0 million during the fiscal year ended March 31, 2011 from R$862.7 million during the fiscal year ended March 31, 2010. This increase was primarily due to higher volumes sold by Raízen Energia, and Raízen Combustíveis segments, resulting in higher freight expenditures.

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Raízen Energia

Raízen Energia selling totaled R$568.4 million in fiscal year 2011 compared to the R$469.8 million for fiscal year 2010. The increase of 21.0%, or R$98.5 million, was primarily due to:

the 30% increase in the volume of sugar bagged for export, which represents a higher cost than sugar in bulk;

significant increases in the volume of retail sugar sold in the domestic market;

marketing expenses of the União brand; and

increases in the volume of ethanol in the domestic market in the modality CIF, which implies an increase in the expenditures with freight which was more than offset by its higher price.

Raízen Combustíveis

Raízen Combustíveis´ selling expenses reflected an increase of 14.5% to R$280.8 million, mainly due to the higher volume sold. In unit terms, selling expenses were in line (R$73.0/cbm) with fiscal year 2010 and benefited from the higher dilution of fixed expenditures due to the 10.7% increase in volumes sold.

Rumo Logística

Due to the nature of its business, no selling expenses are recorded for Rumo Logística.

General and Administrative Expenses

General and administrative expenses increased to R$545.4 million in fiscal year of 2011 from R$501.7 million in fiscal year of 2010. This increase occurred in all of our businesses, and reflects the efforts and investments that continue to be made to improve controls, management and operating efficiency when investments are completed, as well as non-recurring expenses of R$46 million in association with the closing of the Joint Venture with Shell, including the transition to the Shared Services Center with Shell.

Gain on tax recovery program

In fiscal year 2010, we reported R$ 270.3 million in gains due to our participation in the Programa de Recuperação Fiscal, or REFIS, tax recovery program.

Financial Results, Net

Financial results, net in fiscal year 2011 totaled a net expense of R$151.1 million compared to financial results, net of R$493.4 million in fiscal year 2010.

	For Fiscal Year Ended March 31,
	2011			2010
	(in millions of reais)
Financial expenses		(677.3	)		(622.4	)
Financial income		188.8			202.0
Foreign exchange variation, net		282.7			559.0
Derivatives, net		54.7			354.8
		(151.1	)		493.4

Expenses of debt charges, net of financial investments yields, represented an increase of 5.7%, when compared to the previous fiscal year, mainly due to the greater average indebtedness. This increase was primarily due to debt financed by BNDES for new investment projects in Rumo Logística (the acquisition of locomotives, railcars and investment in permanent ways) as well as in energy cogeneration projects. In addition, as a result of the adoption of IFRS as issued by the IASB, we capitalized financial charges to fixed assets, which reduced the financial expenses at R$70.5 million in the current year and R$43.3 million in the previous fiscal year.

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Financial income during the fiscal year ended March 31, 2011 totaled R$188.8 million compared to financial income of R$202.0 million during the fiscal year ended March 31, 2010.

Foreign exchange variation, net . Foreign exchange variation, net resulted in R$282.7 million in fiscal year 2011 compared to R$559 million in fiscal year 2010. The positive effects from exchange variation occurred due to the impacts on assets and liabilities denominated in foreign currency. Our gross indebtedness denominated in U.S. dollars was R$3,750.8 million and R$3,618.2 million at March 31, 2010 and March 31, 2011, respectively.

Derivatives, net . Derivatives, net totaled R$54.7 million in fiscal year 2011 compared to R$354.8 million in fiscal year 2010, net of hedge accounting impacts. It should be noted that in fiscal year 2010, we did not adopt hedge accounting and as a consequence the results from derivatives in both years are not comparable since the gains/losses with derivatives in the current year financial results refer only to the derivative instruments not designed for hedge accounting and the non-effective portion of the designed hedge. In addition, as a result of the adoption of IFRS as issued by the IASB, we measure warrants at fair value. As a result, Cosan’s warrant in Radar was recognized as a derivative gain and totaled R$13.2 million for fiscal year 2011, compared to R$23.9 million in fiscal year 2010.

Starting April 1, 2010, we adopted hedge accounting in the cash flow hedge category for certain financial derivative instruments designated for covering price risk and foreign exchange variance risk on revenues from sugar exports. In fiscal year 2011, there was a deferral (reclassification between results and the “reserve” account in equity) of R$143.3 composed of R$ 217.1 regarding derivative fair value and R$ 73.8 related to deferred income tax. The derivatives will impact the net operating revenue in the next periods, in accordance with the period of coverage of each one of the designated instruments.

Income Taxes

Current income tax expense increased to R$85.4 million in fiscal year 2011, compared to an expense of R$78.4 million in fiscal year 2010, mainly resulting from the earnings in fiscal year 2010 compared to fiscal year 2011. Deferred income tax expense decreased from R$344.9 million in fiscal year 2010 to R$329.1 million in fiscal year 2011, mainly due to gain from a tax recovery program in the previous fiscal year, which tax effect was R$59.0 million.

Net Income for the year

As a result of the foregoing, we incurred net income of R$767.7 million in fiscal year 2011, compared to a net income of R$1,082.5 million in fiscal year 2010.

Net income attributable to owners of the Company

Net income attributable to owners of the Company decreased from R$706.1 million in fiscal year 2010 to R$470.9 million in fiscal year 2011.

B. Liquidity and Capital Resources

Our financial condition and liquidity are influenced by several factors, including:

our ability to generate cash flow from our operations;

the level of our outstanding indebtedness and related accrued interest, which affects our net financial expenses;

prevailing Brazilian and international interest rates, which affects our debt service requirements;

our ability to continue to borrow funds from Brazilian and international financial institutions and to obtain pre-export financing from certain of our customers;

our capital expenditure requirements, which consist primarily of investments in crop planting and the purchase of equipment;

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credit ratings, including factors that may materially influence credit ratings, implications of potential changes in ratings and management’s expectations; and covenant compliance, including the implications of a breach of financial or other covenants and the company’s capacity for additional borrowing under its covenants.

Our cash needs have traditionally consisted of working capital requirements, servicing of our indebtedness, capital expenditures related to investments in operations, maintenance and expansion of plant facilities, as well as acquisitions. Our sources of liquidity have traditionally consisted of cash flows from our operations and short and long-term borrowings. We have financed acquisitions through seller financing, third party-financing or capital contributions by our shareholders.

In fiscal year 2012, the cash flow used in investing activities was funded principally by increased borrowing, while in fiscal year 2011, the cash flow used in investing activities was funded principally by increased borrowing. As of March 31, 2012, our consolidated cash and cash equivalents amounted to R$1,654.1 million compared to R$1,271.8 million as of March 31, 2011.

Cash Flow from Operating Activities

We had net cash flows from operating activities of R$1,951.6 million in fiscal year 2012, compared to R$2,327.2 million in fiscal year 2011. This decrease was primarily attributable to an increase of net income deductible from gain on the de-recognition of subsidiaries operations to form the Joint Venture and net changes in assets/liabilities.

Cash Flow Used in Investing Activities

We had net cash flows used in investing activities of R$2,221.1 million in fiscal year 2012, compared to R$3,145.7 million in fiscal year 2011. This variation was mainly attributable to:

a decrease in acquisitions of property, plant and equipment of R$1,584.5 million in fiscal year 2012 from R$2,291.6 million in fiscal year 2011;

a 25.9% decrease as compared to fiscal year 2011, in sugarcane, planting and growing costs to R$552.0 million in fiscal year 2012, This was mainly due to significantly lower capital expenditures for Raízen Energia decreasing from R$214.7 million in fiscal year 2011 to R$138.3 million in fiscal year 2012, resulting from the completion of greenfield and cogeneration projects which was partially offset by increased investments in the mechanization of sugar plantations, biological assets, interharvest maintenance mechanization and health, safety and environmental costs; and

dividends received from subsidiaries of R$121.4 million and increased sales of property plant and equipment, increasing R$48.8 million to R$182.1 million in fiscal year 2012 as compared to fiscal year 2011.

Cash Flow from Financing Activities

We had R$636.1 million of net cash inflows from financing activities in fiscal year 2012, compared to R$980.7 million of net cash inflows used in financing activities in fiscal year 2011. The addition of long-term debt, net of repayments cash inflow decreased from R$747.9 million in fiscal year 2011 to R$457.0 million in fiscal year 2012, and cash inflow from non-controlling interests increased 40.0% to R$561.0 million in fiscal year 2012 from R$400.0 million in fiscal year 2011. Our cash inflow from financing activities in fiscal year 2012 was partially offset by cash outflow comprised principally of treasury shares, and dividends paid which increased 72.8.% from R$193.1 million in fiscal year 2011 to R$333.7 million in fiscal year 2012.

Indebtedness

As of March 31, 2012, our outstanding debt totaled R$5,199.4 million of which R$540 million was short-term debt, including our current-portion of long-term debt. Our debt consisted of R$2,469 million of local currency-denominated debt and R$2,730 million of foreign currency-denominated debt.

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Our total debt of R$5,199.4 million at March 31, 2012 decreased 28.10% as compared to our total debt of R$7,232 million at March 31, 2011. Our short-term debt, comprised of our current portion of long-term debt and interest accrued, represented 10.39% of our total indebtedness at March 31, 2012. Our U.S. dollar-denominated debt at March 31, 2012 represented 52.51% of our total indebtedness.

As of March 31, 2012, we had total assets of R$22,168.1 million compared to R$18,614.0 million at March 31, 2011. Our total assets increased 19.1%, mainly due to R$3,037.2 billion level capital expenditure additions (as described above) and biological assets investments of R$968 million and a fair value variation amounting to R$60 million.

Certain of our long-term debt agreements, require us or certain of our subsidiaries and Joint Venture entities, as applicable, to comply with certain financial and negative covenants, including our US$200 million and US$300 million 8.25% perpetual notes, and debt of the Joint Venture, including the US$400 million 7.0% senior notes due in 2017 and US$350 million 9.50% Senior Notes due in 2014 which limits the Joint Venture’s ability and the ability of their subsidiaries to, among other things, enter into certain transactions with shareholders or affiliates, engage in a merger, sale or consolidation transactions and create liens.

The Company, its subsidiaries and jointly-controlled entities are subject to certain restrictive financial covenants set forth in existing loans and financing agreements. For the year ended as at March 31, 2012, the Company, its subsidiaries and jointly-controlled entities were in compliance with their debt covenants.

The table below shows the profile of our debt instruments:

Description	Index	Average annual interest rate	As of March 31,
Description	Index	Average annual interest rate	2012	2011	2010	Maturity Date
			(in thousands of Reais)
Senior Notes Due 2014	Dollar (USD)	9.5%	645,308	576,814	631,246	July 2014
Senior Notes Due 2017	Dollar (USD)	7.0%	737,202	658,954	720,573	February 2017
BNDES	URTJLP	2.54%	1,367,172	1,308,034	1,053,337	October 2025
	Upon fixed	4.5%	371,136	242,508	—	July 2020
	UMBND	6.59%	36,730	38,947	—	July 2019
	Dollar (USD)	6.94%	22	—	—	November 2012
Bank Credit Notes	CDCA	0.6%+CDI	—	31,378	62,497	December 2011
ACC	Dollar (USD)	1.73%	276,738	228,229	296,375	August 2012
Resolution 2471 (PESA)	IGP-M	3.95%	632,216	674,392	603,504	April 2023
	Pre fixed	3.0%	106	114	121	October 2025
Rural Credits	Pre fixed	6.7%	40,920	92,352	—	October 2012
Working capital	Dollar (USD) + Libor	2.42%	820,004	—	—	September 2016
	IGP-M	11%	176	—	—	December 2012
	Pre fixed	13.78%	10,664	—	—	March 2015
Pre-Payments	Dollar (USD) + Libor	6.01%	1,014,908	736,472	976,277	February 2016
Total Raízen			5,953,302	4,588,194	4,343,930
Raízen consolidated (50%)			2,976,651	—	—

Perpetual Notes	Dollar (USD)	8.25%	930,094	1,236,209	810,896	November 2015
Credit Notes	110% CDI	—	341,226	303,719	380,140	February 2014
	Dollar (USD)	2.35%	52,891	314,105	182,831	February 2013
	Pre fixed	6.25%	—	10,142	—	October 2012
Finame	Pre fixed	4.83%	397,515	517,842	104,214	July 2020
Finame	URTJLP	2.21%	337,091	187,336	94,775	March 2021
Others	Diverse	Diverse	163,921	74,482	59,272	Diverse
Total Cosan (excluding Raízen)			2,222,738	2,643,835	1,632,128

Total Consolidated Debt			5,199,389	7,232,029	5,976,058
Current			(540,237)	(957,134)	(839,529)
Non-Current			4,659,152	6,274,895	5,136,529

The principal financing activities for fiscal year 2012 are described below:

On April 1, 2011, one of our subsidiaries entered into a bank loan for US$450 million in order to replace (and repay) the perpetual notes issued in 2006. The borrower is controlled by our jointly-controlled subsidiary Raízen Energia. Interest on the loan is payable quarterly at a rate of Libor + interest of 2.15% per annum.

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On July 13, 2011, Cosan Overseas Limited, a wholly owned subsidiary of Cosan S.A., issued US$200 million aggregate principal amount of perpetual notes guaranteed by Cosan S.A. in accordance with Regulation S of the Securities Act. These notes bear interest at a rate of 8.25% per year payable quarterly.

In addition, there are certain restrictions on the ability of the Joint Venture to declared dividends, see “Financial Information—A. Consolidated Statements and Other Financial Information—Dividend and Dividend Policy—Joint Venture’s Dividend Policy.”

Working Capital

As of March 31, 2012, we had working capital of R$2,679.1 million, compared to R$1,099.9 million in fiscal year 2011, primarily attributable to:

a decrease in the current portion of long-term debt, from R$957.1 million at March 31, 2011 to R$540.2 million at March 31, 2012 related to refinancing of our indebtedness;

an increase in the cash and cash equivalents, from R$1,271.8 million to R$1,654.1 million;

an increase in inventories, from R$ 670.3 million at March 31, 2011 to R$748.1 million at March 31, 2012; and

an increase in related parties, from R$ 14.6 million at March 31, 2011 to R$678.3 million at March 31, 2012.

We believe our current liquidity and our cash flow from operations will be sufficient to meet our working capital requirements for at least the next 12 months.

Capital Expenditures

Our capital expenditures in property, plant and equipment, including acquisitions (net of cash acquired), expenditures for crop formation and expenditures for purchases of land, were R$2,136.6 million during fiscal year 2012, compared to R$3,037.2 million during fiscal year 2011.

The following table sets forth our capital expenditures for the fiscal years 2012, 2011 and 2010:

	For Fiscal Year Ended March 31,
	2012		2011		2010
	(in millions of reais)
Raízen Energia – Operational
Biological assets		942.7		745.0		647.5
Inter-harvest maintenance costs		605.5		514.2		332.4
Health, safety and environmental (SSMA) & Sustaining		149.2		237.5		45.0
Mechanization		138.3		214.7		30.5
Projects		—		—		174.2
Total – Operational		1,835.7		1,711.4		1,229.6
Raízen Energia – Expansion
Co-generation projects		462.5		287.6		376.4
Greenfield projects		0.4		66.9		462.2
Other expansion projects		279.2		348.4		203.00
Total – Expansion		742.2		702.9		1,041.6
Raízen Energia – Total		2,577.9		2,414.3		2,271.2
Raízen Combustíveis		491.7		191.6		130.5
Total Raízen		3,069.6		2,605.9		2,401.7
Raízen consolidated (50%)		1,765.2		—		—

Rumo		269.0		427.9		143.8
Other business		102.3		3.3		—
Cosan Alimentos		—		—		—
Total Cosan (excluding Raízen)		371.3		431.2		143.8
Total consolidated capital expenditures		2,136.6		3,037.1		2,545.5

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The main planned and undergoing projects related to capital expenditures are described in “Item 4. Information on the Company—D. Property, Plant and Equipment.”

As of March 31, 2012 we have future commitments related to these projects in the amount of R$615.8 million fully directed at the completion of the corresponding assets. Financing for such commitments will be primarily based on third party financing with financial institutions up to 2020.

C. Research and Development, Patents, Licenses, etc .

See “Item 5. Operating and Financial Review and Prospects—Research and Development.”

D. Trend Information

We are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect upon our net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information to not necessarily be indicative of future operating results or financial condition.

E. Off-Balance Sheet Arrangements

Sales

The jointly-controlled entity “Raízen Energia” is mainly engaged in the commodities market and sales are substantially performed at the price on the date of sale. However, Raizen Energia has several agreements in the sugar market, which undertake to sell volumes of those products in future harvests.

The commitments for the sale of sugar, in tons, as March 31, 2012 are as follows:

Fiscal Year	As of March 31, 2012 (*)
2012-2013 harvest		2,518,640
2013-2014 harvest		1,714,101
Total		4,232,741

___________

(*)

Represents 100% of the commitments of Raízen Energia, of which the Company proportionately consolidates only 50%.

Purchases

Raízen Energia has several commitments for the purchase of sugarcane from third parties in order to secure part of its production in subsequent years. The amount of sugarcane to be acquired has been calculated based on an estimate of the quantity to be ground by area. The amount to be paid by the jointly-controlled is determined at the end of each harvest, according to prices published by CONSECANA.

Purchase commitments by harvest, in thousands of tons on March 31, 2012 are as follows:

Fiscal Year	As of March 31, 2012 (*)
2012-2013 harvest		25,130
2013-2014 harvest		24,747
2014-2015 harvest		22,096
2015-2016 harvest		19,624
After 2016		129,601
Total		221,198

___________

(*)

Represents 100% of the commitments of Raízen Energia, of which the Company proportionately consolidates only 50%.

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Purchases

The jointly-controlled entity Raízen Energia has contracts to purchase industrial equipment intended for maintenance and expansion of the mills, as well as to meet the demand of the electric energy co-generation project, in the total amount of R$ 80,076 on March 31, 2012.

The Company, through its subsidiary, Rumo entered into a commitment to invest in rail track improvements aimed at the expansion of the logistics business, as follows:

Fiscal Year	2012
2012		489,794
2013		44,000
2014		2,000
Total		535,794

Lease Agreements

Operating Leases

Raizen Energia has operating lease contracts on land used for planting sugarcane, which will end within 20 years. The minimum payments related to these obligations are calculated on a straight-line basis over the term of the lease. The costs for these contracts during the year ended March 31, 2012, 2011 and 2010 consisted of the following:

	2012(*)	2011	2010
Minimum installment	214,949	155,800	113,953
Variable installment	280,930	186,484	112,990
Total	495,879	342,284	226,943

___________

(*)

Represents 100% of the commitments of Raízen Energia, of which the Company proportionately consolidates only 50%

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of March 31, 2012 are:

	Raízen Energia (*)		Rumo
Within 1 year		553,815		37,303
Over 1 year, less than 5 years		1,673,249		241,741
More than 5 years		1,676,005		-
Total		3,903,069		279,044

___________

(*)Represents 100% of the commitments of Raízen Energia, of which the Company proportionately consolidates only 50%

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Guarantees

As of March 31, 2012, we have entered into guarantees contracts with financial institutions relating to legal proceedings, debt, energy auctions and concession agreements, as follows:

	As of March 31, 2012		As of March 31, 2011
	(In thousands of reais)		(In thousands of reais)
Cosan		411,299		—
Raízen Energia		535,391		814,145
Raízen Combustíveis		2,075,975		191,970
Rumo		5,653		5,443
Total		3,028,318		1,011,558

F. Tabular Disclosure of Contractual Obligations

Contractual financial obligations

The following table sets forth the maturity schedule of our material contractual financial obligations at March 31, 2012:

	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
	(in millions of reais)
Long-term debt obligations(1)		5,199		540		1,833		1,887		939
Operating lease obligations(2)		14,821		―		3,343		2,795		8,683
Purchase obligations		615.8		569.8		46		―		―
Total		20,635.8		1,109.8		5,222		4,682		9,622

(1)	Less than one year amounts include accrued interest over existing long-term debt installments.

(2)	Purchase obligations were valued at the amount of sugarcane committed by a TSR of 137.3 kg per ton, at a price of R$0.4881, per kg as defined by CONSECANA for March 2012.

Sales commitments

Raízen Energía is highly affected by the commodities market, where sales are substantially performed at the price on the date of sale. However, Raízen Energia has several agreements in the sugar market, which undertake to sell volumes of those products in future harvests.

The commitments for future sales of sugar, in tonnes, as of March 31, 2012 are as follows:

	As of March 31,
Year	2013		2014
March 31, 2012		2,518,640		1,714,101

Sales commitments have their price established contractually based on CONSECANA.

Since March 31, 2012, there have been no material changes to the contractual obligations described above.

Our long-term debt consists primarily of:

R$414.4 million of export pre-payment notes due from 2012 through 2016;

R$ 364.4 million senior notes due February 2017;

R$ 318.9 million senior notes due February 2014;

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R$ 315.9 million PESA debt due between 2018 and 2020, payable against CTN credits;

R$ 1,396.7 million BNDES and Finame due between 2019 and 2020;

R$ 341.2 million export credit notes due between 2012 and 2020;

R$ 916.6 million perpetual notes with call option for Cosan beginning on November 5, 2015;

R$ 413.3 million working capital due between 2012 and 2016; and

R$ 177.7 million other debts.

We believe we will be able to refinance our existing debt on favorable market conditions.

Recently Issued Accounting Standards

New IASB accounting standards have been published and/or reviewed and may be adopted for the current fiscal year, as described below:

IFRS 9 Financial Instruments: Classification and Measurement

Classification and measurement reflects the first phase of the IASB’s work on the replacement of IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 uses a simplified approach to determine whether a financial asset is measured at amortized cost or fair value, based on the manner in which an entity manages its financial instruments (business model) and the typical contractual cash flow of financial assets. The standard also requires the adoption of only one method for determining losses in recoverable value of assets. The standard is effective for annual periods beginning on or after January 1, 2013. Management is still evaluating the impact on its financial position or performance in relation to IFRS 9.

IFRS 10 Consolidated Financial Statements

IFRS 10 as issued establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. IFRS 10 replaces the consolidation requirements in SIC-12 Consolidation—Special Purpose Entities and IAS 27 Consolidated and Separate Financial Statements and is effective for annual periods beginning on or after January 1, 2013. Early application is permitted. Management is still evaluating the impact on its financial position or performance from the adoption of IFRS 10.

IFRS 11 Joint Arrangements

IFRS 11 will significantly change the accounting for the Company’s joint arrangements. The new standard eliminates inconsistencies in the reporting of joint arrangements in current practice, by requiring a single method (the equity method of accounting) to account for interests in jointly controlled entities. It eliminates the option to proportionate consolidate these jointly controlled entities. It is effective for annual periods beginning on or after January 1, 2013. Early adoption is permitted.

With the adoption of IFRS 11, currently expected for the year ended March 31, 2014, the Company's joint ventures (Raízen Energia and Raízen Combustíveis) currently presented via proportionate consolidation, will be presented using the equity method of accounting in accordance with IAS 28R – Investment in Associates and Joint Ventures. These two joint ventures currently comprise a substantial component of the Company's assets and operations. Thus, while the Company is currently estimating the impacts of the adoption of IFRS 11, it is anticipated that it will be significant.

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The total assets of these Joint Ventures represented approximately 71% of consolidated totals at March 31, 2012. The revenues, operating income and cash flow from operating activities of these Joint Ventures accounted for approximately 80%, 67% and 93% of consolidated totals for the year ended March 31, 2012, respectively. A change from proportionate consolidation to equity method accounting would have no impact on the total equity or net income derived from these Joint Ventures, except that when using a proportional consolidation model net income would be lower in the year of Joint Venture formation as the transaction costs would be expensed as incurred. When applying the equity method of accounting those expenses would be considered a component of the equity method investment .

IFRS 12 Disclosure of Involvement with Other Entities

IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. Management is still evaluating the impact on its financial position or performance from the adoption of IFRS 11.

IFRS 13 Fair Value Measurement

IFRS 13 establishes new requirements on how to measure fair value and the related disclosures for IFRS and US generally accepted accounting principles. The standard is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. Management is still evaluating the impact on its financial position or performance from the adoption of IFRS 13.

IAS 28 Investments in Associates and Joint Ventures (revised in 2011)

As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed IAS 28 Investments in Associates and Joint Ventures , and describes the application of the equity method to investments in joint ventures in addition to associates. The amendment becomes effective for annual periods beginning on or after January 1, 2013.

There are no other standards and interpretations issued but not yet adopted that may, in management´s opinion, have a significant impact on the results or equity disclosed by the Company.

G. Safe harbor

See “Forward-Looking Statements.”

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Item 6. Directors, Senior Management and Employees

Our board of directors and our executive officers are responsible for the operation of our business. Nevertheless, Mr. Rubens Ometto Silveira Mello, who controls all of our class B series 1 common shares, has the overall power to control us, including the power to establish our management policies.

A. Directors and Senior Management

Board of Directors

Our by-laws provide that our board of directors shall consist of between five and eleven directors. Our board of directors currently consists of eleven directors.

Our board of directors is the decision-making body responsible for, among other things, determining policies and guidelines for our business. Our board of directors also supervises our executive officers and monitors their implementation of policies and guidelines established from time to time by our board of directors.

Our board of directors is divided into three classes (Class I, Class II and Class III) that are, as nearly as possible, of equal size. Each class of directors is elected for a three-year term of office, and the terms are staggered so that the term of only one class of directors expires at each annual general meeting. Members of our board of directors are subject to removal at any time with or without cause at a general meeting of shareholders. Our by-laws do not include any citizenship or residency requirements for members of our board of directors.

The following table lists the members of our board of directors:

Name

Initial Year of Appointment to Cosan Limited’s Board

Initial Year of Appointment to Cosan S.A.’s Board

Class(1)

Position Held – Cosan Limited

Position Held – Cosan S.A.

Year of Birth

Rubens Ometto Silveira Mello	2007	2000	III	Chairman	Chairman	1950
Marcus Vinicius Pratini de Moraes(2)	2007	2005	II	Vice Chairman	—	1939
Marcelo Eduardo Martins	2009	2009	III	Director	Director	1966
Mailson Ferreira da Nóbrega(2)	2007	2008	I	Director	Director	1942
Marcos Marinho Lutz	2007	—	II	Director	—	1969
Pedro Isamu Mizutani	2007	2000	III	Director	Vice Chairman	1959
George E. Pataki(2)	2007	—	I	Director	—	1945
Marcelo de Souza Scarcela Portela	2007	2009	II	Director	Director	1961
José Alexandre Scheinkman(2)	2007	—	I	Director	—	1948
Burkhard Otto Cordes	2008	2005	II	Director	Director	1975
Hélio Franca Filho (2)	2009	—	III	Director	—	1959
Serge Varsano (2)	—	2009	—	—	Director	1955
Roberto de Rezende Barbosa	—	2009	—	—	Director	1950

(1)	The terms of the directors expire as follows: Class I at the annual general meeting referred to the fiscal year 2011; Class II at the annual general meeting held in the transition fiscal year 2012; and Class III at the annual general meeting held in the fiscal year 2013.

(2)	Independent director.

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The following is a summary of the business experience of our current directors. Unless otherwise indicated, the business address of our current directors is Av. Juscelino Kubitschek, 1327, 4th floor, São Paulo, SP, Brazil.

Rubens Ometto Silveira Mello . Mr. Mello is our chairman and chief executive officer. He is also Chairman of Cosan S.A. He holds a degree in mechanical engineering from the Escola Politécnica of the University of São Paulo (1972). Mr. Mello has more than 30 years of experience in the management of large companies. He has also served as general director and chairman of the board of directors of Costa Pinto S.A. since 1980, vice president of Pedro Ometto S.A. Administração e Participações since 1980, director of Cosan Operadora Portuária S.A. since 1998, chairman of the board of directors of FBA from 2001 until its merger into Corona and its currently the chairman of the boards of Cosan and Raízen, He also holds the position of director of UNICA, the Sugarcane Agroindustry Association of the State of São Paulo ( UNICA—União da Agroindústria Canavieira do Estado de São Paulo ). Prior to joining Cosan, Mr. Mello worked from 1971 to 1973 as an advisor to the board of executive officers of UNIBANCO União de Bancos Brasileiros S.A. and from 1973 to 1980 as chief financial officer of Indústrias Votorantim S.A.

Marcus Vinicius Pratini de Moraes . Mr. Pratini de Moraes is our vice-chairman and has been a member of Cosan S.A.’s board of directors since 2005. He holds a degree in economics from Faculdade de Ciências Econômicas da Universidade do Rio Grande do Sul (1963), a postgraduate degree in public administration from Deutsche Stiftung fur Entwicklungsländer—Berlin (1965) and a business administration degree from University of Pittsburgh and Carnegie Institute of Technology (1966). Mr. Pratini de Moraes held several positions in the Brazilian federal government, including Minister of Planning and General Coordination (1968-1969), Minister of Industry and Commerce (1970-1974), Minister of Mines and Energy (1992) and Minister of Agriculture, Livestock and Food Supply (1999-2002). He also served a term as a congressman from the state of Rio Grande Do Sul (1982-1986). He was a board member of Solvay do Brasil (1998-1999) and chairman (2003); member of the advisory council of the Brazilian Mercantile & Futures Exchange—BM&F (2003); member of the Brazil—China Business Council (2004); president of the Brazil—Russia Business Council (2004); member of the National Council of Industrial Development (2005); and vice-president of the Beef Information Center—SIC (2005). Mr. Pratini de Moraes is currently the chairman of ABIEC (Brazilian Beef Export Industries Association), a board member of FIESP (Federation of Industries of the State of São Paulo), a board member of JBS S.A. and a member of the supervisory board and the audit committee of ABN AMRO Bank N.V.

Marcelo Eduardo Martins . Mr. Martins has been a member of our board of directors and of Cosan S.A.’s board of directors since March 23, 2009. Mr. Martins currently holds the position of chief financial officer and investor relations officer. His duties include identifying acquisition opportunities and implementing takeovers as well as business development activities for which the company may have strategic interest in the future. In July 2007, Mr. Martins was appointed as an executive officer of Aguassanta Participações S.A. Prior to joining the Cosan Group, Mr. Martins was the Chief Financial and Business Development Officer of Votorantim Cimentos between July 2003 and July 2007 and, prior to that, head of Latin American Fixed Income at Salomon Smith Barney (Citigroup) in New York. He has significant experience in capital markets, having worked at Citibank (where he began his career as a trainee in 1989), Unibanco, UBS and FleetBoston. He has a degree in business administration from the Getúlio Vargas Foundation, majoring in finance.

Mailson Ferreira da Nóbrega . Mr. Nóbrega has been a member of our board of directors since November 2007. He is an economist and was Brazil’s Minister of Finance from 1988 to 1990. He was previously Technical Consultant and Chief of Project Analysis Department at Banco do Brasil; Coordination Chief of Economic Affairs of the Ministry of Industry and Commerce and Secretary General of the Ministry of Finance. He performed as the Chief Executive Officer of the European Brazilian Bank—EUROBRAZ, in London. Mr. Nóbrega is also member of the board of directors of the following companies: Abyara Planejamento Imobiliário, CSU Cardsystem S.A., Grendene S.A., Portobello S.A., Rodobens Negócios Imobiliários S.A., TIM Participações S.A. and Veracel Celulose S.A.

Marcos Marinho Lutz . Mr. Lutz is a member of our board of directors and our chief commercial officer. He has been Cosan S.A.’s chief executive officer since November 2009 and served as chief commercial officer since 2006. Mr. Lutz holds a naval engineering degree from Escola Politécnica of the University of São Paulo and a master’s degree in business administration from Kellogg Graduate School of Management, Northwestern University. From 2002 to 2006, Mr. Lutz was the executive director of infra-structure and energy at CSN (SID) and board member of MRS Logística, CFN Railways, and Itá Energética. Before that, Mr. Lutz was the chief operating officer at Ultracargo S.A., the logistics affiliate of the Ultra Group.

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Pedro Isamu Mizutani . Mr. Mizutani has been a member of our board directors since 2007 and is our chief operating officer. He has been a member of Cosan S.A.’s board of directors since 2000. He has served as Cosan S.A.’s managing director since 2001, and served as Cosan’s chief operating officer until June 2011. Currently Mr. Mizutani holds a position as Raízen’s chief operating officer. Mr. Mizutani holds a production-engineering degree from the Escola Politécnica of the University of São Paulo (1982), a postgraduate degree in finance from UNIMEP—Universidade Metodista de Piracicaba (1986) and a master’s degree in business management from FGV—Fundacão Getúlio Vargas, São Paulo, with an extension degree from Ohio University (2001). Mr. Mizutani has more than 20 years of experience in finance and administration with companies in the ethanol and sugar industries. He also served as a planning director of Usina Costa Pinto S.A. from 1983 to 1987, as financial manager from 1987 to 1988, and as administrative and financial director from 1988 to 1990. From 1990 to 2001, he acted as managing administrative and financial director of the group.

George E. Pataki . Mr. Pataki is a member of our board of directors. He has a bachelor’s degree from Yale University (1967), and a law degree from Columbia Law School (1970). Mr. Pataki was a partner in the New York law firm of Plunkett & Jaffe until 1987. He was elected mayor of Peekskill, New York in 1981, and served in the New York State Legislature as an assemblyman and then a senator from 1985 to 1994. In 1994, Mr. Pataki became the fifty-third Governor of the State of New York and was reelected in 1998 and 2002. He served as Governor from January 1, 1995 until January 1, 2007. Mr. Pataki is counsel at Chadbourne & Parke LLP.

Marcelo de Souza Scarcela Portela . Mr. Portela is a member of our board of directors and has been a member of Cosan S.A.’s board of directors since 2005. He is the general counsel. He holds a law degree from Faculdade de Direito da Universidade de São Paulo (1983), and completed graduate studies in commercial law from Faculdade de Direito da Universidade de São Paulo (1988) and McGill University Law School (1990) in Montreal, Canada.

José Alexandre Scheinkman . Mr. Scheinkman is a member of our board of directors. He is the Theodore A. Wells ‘29 Professor of Economics at Princeton University. He has a bachelor’s degree in economics from the Federal University of the State of Rio de Janeiro (1969), a master’s degree (1973) and doctorate degree (1974) in economics from the University of Rochester, and a master’s degree in mathematics from Instituto de Matemática Pura e Aplicada (Brazil) (1976). Mr. Scheinkman is a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, and received a “ docteur honoris causa ” from the Université Paris-Dauphine. In 2002, he was a Blaise Pascal Research Professor (France). Professor Scheinkman is a member of the Conseil Scientifique of the Institute Europlace de Finance (Paris) and a member of the Conselho Acadêmico of IBMEC (São Paulo). Previously, he was the Alvin H. Baum Distinguished Service Professor and Chairman of the Department of Economics at the University of Chicago, Vice President in the Financial Strategies Group of Goldman, Sachs & Co., co-editor of the Journal of Political Economy and a member of the advisory panel in economics to the Sloan Foundation.

Burkhard Otto Cordes . Mr. Cordes has been a member of Cosan Limited’s board of directors since 2008 and of Cosan S.A.’s board of directors since 2005. He graduated with a degree in business administration from Fundação Armando Álvares Penteado (1997) and he holds a master’s degree in finance from IBMEC-SP (2001). Mr. Cordes has worked in financial markets over the last seven years. He worked at Banco BBM S.A., a company owned by Grupo Mariani, where he worked at its commercial division focusing corporate and middle market segments. Currently, he serves as financial manager. Before holding his current position, he had worked at IBM Brasil in its financial division. Mr. Cordes is Mr. Mello’s son-in-law.

Helio Franca Filho . Mr. Franca Filho has been a member of Cosan Limited’s board of directors since August 2009. He joined Gavea’s Illiquid Strategies Group in April 2007, focusing primarily on the commodities sector. With over 20 years of experience in the commodities sector, Mr. Franca Filho began his career with the Sucres & Denrées group, where he worked from 1984 to 1985 trading coffee, sugar and cocoa. He subsequently joined the Louis Dreyfus group in New York, where he was in charge of the Latin American sugar and ethanol market from 1985 to 1996. From 2000 to 2007, he was director of Brazilian operations for the Noble group, a commodities trading company listed in England and Singapore. Mr. Franca Filho has a degree in economics from the Pontifical Catholic University of Rio de Janeiro (PUC-RJ).

Serge Varsano . Mr. Varsano has been a member of Cosan’s board of directors since 2007 and holds a degree from the Marshall School of Business of the University of Southern California (1975). Mr. Varsano began his career as a trader in the Sucres et Denrées group, one of the world’s leading sugar traders, subsequently becoming its chief executive officer. He has been chief executive officer of the Sucres et Denrées group since 1988.

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Roberto de Rezende Barbosa . Mr. Barbosa has been a member of Cosan S.A.’s board of directors since 2009. He worked as a trainee at Halles Bank and the Dacon dealership, assuming the family business in 1975. He was the chief executive officer of Grupo Nova América and is currently the chief executive officer and a board member at CTC – Centro de Tecnologia Canavieira, and a board member at SCA – Sociedade Corretora de Álcool, IEDI – Institute of Industrial Development Studies and UNICA – the Federation of Sugarcane Industries of São Paulo State.

Executive Officers

Our executive officers serve as our executive management body. They are responsible for our internal organization and day-to-day operations and for the implementation of the general policies and guidelines established from time to time by our board of directors.

Our executive officers are elected by our board of directors for one-year terms and are eligible for reelection. Our board of directors may remove any executive officer from office at any time with or without cause. Our executive officers hold meetings when called by any of our executive officers.

The following table lists our current executive officers:

Name

Initial Year of Appointment to Cosan Limited

Initial Year of Appointment to Cosan S.A.

Position Held –

Cosan Limited

Position Held – Cosan S.A.

Year of Birth

Rubens Ometto Silveira Mello	2007	—	Chief Executive Officer	—	1950
Marcos Marinho Lutz	2007	2009	Chief Commercial Officer	Chief Executive Officer	1969
Marcelo Eduardo Martins	2009	2009	Chief Financial Officer and Investor Relations Officer & M&A Officer	Chief Financial Officer and Investor Relations Officer & M&A Officer	1966
Marcelo de Souza Scarcela Portela	—	2009	—	General Counsel	1961
Nelson Roseira Gomes Neto	—	2011	—	Executive Officer	1970
Colin Butterfield	—	2011	—	Executive Officer	1973

The following is a summary of the business experience of our executive officers who are not directors. Unless otherwise indicated, the business address of our current executive officers is Av. Juscelino Kubitschek, 1327, 4th floor, São Paulo, SP, Brazil.

Nelson Roseira Gomes Neto . Mr. Gomes Neto is an executive officer of Cosan S.A. and the chief executive officer of CLE. He received a bachelor’s degree in engineering from Catholic University (1992), a master’s degree in corporate finance from PUC – IAG Master (1998) and a master’s degree in business administration from COPPEAD (2001). He joined Exxon Mobil Corporation in 1991 as a trainee. Throughout the course of his career, he has served in positions of increasing managerial responsibility in several business lines such as Fuels Marketing, Convenience Retailing, Natural Gas, and since 2001 part of Lubricants business. In February 2008 he was appointed Brazil Lubricants Officer to Esso Brasileira de Petroleo Limitada, and in December 2008, Lubricants Vice President.

Collin Butterfield . Mr. Butterfield is an executive officer of Cosan S.A. and chief executive officer of Docelar. He holds a bachelor’s degree in engineering from Boston University and a master’s degree in economics and finance from Dartmouth College. He created the website Viajo.com (currently named Decolar.com.br) and before joining Cosan S.A. he acted as Bracor’s Investments Officer.

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Key managers

Name	Initial Year of Appointment to Cosan	Position Held – Cosan
Nelson Roseira Gomes Neto	2008	Chief Executive Officer – CLE
Julio Fontana Neto	2009	Chief Executive Officer – Rumo
Collin Butterfield	2010	Chief Executive Officer – Docelar

The following is a summary of the business experience of the key manager who is not an executive officer.

Julio Fontana Neto is the chief executive officer of Rumo Logística Operadora Multimodal S.A. (former Cosan Operadora Portuária S.A.). He was formerly chief executive officer of MRS Logística S.A. with experience in logistics, railroad operations and infrastructure. He holds a bachelor’s degree in mechanical engineering (1978) and in business administration from Mackenzie University (1981) and a master’s degree in administration from EISE Business school – University of Navarra, Spain (2002).

In addition, our Joint Venture with Shell is run by a management team drawn from Cosan and Shell with a proven track record in sugar, ethanol and fuels. The executive team is comprised of:

Vasco Dias is the CEO of the Joint Venture. Vasco joined Shell in 1979 and was formerly the President of Shell Brasil. He occupied positions of increasing responsibility in Brazil and abroad throughout his career and participated, in the Hague, in the team that led the global restructuring of the Shell Group. He returned to Brazil in 1997 to hold the position of CEO of Shell Gas and, as of 2005, Retail Vice President for Latin America and Country Chair of Shell in Brazil;

Luis Rapparini is the CFO of the Joint Venture. He joined Raízen from BAT, having worked in Brazil, Africa, UK and the US. He previously was Finance and Investor Relations Director for Souza Cruz in Brazil;

Pedro Mizutani is the Sugar, Ethanol and Energy Operational Officer and was previously CEO of Cosan S.A. Açúcar e Álcool. He maintains his responsibilities on sugar and ethanol production and cogeneration in the Joint Venture, with ultimate responsibility for the Sugar and Ethanol division. Mr. Mizutani has 27 years of experience in the sugar and energy sector and started his professional career at Cosan in the 1980’s, having taken positions of increasing responsibility up to his current one. He is a member of the Board of Directors of UNICA and a professor at Fundação Getúlio Vargas’s post-graduation course;

Luis Henrique Guimarães is the Fuels Operational Officer and responsible for the Joint Venture’s Downstream division, which covers the retail, commercial and aviation businesses. Luis Henrique joined Shell in 1987 and worked in several positions in the lubricants and retail businesses in Brazil and abroad (based in London). In 2007, he took the position of Shell’s Chief Marketing Officer for Lubricants in North America, based in Houston; and

Leonardo Gadotti Filho is the Logistics, Distribution and Trading Operational Officer and manages logistics, supply and distribution for the Joint Venture. Mr. Leonardo Gadotti joined Esso Brasileira in 1980 as an intern and took positions of increasing responsibility in Brazil and abroad. He is currently the President of Sindicom, a board member of the Brazilian Institute for Ethics in Competition ( Instituto Brasileiro de Etica Concorrencial ) and a board member of the Brazilian Institute for Petrol, Gas and Biofuels ( Instituto Brasileiro de Petroleo, Gás e Biocombustíveis ).

The executive board of the Joint Venture is overseen by the supervisory board. The supervisory board is responsible for appointing members of the executive board and monitors the activities and reports of the executive board. The supervisory board consists of three directors nominated by Cosan and three directors nominated by Shell. Our chairman, Rubens Ometto Silveira Mello, is the chairman of the supervisory board. Cosan and Shell have each designated a shareholder representative who is responsible for determining the Joint Venture’s strategic priorities and resolving any deadlock within the supervisory board. Our shareholder representative is Rubens Ometto Silveira Mello.

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Our Relationship with our Executive Officers and Directors

Mr. Burkhard Otto Cordes is a member of Cosan’s and Cosan Limited’s boards of directors and serves as financial manager in Aguassanta Participações S.A. Mr. Cordes is Mr. Mello’s son-in-law.

There are no arrangements or understandings with any of our shareholders, customers, suppliers or others, pursuant to which any director or member of our senior management has been or will be selected.

Committees of the Board of Directors

Audit Committee

The members of our audit committee are Messrs. Marcus Vinicius Pratini de Moraes (chairman), Mailson Ferreira da Nóbrega and Hélio França Filho. Our board of directors has determined that Marcus Vinicius Pratini de Moraes (chairman), Mailson Ferreira da Nóbrega and Hélio França Filho meet the independence requirements of the SEC and the NYSE listing standards. For a discussion of the role of our audit committee, see “—C. Summary of Significant Differences of Corporate Governance Practices—Audit Committee.”

Compensation Committee

We have a compensation committee that reviews and approves the compensation and benefits for our executive officers and other key executives, makes recommendations to the board regarding compensation matters and is responsible for awarding equity-based compensation to our executive officers and other employees under our employee equity incentive plan. The committee also has the discretion to interpret the terms of the plan, to amend the plan and take all other actions necessary to administer the plan in our best interests. The members of our compensation committee are Messrs. Pedro Isamu Mizutani (chairman), Marcus Vinicius Pratini de Moraes and Marcelo de Souza Scarcela Portela.

Risk Management Committee

We have a risk management committee that is responsible for advising the board on risk management, by establishing exposure limits and hedging ratios on a periodic basis so as to achieve better operational and financial controls. The members of our risk management committee are Messrs. José Alexandre Scheinkman (chairman), Marcelo Eduardo Martins and Marcos Marinho Lutz.

B. Compensation

Under our by-laws, our board of directors is responsible for establishing the annual aggregate compensation that we pay to the members of our board of directors and our executive officers.

The aggregate amount of compensation paid to all members of the board of directors and its executive officers in fiscal year 2012 was R$ 68.8 million. In fiscal year 2011, it was R$ 34.7 million. The compensation to be paid to directors and executive officers of Cosan S.A., its subsidiaries and jointly controlled entities who also act as directors or executive officers of our company will be in addition to compensation paid to them by our company.

Our executive officers receive the same benefits generally provided to our employees. Members of our board of directors are not entitled to these benefits.

We currently have no employment agreements with our directors and executive officers providing for benefits upon the termination of employment. Our directors and executive officers who serve for both us and Cosan will receive compensation from both companies.

C. Summary of Significant Differences of Corporate Governance Practices

The NYSE Corporate Governance Rules provide that we are required to disclose any significant differences on our corporate governance practices from those required to be followed by U.S. companies under NYSE listing standards. We have summarized these significant differences below.

We are permitted to follow practice in Bermuda in lieu of the provisions of the NYSE Corporate Governance Rules, except that we will be required to have a qualifying audit committee under Section 303A.06 of the Rules, or avail ourselves of an appropriate exemption. In addition, Section 303A.12(b) provides that our chief executive

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officer is obligated to promptly notify the NYSE in writing after any of our executive officers becomes aware of any material non-compliance with any applicable provisions of the NYSE Corporate Governance Rules.

Majority of Independent Directors

NYSE Rule 303A.01 provides that each U.S. company that is listed on the Exchange must have a majority of independent directors. Bermuda corporate law does not require that we have a majority of independent directors. Under our by-laws, at least 40% of our directors are required to be independent directors; which requirement increases to 60% following the death or permanent incapacitation of Mr. Rubens Ometto Silveira Mello.

Separate Meetings of Non-Management Directors

NYSE Rule 303A.03 provides that the non-management directors of each U.S. company that is listed on the Exchange must meet at regularly scheduled executive sessions without management. We are not required to have such executive sessions for the non-management directors under Bermuda law.

Nominating and Corporate Governance Committee

NYSE Rule 303A.04 provides that each U.S. company that is listed on the Exchange must have a nominating/corporate governance committee composed entirely of independent directors. We are not required to have such a committee under Bermuda law. We believe that, pursuant to our by-laws, the role of a nominating committee is generally performed by our board of directors and that the role of the corporate governance committee is generally performed by either our board of directors or our senior management.

Compensation Committee

NYSE Rule 303A.05 provides that each U.S. company that is listed on the Exchange must have a compensation committee composed entirely of independent directors. We are not required to have such a committee under Bermuda law. However, we formed such a committee with one independent director.

Audit Committee

NYSE Rule 303A.06 and the requirements of Rule 10A-3 of the SEC provide that each listed company is required to have an audit committee consisting entirely of independent members that comply with the requirements of Rule 10A-3. In addition, the company must have an internal audit function and otherwise fulfill the other requirements of the NYSE rules and Rule 10A-3 of the SEC.

While we are not required under Bermuda law to have an audit committee, we have formed a committee that has the following responsibilities:

pre-approve services to be provided by our independent auditor;

review auditor independence issues and rotation policy;

supervise the appointment of our independent auditors;

discuss with management and auditors major audit, accounting and internal control issues;

review quarterly financial statements prior to their publication, including the related notes, management’s report and auditor’s opinion;

review our annual report and financial statements;

provide recommendations to the board on the audit committee’s policies and practices;

review recommendations given by our independent auditor and internal audits and management’s responses;

provide recommendations on the audit committee’s by-laws; and

the receipt, retention and treatment of complaints received by the issuer regarding accounting, internal controls or auditing matters.

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Equity Compensation Plans

NYSE Rule 303A.08 provides that shareholders must be given the opportunity to vote on all equity compensation plans and material revisions thereto, with certain limited exemptions as described in the rule. Under Bermuda law, shareholder pre-approval is not required for the adoption of equity compensation plans nor any material revision thereto.

Corporate Governance Guidelines

NYSE Rule 303A.09 provides that each U.S. listed company must adopt and disclose its corporate governance guidelines. We do not have a similar requirement under Bermuda law. In addition, we have adopted a written policy of trading of securities and disclosure matters.

Code of Business Conduct and Ethics

NYSE Rule 303A.10 provides that each U.S. listed company must adopt and disclose a code of business conduct and ethics for directors, officers and employees and promptly disclose any waivers of the code for directors or executive officers. Although not required under Bermuda law, the Company has adopted a code of business conduct and ethics for directors, officers and employees as provided for in NYSE Rule 303A.10, which has been filed with the SEC.

D. Employees

As of March 31, 2012, we had 34,781 employees. The following table sets forth the number of our total employees by segment for the periods indicated:

	At March 31,
	2012		2011		2010
Agricultural		19,156		21,860		25,816
Industrial		9,576		7,971		8,019
Commercial(1)		―		―		876
Administrative(1)		5,160		3,799		3,128
Financial and investor relations(1)		―		―		60
Port		889		651		1,165
Total		34,781		34,281		31,648

(1)	The number of Commercial, Financial and Investor Relations employees has been consolidated to the Administrative category in the fiscal year 2011 and 2012.

We pay a mandatory union contribution for all of our employees. We believe that we have good relations with our employees and the unions that represent them, and we have not experienced a strike or other labor slowdown since 1992. Collective bargaining agreements to which we are party have either one-year or two-year terms, are subject to annual renewal and are subject to changes in Brazilian law. We apply the terms of bargaining agreements entered into with the unions equally to unionized and non-unionized employees.

Our total annual payroll was R$568.0 million as of March 31, 2012, which includes a provision for vacations, and bonuses, taxes and social contributions.

We offer our employees, including our executive officers, various benefits, which are provided in accordance with the employee’s position in our company. Benefits include medical (including dental) assistance, meal and transport vouchers, life insurance, maternity leave, scholarships and funeral assistance and nursery assistance. Members of our board of directors are not entitled to these benefits. All of our employees participate in profit sharing plans developed with the labor unions of which our employees are members, which provide performance-based compensation. In fiscal year 2012, we paid R$44.85 million as profit sharing distributions.

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E. Share Ownership

As of March 31, 2012, the following members of the board of directors own Cosan Limited shares:

Name

Position Held – Cosan Limited

Cosan Limited

Class A – Common Shares

Cosan Limited

Class B – Common Shares

Rubens Ometto Silveira Mello	Chairman and CEO	10,007,361	96,332,044
Pedro Mizutani	Board Member	10,000	—
Burkhard Otto Cordes	Board Member	5,000	—

Other than as disclosed in the table above, none of our executive officers currently owns or holds class A common shares or class B common shares of our company.

Equity-Based Compensation Plans

Cosan Limited

We have adopted a Cosan Limited equity incentive plan. We have reserved up to 5% of our issued and outstanding class A common shares as of the granting date for issuance under our equity incentive plan. The plan is intended to attract, retain and motivate our directors, officers and employees, to link compensation to the overall performance of the company in order to promote cooperation among our diverse areas of business and to create an ownership interest in the company with respect to these directors, officers and employees in order align their interests with the interests of our shareholders. No shares or options have been issued or granted in connection with this incentive plan.

Cosan

On August 30, 2005, Cosan’s shareholders approved a stock option plan that authorized the issuance of a maximum of 5% of Cosan’s total share capital. On September 22, 2005, Cosan’s board of directors approved the distribution of stock options corresponding to 4,302,780 common shares, or 3.25% of Cosan’s total share capital. A remaining 1.75% of Cosan’s share capital may subsequently be issued pursuant to the terms of Cosan’s stock option plan. The stock options that were issued have an option price of US$2.93 per common share, and may be partially exercised (up to a maximum of 25% annually) after November 18, 2006. On November 20, 2006, Cosan’s board of directors approved the issuance of 1,132,707 new common shares to certain of Cosan’s executive officers under Cosan’s stock option plan, which resulted in an increase in the number of Cosan’s issued and outstanding common shares on that date. On September 11, 2007, Cosan’s board of directors granted 450,000 options to one of Cosan’s executive officers. On November 19, 2007 and December 11, 2007, 922,947 and 38,725 options, respectively, were exercised. On March 30, 2010 and September 14, 2010, 17,000 and 48,829 options were exercised. On January 29, 2010, 15,000 options were exercised. On July 20, 2010, 225,000 options were exercised. On November 11, 2010, 224,819 options were exercised. On March 4, 2011, 112,500 options were exercised. All options in connection with this plan have been exercised.

A new stock option plan was approved by Cosan’s General meeting, held on July 29, 2011. On August 18, 2011, the Board of Directors deliberated that 12,000,000 common shares were inserted in the first program of Stock Option Plan in which was established that the exercise right would be effected as from August 18, 2012. See note 28 to our audited consolidated financial statements for more information.

If a holder of stock options ceases to be an executive officer, manager or eligible employee for any reason (other than termination of his or her employment contract without just cause on Cosan’s part, death, retirement or permanent incapacitation), after partially exercising his or her option to purchase Cosan’s common shares, the options that have not yet been exercised will be extinguished as of the date that the holder ceases to be an executive officer, manager or eligible employee.

Cosan stock options held by Cosan’s executive officers may, at their option, be canceled and converted into awards of Cosan Limited, and as a result, we will comply with the limit of shares we have reserved for our equity incentive plan. Cosan´s stock options will be converted based upon a ratio equal to the initial offering price of our common stock, divided by the weighted average stock price of Cosan’s common stock for a specified period

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immediately preceding the date of the completion of our initial public offering. The converted securities, if unvested, generally will continue to vest over their original vesting periods.

Item 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

Cosan Limited

As of the date of this annual report our authorized share capital is US$ 11,888,863.60, consisting of 1,000,000,000 class A common shares, par value US$0.01 per share, 96,332,044 class B series 1 common shares, par value US$0.01 per share and 174,355,341 class A common shares, par value US$0.01 per share. Each of our class A common shares entitles its holder to one vote. Each of our class B common shares entitles its holder to ten votes. The chairman of our board of directors, Mr. Rubens Ometto Silveira Mello controls 39.3% of our issued and outstanding share capital, and 85.6% of our voting power by virtue of his control of 100% of our class B common shares and 5.7% of our class A common shares. Other than the entities and individuals mentioned below, no other single shareholder holds more than 5.0% of our issued and outstanding share capital.

The following table sets forth the principal holders of our issued and outstanding share capital and their respective shareholding as of the date of this annual report:

Shareholders	Class A Common Shares		%		Class B Common Shares		%		Total Number of Shares		%
Queluz Holdings Limited		7,941,111		4.55		66,321,766		68.85		74,262,877		27.43
Usina Costa Pinto S.A. Açúcar e Álcool		—		—		30,010,278		31.15		30,010,278		11.09
Gávea Funds (2)		39,445,393		22.62		—		—		39,445,393		14.57
Others		126,968,837		72.83		—		—		126,968,837		46.91
Total		174,355,341		100.0		96,332,044		100.0		270,687,385		100.0

(1)	Based on information filed on July 14, 2011 by Gávea Investimentos Ltda, GIF Venus, Ltd. and Armino Frago Neto.

No class B series 2 common shares are currently issued and outstanding.

Queluz Holdings Limited, Costa Pinto, CFV19 Participações S.A., MSAL Participações S.A., Certo Participações S.A., MSOR Participações S.A. and Usina Bom Jesus S.A. Açúcar e Álcool

On November 24, 2009, a corporate reorganization was approved within companies from its controlling group (Aguassanta Participações S.A., Queluz Holdings Limited, or “Queluz,” and Usina Bom Jesus S.A. Açúcar e Álcool), aiming at consolidating their control with Mr. Rubens Ometto Silveira Mello.

This reorganization resulted in the transference by an affiliated of Queluz of up to around 5,500,000 class A common shares issued by Cosan Limited, that did not exceed 1% of total Class A shares, pursuant to Securities Act Rule 144 and other applicable provisions. Its class B share position remains unaltered.

Queluz Holdings Limited and Costa Pinto own all of our class B series 1 common shares. Queluz Holdings Limited, CFV19 Participações S.A., MSAL Participações S.A., Certo Participações S.A., MSOR Participações S.A. and Usina Bom Jesus S.A. Açúcar e Álcool also hold in aggregate 10% of our class A common shares. These companies are indirectly controlled by Mr. Rubens Ometto Silveira Mello, the chairman of our board of directors through several companies controlled directly and indirectly by him. Although the control is exercised by Mr. Rubens Ometto Silveira Mello, there are some family members and other individuals who are also beneficial owners of minority interests in these companies.

Cosan S.A.

As of March 31, 2012, we owned 62.30% of Cosan’s common shares. Prior to our initial public offering, Usina Costa Pinto S.A. Açúcar e Álcool and Aguassanta Participações S.A., each company indirectly controlled by our chief executive officer, Mr. Rubens Ometto Silveira Mello and his family, were the controlling shareholders of Cosan.

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Rezende Barbosa

On June 18, 2009, Cosan entered into an agreement with Rezende Barbosa to acquire 100% of the outstanding shares of Curupay S.A. Participações, or “Curupay.” The acquisition was carried out through the merger of Curupay into Cosan resulting in the issuance by Cosan of 44,300,389 new common shares, fully subscribed and paid-in by Rezende Barbosa.

Pursuant to an agreement dated June 9, 2009, the Rezende Barbosa Family has the right to have one member on both the supervisory board and the board of directors. Cosan Limited has, subject to limited exceptions, a right of first refusal on shares of Cosan (CSAN3) owned by the Rezende Barbosa family.

Cosan Portuária

On February 8, 1999, São Francisco and Tate & Lyle do Brasil Serviços e Participações S.A., or “Tate & Lyle,” entered into a shareholders’ agreement that governs the rights of the shareholders of Cosan Portuária (formerly São Francisco Operadora Portuária de Granéis Ltda.). In April 2004, Cosan acquired 90.0% of the outstanding capital stock of Cosan Portúaria through a Cosan capital increase in the amount of US$1.5 million, which was fully subscribed by Cosan’s shareholder, São Francisco, using shares that it held at Cosan Portuária.

Cosan has signed a memorandum of understanding dated April 9, 2008 with Rezende Barbosa with the intention of merging into a new entity the port terminal facilities of Cosan Portuária with those at the neighboring site of Teaçu Armazéns Gerais S/A, owned by Rezende, or the “merged entity.” Cosan asked Tate & Lyle to provide its approval as the minority shareholder in Cosan Portuária to the arrangements. Tate & Lyle’s and Cosan’s equity interests in the merged entity would be held by a holding company owned by Cosan and Tate & Lyle. Because of the creation of the holding company, Cosan and Tate & Lyle entered into a shareholders’ agreement with respect to the holding company named COPSAPAR Participações S/A in order to govern: (1) the election of the board of directors; (2) the exercise of voting rights in general shareholder meetings and meetings of the board of directors; and (3) the preemptive rights of shareholders.

On April 13, 2010, Tate & Lyle, through a Share Purchase Agreement, sold its entire stake on Copsapar Participações S/A to Bunge Açúcar e Bioenergia Ltda, that had, on the same date, agreed to replace Tate & Lyle on the shareholder agreement with respect to Copsapar Participações S/A.

Rumo Logística

On September 2, 2010, Novo Rumo, Cosan, Cosan Limited and investment vehicles controlled by TPG and Gávea entered into a shareholders’ agreement that regulates the rights of the shareholders of Rumo Logística and on the same date the parties have entered into a subscription agreement in which Gávea and TPG agreed to subscribe common shares of Rumo Logística representing a 25% ownership for a price of R$400 million, implying a post-money equity valuation of R$1,600 million. In accordance to the shareholders agreement, Rumo Logística will have a board of directors of five members and Gávea and TPG will have the right to appoint two of the directors. Pursuant to the agreement, (1) Gávea and TPG will have the right to participate, through at least one representative, in all board committees and certain other relevant committees of Rumo Logística; (2) any decision regarding Rumo Logística or any of its subsidiaries will be determined by a simple majority vote; (3) Gávea and TPG will have rights of first refusal; (4) Gávea and TPG will have tag along rights.

TEAS

Cosan and Cargill Agricola S/A entered into a shareholders’ agreement with respect to TEAS Terminal Exportador de Alcool de Santos S/A, or “TEAS,” dated as of February 15, 2005 and amended on November, 26, 2009, that provides for, among other things, the right of first refusal of the shareholder to acquire the shares of TEAS owned by the other shareholder, in the event such party decides to sell its shares to a third party.

Cosan’s stake on TEAS, on April 2011, was contributed to Raízen, the Joint Venture established between Cosan and Shell.

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RADAR

In August 2008, Cosan entered into a shareholders’ agreement with TIAA regarding its subsidiary Radar Propriedades Agrícolas S.A., whose corporate purpose is to identify and acquire rural properties with high appreciation potential for subsequent leasing and/or sale. Cosan currently retain approximately 18.9% of RADAR’s capital, with the remaining 81.1% being divided among other investors part of TIAA group. According to the shareholders’ agreement, COSAN retains the majority of votes on RADAR’s Board of Directors, thereby retaining control of the company. In addition, COSAN has a 10-year option to subscribe 20% of RADAR’s capital stock for the same amount as the initial capitalization.

CTC

Cosan has entered, among other parties, including Raízen, into a shareholder agreement regarding CTC . Cosan and Raízen, in accordance to the terms of such agreement, shall jointly appoint their representative on the board of directors of CTC for the first two initial successive two year terms and any subsequent term. In the event that there is a disagreement between Cosan and Raízen with respect to the appointment of the representative for any subsequent term, then the right to appoint the representative on the board of directors of CTC shall alternate between Cosan and Raízen for a two-year period, with Cosan having the first right of appointment.

Tellus

On July 1, 2011 Cosan has entered into a shareholders’ agreement with TIAA - CREF in order to govern certain of their rights, duties and obligations as shareholders of Tellus Brasil Participações S.A..

Shareholders’ Agreements and Other Arrangements

Shell and Cosan have entered into other definitive agreements, among others, concerning the scope of the Joint Venture, the governance and management of the Joint Venture and the granting of reciprocal put and call options concerning their interests in the Joint Venture. Each of these agreements was entered into on June 1, 2011.

The shareholders’ agreements for Raízen Energia and Raízen Combustíveis establish the scope and governance of the Joint Venture, as well as its dividend policy. The agreements provide that the scope of the Joint Venture is the global production of sugar cane-based ethanol and sugar and the distribution, commercialization and sale of fuel products within Brazil. Cosan, Shell and their respective affiliates are prohibited from competing with the Joint Venture as long as they remain shareholders of the Joint Venture (subject to customary exceptions).

The shareholders’ agreements provide that the Joint Venture will be governed by supervisory boards that are composed of six members: three nominated by Cosan, with Mr. Rubens Ometto Silveira Mello acting as chairman, and three nominated by Shell. Most decisions by the supervisory boards require a quorum of two members and are generally made by a majority present and voting. Certain significant matters, however, will require the consent of five of the six or four of the six members, as the case may be.

The matters which require the consent of five of the six or four of the six members include but are not limited to the following:

setting the general strategic guidelines and direction for the Joint Venture and amending and updating the Joint Venture’s business plan;

appointing, removing or terminating members of the executive board;

determining the compensation and benefits of certain employees;

amending key policies and procedures of the Joint Venture;

adopting or amending the annual and capital budgets;

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instituting or settling any litigation or dispute in excess of a specified sum or which could damage the reputation of the Joint Venture, Cosan or Shell;

selling, assigning, transferring or encumbering assets of the Joint Venture outside of the ordinary course of business in excess of a specified amount;

entering into transactions (including mergers, stock purchases or asset purchases) of which the value or purchase price exceeds a specified amount;

making capital expenditures in excess of a specified amount, subject to certain exceptions;

submitting any matters, including financial statements and reports, to the meeting of the Joint Venture’s shareholders;

entering into any contract, agreement or instrument outside of the ordinary course of business and that provides for payments in excess of a specified amount;

entering into material amendments, modifications or waivers or terminating any contract where payment obligations exceed a specified amount;

making any decision to borrow money or guarantee the payment or performance of any obligation in excess of a specified amount or to prepay indebtedness of a specified amount;

creating any encumbrance over or the issuance of any Joint Venture securities or any option relating to any Joint Venture securities, subject to certain exceptions;

approving the credit limits or the extension of credit to any customer of the Joint Venture in excess of a specified amount; and

entering into, amending, terminating or renewing any insurance policy.

If the supervisory boards cannot reach a decision with respect to a matter that is their responsibility, one representative of Cosan and one representative of Shell will meet to attempt to resolve the matter. Any decision by these shareholder representatives must be unanimous. If the shareholder representatives cannot reach a joint decision, no decision would be taken or effected and the status quo would prevail.

Additionally, certain matters require the consent of the shareholders of the Joint Venture. These matters include, but are not limited to, removal of any member of a supervisory board; approval of supervisory board resolutions relating to dividend payments; approval of management accounts and financial statements; amendments to the by-laws of Raízen Energia or Raízen Combustíveis; and issuance of securities by the Joint Venture.

The shareholders’ agreements provide that a shareholder may lose certain governance rights if it fails to make capital contributions that may be required pursuant to the shareholders’ agreements or to make certain payments required pursuant to the Framework Agreement. If the delinquent party pays or contributes such amounts in full within a specified cure period, the respective governance rights of the shareholders are returned to their original state prior to any such delinquency.

The day-to-day management of the Joint Venture is conducted by the executive boards, composed of a chief executive officer and other senior executive officers. The shareholders’ agreements set forth the various functions and responsibilities of the chief executive officer and senior management, as well as the actions that may be taken by the executives without the approval of the relevant supervisory board.

Cosan Limited

Aguassanta and Costa Pinto, our indirect controlling shareholders, entered into a shareholders’ agreement pursuant to which they undertake to vote jointly with respect to any matter related to us and our subsidiaries. Aguassanta and Costa Pinto have agreed to meet before any shareholders’ or board of directors meeting to reach an agreement as to their votes regarding such matters. The vote of the indirect shareholder that owns a greater equity stake in Cosan Limited shall prevail.

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B. Related Party Transactions

We engage in related party transactions with certain of our affiliates, some of which are of a recurring nature. Financial information with respect to certain material related party transactions is set forth in Note 10 to our consolidated financial statements attached hereto.

Our board of directors delegates to the audit committee the responsibility for reviewing and approving all related party transactions (within the meaning of Item 404 of Regulation S-K of the SEC). The audit committee is responsible for obtaining information from our directors, executive officers and major shareholders with respect to related party transactions and for then determining, based on the facts and circumstances, whether our company or a related party has a direct or indirect material interest in the transaction. As required under SEC rules, transactions that are determined to be directly or indirectly material to our company or a related party has been disclosed herein.

In October 2008, a private placement of the Company’s class A shares was made in the amount of R$ 96 million (US$50 million) by the controlling shareholder, Mr. Rubens Ometto Silveira Mello, and R$ 288.1 (US$150 million) by the funds managed by Gávea Investimentos Ltda., at R$ 8.6 (US$4.50) per class A share or BDR subscribed. The offering was extended to all class A share or BDR holders, as permitted by applicable law. The offering was concluded on October 27, 2008. As a result and following the date of the acquisition, Mr. Rubens Ometto Silveira Mello holds 41.5% of the Company’s total capital and 86.1% of its voting capital.

In the normal course of business, we have operational and financing transactions with related parties. The significant related party balances and transactions are described in Note 9 (related parties) in the financial statement of March 31, 2012.

Recurring Transactions with Shareholders

Cosan leases agricultural land for planting sugarcane from certain of our and its shareholders and other related parties on market terms. As of March 31, 2012 we leased 68,291 hectares, through 10 land lease contracts with an average term of fourteen years. These land lease agreements are on market terms equivalent to those we enter into with third parties. Lease payments under these agreements are based on the price of 16.9 tonnes of sugarcane per hectare, calculated in accordance with certain regulations of CONSECANA.

Through our indirect subsidiary Agrícola Ponte Alta S.A., we also acquired 28 barges for R$12,115,000 pursuant to a Purchase Agreement, entered into on October 1, 2009. We had previously leased and used the ships to transport sugarcane to our plant in Jaú, in the district of Potunduva.

Guarantees with Related Parties

As a result of Cosan’s participation in the PESA federal government financing program between 1998 and 2000, Amaralina mortgaged land to secure the restructuring of Cosan’s debt, and Agrícola Ponte Alta and Pedro Ometto S.A. mortgaged land to secure the restructuring of the debt of Da Barra.

For approximately seven months, Cosan and Palermo had the planned the stages of a project involving a build-to-suit and lease arrangement whereby Palermo would construct, pursuant to Cosan specifications, the building that will house Cosan’s shared services center in Piracicaba, São Paulo State, or the “Shared Services Center,” which would thereafter be leased by Palermo to Cosan. On July 1, 2010, Cosan entered into the build-to-suit and lease agreement with Palermo based on previously agreed business terms that formalized this arrangement. Following the completion of construction of the Shared Services Center, Cosan leased this building from Palermo and Cosan has licensed this building to Raízen for a period of ten years, with monthly rental payments of R$350,000 (US$196,500).

C. Interests of Experts and Counsel

Not applicable.

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Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

See note 18 to our audited consolidated financial statements.

Legal Proceedings

We are party to numerous legal proceedings as further described below and in note 18 of our audited consolidated financial statements for further information.

Probable losses

In the ordinary course of our business, we are party to a number of legal proceedings for which we deem the risk of loss as probable for which we have recorded provisions in an aggregate amount of R$1,051.7 million as of March 31, 2012. Provisions relating to probable losses are categorized into tax, civil and labor, described below.

Tax We recorded provisions of R$620.8 million for tax proceedings as of March 31, 2012. The principal tax legal are describe below. For more information on other tax proceedings where provisions relating to probable losses are recorded, see note 18 of our audited consolidated financial statements for further information.

CLE filed a suit to challenge the balance sheet restatement index (IPC) established by the federal government in 1989, on the basis that such index did not reflect actual inflation at such time. The use of this index led CLE to overstate and overpay its income and social contribution taxes. CLE obtained a favorable preliminary court ruling that allowed it to recalculate the financial position, using indexes that accurately measured the inflation over the period. In doing so CLE adjusted the amounts of income and social contribution taxes payable and identified that overpayments for both taxes were offset in subsequent years until 1997. Despite the favorable court rulings, tax authorities issued a notice of infringement, challenging all tax offsets performed in 1993 and some offsets in 1994 and 1997, which led the company to record a provision in relation to those court rulings. The provision for this proceeding increased from R$80.3 million in fiscal year 2011 to R$82.2 million in fiscal year 2012.

During the period from October 2003 to November 2006 CLE offset the FINSOCIAL tax with several other federal taxes, based on a final court decision in 2003 in the context of a proceeding which discussed the constitutionality of the FINSOCIAL tax. The provision for this proceeding increased from R$183.7 million in fiscal year 2011 to R$195.4 million in fiscal year 2012.

Prior the formation of the JV, Raízen Combustíveis (formerly Shell Brasil Ltda), recorded CIDE tax on services provided by operations. This contingency will be reimbursed by Shell if any payment is required, an equivalent amount is recorded as a receivable. A provision of R$93.8 million was recorded in fiscal year 2012. Judicial deposits in connection with this provision amount to R$170.8 million.

The provision for ICMS credits is comprised of: (i) a tax assessment received where legal counsel considers it is more likely than not that a loss will occur, and (ii) recovery of credits and financial charges on matters in which Company´s management has a differing view from the tax authorities. The provision for ICMS credits increased to R$97.5 million in fiscal year 2012 as compared to R$56. 9 million in the prior year. There are judicial deposits related to these processes, amounting R$8.4 million.

Civil and Labor claims: Cosan, its subsidiaries and jointly-controlled entities are parties to a number of civil claims related to (i) indemnity for physical and moral damages; (ii) public civil claims related to sugarcane stubble burning; and (iii) environmental matters. Provisions for civil claims in fiscal year 2012 amounted to R$169.0 million

Cosan, its subsidiaries and jointly-controlled entities are also parties to a number of labor claims filed by former employees and service providers challenging, among other factors, the payment of additional hours, night shift premium and risk premium, employment inclusion, reimbursement of discounts from payroll, such as social contribution, trade union charges, among others. Provisions for labor claims in fiscal year 2012 amounted to R$261.9 million.

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Possible losses

In addition, there are currently certain legal proceedings pending in which we are involved for which we have not recorded provisions, as we deem the likelihood of loss as possible. If any of these legal proceedings is decided adversely against us, our results of operations or financial condition could be materially and adversely affected. The aggregate of provisions relating to possible losses in fiscal year 2012 amounted to R$6,865.8 million of which R$4,115.4 million, R$869.9 million and R$1,200.6 million were recorded for tax, civil and labor claims respectively. For more information see note 18 of our audited consolidated financial statements for further information.

Other Proceedings

We are party to numerous civil lawsuits involving claims that amounted to R$1,038,906 million in the aggregate as of March 31, 2012. Based on the opinions of our Brazilian legal advisors handling these lawsuits, we have recorded a provision for civil contingencies in our consolidated financial statements of R$ 168.9 million as of March 31, 2012.

In accordance with court orders concerning certain tax, civil and labor lawsuits, we had bank accounts frozen or judicial deposit in an aggregate amount of R$ 509;2 million as of March 31, 2012.

We are involved in numerous other lawsuits from time to time, including commercial litigation.

On February 28, 2007, the subsidiary Usina da Barra S.A. Açúcar e Álcool recognized financial income in the amount of R$ 318.3 million. The company had sought damages from the Brazilian federal government for setting prices for its products below the established price control guidelines. In the third quarter of fiscal year 2007, Brazilian courts reached a final and unappealable decision favorable to us. As of March 31, 2012, this account receivable from the government amounted to R$357.9 million.

Dividends and Dividend Policy

Dividend Rights

Cosan Limited is a holding company and can only pay dividends to the extent, if any, that funds are received from our subsidiaries. Our dividend policy is similar to the current dividend policy of our main subsidiary, Cosan S.A. Brazilian corporate law requires that the bylaws of a Brazilian company specify a minimum percentage of the available income for the annual distribution of dividends, known as the mandatory dividend, which must be paid to shareholders as either dividends or interest attributable to shareholders’ equity. We intend to pay cash dividends representing on an annual basis 25% of our annual consolidated net income, to holders of class A common shares and class B common shares in proportion to the number of shares held by them unless our board of directors has determined, in its discretion, that such distribution would not be advisable or appropriate in light of our financial condition or we are unable to meet applicable statutory solvency requirements under Bermuda law.

Our board of directors may, in its discretion, amend or repeal our dividend policy. You may not receive the level of dividends provided for in the dividend policy or any dividends at all due to a number of factors, such as:

we are a holding company, and therefore, our ability to pay dividends will depend on our ability to receive distributions from our subsidiaries, particularly our subsidiary Cosan S.A.;

our subsidiaries may become subject to covenants restricting their ability to distribute dividends under credit facilities, term loans or other indebtedness;

any imposition of restrictions on conversions and remittances by the Brazilian government could hinder or prevent us from converting into U.S. dollars or other foreign currencies and remitting abroad dividends of our Brazilian subsidiaries;

our shareholders have no contractual or other legal rights to dividends pursuant to Bermuda law; and

we may not have sufficient cash to pay dividends due to changes in our operating earnings, working capital requirements and anticipated cash needs.

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Under Bermuda law, a company’s board of directors may declare and pay dividends from time to time unless there are reasonable grounds for believing that the company is or would, after the payment, be unable to pay its liabilities as they become due or that the realizable value of its assets would thereby be less than the aggregate of its liabilities and issued share capital and share premium accounts. Under our by-laws, each class A common share and class B common share is entitled to dividends if, as and when dividends are declared by our board of directors, subject to any preferred dividend right of holders of any preference shares. There are no restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in or out of Bermuda or to pay dividends to U.S. residents who are holders of our common shares.

We expect to have sufficient available cash to pay dividends in accordance with our dividend policy. We do not, however, plan to pay dividends in the event that we do not generate sufficient cash from operations. In addition, we will not pay dividends if we believe that such payment will limit or preclude our or our subsidiaries’ ability to pursue growth opportunities. Although our by-laws and Cosan’s by-laws do not restrict us from borrowing funds to pay dividends, we do not intend to borrow funds to pay dividends.

The dividend rights attaching to our class A common shares and class B common shares are not cumulative in the event that we do not, for any reason, pay dividends on those shares.

Any cash dividends payable to holders of our common shares quoted on the NYSE will be paid to Mellon Investors Services LLC, our transfer agent in the United States, for disbursement to those holders.

Cosan S.A. Dividend Policy

Brazilian corporate law and Cosan’s by-laws require that Cosan distributes annually to its shareholders a mandatory minimum dividend, unless Cosan’s board of directors notifies the shareholders that such distribution is not advisable in light of Cosan’s financial condition as reflected in Cosan’s consolidated financial statements. The basis of the mandatory dividend is a percentage of the net income, as adjusted pursuant to the Brazilian Corporate Law. Under our bylaws, a minimum of 25.0% of our adjusted net income should be intended for the distribution and payment to our shareholders as mandatory dividend. However, the payment of mandatory dividends to our shareholders may be limited to the amount of realized net income in a given year, provided the difference is recorded as an unrealized income reserve.

We are required by the Brazilian Corporate Law and our bylaws to hold an annual shareholders’ meeting no later than four months after the end of each fiscal year, at which time the allocation of the results of operations in any year and the distribution of an annual dividend are reviewed. The distribution of annual dividends is based on our audited financial statements prepared for the immediately preceding fiscal year.

Calculation of Adjusted Net Income

At each annual shareholders ’ meeting, our board of directors is required to recommend how to allocate our net income for the preceding fiscal year, which recommendation our board of executive officers initially submits to our board of directors for approval.

This allocation is subject to approval by our common shareholders. The Brazilian Corporation Law defines “net income” for any fiscal year as our net income after income taxes for that fiscal year, net of any accumulated losses from prior fiscal years and any amounts allocated to employees’ participation in our net income in that fiscal year. Under the Brazilian Corporation Law, our adjusted net profit available for distribution are equal to our net profit in any fiscal year, reduced by amounts allocated to our legal reserve and other applicable reserves, and increased by any reversals of reserves that we constituted in prior years.

Reserve Accounts

Under the Brazilian Corporation Law and our by-laws, we are required to maintain a legal reserve. In addition, we are permitted by the Brazilian Corporation Law to establish the following discretionary reserves:

a contingency reserve for an anticipated loss that is deemed probable in future years. Any amount so allocated in a previous year must be reversed in the fiscal year in which the loss had been anticipated if the loss does not occur as projected or charged off in the event that the anticipated loss occurs;

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a reserve for investment projects, in an amount based on a capital expenditure budget approved by our shareholders;

an unrealized income reserve; and

a tax incentive investment reserve, included in our capital reserve accounts, in the amount of the reduction in our income tax obligations due to government tax incentive programs.

Allocations to each of these reserves (other than the legal reserve) are subject to approval by our common shareholders voting at our annual shareholders’ meeting.

The Brazilian Corporation Law provides that the legal reserve and the tax incentive investment reserve may be credited to shareholders’ equity or used to absorb losses, but these reserves are unavailable for the payment of distributions in subsequent years.

The amounts allocated to the other reserves may be credited to shareholders’ equity and used for the payment of distributions in subsequent years.

Joint Venture’s Dividend Policy

The shareholders’ agreement between us and Shell also establish the dividend policy of the Joint Venture. The dividend policy states that the Joint Venture seeks to maximize the amount of profits to be distributed to its shareholders in a manner consistent with its leverage ratio objectives and capital investment requirements. The supervisory boards must propose, and the shareholders approve, an allocation of the net profit of the Joint Venture in accordance with the shareholders’ agreements. The shareholders’ agreements provide that net profit is subject to the following allocation order:

first , up to 5% of net profit to the respective company’s legal reserve, which may not exceed a specified amount, the lower of 20% of the respective company’s capital stock or 30% of the capital plus any capital surplus;

second , a variable amount of net profit to each shareholder based on certain tax attributes contributed by it to the Joint Venture; Cosan is entitled to receive preferential dividends equivalent to the amount of any tax savings from the amortization of goodwill it contributes to the Joint Venture. Similarly, Shell is entitled to receive preferential dividends equivalent to the amount of any tax savings from the amortization of accumulated losses that it contributes to the Joint Venture;

third , a nominal amount of net profit to the holders of certain preferred shares;

fourth , 1% of net profit to the shareholders;

fifth , a variable amount, capped at a specified percentage of net profit, to the respective company’s statutory reserve for operations and projects, such amount not to exceed 80% of net profits or 80% of the respective company’s share capital; and

sixth , the distribution of the remaining amount of net profit to be determined by the shareholders.

Brazilian Taxation

Dividends paid by Cosan to us are currently not subject to withholding income tax in Brazil, to the extent that such amounts are related to profits generated as of January 1, 1996. In addition, Brazilian tax laws permit Cosan to make distributions to shareholders of interest on own shareholders’ equity and treat those payments as a deductible expense for purposes of calculating Brazilian income tax and social contributions. For tax purposes, this interest is limited to the daily pro rata portion of the TJLP, as determined by the Central Bank from time to time, and the amount of the deduction is limited to (1) 50% of net income (after social contributions but before income tax and the amount to be distributed as interest on shareholders’ equity) related to the period in respect of which the payment is made; or (2) 50% of the sum of retained profits and profit reserves as of the date of the beginning of the period in respect of which the payment is made. A payment to us of interest on own shareholders’ equity is subject to withholding income tax at the rate of 25%.

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B. Significant Changes

A discussion of the significant changes in our business can be found under “Item 4. Information on the Company—A. History and Development of the Company.”

Please also see our earnings reports furnished to the SEC on Form 6-K on June 4, 2012.

Dividends

On August 12, 2011, the board of directors approved the distribution of the entire dividend received by Cosan Limited from Cosan S.A. on August 31, 2011. The dividends were paid to shareholders for the fiscal year 2011 ended March 31, 2011 totaling US$76,097,326.26 corresponding to US$0.281126238 per common share or the equivalent to R$ 0.46104709032 to holders of Brazilian depositary receipts, without withholding income tax.

Item 9. The Offer and Listing

A. Offer and Listing Details

Prior to August 16, 2007, no public market existed for our class A common shares. Since August 16, 2007, our class A common shares have been listed on the NYSE and trade under the symbol “CZZ.” The BDRs representing our class A common shares are listed on the BM&FBOVESPA and trade under the symbol “CZLT11.”

The following information concerning the trading history of our class A common shares and BDRs representing our class A common shares is presented solely for informational purposes. This information should not be viewed as indicative of future sales prices for either our class A common shares on the NYSE or BDRs representing our class A common shares on the BM&FBOVESPA. Actual future sales prices for our class A common shares and the BDRs are likely to be significantly different from their trading history.

The following table sets forth the high and low closing sales prices for our class A common shares on the NYSE and the BDRs representing our class A common shares on the BM&FBOVESPA for the periods indicated.

	NYSE (US$ per common share)
	High		Low
Fiscal Year Ended March 31, 2012		15.11		9.08
Fiscal Year Ended March 31, 2011		14.57		7.95
Fiscal Year Ended March 31, 2010		9.75		2.40
Eleven Months Ended March 31, 2009		14.02		2.03
Fiscal Year Ended March 31, 2008		15.75		10.00
Fiscal Quarter
First Fiscal Quarter 2011		10.9		7.95
Second Fiscal Quarter 2011		12.01		9.82
Third Fiscal Quarter 2011		14.08		11.57
Fourth Fiscal Quarter 2011		14.57		12.17
First Fiscal Quarter 2012		13.35		10.83
Second Fiscal Quarter 2012		12.82		9.44
Third Fiscal Quarter 2012		12.39		9.08
Fourth Fiscal Quarter 2012		15.11		10.96
Month
February 2012		14.87		13.43
March 2012		15.11		14.05
April 2012		15.23		13.27
May 2012		13.86		11.66
June 2012		12.69		11.29
July 2012 ( through July 26, 2012)		13.13		12.78

Source: Bloomberg.

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	BM&FBOVESPA ( reais per BDR)
	High		Low
Fiscal Year Ended March 31, 2012		27.90		15.70
Fiscal Year Ended March 31, 2011		24.15		14.89
Fiscal Year Ended March 31, 2010		17.65		5.78
Eleven Months Ended March 31, 2009		23.20		5.40
Fiscal Year Ended April 30, 2008		26.99		17.80
Fiscal Quarter
First Fiscal Quarter 2011		19.00		14.89
Second Fiscal Quarter 2011		20.38		17.68
Third Fiscal Quarter 2011		23.65		19.68
Fourth Fiscal Quarter 2011		24.15		19.96
First Fiscal Quarter 2012		21.29		17.40
Second Fiscal Quarter 2012		19.80		15.70
Third Fiscal Quarter 2012		22.30		17.00
Fourth Fiscal Quarter 2012		27.90		20.00

Month
February 2012		25.68		23.43
March 2012		27.90		25.00
April 2012		28.00		25.10
May 2012		26.46		23.45
June 2012		25.89		23.62
July 2012 (through July 26, 2012)		26.97		25.30

Source: Bloomberg

On July 26, 2012, the last reported closing sale price of our class A common shares on the New York Exchange and the BDRs representing our class A common shares on the BM&FBOVESPA were US$12.55 and R$25.46 per class A common share and BDR representing our class A common shares, respectively.

Trading History of Cosan’s Common Shares

Prior to our initial public offering and the formation of our company, Cosan’s common shares have been listed on the Novo Mercado segment of the BM&FBOVESPA under the symbol “CSAN3.” Because the exchange offer has been completed and not all shareholders accepted our exchange offer, we do not expect to seek delisting from trading on the Novo Mercado . For more information regarding the exchange offer see our registration statement on Form F-4 (Registration No. 333-147235) filed by the Company with the U.S. Securities and Exchange Commission.

The following information concerning the trading history of Cosan’s common shares is presented solely for informational purposes. This information should not be viewed as indicative of future sales prices for either our class A common shares on the NYSE or BDRs representing our class A common shares on the BM&FBOVESPA. Actual future sales prices for our class A common shares and the BDRs are likely to be significantly different from the trading history of Cosan’s common shares.

The market information in the following tables has been restated to reflect the three-for-one share split of Cosan’s common shares on August 31, 2006.

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The following table sets forth the high and low closing sales prices for Cosan’s common shares on the BM&FBOVESPA for the periods indicated.

	BM&FBOVESPA
	(reais per common share)
	High		Low
Fiscal Year Ended March 31, 2012		34.70		19.52
Fiscal Year Ended March 31, 2011		28.85		18.00
Fiscal Year Ended March 31, 2010		25.60		10.08
Eleven Months Ended March 31, 2009		33.15		8.54
Fiscal Year Ended March 31, 2008		43.93		18.87
Fiscal Quarter
First Fiscal Quarter 2011		23.75		18.00
Second Fiscal Quarter 2011		25.30		22.24
Third Fiscal Quarter 2011		28.85		24.88
Fourth Fiscal Quarter 2011		28.59		23.91
First Fiscal Quarter 2012		26.78		21.23
Second Fiscal Quarter 2012		25.50		19.52
Third Fiscal Quarter 2012		28.01		23.00
Fourth Fiscal Quarter 2012		34.70		26.70

Month
February 2012		31.00		28.60
March 2012		34.70		31.17
April 2012		34.47		31.25
May 2012		33.50		29.05
June 2012		31.65		29.15
July 2012 (through July 26, 2012)		31.25		30.05

Source: Bloomberg.

On July 26, 2012, the last reported closing sale price of Cosan’s common shares on the BM&FBOVESPA was R$30.90 per share.

B. Plan of Distribution

Not applicable.

C. Markets

Our class A common shares are listed on the NYSE and trade under the symbol “CZZ.” The BDRs representing our class A common shares are listed on the BM&FBOVESPA and trade under the symbol “CZLT11.”

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

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Item 10. Additional Information

A. Share Capital

Not applicable

B. Memorandum and By-laws

General

We are a limited liability exempted company incorporated under the laws of Bermuda on April 30, 2007. We are registered with the Registrar of Companies in Bermuda under registration number EC 39981. Our registered office is located at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda.

The objects of our business are set forth in our memorandum of association and provide that we have unrestricted objects and powers and rights including to:

import, export, produce and sell ethanol, sugar, sugarcane and other sugar by-products;

distribute and sell fuel and other fuel by-products;

produce and market electricity, steam and other co-generation by-products;

render technical services related to the activities mentioned above; and

hold equity interests in other companies.

There have been no bankruptcy, receivership or similar proceedings with respect to us or our subsidiaries.

Issued Share Capital

Under our by-laws, the holders of our class A common shares and class B common shares will be offered the preemptive right to purchase, in the first instance, on a pro rata basis according to their ownership interests, additional shares in the event of any increase in share capital. However, this preemptive right may be waived by (1) a majority of our board of directors in the case of an offering (whether or not registered under the Securities Act) or (2) a majority of the independent directors on our board of directors in any circumstance.

Pursuant to and in accordance with the Notice to the Public dated June 1, 2005 issued by the Bermuda Monetary Authority, there is no limitation on the right of non-residents of Bermuda to hold our shares as long as we remain listed on the NYSE.

Common Shares

Holders of class A common shares are entitled to one vote per share on all matters submitted to a vote of shareholders in general meeting. Holders of class B series 1 common shares or class B series 2 common shares are entitled to ten votes per share on all matters submitted to a vote of shareholders in general meeting, except as otherwise provided by our by-laws.

Except for the conversion provisions relating to our class B common shares, holders of our class A common shares and class B common shares have no redemption, conversion or sinking fund rights. Unless a different majority is required by law or by our by-laws, resolutions to be approved by holders of common shares require approval by a simple majority of votes cast at a meeting at which a quorum is present.

In the event of our liquidation, dissolution or winding-up, the holders of class A common shares and class B common shares are entitled to share equally and ratably in our assets, if any, remaining after the payment of all of our debts and liabilities, subject to any liquidation preference on any outstanding preference shares.

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Preference Shares

Under our by-laws, we may, subject to the affirmative vote of a majority of our board of directors and, in certain circumstances as provided for in our by-laws, a majority of our class A common shares and class B common shares, each voting as a separate class, establish one or more series of preference shares having such number of shares, designations, dividend rates, relative voting rights, conversion or exchange rights, redemption rights, liquidation rights and other relative participation, optional or other special rights, qualifications, limitations or restrictions as may be fixed. Such rights, preferences, powers and limitations as may be established could also have the effect of discouraging an attempt to obtain control of us. There are no outstanding preference shares, and we have no present plans to issue any preference shares.

Dividend Rights

For information concerning dividend rights of our class A common shares, class B series 1 common shares and class B series 2 common shares, see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividends and Dividend Policy.”

Tag-along Rights

Following the consummation of our initial public offering, no person or group of persons (other than a holder of class B series 1 common shares) may, in a transaction or series of transactions, acquire, directly or indirectly, the beneficial ownership of class A common shares representing more than 15% of our issued and outstanding common shares from any person or otherwise acquire control over our company, unless the terms and conditions of such transaction or transactions include an offer by the acquiring person or group of persons to the holders of all other class A common shares or class B common shares to acquire at the option of each applicable shareholder, all or any part of the respective shares owned by such shareholder. The price per share paid by the acquiring person or group of persons will be equivalent to the greater of (1) the highest price per share paid by the acquiring person or group of persons to acquire any such class A shares representing 15% of our issued and outstanding common shares or control, as applicable and (2) a price determined based on an appraisal report. The tag-along tender offer must be launched promptly after closing of the sale that triggers application of the tag-along provision and be completed within 60 days after the consummation of the transaction or series of transactions. In the event that the tag-along tender offer is not completed within the 60-day period, the holder or holders of the shares acquired in the sale that triggered the preemption rights will not be entitled to vote such shares, and we will be entitled to compel such holder or holders to sell these shares to unaffiliated persons deemed acceptable by a majority of our board of directors at the lower of (A) the lowest acquisition price for the class A common shares and (B) the then prevailing market price on the NYSE or such other stock exchange which constitutes the principal market for the class A common shares on a date selected by our board of directors that is not more than ten trading days on the applicable exchange following the expiration of the 60-day period.

Conversion

Our class A common shares are not convertible into any other shares of our authorized share capital.

Each class B common share is convertible at any time after three years following our initial public offering (August 16, 2007), at the option of the holder, into one class A common share. In addition, each class B common share will, subject to limited exceptions applicable to class B series 1 common shares referred to below, automatically convert into one class A common share upon any transfer of its current beneficial ownership, whether or not for value.

Following the death of Mr. Rubens Ometto Silveira Mello or a determination by 66-2/3% of our board of directors based on the medical determination of two internationally-recognized certified physicians that he is permanently mentally incapacitated, the beneficial ownership of class B series 1 common shares may be transferred from him to his immediate family members without resulting in the automatic conversion of those shares into class A common shares. So long as class B common shares are issued and outstanding, in the case of death or permanent incapacitation of Mr. Rubens Ometto Silveira Mello, the following actions or events will be subject to approval by a majority of the then independent members of our board of directors, in addition to any other approval of shareholders or members of our board required by Bermuda law or our by-laws:

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appointment of the chief executive officer of our company or any of its subsidiaries (including successors thereof);

changes to the core business strategy of our company or any of its subsidiaries;

change name or corporate purpose of our company or any of its subsidiaries;

amendments to any rights of the class B series 1 common shares;

any recapitalization, stock split, combination, reclassification or similar action affecting equity interests in our company or any of its subsidiaries;

redemption, capital reduction or other acquisition for value of any shares of equity interests in our company or any of its subsidiaries;

any transaction or series of transactions resulting in a spin-off, delisting, merger, amalgamation, reorganization or combination of or by our company or any of its subsidiaries with, or any acquisition of, another person involving an amount in excess of US$250 million;

any sale, lease, assignment, transfer or other disposition of assets valued in the aggregate, in excess of US$250 million;

any voluntary liquidation, reorganization, dissolution or winding-up of, or a voluntary filing for bankruptcy protection by our company or any of its subsidiaries;

the approval of the limit of the compensation of members of the board of directors or executive officers of our company or any of its subsidiaries;

the making of any investment in excess of US$250 million other than investments in the ordinary course of business;

entering into any Joint Venture, partnership or any similar arrangement other than in the ordinary course of business;

any related-party transactions;

the incurrence of any liens on properties valued, in the aggregate, in excess of US$250 million;

amendment of the provisions of any of the foregoing actions or events; and

agreeing to, or otherwise committing to take, any of the foregoing actions.

Mr. Rubens Ometto Silveira Mello may also transfer his class B series 1 common shares to a trust, corporation, partnership or limited liability company in which he and, following his death or permanent incapacitation, a member or members of his immediate family, directly or indirectly, retain sole dispositive power and exclusive voting control with respect to such entity and the class B series 1 common shares held by such entity. In addition, any such trust, corporation, partnership, or limited liability company that directly holds class B series 1 common shares may distribute those shares to its respective partners, members or owners (which may further distribute the class B series 1 common shares to their respective partners, members or owners) without triggering a conversion to class A common shares, provided that Mr. Rubens Ometto Silveira Mello and, following his death or permanent incapacitation, his immediate family members continue to hold sole dispositive power and exclusive voting control over the class B series 1 common shares.

Class B common shares also will automatically convert into class A common shares when the aggregate outstanding class B series 1 common shares represent less than 45% of our total voting power in respect of the issued and outstanding share capital in the company. In addition, class B series 2 common shares will automatically convert into class A common shares if all the class B series 1 common shares convert into class A common shares.

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Once transferred and converted into class A common shares, class B common shares will not be reissued. No class of common shares may be subdivided or combined unless the other class of common shares concurrently is subdivided or combined in the same proportion and in the same manner.

Transfer of Shares

Our board of directors may, in its discretion and without assigning any reason, refuse to register the transfer of a share that it is not fully paid. Our board of directors may also refuse to register the transfer of a share unless the instrument of transfer for such share is duly stamped (if required by law), is in respect of one class of shares, is in favor of less than 5 persons jointly and is accompanied by the relevant share certificate (if one has been issued) and such other evidence of the transferor’s right to make the transfer as our board of directors shall reasonably require. Any transfer of beneficial ownership of class B series 1 common shares or class B series 2 common shares not registered with the company will be null and void. For a period of three years following our initial public offering (August 16, 2007), holders of our class B series 2 common shares may not transfer less than all of the class B series 2 common shares that they own. Subject to these restrictions as are more fully set out in our by-laws a holder of shares in the company may transfer the title to all or any of such holder’s shares in the company by completing a form of transfer in such form as our board of directors may reasonably approve. The instrument of transfer must be signed by the transferor and transferee, although in the case of a fully paid share, our board of directors may accept the instrument signed only by the transferor. The board may also accept mechanically executed transfers.

Meetings of Shareholders

Under Bermuda law, a company is required to convene at least one general meeting of shareholders in each calendar year. Bermuda law provides that a special general meeting of shareholders may be called by the board of directors of a company and must be called upon the requisition of shareholders holding not less than 10% of the paid-up capital of the company as of the date of deposit carries the right to vote. Bermuda law also requires that shareholders be given at least five days’ advance notice of a general meeting, but the accidental omission to give notice to, or the non-receipt of a notice by, any person entitled to receive notice does not invalidate the proceedings at the meeting. Our by-laws provide that the chairman of the Board may call an annual general meeting or a special general meeting. Special general meetings of the shareholders may also be convened by our board of directors.

Under our by-laws, at least 10 clear days notice of an annual general meeting or a special general meeting must be given to each shareholder entitled to receive notice of such meeting. This notice requirement is subject to the ability to hold such meetings on shorter notice if notice is served pursuant to Bermuda law in the manner provided by the Companies Act 1981. The quorum required for a general meeting of shareholders is two or more persons present in person or by proxy and entitled to vote representing the holders of more than 45% of the aggregate voting power of the shares in the Company which by their terms carry the right to vote.

Any action required to be taken at a meeting of shareholders except in the case of the removal of auditors or directors may be taken without a meeting and without vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of issued and outstanding shares of the company, their proxy or corporate representative representing the percentage of votes required if the resolution had been voted on at a meeting of the shareholders. Notice of any resolution in writing shall be given to all shareholders entitled to attend a vote at a shareholder meeting.

Access to Books and Records and Dissemination of Information

Members of the general public have the right to inspect the public documents of a company available at the office of the Registrar of Companies in Bermuda. These documents include the company’s memorandum of association and any alteration to its memorandum of association. The shareholders have the additional right to inspect the by-laws of the company, minutes of general meetings and the company’s audited consolidated financial statements, which audited financial statements must be presented at the annual general meeting unless waived in accordance with the provisions of the Companies Act 1981. The register of shareholders of a company is also open to inspection by shareholders and by members of the general public without charge. The register of shareholders is required to be open for inspection for not less than two hours in any business day (subject to the ability of a company to close the register of shareholders for not more than thirty days in a year). A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act 1981, establish a branch register outside Bermuda. A company is required to keep at its registered office a register of directors and

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officers that is open for inspection for not less than two hours in any business day by members of the general public without charge. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.

Election and Removal of Directors

Our by-laws provide that our board of directors must consist of between five and eleven directors or such greater number as the board may determine. Our board of directors currently consists of eleven directors. Our by-laws provide that at least 40% (and, following the death or permanent incapacitation of Mr. Rubens Ometto Silveira Mello, at least 60%) of the members of our board of directors must be independent (as defined by the rules promulgated by (1) the U.S. Securities and Exchange Commission under the Exchange Act and (2) by the NYSE or any other principal securities exchange on which the class A common shares are so listed).

Our board of directors is divided into three classes that are, as nearly as possible, of equal size. Each class of directors is elected for a three-year term of office, and the terms are staggered so that the term of only one class of directors expires at each annual general meeting. There is also no requirement under Bermuda law or in our by-laws that our directors must retire at a certain age.

Any shareholder wishing to propose for election as a director a person who is not an existing director must give notice to the company of the intention to propose that person for election. The notice must be given not later than 90 days before the first anniversary of the last annual general meeting, or ten days after the notice of the general meeting at which the directors will be elected, whichever is earlier.

Our by-laws provide that a director may be removed with or without cause by a majority of the other directors then in office. Our by-laws also provide that a director may be removed for cause by the affirmative vote of the holders of a majority of the shareholder votes cast at a general meeting at which a quorum is present, provided notice is given to the director of the shareholders general meeting convened to remove the director. A director may be removed without cause upon the affirmative vote of the holders of a majority of the aggregate voting power of the shares of the Company which carry the right to vote on all matters submitted to shareholders, provided notice is given to the director of the general meeting convened to remove the director, which notice must contain a summary of the facts justifying the removal and must be served on the director not less than fourteen days before the meeting. As long as a director has made a written request deposited at the registered office of the Company pursuant to the Companies Act 1981, a director is entitled to attend the general meeting and be heard at any general meeting called for his removal.

So long as a quorum remains in office, our board of directors may fill any casual vacancy occurring.

Proceedings of Board of Directors

Our by-laws provide that our business is to be managed and conducted by our board of directors. Bermuda law requires that our directors be individuals, but there is no requirement in our by-laws or Bermuda law that directors hold any of our shares.

The remuneration of our directors is determined by our board of directors, and there is no requirement that a specified number or percentage of “independent” directors must approve any such determination. Our directors may also be paid all travel, hotel and other expenses properly incurred by them in connection with our business or their duties as directors.

Provided that he or she discloses a direct or indirect interest in any contract or arrangement with us as required by Bermuda law, our by-laws provide that a director is entitled to be counted in the quorum, but may not vote in respect of any such contract or arrangement in which he or she is interested. Under Bermuda law, a director (including the spouse or children of the director or any company (other than a company which is a holding company or a subsidiary of the company making the loan) of which such director, spouse or children own or control, directly or indirectly, more than 20% of the total capital or loan debt) cannot borrow from us without the consent of any shareholders holding in the aggregate not less than 90% of the total voting rights of all shareholders having the right to vote at any general meeting of the shareholders.

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Waiver of Claims by Shareholders; Indemnification of Directors and Officers

Our by-laws contain a provision by virtue of which our shareholders waive any claim or right of action that they may have, both individually and on our behalf, against any director or officer in relation to any action or failure to take action by such director or officer, except in respect of any fraud or dishonesty of such director or officer. We understand that, in the opinion of the staff of the SEC, the operation of this provision as a waiver of the right to sue for violations of U.S. federal securities laws would likely be unenforceable in U.S. courts.

Our by-laws also indemnify our directors and officers in respect of their actions and omissions, except in respect of their fraud or dishonesty.

Amalgamations and Other Business Combinations

Under Bermuda law, the amalgamation or other business combination of a Bermuda company with another company (other than certain affiliated companies), unless the by-laws otherwise provide requires the amalgamation or other business combination to be approved by a majority of the Bermuda company’s board of directors and by a majority of 75% of those voting at the general meeting of the Bermuda company. The quorum for the shareholder approval is two persons holding or representing at least one-third of the issued shares of the Company.

Our by-laws provide that an amalgamation or other business combination (as defined in our by-laws) (other than with a wholly-owned subsidiary) that has been approved by our board of directors must only be approved by a majority of the votes cast at a general meeting of our shareholders at which the quorum must be two persons representing the holders of more than 45% of the aggregate voting power of the paid-up and outstanding shares carrying the right to vote. Any amalgamation or other business combination (as defined in our by-laws) not approved by our board of directors must be approved by resolution passed by 66 2/3% of all votes attaching to all shares then in issue entitling the holder to attend and vote on the resolution.

Specified Transactions Involving Interested Shareholders

Specified transactions include the following:

any merger, consolidation or amalgamation of the Company with an interested shareholder;

any disposition or security arrangement with or for the benefit of any interested shareholder involving any of our assets, securities or commitments or those of any subsidiary or any interested shareholder that has an aggregate fair market value and/or involves aggregate commitments of US$250 million or more or constitutes more than 10% of the book value of the total assets or 10% of the shareholders equity of the entity in question;

the adoption of any plan for our liquidation or dissolution or for the discontinuation into another jurisdiction, unless proposed or adopted independently of any interested shareholder; or

any reclassification of our shares or other securities, or recapitalization, or any merger, consolidation or amalgamation with any of our subsidiaries or any other transaction that has the effect of increasing the proportionate share of any class of shares beneficially owned by an interested shareholder.

In addition to any affirmative vote required by law or our by-laws, a specified transaction with any interested shareholder will require the affirmative vote of not less than 66 2/3% of the aggregate voting power of the voting shares, voting together as a single class, excluding voting shares beneficially owned by any interested shareholder. Alternatively, a specified transaction may proceed with any affirmative vote required by law or our by-laws if the following principal conditions are satisfied in relation to common shares: (1) the approval of a majority of directors who are not affiliates of the interested shareholder; and (2) the aggregate amount of the cash and the fair market value as of the date of the consummation of the specified transaction of consideration other than cash to be received by the holder of common shares in such specified transaction shall be at least equal to the highest per share amount paid by the interested shareholder within a two-year period immediately prior to the first public announcement of the proposed specified transaction; or in the transaction in which he or she became such an interested shareholder (whichever is higher) or, if higher, the closing sales prices of such shares on the NYSE on the announcement date for the specified transaction or on the date of the transaction in which he or she became such an interested shareholder.

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For purposes of our by-laws, an “interested shareholder” includes, among others, any person who is or has publicly disclosed an intention to become the beneficial owner of shares representing 10% or more of our aggregate voting power of the voting shares.

Non-Competition Provision Applicable to Brazil

Our by-laws provide that we will operate and conduct business in Brazil exclusively through Cosan and its subsidiaries, and we will not compete, directly or indirectly, with Cosan in Brazil, unless otherwise approved by a majority of our independent directors.

Amendment of Memorandum of Association and By-laws

Bermuda law provides that the memorandum of association of a company may be amended by a resolution passed at a general meeting of shareholders of which due notice has been given.

Our by-laws provide that no by-law will be rescinded, altered or amended, unless it has been approved by a resolution of our board of directors and by a resolution of the shareholders. In the case of rescission, alteration or amendment to the by-laws relating to interpretation, rights of shares, modification of rights, indemnity of directors and officers, amalgamations and other business combinations, specified transactions involving interested shareholders, our discontinuation into another jurisdiction, tag-along rights and amendment or alterations of by-laws, the required resolutions must include the affirmative vote of at least 66 2/3% of our directors then in office and holders of at least 66 2/3% of class A common shares and at least a majority of class B common shares then in issue entitling the holder to attend and vote on the resolution, with each class voting separately as a class. In the case of rescission, alteration or amendment to the by-laws relating to the transmission of shares upon the death of a holder of class B series 1 shares, election of directors, the removal of directors, the increase of share capital and the alteration of share capital, the requisite affirmative votes are a majority of the directors then in office and holders of a majority of each of class A common shares and class B common shares then in issue entitling the holder to attend and vote on the resolution, with each class voting separately as a class.

Under Bermuda law, the holders of an aggregate of not less than 20% in par value of the company’s issued and outstanding share capital or any class thereof and or the holders of not less in the aggregate than 20% of the company’s debentures entitled to object to amendments to the memorandum of association have the right to apply to the Bermuda court for an annulment of any amendment of the memorandum of association adopted by shareholders at any general meeting, other than an amendment which alters or reduces a company’s share capital as provided in the Companies Act 1981.

Where such an application is made, the amendment becomes effective only to the extent that it is confirmed by the Bermuda court. An application for an annulment of an amendment of the memorandum of association must be made within twenty-one days after the date on which the resolution altering the company’s memorandum of association is passed and may be made on behalf of persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose. No application may be made by shareholders voting in favor of the amendment.

Modification of Rights

While we have more than one class of shares and more than one series of class B common shares, the rights attaching to any class or series, unless otherwise provided for by the terms of issue of the relevant class or series, may be modified with the consent in writing of the holders or the approval of the votes cast at a general meeting representing not less than 66- 2/3 % of the aggregate voting power of the shares in issue and not less than 75% of the aggregate voting power of the issued shares of that class or series, as the case may be. The quorum for any such general meeting will be two or more persons holding or representing by proxy one-third of the voting power of the issued shares of the class or series, as the case may be. Our by-laws specify that the creation or issue of shares ranking equally with existing shares will not, unless expressly provided by the terms of issue of those new shares, vary the rights attached to existing shares.

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Appraisal Rights and Shareholder Suits

Under Bermuda law, in the event of an amalgamation of a Bermuda company with another company, a shareholder of the Bermuda company who is not satisfied that fair value has been offered for such shareholder’s shares may apply to the Bermuda court to appraise the fair value of those shares within one month of the giving of the notice of the shareholders’ meeting called to approve the amalgamation.

Class actions and derivative actions are generally not available to shareholders under Bermuda law. Bermuda courts, however, may permit in certain circumstances a shareholder to commence an action in the name of a company to remedy a wrong to the company where the challenged act would allegedly be beyond the power of the company or illegal. In addition, consideration would be given by a Bermuda court to acts that would allegedly constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders’ voting power than that which actually approved it.

When the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interests of some or all of the shareholders, one or more shareholders may apply to a Bermuda court, which may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company.

Capitalization of Profits and Reserves

Pursuant to our by-laws, our board of directors may capitalize any part of the amount of our share premium account or any reserve or fund which is available for distribution by either: (1) paying up unissued shares to be allotted on a pro rata basis to shareholders as fully paid bonus shares; or (2) paying up in full partly paid shares of those shareholders who would be entitled to such sums if they were distributed by way of dividend or other distribution (or partly in one way and partly the other) provided that a share premium account may be applied only in paying up of unissued shares to be issued to such shareholders as fully paid.

Untraced Shareholders

Our by-laws provide that our board of directors may forfeit any dividend or other monies payable in respect of any shares which remain unclaimed for six years. In addition, we are entitled to cease sending dividend warrants and checks by post or otherwise to a shareholder if such instruments have been returned undelivered to, or left uncashed by, such shareholder on at least two consecutive occasions or, following one such occasion, reasonable inquires have failed to establish the shareholder’s new address. This entitlement ceases if the shareholder claims a dividend or cashes a dividend check or a warrant.

Certain Provisions of Bermuda Law

We have been designated by the Bermuda Monetary Authority as a non-resident for Bermuda exchange control purposes. This designation allows us to engage in transactions only in currencies other than the Bermuda dollar, and there are no restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to U.S. residents who are holders of our common shares.

Pursuant to a Notice to the Public dated June 1, 2005, issued by the Bermuda Monetary Authority, the Bermuda Monetary Authority granted general permission for the issue and subsequent transfer of any shares of a Bermuda company to and between non-residents of Bermuda where any shares of the company are listed and remain so listed on an appointed stock exchange, which includes the NYSE. Approvals or permissions given by the Bermuda Monetary Authority do not constitute a guarantee by the Bermuda Monetary Authority as to our performance or our creditworthiness. Accordingly, in giving such permissions, the Bermuda Monetary Authority will not be liable for the financial soundness, performance or default of our business or for the correctness of any opinions or statements expressed in this annual report.

In accordance with Bermuda law, share certificates are only issued in the names of companies, partnerships or individuals. In the case of a shareholder acting in a special capacity (for example, as a trustee), certificates may, at the request of the shareholder, record the capacity in which the shareholder is acting. Notwithstanding such recording of any special capacity, we are not bound to investigate or see to the execution of any such trust. We will take no notice of any trust applicable to any of our shares, whether or not we have been notified of such trust.

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Registrar or Transfer Agent

A register of holders of the class A common shares and class B common shares and any other issued share capital is maintained by Compass Administration Services Ltd. in Bermuda, and a branch register is maintained in the United States by Mellon Investor Services LLC, who serves as branch registrar and transfer agent.

Anti-takeover Effects Of Our By-laws

Our by-laws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors. These provisions provide, among other things, for:

a classified board of directors with staggered three-year terms;

restrictions on the time period in which directors may be nominated;

the affirmative vote of a majority of our directors then in office and a majority of all votes cast at a general meeting or, if not approved by a majority of the directors in office, at least 66 2/3% of all votes attaching to all shares then in issue for amalgamation and other business combination transactions; and

the tag-along rights described under “—Tag-Along Rights.”

C. Material Contracts

On August 25, 2010, we entered into a definitive agreement, or the Framework Agreement, for the creation of the Joint Venture with Shell. The transaction was concluded on June 1, 2011. Pursuant to the Joint Venture, Cosan and its subsidiaries contributed their sugar and ethanol businesses, their energy cogeneration business, their fuel distribution business and their interests in certain ethanol logistics facilities at the Port of Santos and transferred debt minus cash and cash equivalent of approximately R$5,596.2 million to the Joint Venture. Shell and its affiliates contributed their Brazilian fuel distribution business, their Brazilian aviation fuels business, their beneficial interest in two companies (Iogen Corp. and Codexis, Inc.) involved in the research and development of biomass fuel, including ethanol, and a capital contribution resulting in cash proceeds to the Joint Venture of approximately US$1.8 billion over a two-year period of which US$ 718.9 million had been contributed as of March 31, 2012. For more information on the operation of the Joint Venture, see “Item 4. Information on the Company—C. Organizational Structure.”

Other Agreements