Edgar Filing: Cosan Ltd.

COSAN LIMITED

August 23, 2010

/s/ Marcelo Eduardo Martins

Marcelo Eduardo Martins

Chief Financial Officer and Investor Relations Officer

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of August 2010

Commission File Number: 1-33659

COSAN LIMITED

(Translation of registrant’s name into English)

Av. Juscelino Kubitschek, 1726 – 6th floor

São Paulo, SP 04543-000 Brazil

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F

Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

COSAN LIMITED

Item
1.	Communication regarding 1st Quarter Fiscal Year 2011 earnings release

Item 1

Cosan Limited

Condensed Consolidated Financial Statements

For the three-month periods ended June 30, 2010 and 2009

COSAN LIMITED

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

Report of independent registered public accounting firm	1

Condensed consolidated balance sheets	2
Condensed consolidated statements of operations	4
Condensed consolidated statements of shareholders’ equity and comprehensive income (loss)	5
Condensed consolidated statements of cash flows	6
Notes to the condensed consolidated financial statements	7

Report of independent registered public accounting firm

To the Board of Directors and Shareholders of

Cosan Limited

We have reviewed the condensed consolidated balance sheet of Cosan Limited and subsidiaries as of June 30, 2010, the related condensed consolidated statements of operations and cash flows for the three-month periods ended June 30, 2010 and 2009 and the condensed consolidated statement of shareholders’ equity and comprehensive income (loss) for the three-month period ended June 30, 2010. These financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Cosan Limited and subsidiaries as of March 31, 2010, and the related consolidated statements of operations, shareholders’ equity and cash flows for the year then ended not presented herein and in our report dated June 10, 2010, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2010, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

São Paulo, Brazil

August 12, 2010

ERNST & YOUNG

Auditores Independentes S.S.

CRC 2SP015199/O-8

Luiz Carlos Nannini

Accountant CRC 1SP171638/O-7

COSAN LIMITED

Condensed consolidated balance sheets

June 30, 2010 and March 2010

(In thousands of U.S. dollars, except share data)

	(Unaudited) June 30, 2010		March 31, 2010
Assets
Current assets:
Cash and cash equivalents		601,388		623,675
Restricted cash		28,462		25,251
Derivative financial instruments		80,215		129,456
Trade accounts receivable, less allowances: June 30, 2010 – $31,206; March 31, 2010 – $32,144		343,673		430,328
Inventories		795,814		587,720
Advances to suppliers		179,557		132,258
Taxes recoverable		197,266		184,090
Other current assets		66,555		49,155
		2,292,930		2,161,933

Property, plant, and equipment, net		4,205,286		4,146,499
Goodwill		1,361,800		1,362,071
Intangible assets, net		582,247		602,263
Accounts receivable from Federal Government		186,663		187,385
Judicial deposits		93,739		94,083
Other non-current assets		467,491		440,672
		6,897,226		6,832,973
Total assets		9,190,156		8,994,906

	(Unaudited) June 30, 2010		March 31, 2010
Liabilities and shareholders’ equity
Current liabilities:
Trade accounts payable		397,924		320,044
Taxes payable		109,548		121,203
Salaries payable		122,058		79,497
Current portion of long-term debt		498,576		471,061
Derivative financial instruments		20,781		43,067
Dividends payable		24,414		24,696
Other current liabilities		173,522		111,971
		1,346,823		1,171,539

Long-term liabilities:
Long-term debt		2,917,580		2,845,667
Estimated liability for legal proceedings and labor claims		297,743		294,605
Taxes payable		380,702		381,805
Deferred income taxes		403,241		408,832
Other long-term liabilities		205,264		209,402
		4,204,530		4,140,311

Shareholders’ equity:
Common shares class A1, $.01 par value. 1,000,000,000 shares authorized; 174,355,341 shares issued and outstanding		1,743		1,743
Common shares class B1, $.01 par value. 96,332,044 shares authorized, issued and outstanding		963		963
Common shares class B2, $.01 par value. 92,554,316 shares authorized		-		-
Additional paid-in capital		1,932,294		1,932,117
Accumulated other comprehensive loss		149,386		167,103
Retained earnings (accumulated losses)		230,330		242,264
Equity attributable to shareholders of Cosan Ltd		2,314,716		2,344,190
Equity attributable to noncontrolling interests		1,324,087		1,338,866
Total shareholders’ equity		3,638,803		3,683,056
Total liabilities and shareholders’ equity		9,190,156		8,994,906

See accompanying notes to condensed consolidated financial statements.

COSAN LIMITED

Condensed consolidated statements of operations

Three-month periods ended June 30, 2010 and 2009

(In thousands of U.S. dollars, except share data)

(Unaudited)

	June 30, 2010			June30, 2009
Net sales		2,233,840			1,720,270
Cost of goods sold		(1,994,462	)		(1,561,430	)
Gross profit		239,378			158,840
Selling expenses		(122,709	)		(102,072	)
General and administrative expenses		(68,301	)		(7,903	)
Operating income		48,368			48,865
Other income (expenses):
Financial income		38,792			153,262
Financial expenses		(101,065	)		62,472
Other		(133	)		(7,927	)

(Loss) income before income taxes and equity in income (loss) of affiliates		(14,038	)		256,672
Income taxes expense		(1,242	)		(76,543	)

(Loss) income before equity in income of affiliates		(15,280	)		180,129
Equity in income (loss) of affiliates		553			(1,713	)

Net (loss) income		(14,727	)		178,416
Less net income (loss) attributable to noncontrolling interests		2,793			(55,795	)
Net (loss) income attributable to Cosan Ltd		(11,934	)		122,621

Per-share amounts attributable to Cosan Ltd
Earnings (loss) from continuing operations
Basic and diluted		(0.04	)		0.50

Weighted number of shares outstanding
Basic and diluted		270,687,385			246,868,311

See accompanying notes to condensed consolidated financial statements.

COSAN LIMITED

Condensed consolidated statements of shareholders’ equity and comprehensive income (loss)

Three-month period ended June 30, 2010

(In thousands of U.S. dollars, except share data)

(Unaudited)

	Common stock
	Common number of class A Shares		Common number of class B shares		Common amount of class A shares		Common amount of class B shares		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income			Noncontrolling interests			Total shareholders’ equity
Balances at March 30, 2010		174,355,341		96,332,044		1,743		963		1,932,117		242,264			167,103			1,338,866			3,683,056

Share based compensation		-		-		-		-		177		-			-			107			284
Net loss		-		-		-		-		-		(11,934	)		-			(2,793	)		(14,727	)
Pension plan		-		-		-		-		-		-			(321	)		(194	)		(515	)
Effective portion of gains/losses on derivative instrument that qualifies as a cash flow hedge		-		-		-		-		-		-			6,927			4,198			11,125
Currency translation adjustment															(24,323	)		(16,097	)		(40,420	)
Total comprehensive loss																					(44,537	)

Balances at June 30, 2010		174,355,341		96,332,044		1,743		963		1,932,294		230,330			149,386			1,324,087			3,638,803

See accompanying notes to condensed consolidated financial statements.

COSAN LIMITED

Condensed consolidated statements of cash flows

Three-month periods ended June 30, 2010 and 2009

(In thousands of U.S. dollars)

(Unaudited)

	June 30, 2010			June 30, 2009
Cash flow from operating activities:
Net (loss) income attributable to Cosan Limited		(11,934	)		122,621
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		145,303			99,330
Deferred income taxes		(5,288	)		66,627
Interest, monetary and exchange variation		72,343			(136,329	)
Net loss (income) attributable to noncontrolling interests		1,091			55,795
Others		11,464			12,219
Decrease/increase in operating assets and liabilities
Trade accounts receivable, net		85,072			56,541
Inventories		(157,992	)		88,423
Advances to suppliers		(42,561	)		(33,804	)
Recoverable taxes		(11,826	)		5,326
Trade accounts payable		81,518			24,065
Derivative financial instruments		67,709			(16,246	)
Taxes payable		(16,119	)		(29,270	)
Other assets and liabilities, net		76,560			27,669
Net cash provided by operating activities		295,340			337,967

Cash flows from investing activities:
Restricted cash		(28,462	)		(14,516	)
Cash received from sales of permanent assets		-			60,325
Acquisition of investment		(2,080	)		(2,050	)
Acquisition of property, plant and equipment		(333,280	)		(226,994	)
Acquisitions, net of cash acquired		373			32,045
Net cash used in investing activities		(363,449	)		(151,190	)

Cash flows from financing activities:
Related parties		-			(62,184	)
Additions of long-term debt		356,588			88,593
Payments of long-term debt		(311,767	)		(69,222	)
Net cash used in financing activities		44,821			(42,813	)
Effect of exchange rate changes on cash and cash equivalents		1,001			23,512
Net increase (decrease) in cash and cash equivalents		(22,287	)		167,476
Cash and cash equivalents at beginning of period		623,675			508,784
Cash and cash equivalents at end of period		601,388			676,260

Supplemental cash flow information
Cash paid during the period for:
Interest		47,094			22,063
Income tax		3,391			18,287

See accompanying notes to condensed consolidated financial statements.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

1.	Operations

Cosan Limited (“Cosan” and “the Company”) was incorporated in Bermuda as an exempted company on April 30, 2007. In connection with its incorporation, Cosan Limited issued 1,000 shares of common stock for $10.00 to Mr. Rubens Ometto Silveira Mello, who indirectly controls Cosan S.A. Indústria e Comércio and its subsidiaries (“Cosan S.A.”).

The companies included in the consolidated financial statements have as their primary activity the production of ethanol and sugar, the marketing and distribution of fuel and lubricants in Brazil, and logistics services in the state of São Paulo, Brazil.

On February 1, 2010, the Company announced that it, along with Royal Dutch Shell, had reached a non-binding memorandum of understanding, to form a joint venture for a combined 50/50 investment. Cosan will contribute its sugar and ethanol and its distribution assets to the joint venture while Shell will contribute its distribution assets in Brazil. Shell will also make a fixed cash contribution in the amount of $1,625 billion over a 2 year period. The closing of this transaction is dependent upon the conclusion of the negotiations. During the three-month period ended June 30, 2010, this association did not generate any accounting records.

2.	Presentation of the consolidated financial statements

Basis of reporting for interim financial statements

In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s results for the periods presented. Interim results for the three-month period ended June 30, 2010, are not necessarily indicative of the results that may be expected for the fiscal year.

The unaudited condensed consolidated financial statements include the accounts of Cosan Limited and its subsidiaries. All significant intercompany transactions have been eliminated.

These condensed consolidated financial statements should be read in conjunction with Cosan Ltd`s annual consolidated financial statements for the fiscal year ended March 31, 2010.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

2.	Presentation of the consolidated financial statements (Continued)

The accounts of Cosan and its subsidiaries are maintained in Brazilian reais, which is the functional currency. The accounts have been translated into U.S. dollars in accordance with Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters”.

The exchange rate of the Brazilian real (R$) to the US$ was R$1.8015=US$ 1.00 at June 30, 2010 and R$1.7810=US$1.00 at March 31, 2010.

Use of estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates. These estimates and assumptions are reviewed and updated regularly to reflect recent experience.

New Accounting Pronouncements

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements, which will require companies to make new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value hierarchies and information on purchases, sales, issuance and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The ASU is effective prospectively for financial statements issued for fiscal years and interim periods beginning after December 15, 2009. The new disclosures about purchases, sales, issuance and settlements on a gross basis in the reconciliation of Level 3 fair value measurements is effective for interim and annual reporting periods beginning after December 15, 2010. The Company expects that the adoption of ASU 2010-06 will not have a material impact on its consolidated financial statements.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

2.	Presentation of the consolidated financial statements (Continued)

Derivative financial instruments

Cosan accounts for derivative financial instruments utilizing ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, as amended. As part of Cosan’s risk management program, it uses a variety of financial instruments, including commodity futures contracts, forward currency agreements, interest rate and foreign exchange swap contracts and option contracts. Beginning April 1, 2010 Cosan recognized a portion of its derivative instruments as cash flow hedge transactions. The derivative instruments are measured at fair value and the gains or losses resulting from the changes in fair value of the instruments are recorded in financial income or financial expense or other comprehensive income when designated as a cash flow hedge. See note 12 for further detail.

3.	Inventories

	June 30, 2010		March 31, 2010
Finished goods:
Sugar		165,911		52,561
Ethanol		178,626 151,562		31,573 149,613
Lubricants and fuel (Gasoline, Diesel and Ethanol)		178,626 151,562		31,573 149,613
		496,099		233,747

Annual maintenance cost of growing crops		203,896		243,709
Others		95,819		110,264
		795,814		587,720

4.	Taxes payable

	June 30, 2010			March 31, 2010

ICMS – State VAT		21,059			27,623
IPI		8,559			3,582
INSS		13,328			13,414
PIS		2,608			4,564
COFINS		12,136			18,010
Tax Recovery from Brazilian Law No 11.941/09 and MP 470/09		367,834			373,650
Income Tax and Social Contribution		52,564			50,471
Others		12,162			11,694
		490,250			503,008
Current liabilities		(109,548	)		(121,203	)
Long-term liabilities		380,702			381,805

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

5.	Long-term debt

Long-term debt is summarized as follows:

	Index	Average annual interest rate			June 30, 2010			March 31, 2010
Resolution No. 2471 (PESA)	IGP-M		3.9	%		306,930			297,243
Senior notes due 2014	US Dollar		9.5	%		362,838			354,433
Senior notes due 2017	US Dollar		7.0	%		412,227			405,258
Perpetual notes	US Dollar		8.3	%		455,668			455,820
BNDES	TJLP		3.6	%		741,719			520,068
Credit notes	DI		2.4	%		169,220			212,660
Credit notes	US Dollar		6.2	%		101,076			102,656
Export Pre-payments	US Dollar		6.2	%		495,805			547,230
Others	Various	Various				370,673			421,360
						3,416,156			3,316,728
Current liability						(498,576	)		(471,061	)
Long-term debt						2,917,580			2,845,667

Long-term debt has the following scheduled maturities:

2011			366,651
2012			361,359
2013			422,280
2014			206,532
2015			79,539
2016			479,036
2017			95,023
2018 and thereafter			907,159
			2,917,580

Resolution No. 2471 - Special Agricultural Financing Program (Programa Especial de Saneamento de Ativos), or PESA

To extend the repayment period of debts incurred by Brazilian agricultural producers, the Brazilian government passed Law 9.138 followed by Central Bank Resolution 2,471, which, together, formed the PESA program. PESA offered certain agricultural producers with certain types of debt the opportunity to acquire Brazilian treasury bills (“CTNs”) in an effort to restructure their agricultural debt. The face value of the Brazilian treasury bills was the equivalent of the value of the restructured debt and was for a term of 20 years.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

5.	Long-term debt (Continued)

Resolution No. 2471 - Special Agricultural Financing Program (Programa Especial de Saneamento de Ativos), or PESA (Continued)

The acquisition price was calculated by the present value, discounted at a rate of 12% per year or at the equivalent of 10.4% of its face value. The CTNs were deposited as a guarantee with a financial institution and cannot be renegotiated until the outstanding balance is paid in full. The outstanding balance associated with the principal is adjusted in accordance with the IGP-M until the expiration of the restructuring term, which is also 20 years, at which point the debt will be discharged in exchange for the CTNs. Because the CTNs will have the same face value as the outstanding balance at the end of the term, it will not be necessary to incur additional debt to pay PESA debt.

On July 31, 2003, the Central Bank issued Resolution 3,114, authorizing the reduction of up to five percentage points of PESA related interest rates, effectively lowering the above-mentioned rates to 3%, 4% and 5%, respectively. The CTNs held by Cosan S.A. as of June 30, 2010 and March 2010 amounted to $137,653 and $133,039, respectively, and are classified as other non-current assets.

Senior notes due 2017

On January 26, 2007, Cosan Finance Limited, an indirect subsidiary of the Company, issued $400,000 of senior notes in the international capital markets. These senior notes, listed on the Luxembourg Stock Exchange, mature in November 2017 and bear interest at a rate of 7% per annum, payable semi-annually. The senior notes are guaranteed by Cosan S.A., and its subsidiary, Cosan Açucar e Álcool.

Senior notes due 2014

On August 4, 2009, the indirect subsidiary CCL Finance Limited issued $ 350,000 of senior notes in the international capital markets. These senior notes, listed on the Luxembourg Stock Exchange, mature in August 2014 and bear interest at a rate of 9.5% per annum, payable semi-annually in February and August of each year, from February of 2010.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

5.	Long-term debt (Continued)

Perpetual notes

On January 24 and February 10, 2006, Cosan S.A. issued perpetual notes which are listed on the Luxembourg Stock Exchange - EURO MTF. These notes bear interest at a rate of 8.25% per year, payable quarterly on May 15, August 15, November 15 and February 15 of each year, beginning May 15, 2006.

These notes may, at the discretion of Cosan, be redeemed on any interest payment date subsequent to February 15, 2011. The notes are guaranteed by Cosan S.A. and by Cosan Açucar e Álcool.

Export Pre-payment Notes

During the third quarter of 2009, the Company obtained funds from export pre-payment notes for the total amount of $530,000. The export pre-payment notes are due from 2012 through 2014, and bear interest of Libor plus 6.2%.

BNDES

Refers to the financing of cogeneration projects, as well as the financing of Jataí and Caarapó greenfields (sugar and ethanol mills). The BNDES financing is due from 2012 through 2025.

Credit Notes

The Company executed several credit note agreements with several financial institutions during 2010 which will be paid through export operations during 2012. The credit notes bear interest at rates between 2.1% and 6.2% per annum, payable semi-annually.

Covenants

Cosan and its subsidiaries are subject to certain restrictive covenants related to their indebtedness.

At June 30, 2010, Cosan was in compliance with its debt covenants.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

6.	Related parties

Assets and liabilities with related parties are summarized as follows:

	Assets
	June 30, 2010			March 31, 2010
Rezende Barbosa S.A. Administração e Participações		48,262			48,889
Vertical UK LLP		18,035			8,403
Others		5,585			2,377
		71,882			59,669
Current (*)		(27,690	)		(13,958	)
Nuncurrent (*)		44,192			45,711

	Liabilities
	June 30, 2010			March 31, 2010
Rezende Barbosa S.A. Administração e Participações		60,948			-
Logispot Armazéns Gerais S.A.		4,161			6,313
Others		1,543			1,781
		66,652			8,094
Current (*)		(66,652	)		(8,094	)
Nuncurrent		-			-
(*) included in other current and non-current assets or liabilities

A receivable of $48,262 ($48,889 as of March 31, 2010) with Rezende Barbosa S.A. Administração e Participações related to credits assumed by Rezende Barbosa, in connection with the acquisition of Cosan Alimentos and intercompany loans.

The amount receivable from the affiliate Vertical UK LLP, refers to ethanol trading, with an average maturity date of 30 days.

A payable of $60,948 with Rezende Barbosa S.A. Administração e Participações related to purchase of sugar cane. This amount is presented offset of credits assumed by Rezende Barbosa, in connection with the acquisition of Cosan Alimentos and intercompany loans.

The payable to Logispot is related to the remaining payment in connection with the interest acquired.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

6.	Related parties (Continued)

Cosan conducts some of its operations through various joint ventures and other partnership forms which are principally accounted for using the equity method. The condensed consolidated income statement includes the following amounts resulting from transactions with related parties:

	June 30, 2010			June 30, 2009
Transactions involving assets
Cash received due to the sale of finished products, services performed, and assets held, net of payments		(29,720	)		(38,781	)
Sale of finished products and services		-			146,986
Purchase of finished products and services		-			(146,986	)
Sale of finished products and services in a subsidiary		42,676			35,386
Receivable added through acquisition of Nova América		-			71,061

Transactions involving liabilities
Payment of financial resources, net of funding		(4,510	)		(1,809	)
Purchase of sugar cane		63,449			-
Financial income/expenses		-			(30,885	)

The purchase and sale of products are carried out at arm’s length and unrealized profit or losses with consolidated companies have been eliminated. Those operations are also carried out at prices and under conditions similar to those existing in the market.

At June 30 and March 31, 2010, Cosan S.A. and its subsidiaries were lessees of approximately 68,000 hectares (unaudited) of affiliated companies’ land and land of its related party Radar Propriedades Agrícolas S.A., which is controlled by another shareholder. These operations are carried out under conditions and prices similar to those prevailing in the market, calculated based on sugarcane tons per hectare, valued in accordance with the price established by CONSECANA (São Paulo State Council of Sugarcane, Sugar and Ethanol Producers).

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

7.	Estimated liability for legal proceedings and labor claims and commitments

	June 30, 2010		March 31, 2010
Tax contingencies		174,837		173,924
Civil and labor contingencies		122,906		120,681
		297,743		294,605

Cosan and its subsidiaries are parties in various ongoing labor claims, civil and tax proceedings in Brazil arising in the normal course of its business. Respective provisions for contingencies were recorded considering those cases in which the likelihood of loss has been rated as probable. Management believes resolution of these disputes will have no significant effect compared to the estimated amounts accrued.

Judicial deposits recorded by Cosan under other non-current assets, in the balance sheets, amounting to $74,406 at June 30, 2010 ($94,083 at March 31, 2010) have been made for certain of these suits. Judicial deposits are restricted assets of Cosan placed on deposit with the court and held in judicial escrow pending legal resolution of the related legal proceedings.

The major tax contingencies as of June 30, 2010 and March 31, 2010 are described as follows:

	June 30, 2010		March 31, 2010
Compensation with Finsocial		97,329		97,114
ICMS credits		44,105		33,824
PIS and Cofins		14,099		11,910
IPI – Federal VAT		4,686		4,692
Other		14,618		26,384
		174,837		173,924

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

7.	Estimated liability for legal proceedings and labor claims and commitments (Continued)

The detail of the movement in the estimated liability for legal proceedings and labor claims is as follows:

Balance at March 31, 2010	294,605
Provision	7,494
Settlements	(1,004	)
Foreign currency translation	(3,352	)
Balance at June 30, 2010	297,743

In addition to the aforementioned claims, Cosan and its subsidiaries are involved in other contingent liabilities relating to tax, civil and labor claims and environmental matters, which have not been recorded, considering their current stage and the likelihood of favorable outcomes rated as possible. These claims are broken down as follows:

	June 30, 2010		March 31, 2010
Withholding Income Tax		103,579		102,652
ICMS – State VAT		187,457		180,988
IAA - Sugar and Ethanol Institute		1,418		1,428
IPI - Federal Value-added tax		239,167		246,190
INSS		2,364		2,280
PIS and COFINS		80,567		80,604
Civil and labor		278,883		275,403
Other		72,733		66,134
		966,168		955,679

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

8.	Accounts receivable from Federal Government

The subsidiary Cosan Açúcar e Álcool has several indemnification suits filed against the Federal Government. The suits relate to product prices that did not conform to the reality of the market, which were mandatorily established at the time the sector was under the Government‘s control.

In connection with one of these suits, a final and unappealable decision in the amount of US$149,121 was rendered in September 2006 in favor of Usina de Barra. This has been recorded as a gain in the statement of operations in 2007. Since the recorded amount is substantially composed of interest and monetary restatement, it was recorded in financial income and in a non-current receivable on the balance sheet. In connection with the settlement process, the form of payment continues to be negotiated with the government.

At June 30, 2010, the receivable and corresponding lawyers’ fees totaled US$186,663 and US$22,399 (US$187,385 and US$22,486 at March 31, 2010), respectively.

9.	Income taxes

Income tax benefit (expense) attributable to income from operations for the three-month periods ended June 30, 2010 and 2009 consists of:

	June 30, 2010			June 30, 2009
Income taxes benefit (expense):
Current		(6,530	)		(11,240	)
Deferred		5,288			(65,303	)
		(1,242	)		(76,543	)

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

9.	Income taxes (Continued)

Income taxes for the three-month periods ended June 30, 2010 and 2009 differed from the amounts computed by applying the income tax rate of 25% and social contribution tax rate of 9% to income before income taxes due to the following:

	June 30, 2010			June 30, 2009
Income (loss) before income taxes and equity in income (loss) of affiliates		(14,038	)		256,678
Income tax benefit (expense) at statutory rate — 34%		4,773			(87,270	)
Increase (reduction) in income taxes resulting from:
Nontaxable income of the Company		(1,400	)		(971	)
Equity in earnings of affiliates not subject to taxation		188			(582	)
Tax loss on tax free entities		(1,856	)		-
Nondeductible goodwill amortization		-			12,206
Nondeductible donations and contributions		(817	)		(236	)
Recognized granted options		(97	)		(570	)
Others		(2,033	)		880
Income tax (expense) benefit		(1,242	)		(76,543	)

Cosan accounts for unrecognized tax benefits in accordance with ASC 740, “Accounting for Uncertainly in Income Taxes”. A reconciliation of the beginning and ending amount of unrecognized tax benefits in the estimated liability for legal proceedings, and labor claims, is as follows:

Balance at March 31, 2010	49,013
Accrued interest on unrecognized tax benefit	709
Settlements	-
Effect of foreign currency translation	(558	)
Balance at June 30, 2010 (*)	49,164

(*) Recorded as taxes payable (long-term)

It is possible that the amount of unrecognized tax benefits will change in the next twelve months, however, an estimate of the range of the possible change cannot be made at this time due to the long time to reach a settlement agreement or decision with the taxing authorities.

The Company and its subsidiaries file income tax returns in Brazil and they are subject to income tax examinations by the relevant tax authorities for the years 2005 through 2010.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

10.	Shareholders’ equity

Capital

As of June 30, 2010 and March 31, 2010, Cosan Limited’s share capital consists of:

Shareholder	Class A shares and/or BDRs		%		Class B shares		%
Queluz Holding Limited		11,111,111		6.37		66,321,766		68.85
Usina Costa Pinto S.A. Açúcar e Álcool		-		-		30,010,278		31.15
Aguassanta Participaçơes S.A.		5,000,000		2.87		-		-
Gávea Funds		33,333,333		19.12		-		-
Others		124,910,897		71.64		-		-
Total		174,355,341		100.00		96,332,044		100.00

11.	Deferred gain on sale of investments in subsidiaries

Agrícola Ponte Alta S.A. is a subsidiary whose principal assets are land used for the growing of sugarcane for Cosan S.A. On December 15, 2008, the shareholders approved a partial spin-off of the assets of Ponte Alta and created four new subsidiaries. Agricultural land was then transferred from Ponte Alta to each of the entities. On December 30, 2008, two of the entities, Nova Agrícola Ponte Alta S.A. and Terras da Ponte Alta S.A. were sold to Radar, an affiliate company accounted for by the equity method. The selling price was fair value, $123,596, which resulted in a gain of $47,080. This gain has previously been deferred since there were no lease contracts executed for the land, which was being used by Cosan S.A. for a monthly fee. During the year ended March 31, 2009 the lease contracts were executed, and the gain is being amortized to profit and loss over the 19 year average term of the leases since then.

During the three-month period ended June 30, 2010, Cosan S.A. recognized d a gain of $939 related to this sale-leaseback transaction.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

12.	Share-based compensation

Cosan offers a stock option plan to officers and employees. The plan authorizes the issue of up to 5% of the shares comprising Cosan’s share capital. The exercise of options may be settled only through issuance of new common shares or treasury shares.

The employees that leave Cosan S.A. before the vesting period will forfeit 100% of their rights. However, if the employment is terminated by Cosan S.A. without cause, the employees will have right to exercise 100% of their options of that particular year plus the right to exercise 50% of the options of the following year.

The fair value of share-based awards was estimated using a binominal model with the following assumptions:

	Options granted on September 22, 2005			Options granted on September 11, 2007			Options granted on August 7, 2009
Grant price - in U.S. dollars		3.39			3.39			3.39
Expected life (in years)		7.5			7.5		Immediate
Interest rate		14.52	%		9.34	%		(1	)
Expected Volatility		34.00	%		46.45	%		(1	)
Expected Dividend yield		1.25	%		1.47	%		(1	)
Weighted-average fair value at grant date - in U.S. dollars		6.86			5.67			(1	)

(1)

The options were fully vested at the date of issuance so the fair value was the quoted market price as of the grant date.

As of June 30, 2010, the amount of $1,360 related to the unrecognized compensation cost related to stock options is expected to be recognized in 3 months.

As of June 30, 2010 there were 653,976 options outstanding with a weighted-average exercise price of $3.39.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments

Risk management

The Company is exposed to market risks, mainly related to the volatility of sugar prices and foreign exchange rates. Management analyzes these risks and uses financial instruments to hedge a portion of the risk exposure.

On June 30 and March 31, 2010, fair values related to transactions involving derivative financial instruments with the purpose of hedge or other purposes were measured at market value (fair value) by observables factors such as quoted prices in active markets or discounted cash flows based on market curves and are presented below:

	Notional				Fair Value
	June 30, 2010		March 31, 2010		June 30, 2010			March 31, 2010
Price risk
Commodity derivatives
Future contracts		609,197		661,110		26,497			63,101
Options contracts		22,410		603,357		(1,831	)		(6,586	)
Swap contracts		-		56,594		-			607
						24,666			57,121

Exchange rate risk
Exchange rate derivative
Future contracts		317,325		1,180,829		1,537			264
Forward contracts		685,601		537,422		27,899			20,527
Options contracts		518,736		377,036		6,162			8,827
Swap contracts		178,753		180,810		-			-
						35,598			29,618

Interest rate risk
Interest derivative		287,977		291,291		(830	)		(350	)
						(830	)		(350	)
Total						59,434			86,389
Total Assets						80,215			129,456
Total Liabilities						(20,781	)		(43,067	)

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

Price risk

This arises from the possibility of fluctuations in the market prices of products sold by the Company, mainly raw material sugar - VHP (sugar #11) and white sugar (LIFFE sugar #5). These fluctuations in prices can cause substantial changes in the revenues of the Company. To mitigate these risks, the Company constantly monitors the markets, seeking to anticipate changes in prices. IThe positions of the consolidated derivative financial instruments to hedge the price risk of commodities are shown in the table below:

Price risk: price derivatives outstanding on June 30, 2010

Derivative

Purchased /

sold

Market

Contract

Maturity

Notional

Fair value

Derivative financial instruments designated in the cash flow hedge accounting

Swap

Sold

OTC

#11

Sep-10

90,728

16,598

Future

Sold

NYBOT

#11

Sep-10

82,819

7,059

Future

Sold

NYBOT

#11

Feb-11

68,355

2,231

Future

Sold

NYBOT

#11

Apr-11

23,093

2,300

Future

Sold

NYBOT

#11

Jun-11

86,411

2,145

Future

Sold

NYBOT

#11

Sep-11

52,284

30,355

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

Price risk (Continued)

Price risk: price derivatives outstanding on June 30, 2010

Derivative

Purchased /

sold

Market

Contract

Maturity

Notional

Fair value

Derivative financial instruments not designated in the cash flow hedge accounting

Future

Sold

LIFFE

White Sugar

Jul-10

14,385

(1,558

)

Future

Sold

LIFFE

White Sugar

Sep-10

10,862

655

Future

Sold

NYBOT

#11

Sep-10

89,377

10,212

9,309

Future

Purchased

NYBOT

#11

Sep-10

(4,225

)

Future

Purchased

NYBOT

#11

Feb-11

(80,496

)

(13,148

)

Future

Purchased

NYBOT

#11

Apr-11

(1,930

)

(79

)

Future

Purchased

NYBOT

#11

Jun-11

(1,871

)

(88

)

(13,241

)

Future

Purchased

NYMEX

Jul-10

(2,361

)

Call

Purchased

OTC

#11

Sep-10

(2,328

)

Call

Purchased

OTC

#11

Sep-10

(2,460

)

154

Call

Sold

NYBOT/OTC

#11

Sep-10

4,283

(627

)

Call

Sold

NYBOT/OTC

#11

Sep-10

3,734

(440

)

Call

Sold

NYBOT/OTC

#11

Feb-11

3,022

(732

)

Call

Sold

NYBOT

#11

Feb-11

451

(138

)

Call

Sold

NYBOT

#11

Feb-11

160

(49

)

(1,985

)

Put

Purchased

NYBOT/OTC

#11

Sep-10

3,759

2,823

Put

Purchased

NYBOT/OTC

#11

Sep-10

1,312

1,055

3,878

Put

Sold

NYBOT/OTC

#11

Sep-10

(819

)

(2,823

)

Put

Sold

NYBOT/OTC

#11

Sep-10

(82

)

(1,055

)

(3,878

)

Total Commodities

24,666

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

Foreign exchange risk

This arises from the possibility of fluctuations in the exchange rates of the foreign currencies used by the Company for the export revenues of products, imports, debt cash flow and other assets and liabilities denominated in a foreign currency. The Company uses derivative transactions to manage the risks of cash flow coming from the export revenues denominated in U.S. dollars, net of other cash flows denominated in foreign currency. The table below demonstrates the consolidated positions open on June 30, 2010 of derivatives used to hedge exchange rates:

Foreign exchange risk: Exchange rate derivatives outstanding on June 30, 2010

Derivative

Purchased/

sold

Market

Contract

Maturity

Notional

Fair value

Derivative financial instruments designated in the cash flow hedge accounting

Forward

Sold

OTC/Cetip

NDF

Jul-10

53,733

3,469

Forward

Sold

OTC/Cetip

NDF

Aug-10

79,788

3,791

Forward

Sold

OTC/Cetip

NDF

Sep-10

5,640

527

Forward

Sold

OTC/Cetip

NDF

Sep-10

25,636

2,114

Forward

Sold

OTC/Cetip

NDF

Oct-10

81,851

5,843

Forward

Sold

OTC/Cetip

NDF

Dec-10

53,081

1,275

Forward

Sold

OTC/Cetip

NDF

Jan-11

49,659

2,504

Forward

Sold

OTC/Cetip

NDF

May-11

78,424

2,269

Forward

Sold

OTC/Cetip

NDF

Jul-11

55,121

407

Forward

Sold

OTC/Cetip

NDF

Aug-11

57,591

2,222

Forward

Sold

OTC/Cetip

NDF

Oct-11

145,079

3,479

27,899

Derivative financial instruments not designated in the cash flow hedge accounting

Future

Sold

BMFBovespa

Commercial U.S.

dollar rate

Aug-10

152,879

573

Future

Sold

BMFBovespa

Commercial U.S.

dollar rate

Dec-10

71,708

441

Future

Sold

BMFBovespa

Commercial U.S.

dollar rate

Jul-11

189,260

1,177

Future

Sold

BMFBovespa

Commercial U.S.

dollar rate

Aug-11

43,586

270

Future

Sold

BMFBovespa

Euro

Jul-10

8,445

)

2,457

Future

Purchased

BMFBovespa

Commercial U.S.

dollar rate

Dec-10

(51,220

)

(315

)

Future

Purchased

BMFBovespa

Commercial U.S.

dollar rate

Jul-11

(97,334

)

(605

)

(921

)

Put Onshore

Purchased

BMFBovespa

Commercial U.S.

dollar rate

Oct-10

485,706

5,393

Put Offshore

Purchased

OTC

Commercial U.S.

dollar rate

Feb-11

23,748

424

Put Offshore

Purchased

OTC

Commercial U.S.

dollar rate

Feb-11

9,281

346

6,163

Total Exchange rate derivative

35,598

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

On June 30, 2010 and March 31, 2010, the Company had the following net exposure to the variation of U.S. dollar assets and liabilities denominated in U.S. dollars:

	June 30, 2010			March 31, 2010
Amounts pending foreign exchange closing		24,906			71,732
Overnight		28,254			28,338
Trade notes receivable - foreign		70,702			83,467
Senior Notes due in 2014		(362,838	)		(354,433	)
Senior Notes due in 2017		(411,589	)		(404,589	)
Perpetual bonds		(455,303	)		(455,304	)
Foreign currency-denominated loans		(203,316	)		(269,066	)
Export pre-payments		(499,090	)		(550,552	)
Restricted cash		28,462			25,251
Exchange exposure		(1,779,812	)		(1,825,156	)

hedge accounting effects

The Company formally designated its transactions subject to hedge accounting for cash flow hedges from sugar VHP (raw material) export revenue, documenting: (i) the relationship of the hedge, (ii) the Company’s purpose for taking the hedge and its risk management strategy, (iii) identification of the financial instrument, (iv) the transaction or item covered, (v) the nature of the risk being hedged, (vi) a description of the hedging relationship (vii) the demonstration of correlation between the hedge and the object of coverage, and (viii) the prospective analysis of hedge effectiveness. The Company has designated derivative financial instruments of Sugar # 11 (NYBOT or OTC) to cover the risk of price and Non-Deliverable Forwards (NDF) to cover exchange rate risk, as demonstrated in topics (b) and (c) of this Note.

The Company records gains and losses deemed effective for purposes of hedge accounting to a specific account in shareholders´ equity (“other comprehensive income”), until the object of coverage (hedged item) affects the profit and loss. When the hedged item affects the profit and loss, the gain or loss is recorded in the same line as the hedged item (in this case, sales revenue). On June 30, 2010, the impact recorded in equity and the periods in which they will affect the profit and loss are as follows:

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

				Expected period to affect P&L
Derivative	Market		Risk	2010/2011		2011/2012		Total

Future	OTC / NYBOT		#11	3,695		3,302		6,997
NDF	OTC/Cetip	USD		3,246		6,613		9,859
(-) Deferred income taxes				(2,360	)	(3,371	)	(5,731	)
Total				4,581		6,544		11,125

The detail of the movement of the cash flow hedge gain or loss in other comprehensive income is as follows:

Cash flow hedges

Balance at March 31, 2010	-
Gain/(losses) of cash flow hedges for the period
Commodities future and swap contracts	6,448
Currency forward contracts	9,860
Reclassification adjustments for losses included in the income statement (net sales)	548
Tax effect on gain/(losses) of cash flow hedges for the period – 34%	(5,731	)
Balance at June 30, 2010	11,125

During the three-month period ended June 30, 2010, there was no effect on results for operations of hedged items that would no longer qualify to be designated to hedge accounting. Also, the Company recorded the amount of $215 related to the gains and losses of the hedges’ ineffectiveness during the three-month period ended June 30, 2010.

Interest rate risk

The Company monitors fluctuations of the interest rates related to certain loan contracts, mainly those with Libor interest rate risk, and in the event of increased volatility of such rates, it may engage in transactions with derivatives so as to minimize such risks. At June 30, 2010, the Company presented the following net balance sheet exposure related to interest rate risk:

Interest rate risk: outstanding interest rate swap derivatives on June 30, 2010

Derivative

Purchased/

sold

Market

Contract

Number of

contracts

Average price

Notional

Fair

Value

Swap

Purchased

OCT/Cetip

Fix/Libor 3 month

1,199% / Libor 3 month

300,000

(830

)

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

Credit risk

A significant portion of sales made by the Company is to a select group of best-in-class counterparts (i.e. trading companies, fuel distribution companies and large supermarket chains).

Credit risk is managed through specific rules of client acceptance including credit ratings and limits for customer exposure, including the requirement of a letter of credit from major banks and obtaining actual warranties on given credit, when applicable. Management believes that the risk of credit is covered by the allowance for doubtful accounts.

The Company buys and sells commodity derivatives in futures and options markets on the New York Board of Trade (NYBOT) and the London International Financial Futures and Options Exchange (LIFFE), as well as in the over-the-counter (OTC) market with selected counterparties. The Company buys and sells foreign exchange derivatives on BM&FBovespa and OTC contracts registered with CETIP (OTC clearing house) with banks Goldman Sachs & Co, Banco Barclays S.A., BNP Paribas Commodity Futures Ltd, Newedge LLC, Macquarie Bank Ltd, ADM Investors Services International Limited (Hencorp), Prudential Bache Commodities LLC, Natixis Commodity Markets Ltd, Espirito Santo Investmento do Brasil S.A., Deutsche Bank S.A. – Banco Alemão, Banco Bradesco S.A., Banco JP Morgan S.A., Banco Standard de Investimentos S.A., Banco Morgan Stanley Witter S.A. e Banco BTG Pactual S.A

Guarantee margins – The Company’s derivative operations on commodity exchanges (NYBOT, LIFFE and BM&FBovespa) require an initial guarantee margin. The brokers with which the Company operates on these commodity exchanges offer credit limits for these margins. As of June 30, 2010, the total credit limit used as initial margin was $30,434 ($38,543 as of March 31, 2010). As a requirement to trade in BM&FBovespa, the Company posted on June 30, 2010, the amount of $53,313 ($46,627 as of March 31, 2010) as guarantee in the form of a settlement bond issued by a first-class banking institution. Over-the-counter derivative transactions of the Company are exempt from margin guarantees.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

Debt acceleration risk

As of June 30, 2010 and March 31, 2010, the Company was a party to loan and financing agreements with covenants generally applicable to these operations, including requirements related to cash generation, debt to equity ratio and others. These covenants are being fully complied with by the Company and do not place any restrictions on its operations as a going-concern.

14.	Fair value measurements

Effective May 1, 2008, Cosan adopted ASC 820, Fair Value Measurements (SFAS 157), for all financial instruments and non-financial instruments accounted for at fair value on a recurring basis. ASC 820 establishes a new framework for measuring fair value and expands related disclosures. Broadly, the ASC 820 framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 establishes market or observable inputs as the preferred source of values, followed by assumptions based on hypothetical transactions in the absence of market inputs.

The valuation techniques required by ASC 820 are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from Independent sources, while unobservable inputs reflect market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 - Quoted prices for identical instruments in active markets.

Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 - Significant inputs to the valuation model are unobservable.

The following section describes the valuation methodologies Cosan uses to measure different financial instruments at fair value.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

14.	Fair value measurements (Continued)

Derivatives

Cosan uses closing prices for derivatives included in Level 1, which are traded either on exchanges or liquid over-the-counter markets.

The remainder of the derivatives portfolio is valued using internal models, most of which are primarily based on market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent interest rate swaps, foreign currency swaps and commodity forward contracts.

The following table presents our assets and liabilities measured at fair value on a recurring basis as of June 30, 2010.

	Level 1			Level 2			Total
Assets
Derivatives		33,427			46,788			80,215

Liabilities
Derivatives		(4,643	)		(16,138	)		(20,781	)

15.	Segment information

Segment information

The following information about segments is based upon information used by Cosan’s senior management to assess the performance of operating segments and to decide on the allocation of resources. Cosan’s operating and reportable segments are business units in Brazil that target different industry segments. Each reportable segment is managed separately because of the need to specifically address customer needs in these different industries. The operations of these segments are based solely in Brazil.

Following is a description of the operating segments of the business.

The Sugar and Ethanol (“S&E”) segment produces and sells a broad variety of sugar and ethanol products.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

15.	Segment information (Continued)

Segment information (continued)

The sugar products include raw (also known as very high polarization - VHP sugar), organic, crystal and refined sugars, which are sold to a wide range of customers in Brazil and abroad. Cosan exports the majority of the sugar produced through international commodity trading companies. Cosan’s domestic customers include wholesale distributors, food manufacturers and retail supermarkets, through which it sells its “Da Barra” and “União” branded products. The ethanol products include fuel ethanol and industrial ethanol. Cosan’s principal fuel ethanol products are hydrous and anhydrous. Hydrous ethanol is used as an automotive fuel and anhydrous (which has a lower water content than hydrous ethanol) is used as an additive in gasoline. The fuel ethanol products are mainly sold in the domestic market by fuel distribution companies. Consumption of hydrous ethanol in Brazil is increasing as a result of the introduction of flex fuel vehicles that can run on either gasoline or ethanol (or a combination of both). In addition, the S&E segment sells liquid and gel ethanol products used mainly in the production of paint, cosmetics and alcoholic beverages for industrial clients in various sectors. Also, the S&E segment includes the co-generation activities and most of the corporate activities.

The Fuel Distribution and Lubricants (“CCL”) segment is engaged in the distribution in Brazil of fuel products, derived from petroleum or ethanol, and lubricants as well as the operation of convenience stores. The network to which the fuel distribution segment distributes such products is comprised of approximately 1,700 fuel stations.

The Sugar Logistics (“Rumo”) segment provides logistics services for the transport, storage and port lifting of sugar for both the S&E segment and third parties.

The accounting policies underlying the financial information provided for the segments are based on Brazilian GAAP. We evaluate segment performance based on information generated from the statutory accounting records.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

15.	Segment information (Continued)

Segment information (continued)

Segment profit and loss and selected balance sheet data under Brazilian GAAP is as follows:

	June 30, 2010
	S&E			CCL			RUMO			Adjustment/ elimination			Consolidated
	Brazilian GAAP												US GAAP
Balance Sheet:
Property, plant & equiptment (PP&E)		2,818,027			191,603			229,915			965,741			4,205,286
Intangible assets		-			-			-			582,247			582,247
Loans, net of cash equivalents		(2,549,978	)		(223,618	)		(82,155	)		40,982			(2,814,768	)
Others assets and net of other liabilities		1,618,452			1,76,879			16,518			(1,045,810	)		1,666,039

Total net Assets		1,886,501			1,044,864			164,278			543,161			3,638,804

Income statements (3 months)
Net Sales		701,798			1,495,664			33,671			2,707			2,233,840
Gross profit		149,381			114,830			18,368			(43,201	)		239,378
Selling, general and administrative expenses (SG&A)		(108,556	)		(74,463	)		(4,482	)		(3,509	)		(191,010	)
Operating income		40,497			43,239			11,736			(45,409	)		50,063
Other income (expenses)		(2,782	)		(2,499	)		4,208			939			(133	)
Other selected data:
Additions to PP&E (Capex)		253,790			8,243			68,794						335,480
Depreciation and amortization		134,134			9,064			2,105						145,303

	March 31, 2010
	S&E			CCL			RUMO			Adjustment/ elimination			Consolidated
	Brazilian GAAP												US GAAP
Balance Sheet:
Property, plant & equiptment (PP&E)		1,330,26			128,712			29,414			771,035			2,259,427
Intangible assets		423,571			966			-			707,398			1,131,935
Loans, net of cash equivalents		(1,122,560	)		39,663			4,811			(445,889	)		(1,523,975	)
Others assets and net of other liabilities		2,943,642			(78,223	)		(1,469	)		(2,590,572	)		273,378

Total net Assets		3,574,919			91,118			32,756			(1,558,028	)		2,140,765

							June 30,2009
	S&E			CCL			RUMO			Adjustment/ elimination			Consolidated
	Brazilian GAAP												US GAAP
Income Statements (3 months)
Net Sales		562,937			1,137,572			18,928			833			1,720,270
Gross profit		80,918			90,152			(6,213	)		(18,443	)		158,840
Selling, general and administrative expenses (SG&A)		(89,308	)		(53,371	)		(1,660	)		34,364			(109,975	)
Operating income		(8,147	)		36,780			4,554			16,725			49,912
Other income (expenses)		(48,725	)		45,392			(12,241	)		7,647			(7,927	)
Other selected data:
Additions to PP&E (Capex)		220,583			6,049			363						226,994
Depreciation and amortization		93,258			4,311			1,761						99,330

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

15.	Segment information (Continued)

Detailed net sales per segment

	June 30, 2010		June 30, 2009
S&E (Brazilian GAAP)
Sugar		462,631		314,145
Ethanol		188,786		220,461
Cogeneration		29,741		14,443
Other		20,640		14,088
		701,798		562,937
CCL (Brazilian GAAP)
Fuels		1,363,004		1,055,989
Lubricants		109,766		72,504
Other		22,894		9,079
		1,495,664		1,137,572
Rumo (Brazilian GAAP)
Port lifting		28,706		18,407
Transports		4,965		521
		33,671		18,928

Adjustments / eliminations		2,707		833

Total (US GAAP)		2,233,840		1,720,270

Net sales by region

The percentage of net sales by geographic area for the three-month period ended June 30, 2010 and 2009 are as follows:

	June 30, 2010			June 30, 2009
Sales by geographic area

Brazil		69.27	%		54,35	%
Europe		26.82	%		35,34	%
Middle east and Asia		2.12	%		1,95	%
North America		0.37	%		6,17	%
Latin American (Except Brazil)		0.07	%		2,19	%
Others		1.35	%		-
Total		100.00	%		100.00	%

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

15.	Segment information (Continued)

Concentration of clients

S&E

There are several clients in this segment, one of which represents more than 10% of the segment net sales -- the SUCDEN Group (26,6% for the three-month period ended June 30, 2010 and 33% for the three-month period ended June 30, 2009).

CCL

In this segment there are no clients that represent more than 10% of the net sales for the three-month period ended June 30, 2010 and 2009.

Rumo

For the three-month period ended June 30, 2010 42,7% of the segment net sales were generated from sales to the S&E segment (34.9% for the three-month period ended June 30, 2009). There are two other customers which represented more than 10% of the net sales for three-month period ended June 30, 2010 and 2009 of this segment. SUCDEN Group accounted for 17% of segment sales for the three-month period ended June 30, 2010 (21% for the three-month period ended June 30, 2009) and the ED&F Man Group accounted for 22.6% of segment sales for the three-month period ended June 30, 2010 (no sales in the previous period).

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

16.	Subsequent events

Subscription Agreement by Means of Capital Increase in Rumo Logística S.A. (“Rumo”)

On July 2, 2010, the indirect subsidiary Novo Rumo Logística S.A. (“Novo Rumo”), entered into a Subscription Agreement with investment vehicles administered by TPG Capital and Gávea Investimentos (“Investors”). The subscription will take place through capital increase in the amount of $222,037, to be paid in equal portions by the Investors. The aforementioned agreement is subject to certain preceding conditions, which shall have to materialize up to September 30, 2010. At the closing of the operation the Investors shall have to subscribe the shares and pay in the capital, as well as enter into a shareholders’ agreement. The Company holds, directly and indirectly, approximately 92.9% of Novo Rumo’s equity, which, in turn, holds 99.9% of Rumo’s equity. After the payment, Novo Rumo will hold 75.0% of Rumo’s equity and each of the Investors shall hold 12.5% of the equity.

Capital increase

In the meeting of the Board of Directors of Cosan S.A. held on July 29, 2010, the shareholders unanimously approved a capital increase of $1,525 through the issuance of 449,819 newly registered uncertificated common shares with no par value, in connection with the “Company’s Stock Option Plan” and with the exercise of such option by the eligible executives, at an issuance price of $3.39 per share, set in the terms of the stock option plan. In connection with the issuance of the new shares, Cosan S.A.’s capital comprised 407,010,196 registered uncertificated common shares with no par value.

Approval of additional dividends over the minimum statutory dividend

On July 30, 2010, additional dividends over the minimum statutory dividend of $46,312, were approved in the extraordinary general shareholders’ meeting, totaling an amount of $111,018 of dividends to be distributed on August 30, 2010. From this amount, $70,413 will be remitted to the Company.

BNDES Finance

On August 4, 2010, the indirect subsidiary Rumo, through its subsidiary Cosan Operadora Portuária S.A. (“Portuária”), obtained the approval of BNDES for a credit line of $430,827 to be invested by Portuária in railways and in a construction of a logistic terminal in the region of Itirapina, State of São Paulo. The aforementioned finance is subject to annual interest of 1.92% plus TJLP, with payment due in 12 years.

COSAN LIMITED

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

16.	Subsequent events (Continued)

Approval of dividends to be distributed by Cosan Limited

On August 6, 2010, the Board of Directors approved the distribution of the dividends which will be received from Cosan S.A. on August 30, 2010. The amount of dividends to be paid to the shareholders on September 10, 2010 is $70,413 thousand.

Cosan S.A. Indústria e Comércio

Condensed Consolidated Financial Statements

For the three-month periods ended June 30, 2010 and 2009

COSAN S.A. INDÚSTRIA E COMÉRCIO

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

Report of independent registered public accounting firm	1

Condensed consolidated balance sheets	2
Condensed consolidated statements of operations	4
Condensed consolidated statements of shareholders’ equity and comprehensive income (loss)	5
Condensed consolidated statements of cash flows	6
Notes to the condensed consolidated financial statements	7

Report of independent registered public accounting firm

To the Board of Directors and Shareholders of

Cosan S.A. Indústria e Comércio

We have reviewed the condensed consolidated balance sheet of Cosan S.A. Indústria e Comércio and subsidiaries as of June 30, 2010, the related condensed consolidated statements of operations and cash flows for the three-month periods ended June 30, 2010 and 2009 and the condensed consolidated statement of shareholders’ equity and comprehensive income (loss) for the three-month period ended June 30, 2010. These financial statements are the responsibility of the Company's management.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Cosan S.A. Indústria e Comércio and subsidiaries as of March 31, 2010, and the related consolidated statements of operations, shareholders’ equity and cash flows for the year then ended not presented herein and in our report dated June 10, 2010, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2010, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

São Paulo, Brazil

August 12, 2010

ERNST & YOUNG

Auditores Independentes S.S.

CRC 2SP015199/O-8

Luiz Carlos Nannini

Accountant CRC 1SP171638/O-7

COSAN S.A. INDÚSTRIA E COMÉRCIO

Condensed consolidated balance sheets

June 30, 2010 and March 31, 2010

(In thousands of U.S. dollars, except share data)

	(Unaudited) June 30,		March 31,
	2010		2010
Assets
Current assets:
Cash and cash equivalents		585,575		605,483
Restricted cash		28,462		25,251
Derivative financial instruments		80,215		129,456
Trade accounts receivable, less allowances: June 30, 2010 – $31,206; March 31, 2010 – $32,144		343,673		430,328
Inventories		795,814		587,720
Advances to suppliers		179,557		132,258
Recoverable taxes		197,266		184,090
Other current assets		65,626		48,303
		2,276,188		2,142,889

Property, plant, and equipment, net		4,059,075		3,997,815
Goodwill		1,289,354		1,289,625
Intangible assets, net		580,590		600,573
Accounts receivable from federal government		186,663		187,385
Judicial deposits		93,739		94,083
Other non-current assets		450,545		423,447
		6,659,966		6,592,928
Total assets		8,936,154		8,735,817

	(Unaudited) June 30,			March 31,
	2010			2010
Liabilities and shareholders’ equity
Current liabilities:
Trade accounts payable		397,588			319,707
Taxes payable		109,548			121,203
Salaries payable		122,058			79,497
Current portion of long-term debt		473,176			445,593
Derivative financial instruments		20,781			43,067
Dividends payable		64,707			65,451
Other current liabilities		173,522			111,971
		1,361,380			1,186,489

Long-term liabilities:
Long-term debt		2,915,024			2,842,953
Estimated liability for legal proceedings and labor claims		297,743			294,605
Taxes payable		380,702			381,805
Deferred income taxes		403,241			408,832
Other long-term liabilities		151,794			154,728
		4,148,504			4,082,923

Shareholders’ equity
Cosan shareholders’ equity:
Common stock, no par value. Authorized 406,560,317 shares; issued and outstanding 406,560,317 as of June 30, 2010 and as of March 31, 2010		2,420,018			2,420,018
Treasury stock		(1,979	)		(1,979	)
Additional paid-in capital		390,884			390,600
Accumulated other comprehensive income		314,686			343,136
Retained earnings		268,688			281,238
Equity attributable to shareholders of Cosan		3,392,297			3,433,013
Equity attributable to noncontrolling interests		33,973			33,392
Total shareholders’ equity		3,426,270			3,466,405
Total liabilities and shareholders' equity		8,936,154			8,735,817

See accompanying notes to condensed consolidated financial statements.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Condensed consolidated statements of operations

Three-month periods ended June 30, 2010 and 2009

(In thousands of U.S. dollars, except share data)

(Unaudited)

	June 30,			June 30,
	2010			2009
Net sales		2,233,840			1,720,270
Cost of goods sold		(1,993,162	)		(1,560,626	)
Gross profit		240,678			159,644
Selling expenses		(122,709	)		(102,072	)
General and administrative expenses		(67,906	)		(7,660	)
Operating income		50,063			49,912
Other income (expenses):
Financial income		48,989			151,409
Financial expenses		(108,838	)		66,133
Other		(133	)		(7,921	)
(Loss) income before income taxes and equity in income (loss) of affiliates		(9,919	)		259,533
Income taxes expense		(1,242	)		(76,543	)
(Loss) income before equity in income (loss) of affiliates		(11,161	)		182,990
Equity income (loss) of affiliates		553			(1,713	)

Net (loss) income		(10,608	)		181,277
Less net (loss) income attributable to noncontrolling interests		(1,942	)		3,737
Net (loss) income attributable to Cosan		(12,550	)		185,014

Per-share amounts attributable to Cosan
Net (loss) income
Basic		(0.03	)		0.58
Diluted		*			0.57

Weighted number of shares outstanding
Basic		406,560,317			313,845,887
Diluted **		*			315,396,031

* Antidilutive

** Adjusted for the effect of dilutive stock options

See accompanying notes to condensed consolidated financial statements.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Condensed consolidated statements of shareholders’ equity and comprehensive income (loss)

Three-month period ended June 30, 2010

(In thousands of U.S. dollars, except share data)

(Unaudited)

															Accumulated
	Common stock				Treasury stock					Additional					other			Non			Total
										paid-in		Retained			comprehensive			controlling			shareholders’
	shares		amount		shares		amount			capital		earnings			income			Interest			equity

Balances at March 31, 2010		406,560,317		2,420,018		343,139		(1,979	)		390,600		281,238			343,136			33,392			3,466,405

Share based compensation		-		-		-		-			284		-			-			-			284
Net (loss) income		-		-		-		-			-		(12,550	)		-			1,942			(10,608	)
Effective portion of gains/losses on derivative instrument that qualifies as a cash flow hedge		-		-		-		-			-		-			11,125			-			11,125
Pension Plan		-		-		-		-			-		-			(515	)		-			(515	)
Currency translation adjustment		-		-		-		-			-		-			(39,060	)		(1,361	)		(40,421	)
Total comprehensive loss																						(40,134	)
Balances at June 30, 2010		406,560,317		2,420,018		343,139		(1,979	)		390,884		268,688			314,686			33,973			3,426,270

See accompanying notes to condensed consolidated financial statements.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Condensed consolidated statements of cash flows

Three-month periods ended June 30, 2010 and 2009

(In thousands of U.S. dollars)

(Unaudited)

	June 30,			June 30,
	2010			2009
Cash flow from operating activities
Net (loss) income for the year attributable to Cosan		(12,550	)		185,014
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		144,484			100,134
Deferred income taxes		(5,288	)		65,989
Interest, monetary and exchange variation		72,054			(136,300	)
Others		27,339			(31,095	)

Decrease/increase in operating assets and liabilities
Trade accounts receivable, net		85,072			56,541
Inventories		(157,992	)		88,423
Advances to suppliers		(42,561	)		(38,804	)
Recoverable taxes		(11,826	)		5,326
Trade accounts payable		81,518			24,065
Derivative financial instruments		67,709			(16,246	)
Taxes payable		(16,119	)		(29,270	)
Other assets and liabilities, net		76,258			24,784
Net cash provided by operating activities		308,098			298,561

Cash flows from investing activities:
Restricted cash		(28,462	)		(14,516	)
Cash received from sales of noncurrent assets		-			60,325
Acquisition of investment		(2,080	)		(2,050	)
Acquisition of property, plant and equipment		(333,280	)		(226,994	)
Acquisitions, net of cash acquired		372			32,045
Net cash used in investing activities		(363,450	)		(151,190	)

Cash flows from financing activities:
Related parties		-			(62,184	)
Additions of long-term debt		356,588			88,593
Payments of long-term debt		(311,767	)		(65,510	)
Net cash provided by (used in) financing activities		44,821			(39,101	)
Effect of exchange rate changes on cash and
cash equivalents		(9,379	)		59,048
Net increase (decrease) in cash and cash equivalents		(19,908	)		167,318
Cash and cash equivalents at beginning of period		605,483			310,710
Cash and cash equivalents at end of period		585,575			478,028

Supplemental cash flow information
Cash paid during the period for:
Interest		47,094			22,063
Income taxes		3,391			18,287

See accompanying notes to condensed consolidated financial statements.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

1.	Operations

Cosan S.A. Indústria e Comércio and subsidiaries (“Cosan” or “the Company”) is incorporated under the laws of the Federative Republic of Brazil. Cosan shares are traded on the São Paulo Stock Exchange (Bovespa).

Cosan Limited, a company incorporated in Bermuda, is the controlling shareholder of Cosan holding a 62.27% interest therein as of June 30, 2010 (62.27% as of March 31, 2010). The class “A” common shares of Cosan Limited are traded in the New York Stock Exchange (NYSE) and Bovespa.

On February 1, 2010, the Company announced that it, along with Royal Dutch Shell, had reached a non-binding memorandum of understanding to form a joint venture for a combined 50/50 investment. Cosan will contribute its sugar and ethanol and its distribution assets to the joint venture while Shell will contribute its distribution assets in Brazil. Shell will also make a fixed cash contribution in the amount of $1,625 billion over a 2 year period. The closing of this transaction is dependent upon the conclusion of the negotiations. During the three-month period ended June 30, 2010, this association did not generate any accounting records.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

2.	Presentation of the consolidated financial statements

Basis of reporting for interim financial statements

The unaudited condensed consolidated financial statements include the accounts of Cosan and its subsidiaries. All significant intercompany transactions have been eliminated.

These financial condensed consolidated statements should be read in conjunction with Cosan`s annual financial consolidated statements for the fiscal year ended March 31, 2010.

The exchange rate of the Brazilian real (R$) to the US$ was R$1.8015=US$ 1.00 at June 30, 2010 and R$1.7810=US$1.00 at March 31, 2010.

Use of estimates

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

2.	Presentation of the consolidated financial statements (Continued)

New Accounting Pronouncements

Derivative financial instruments

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

3.	Inventories

	June 30, 2010		March 31, 2010
Finished goods:
Sugar		165,911		52,561
Ethanol		178,626 151,562		31,573 149,613
Lubricants and fuel (Gasoline, Diesel and Ethanol)		178,626 151,562		31,573 149,613
		496,099		233,747

Annual maintenance cost of growing crops		203,896		243,709
Others		95,819		110,264
		795,814		587,720

4.	Taxes payable

	June 30, 2010			March 31, 2010

ICMS – State VAT		21,059			27,623
IP		8,559			3,582
INSS		13,328			13,414
PIS		2,608			4,564
COFINS		12,136			18,010
Tax Recovery from Brazilian Law No 11.941/09 and MP 470/09		367,834			373,650
Income Tax and Social Contribution		52,564			50,471
Others		12,162			11,694
		490,250			503,008
Current liabilities		(109,548	)		(121,203	)
Long-term liabilities		380,702			381,805

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

5.	Long-term debt

Long-term debt is summarized as follows:

	Index	Average annual interest rate		June 30, 2010			March 31, 2010
Resolution No. 2471 (PESA)	IGP-M		3.9%		305,050			295,291
Senior notes due 2014	US Dollar		9.5%		362,838			354,433
Senior notes due 2017	US Dollar		7.0%		411,589			404,589
Perpetual notes	US Dollar		8.3%		455,304			455,304
BNDES	TJLP		3.6%		741,719			520,068
Credit notes	DI		2.4%		169,220			212,660
Credit notes	US Dollar		6.2%		101,076			102,656
Export Pre-payments	US Dollar		6.2%		495,805			547,230
Others	Various	Various			345,599			396,315
					3,388,200			3,288,546
Current portion					(473,176	)		(445,593	)
Long-term debt					2,915,024			2,842,953

Long-term debt has the following scheduled maturities:

2011			366,293
2012			360,990
2013			421,913
2014			206,167
2015			79,188
2016			478,703
2017			94,782
2018 and thereafter			906,988
			2,915,024

Resolution No. 2471 - Special Agricultural Financing Program (Programa Especial de Saneamento de Ativos), or PESA

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

5.	Long-term debt (Continued)

Resolution No. 2471 - Special Agricultural Financing Program (Programa Especial de Saneamento de Ativos), or PESA (Continued)

On July 31, 2003, the Central Bank issued Resolution 3,114, authorizing the reduction of up to five percentage points of PESA related interest rates, effectively lowering the above-mentioned rates to 3%, 4% and 5%, respectively. The CTNs held by Cosan as of June 30, 2010 and March 31, 2010 amounted to $137,653 and $133,039, respectively, and are classified as other non-current assets.

Senior notes due 2017

On January 26, 2007, the wholly-owned subsidiary Cosan Finance Limited issued $400,000 of senior notes in the international capital markets. These senior notes, listed on the Luxembourg Stock Exchange, mature in November 2017 and bear interest at a rate of 7% per annum, payable semi-annually. The senior notes are guaranteed by Cosan, and its subsidiary, Cosan Açúcar e Álcool.

Senior notes due 2014

On August 4, 2009, the indirect subsidiary CCL Finance Limited issued $350,000 of senior notes in the international capital markets. These senior notes, listed on the Luxembourg Stock Exchange, mature in August 2014 and bear interest at a rate of 9.5% per annum, payable semi-annually in February and August of each year, from February of 2010.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

5.	Long-term debt (Continued)

Perpetual notes

On January 24 and February 10, 2006, Cosan issued perpetual notes which are listed on the Luxembourg Stock Exchange - EURO MTF. These notes bear interest at a rate of 8.25% per year, payable quarterly on May 15, August 15, November 15 and February 15 of each year, beginning May 15, 2006.

These notes may, at the discretion of Cosan, be redeemed on any interest payment date subsequent to February 15, 2011. The notes are guaranteed by Cosan and by Cosan Açúcar e Álcool.

Export Pre-payment Notes

BNDES

Refers to the financing of cogeneration projects, as well as the financing of Jataí and Caarapó greenfields (sugar and ethanol mills). The BNDES financing is due from 2012 through 2025.

Credit Notes

Covenants

Cosan and its subsidiaries are subject to certain restrictive covenants related to their indebtedness.

At June 30, 2010, Cosan was in compliance with its debt covenants.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

6.	Related parties

Assets and liabilities with related parties are summarized as follows:

	Assets
	June 30, 2010			March 31, 2010

Rezende Barbosa S.A. Administração e Participações		48,262			48,889
Vertical UK LLP		18,035			8,403
Others		5,585			2,377
		71,882			59,669
Current (*)		(27,690	)		(13,958	)
Nuncurrent (*)		44,192			45,711


	Liabilities
	June 30, 2010			March 31, 2010

Rezende Barbosa S.A. Administração e Participações		60,948			-
Logispot Armazéns Gerais S.A.		4,161			6,313
Others		1,543			1,781
		66,652			8,094
Current (*)		(66,652	)		(8,094	)
Nuncurrent		-			-
(*) included in other current and non-current assets or liabilities

The amount receivable from the affiliate Vertical UK LLP, refers to ethanol trading, with an average maturity date of 30 days.

The payable to Logispot is related to the remaining payment in connection with the interest acquired.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

6.	Related parties (Continued)

	June 30, 2010			June 30, 2009
Transactions involving assets
Cash received due to the sale of finished products, services performed, and assets held, net of payments		(29,720	)		(38,781	)
Sale of finished products and services		-			146,986
Purchase of finished products and services		-			(146,986	)
Sale of finished products and services in a subsidiary		42,676			35,386
Receivables added through acquisition of Nova América		-			71,061

Transactions involving liabilities
Payment of financial resources, net of funding		(4,510	)		(1,809	)
Purchase of sugar cane		63,449			-
Financial income/expenses		-			(30,885	)

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

7.	Estimated liability for legal proceedings and labor claims and commitments

	June 30, 2010		March 31, 2010
Tax contingencies		174,837		173,924
Civil and labor contingencies		122,906		120,681
		297,743		294,605

The major tax contingencies as of June 30, 2010 and March 31, 2010 are described as follows:

	June 30, 2010		March 31, 2010
Compensation with Finsocial		97,329		97,114
ICMS credits		44,105		33,824
PIS and Cofins		14,099		11,910
IPI – Federal VAT		4,686		4,692
Other		14,618		26,384
		174,837		173,924

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

7.	Estimated liability for legal proceedings and labor claims and commitments (Continued)

The detail of the movement in the estimated liability for legal proceedings and labor claims is as follows:

Balance at March 31, 2010	294,605
Provision	7,494
Settlements	(1,004	)
Foreign currency translation	(3,352	)
Balance at June 30, 2010	297,743

In addition to the aforementioned claims, Cosan and its subsidiaries are involved in other contingent liabilities relating to tax, civil and labor claims and environmental matters, which have not been recorded, considering their current stage and the likelihood of unfavorable outcomes rated as possible. These claims are broken down as follows:

	June 30, 2010		March 31, 2010
Withholding Income Tax		103,579		102,652
ICMS – State VAT		187,457		180,988
IAA - Sugar and Ethanol Institute		1,418		1,428
IPI - Federal Value-added tax		239,167		246,190
INSS		2,364		2,280
PIS and COFINS		80,567		80,604
Civil and labor		278,883		275,403
Other		72,733		66,134
		966,168		955,679

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

8.	Accounts receivable from Federal Government

At June 30, 2010, the receivable and corresponding lawyers’ fees totaled US$186,663 and US$22,399 (US$187,385 and US$22,486 at March 31, 2010), respectively.

9.	Income taxes

Income tax benefit (expense) attributable to income from operations for the three-month periods ended June 30, 2010 and 2009 consists of:

	June 30, 2010			June 30, 2009
Income taxes benefit (expense):
Current		(6,530	)		(11,240	)
Deferred		5,288			(65,303	)
		(1,242	)		(76,543	)

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

9.	Income taxes (Continued)

	June 30, 2010			June 30, 2009
Income (loss) before income taxes and equity in income (loss) of affiliates		(9,919	)		259,533
Income tax benefit (expense) at statutory rate — 34%		3,373			(88,241	)
Increase (reduction) in income taxes resulting from:
Equity in earnings of affiliates not subject to taxation		188			(582	)
Tax loss on tax free entities		(1,856	)		-
Nondeductible goodwill amortization		-			12,206
Nondeductible donations and contributions		(817	)		(236	)
Recognized granted options		(97	)		(570	)
Others		(2,033	)		880
Income tax (expense) benefit		(1,242	)		(76,543	)

Balance at March 31, 2010	49,013
Accrued interest on unrecognized tax benefit	709
Settlements	-
Effect of foreign currency translation	(558	)
Balance at June 30, 2010 (*)	49,164

(*) Recorded as taxes payable (long-term)

The Company and its subsidiaries file income tax returns in Brazil and they are subject to income tax examinations by the relevant tax authorities for the years 2005 through 2010.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

10.	Shareholders’ equity

Capital

As of June 30, 2010, the Company’s capital is represented by 406,560,317 common shares (406,560,317 as of March 31, 2010), with no par value.

Treasury stock

During ended March 31, 2009, the Company acquired 343,139 common shares from dissident shareholders related to a prior acquisition. These shares are held in treasury.

11.	Deferred gain on sale of investments in subsidiaries

Agrícola Ponte Alta S.A. is a subsidiary whose principal assets are land used for the growing of sugarcane for Cosan. On December 15, 2008, the shareholders approved a partial spin-off of the assets of Ponte Alta and created four new subsidiaries. Agricultural land was then transferred from Ponte Alta to each of the entities. On December 30, 2008, two of the entities, Nova Agrícola Ponte Alta S.A. and Terras da Ponte Alta S.A. were sold to Radar, an affiliate company accounted for by the equity method. The selling price was fair value, $123,596, which resulted in a gain of $47,080. This gain has previously been deferred since there were no lease contracts executed for the land, which was being used by Cosan for a monthly fee. During the year ended March 31, 2009 the lease contracts were executed, and the gain is being amortized to profit and loss over the 19 year average term of the leases since then.

During the three-month period ended June 30, 2010, the Company recognized a gain of $939 related to this sale-leaseback transaction.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

12.	Share-based compensation

The employees that leave Cosan before the vesting period will forfeit 100% of their rights. However, if the employment is terminated by Cosan without cause, the employees will have right to exercise 100% of their options of that particular year plus the right to exercise 50% of the options of the following year.

The fair value of share-based awards was estimated using a binominal model with the following assumptions:

	Options granted on September 22, 2005			Options granted on September 11, 2007			Options granted on August 7, 2009
Grant price - in U.S. dollars		3.39			3.39			3.39
Expected life (in years)		7.5			7.5		Immediate
Interest rate		14.52	%		9.34	%		(1	)
Expected Volatility		34.00	%		46.45	%		(1	)
Expected Dividend yield		1.25	%		1.47	%		(1	)
Weighted-average fair value at grant date - in U.S. dollars		6.86			5.67			(1	)

(1)

The options were fully vested at the date of issuance so the fair value was the quoted market price as of the grant date.

As of June 30, 2010, the amount of $1,360 related to the unrecognized compensation cost related to stock options is expected to be recognized in 3 months.

As of June 30, 2010 there were 653,976 options outstanding with a weighted-average exercise price of $3.39.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments

Risk management

	Notional				Fair Value
	June 30, 2010		March 31, 2010		June 30, 2010			March 31, 2010
Price risk
Commodity derivatives
Future contracts		609,197		661,110		26,497			63,101
Options contracts		22,410		603,357		(1,831	)		(6,586	)
Swap contracts		-		56,594		-			607
						24,666			57,121
Exchange rate risk
Exchange rate derivative
Future contracts		317,325		1,180,829		1,537			264
Forward contracts		685,601		537,422		27,899			20,527
Options contracts		518,736		377,036		6,162			8,827
Swap contracts		178,753		180,810		-			-
						35,598			29,618
Interest rate risk
Interest derivative		287,977		291,291		(830	)		(350	)
						(830	)		(350	)
TOTAL						59,434			86,389
Total Assets						80,215			129,456
Total Liabilities						(20,781	)		(43,067	)

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

Price risk

Price risk: price derivatives outstanding on June 30, 2010

Derivative

Purchased /

sold

Market

Contract

Maturity

Notional

Fair

value

Derivative financial instruments designated in the cash flow hedge accounting

Swap

Sold

OTC

#11

Sep-10

90,728

16,598

Future

Sold

NYBOT

#11

Sep-10

82,819

7,059

Future

Sold

NYBOT

#11

Feb-11

68,355

2,231

Future

Sold

NYBOT

#11

Apr-11

23,093

2,300

Future

Sold

NYBOT

#11

Jun-11

86,411

2,145

Future

Sold

NYBOT

#11

Sep-11

52,284

30,355

Derivative financial instruments not designated in the cash flow hedge accounting

Future

Sold

LIFFE

White Sugar

Jul-10

14,385

(1,558

)

Future

Sold

LIFFE

White Sugar

Sep-10

10,862

655

Future

Sold

NYBOT

#11

Sep-10

89,377

10,212

9,309

Future

Purchased

NYBOT

#11

Sep-10

(4,225

)

Future

Purchased

NYBOT

#11

Feb-11

(80,496

)

(13,148

)

Future

Purchased

NYBOT

#11

Apr-11

(1,930

)

(79

)

Future

Purchased

NYBOT

#11

Jun-11

(1,871

)

(88

)

(13,241

)

Future

Purchased

NYMEX

Jul-10

(2,361

)

Call

Purchased

OTC

#11

Sep-10

(2,328

)

Call

Purchased

OTC

#11

Sep-10

(2,460

)

154

Call

Sold

NYBOT/OTC

#11

Sep-10

4,283

(627

)

Call

Sold

NYBOT/OTC

#11

Sep-10

3,734

(440

)

Call

Sold

NYBOT/OTC

#11

Feb-11

3,022

(732

)

Call

Sold

NYBOT

#11

Feb-11

451

(138

)

Call

Sold

NYBOT

#11

Feb-11

160

(49

)

(1,985

)

Put

Purchased

NYBOT/OTC

#11

Sep-10

3,759

2,823

Put

Purchased

NYBOT/OTC

#11

Sep-10

1,312

1,055

3,878

Put

Sold

NYBOT/OTC

#11

Sep-10

(819

)

(2,823

)

Put

Sold

NYBOT/OTC

#11

Sep-10

(82

)

(1,055

)

(3,878

)

Total Commodities

24,666

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

Foreign exchange risk

Foreign exchange risk: Exchange rate derivatives outstanding on June 30, 2010

Derivative

Purchased/ sold

Market

Contract

Maturity

Notional

Fair value

Derivative financial instruments designated in the cash flow hedge accounting

Forward

Sold

OTC/Cetip

NDF

Jul-10

53,733

3,469

Forward

Sold

OTC/Cetip

NDF

Aug-10

79,788

3,791

Forward

Sold

OTC/Cetip

NDF

Sep-10

5,640

527

Forward

Sold

OTC/Cetip

NDF

Sep-10

25,636

2,114

Forward

Sold

OTC/Cetip

NDF

Oct-10

81,851

5,843

Forward

Sold

OTC/Cetip

NDF

Dec-10

53,081

1,275

Forward

Sold

OTC/Cetip

NDF

Jan-11

49,659

2,504

Forward

Sold

OTC/Cetip

NDF

May-11

78,424

2,269

Forward

Sold

OTC/Cetip

NDF

Jul-11

55,121

407

Forward

Sold

OTC/Cetip

NDF

Aug-11

57,591

2,222

Forward

Sold

OTC/Cetip

NDF

Oct-11

145,079

3,479

27,899

Derivative financial instruments not designated in the cash flow hedge accounting

Future

Sold

BMFBovespa

Commercial U.S.

dollar rate

Aug-10

152,879

573

Future

Sold

BMFBovespa

Commercial U.S.

dollar rate

Dec-10

71,708

441

Future

Sold

BMFBovespa

Commercial U.S.

dollar rate

Jul-11

189,260

1,177

Future

Sold

BMFBovespa

Commercial U.S.

dollar rate

Aug-11

43,586

270

Future

Sold

BMFBovespa

Euro

Jul-10

8,445

)

2,457

Future

Purchased

BMFBovespa

Commercial U.S.

dollar rate

Dec-10

(51,220

)

(315

)

Future

Purchased

BMFBovespa

Commercial U.S.

dollar rate

Jul-11

(97,334

)

(605

)

(921

)

Put Onshore

Purchased

BMFBovespa

Commercial U.S.

dollar rate

Oct-10

485,706

5,393

Put Offshore

Purchased

OTC

Commercial U.S.

dollar rate

Feb-11

23,748

424

Put Offshore

Purchased

OTC

Commercial U.S.

dollar rate

Feb-11

9,281

346

6,163

Total Exchange rate derivative

35,598

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

On June 30, 2010 and March 31, 2010, the Company had the following net exposure to the variation of U.S. dollar assets and liabilities denominated in U.S. dollars:

	June 30, 2010			March 31, 2010
Amounts pending foreign exchange closing		24,906			71,732
Overnight		28,254			28,338
Trade notes receivable - foreign		70,702			83,467
Senior Notes due in 2014		(362,838	)		(354,433	)
Senior Notes due in 2017		(411,589	)		(404,589	)
Perpetual bonds		(455,303	)		(455,304	)
Foreign currency-denominated loans		(203,316	)		(269,066	)
Export pre payments		(499,090	)		(550,552	)
Restricted cash		28,462			25,251
Exchange exposure		(1,779,812	)		(1,825,156	)

hedge accounting effects

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

				Expected period to affect P&L
Derivative	Market		Risk	2010/2011		2011/2012		Total

Future	OTC / NYBOT		#11	3,695		3,302		6,997
NDF	OTC/Cetip	USD		3,246		6,613		9,859
(-) Deferred income taxes				(2,360	)	(3,371	)	(5,731	)
Total				4,581		6,544		11,125

The detail of the movement of the cash flow hedge gain or loss in other comprehensive income is as follows:

Cash flow hedges

Balance at March 31, 2010	-
Gain/(losses) of cash flow hedges for the period
Commodities future and swap contracts	6,448
Currency forward contracts	9,860
Reclassification adjustments for losses included in the income statement (net sales)	548
Tax effect on gain/(losses) of cash flow hedges for the period – 34%	(5,731	)
Balance at June 30, 2010	11,125

Interest rate risk

Interest rate risk: outstanding interest rate swap derivatives on June 30, 2010

Derivative

Purchased/

sold

Market

Contract

Number of

contracts

Average price

Notional

Fair

Value

Swap

Purchased

OCT/Cetip

Fix/Libor 3 month

1,199% / Libor 3 month

300,000

(830

)

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

13.	Risk management and financial instruments (Continued)

Credit risk

A significant portion of sales made by the Company is to a select group of best-in-class counterparts (i.e. trading companies, fuel distribution companies and large supermarket chains).

COSAN S.A. INDÚSTRIA E COMÉRCIO

Condensed consolidated statements of cash flows

Three-month periods ended June 30, 2010 and 2009

(In thousands of U.S. dollars)

(Unaudited)

13.	Risk management and financial instruments (Continued)

Debt acceleration risk

14.	Fair value measurements

The valuation techniques required by ASC 820 are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 - Quoted prices for identical instruments in active markets.

Level 3 - Significant inputs to the valuation model are unobservable.

The following section describes the valuation methodologies Cosan uses to measure different financial instruments at fair value.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

14.	Fair value measurements (Continued)

Derivatives

Cosan uses closing prices for derivatives included in Level 1, which are traded either on exchanges or liquid over-the-counter markets.

The following table presents our assets and liabilities measured at fair value on a recurring basis as of June 30, 2010.

	Level 1			Level 2			Total
Assets
Derivatives		33,427			46,788			80,215

Liabilities		(4,643	)		(16,138	)		(20,781	)
Derivatives

15.	Segment information

Segment information

Following is a description of the operating segments of the business.

The Sugar and Ethanol (“S&E”) segment produces and sells a broad variety of sugar and ethanol products.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

15.	Segment information (Continued)

Segment information (continued)

The Sugar Logistics (“Rumo”) segment provides logistics services for the transport, storage and port lifting of sugar for both the S&E segment and third parties.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

15.	Segment information (Continued)

Segment information (continued)

Segment profit and loss and selected balance sheet data under Brazilian GAAP is as follows:

	June 30, 2010
	S&E			CCL			RUMO			Adjustment/ elimination			Consolidated
	Brazilian GAAP												US GAAP
Balance Sheet:
Property, plant & equipment (PP&E)		2,818,027			191,603			229,915			819,530			4,059,075
Intangible assets		-			-			-			580,590			580,590
Loans, net of cash and cash equivalents		(2,540,785	)		(223,618	)		(82,155	)		43,933			(2,802,625	)
Others assets (liabilities)		1,458,506			1,076,879			16,518			(962,672	)		1,589,232
Total net assets		1,735,748			1,044,864			164,278			481,381			3,426,271

Income statements (3 months)
Net Sales		701,798			1,495,664			33,671			2,707			2,233,840
Gross profit		149,381			114,830			18,368			(41,901	)		240,678
Selling general and administrative expenses		(108,162	)		(74,463	)		(4,482	)		(3,508	)		(190,616	)
Operating income		40,497			43,239			11,736			(45,409	)		50,063
Other income (expense)		(2,782	)		(2,499	)		4,208			939			(133	)
Other selected data:
Addiitions to PP&E (Capex)		258,443			8,243			68,794			-			335,480
Depreciation and amortization		133,316			9,064			2,105			-			144,484

	March 31, 2010
	S&E			CCL			RUMO			Adjustment/ elimination			Consolidated
	Brazilian GAAP												US GAAP
Balance Sheet:
Property, plant & equipment (PP&E)		1,330,266			128,712			29,414			613,395			2,101,787
Intangible assets		423,571			966			-			(183,186	)		241,351
Loans, net of cash equivalents		(1,122,560	)		39,663			4,811			(488,458	)		(1,566,544	)
Others assets (liabilities)		2,943,642			(78,223	)		(1,469	)		(1,917,548	)		946,402
Total net assets		3,574,919			91,118			32,756			(1,975,797	))		1,722,996

	June 30, 2009
	S&E			CCL			RUMO			Adjustment/ elimination			Consolidated
	Brazilian GAAP												US GAAP
Income Statements (3 months)
Net sales		562,937			1,137,572			18,928			833			1,720,270
Gross profit		80,918			40,368			6,213			(17,639	)		159,644
Selling, general and administrative expenses (SG&A)		(89,065	)		(53,371	)		(1,660	)		34,364			(109,732	)
Operating income		(8,147	)		36,780			4,554			16,725			49,912
Other income (expense)		1,797			45,392			(12,240	)		(42,870	)		(7,921	)
Other selected data:
Additions to PP&E (Capex)		220,583			6,049			362			-			226,994
Depreciation and amortization		94,062			4,311			1,761			-			100,134

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

15.	Segment information (Continued)

Detailed net sales per segment

	June 30, 2010		June 30, 2009
S&E (Brazilian GAAP)
Sugar		462,631		314,145
Ethanol		188,786		220,461
Cogeneration		29,741		14,443
Other		20,640		14,088
		701,798		562,937
CCL (Brazilian GAAP)
Fuels		1,363,004		1,055,989
Lubricants		109,766		72,504
Other		22,894		9,079
		1,495,664		1,137,572
Rumo (Brazilian GAAP)
Port lifting		28,706		18,407
Transports		4,965		521
		33,671		18,928

Adjustments / eliminations		2,707		833
Total (US GAAP)		2,233,840		1,720,270

Net sales by region

The percentage of net sales by geographic area for the three-month period ended June 30, 2010 and 2009 are as follows:

	June 30, 2010			June 30, 2009
Sales by geographic area

Brazil		69.27	%		54,35	%
Europe		26.82	%		35,34	%
Middle east and Asia		2.12	%		1,95	%
North America		0.37	%		6,17	%
Latin American (Except Brazil)		0.07	%		2,19	%
Others		1.35	%		-
Total		100.00	%		100.00	%

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

15.	Segment information (Continued)

Concentration of clients

S&E

There are several clients in this segment, one of which represents more than 10% of the segment net sales -- the SUCDEN Group (26.6% for the three-month period ended June 30, 2010 and 33% for the three-month period ended June 30, 2009).

CCL

In this segment there are no clients that represent more than 10% of the net sales for the three-month period ended June 30, 2010 and 2009.

Rumo

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

16.	Subsequent events

Subscription Agreement by Means of Capital Increase in Rumo Logística S.A. (“Rumo”)

The aforementioned agreement is subject to certain preceding conditions, which shall have to materialize up to September 30, 2010. At the closing of the operation the Investors shall have to subscribe the shares and pay in the capital, as well as enter into a shareholders’ agreement. The Company holds, directly and indirectly, approximately 92.9% of Novo Rumo’s equity, which, in turn, holds 99.9% of Rumo’s equity. After the payment, Novo Rumo will hold 75.0% of Rumo’s equity and each of the Investors shall hold 12.5% of the equity.

Capital increase

In the meeting of the Board of Directors held on July 29, 2010, the shareholders unanimously approved a capital increase of $1,525 through the issuance of 449,819 newly registered uncertificated common shares with no par value, in connection with the “Company’s Stock Option Plan” and with the exercise of such option by the eligible executives, at an issuance price of $3.39 per share, set in the terms of the stock option plan. In connection with the issuance of the new shares, the Company’s capital comprised 407,010,196 registered uncertificated common shares with no par value.

Approval of additional dividends over the minimum statutory dividend

On July 30, 2010, additional dividends over the minimum statutory dividend of $45,757, were approved in the extraordinary general shareholders’ meeting, totaling an amount of $111,018 of dividends to be distributed on August 30, 2010.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the condensed consolidated financial statements (Continued)

(In thousands of U.S. dollars, unless otherwise stated)

(Unaudited)

16.	Subsequent events (Continued)

BNDES Finance

Unconsolidated and Consolidated

Quarterly Financial Information

Cosan S.A. Indústria e Comércio

June 30, 2010

“A free translation into English of the original issued in Portuguese”

COSAN S.A. INDÚSTRIA E COMÉRCIO

UNCONSOLIDATED AND CONSOLIDATED QUARTERLY FINANCIAL INFORMATION

June 30, 2010

Table of contents

Special review report of independent auditors	1

Unaudited quarterly financial information

Unaudited balance sheets	3
Unaudited statements of operations	5
Unaudited statement of changes in shareholders’ equity	6
Unaudited statements of cash flows	7
Notes to the unaudited quarterly financial information	9




	Condomínio São Luiz Av. Pres. Juscelino Kubitschek, 1830 Torre I - 8º Andar - Itaim Bibi 04543-900 - São Paulo, SP, Brasil

	Tel: (5511) 2573-3000 Fax: (5511) 2573-5780 www.ey.com.br

A free translation from Portuguese into English of Special Review Report of Independent Auditors on Quarterly Financial Information prepared in Brazilian currency in accordance with the accounting practices adopted in Brazil

SPECIAL REVIEW REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders of

Cosan S.A. Indústria e Comércio

We have performed a special review of the accompanying Quarterly Financial Information of Cosan S.A. Indústria e Comércio (parent company and consolidated) for the quarter ended June 30, 2010, including the balance sheets, statements of operations and cash flows, report on the Company’s performance and explanatory notes, prepared under the management’s responsibility.

Our review was conducted in accordance with the specific procedures determined by the Brazilian Institute of Independent Auditors (IBRACON) and the Federal Board of Accountancy (CFC), which comprised principally: (a) inquiries of and discussions with the management responsible for the Company’s accounting, financial and operational areas about the criteria adopted for the preparation of the Quarterly Financial Information; and (b) review of information and subsequent events which have, or could have, significant effects on the Company’s operations and financial position.

Based on our special review, we are not aware of any material modification that should be made to the Quarterly Financial Information referred to above for it to comply with specific standards established by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of the Quarterly Financial Information.

As mentioned in Note 2, during the 2009, CVM approved several Pronouncements, Interpretations and Technical Orientations issued by the Committee of Accounting Pronouncements (“CPC”) effective 2010, which have changed accounting practices adopted in Brazil. As permitted by CVM Deliberation 603/09, management of the Company opted to present is Quarterly Financial Information using the same accounting standards adopted in Brazil until December 31, 2009, therefore, it did not apply the new pronouncements effective in 2010. As required by the CVM Deliberation, the Company disclosed this fact in Note 2 of the Quarterly Financial Information as well as the description of the main changes the can have an impact in its financial statements at the end of the year and the reasons that avoid the presentation of the estimated effects in shareholders’ equity and income, as required by the Deliberation.

São Paulo, August 12, 2010

ERNST & YOUNG

Auditores Independentes S.S.

CRC 2SP015199/O-6

Luiz Carlos Nannini

Accountant CRC 1SP171638/O-7

A free translation from Portuguese into English of financial statements prepared in Brazilian currency in accordance with accounting practices adopted in Brazil

COSAN S.A. INDÚSTRIA E COMÉRCIO

Unaudited balance sheets

June 30, 2010 and 2009

(In thousands of reais)

		Parent Company				Consolidated
		(Unaudited) June 30, 2010		March 31, 2010		(Unaudited) June 30, 2010		March 31, 2010
Assets
Current assets
Cash and cash equivalents	Note 4		85,071		285,925		1,054,914		1,078,366
Restricted cash			51,274		44,972		51,274		44,972
Trade accounts receivable	Note 5		106,806		224,961		619,127		766,415
Derivative financial instruments	Note 20		148,767		238,024		144,507		230,561
Inventories	Note 6		380,238		255,643		1,433,659		1,046,730
Advances to suppliers			84,266		69,480		323,472		235,552
Related parties	Note 7		530,338		429,223		49,883		24,859
Deferred income and social contribution taxes	Note 12.b		12,695		12,680		94,581		76,310
Recoverable taxes			117,968		115,321		355,375		327,864
Dividends			83,330		15,132		-		-
Other assets			10,945		7,165		68,329		61,166
			1,611,698		1,698,526		4,195,121		3,892,795

Noncurrent assets
Long-term receivables
Accounts receivable from federal government	Note 15		-		-		336,273		333,733
CTNs-Restricted Brazilian Treasury Bills	Note 13		33,040		31,234		217,550		205,657
Deferred income and social contribution taxes	Note 12.b		139,612		150,226		521,474		560,114
Advances to suppliers			13,301		4,635		52,494		63,741
Related parties	Note 7		33,199		22,160		79,612		81,411
Recoverable Taxes			3,488		2,666		38,812		45,018
Other assets			1,981		1,712		177,873		166,823
Permanent assets
Investments	Note 8		6,157,836		6,112,223		193,625		193,123
Property, plant and equipment	Note 9		841,064		872,122		5,836,039		5,561,065
Intangible assets	Note 10		399,400		399,648		2,921,239		2,901,308
			7,622,921		7,596,626		10,374,991		10,111,993

Total assets			9,234,619		9,295,152		14,570,112		14,004,788

		Parent Company					Consolidated
		(Unaudited) June 30, 2010		March 31, 2010			(Unaudited) June 30, 2010		March 31, 2010
Liabilities
Current liabilities
Loans and financing	Note 13		465,333		500,142			860,304		800,902
Derivative financial instruments	Note 20		37,437		76,703			37,437		76,703
Trade accounts payable			156,544		116,363			716,254		569,399
Salaries payable			77,574		48,759			219,887		141,584
Taxes and social contributions payable	Note 11		30,886		42,633			197,350		215,862
Dividends payable	Note 16.b		116,569		116,569			116,569		116,569
Related parties	Note 7		147,092		92,818			120,073		14,416
Other liabilities			58,945		68,047			189,395		182,434
			1,090,380		1,062,034			2,457,269		2,117,869

Noncurrent liabilities
Loans and financing	Note 13		1,630,756		1,740,779			5,322,684		5,136,529
Taxes and social contributions payable	Note 11		87,803		87,645			597,862		593,505
Provision for judicial demands	Note 14		74,463		71,556			456,083		444,421
Related parties	Note 7		979,115		967,974			-		-
Actuarial liability	Note 24		-		-			59,774		61,788
Deferred income and social contribution taxes	Note 12.b		197,862		220,697			341,294		346,599
Other liabilities			35,318		34,711			146,497		146,496
			3,005,317		3,123,362			6,924,194		6,729,338

Minority shareholders’ interest			-		-			49,727		47,825

Shareholders’ equity	Note 16
Capital			4,687,826		4,687,826			4,687,826		4,687,826
Capital reserves			51,136		50,626			51,136		50,626
Income reserves			374,248		374,248			374,248		374,248
Other comprehensive income			16,993		(2,944	)		16,993		(2,944	)
Accumulated income			8,719		-			8,719		-
			5,138,922		5,109,756			5,138,922		5,109,756
Total liabilities and shareholders’ equity			9,234,619		9,295,152			14,570,112		14,004,788

The notes are an integral part of the financial statements.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Unaudited statement of operations

Quarters ended June 30, 2010 and 2009

(In thousands of reais, except earnings per share)

		Parent Company						Consolidated
		June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Gross operating sales
Sales of goods and services			592,071			665,996			4,369,376			3,843,505
Taxes and sales deductions			(28,265	)		(36,728	)		(369,754	)		(277,402	)
Net operating sales			563,806			629,268			3,999,622			3,566,103

Cost of goods sold and services rendered			(439,853	)		(542,670	)		(3,493,059	)		(3,198,418	)

Gross profit			123,953			86,598			506,563			367,685

Operating income (expenses)
Selling expenses			(30,019	)		(47,468	)		(215,210	)		(209,570	)
General and administrative expenses			(51,826	)		(44,458	)		(120,205	)		(89,285	)
Financial, net	Note 18		(103,837	)		343,309			(139,340	)		433,433
Income (loss) on equity investments	Note 8		52,555			108,992			(351	)		(3,554	)
Goodwill realized through sale	Note 8		-			-			-			(85,589	)
Other operating income (expenses), net	Note 19		(4,617	)		3,615			(2,329	)		72,484
			(137,744	)		363,990			(477,435	)		117,919
Operating income (loss) before income and social contribution taxes			(13,791	)		450,588			29,128			485,604

Income and social contribution taxes
Current	Note 12.a		-			-			(11,706	)		(23,312	)
Deferred	Note 12.a		22,510			(113,319	)		(6,801	)		(134,587	)
			22,510			(113,319	)		(18,507	)		(157,899	)

Net income before minority interest			8,719			337,269			10,621			327,705

Minority interest			-			-			(1,902	)		9,564

Net income for the period			8,719			337,269			8,719			337,269

Earnings per share – in Reais			0,02146			0,90605

The notes are an integral part of the financial statements.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Unaudited statement of changes in shareholders’ equity

Quarter ended June 30, 2010

(In thousands of reais)

	Unconsolidated and Consolidated
	Capital		Capital reserve		Income reserve		Retained earnings / (accumulated losses)		Other comprehensive			Total

Balance on March 31, 2010		4,687,826		50,626		374,248		-		(2,944	)		5,109,756

Recorded granted options		-		510		-		-		-			510
Other comprehensive income		-		-		-		-		19,937			19,937
Net income in the period		-		-		-		8,719		-			8,719

Balance on March 31, 2010		4,687,826		51,136		374,248		8,719		16,993			5,138,922

The notes are an integral part of the financial statements.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Unaudited statements of cash flows

Quarters ended June 30, 2010 and 2009

(In thousands of reais)

	Parent Company						Consolidated
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Cash flows from operating activities
Net income for the period		8,719			337,269			8,719			337,269
Adjustments to reconcile net income for the period to cash provided by operating activities
Depreciation and amortization		56,250			62,557			189,191			169,917
Losses (income) on equity investments		(52,555	)		(108,992	)		351			3,554
Loss (income) from disposal of permanent assets		(69	)		(259	)		3,112			(103,168	)
Goodwill amortization and realized through sale		-			-			-			85,589
Deferred income and social contribution taxes		(22,510	)		113,319			6,801			134,587
Recording of provision for legal claims		3,488			592			10,656			2,890
Minority interest		-			-			1,902			(9,564	)
Recorded granted options		510			3,479			510			3,479
Interest, monetary and exchange variation, net		85,574			(243,609	)		162,571			(287,809	)
Other		2,871			(5,102	)		18,914			1,728
		82,278			159,254			402,727			338,472
Changes in assets and liabilities
Trade accounts receivables		116,695			(23,041	)		153,257			110,345
Inventories		(92,177	)		37,336			(284,622	)		172,567
Recoverable taxes		19			(8,392	)		(21,305	)		10,394
Advances to suppliers		(23,452	)		(23,019	)		(76,673	)		(75,730	)
Suppliers		40,181			39,071			146,855			46,966
Salaries payable		28,815			22,896			78,303			41,354
Taxes payable		(13,662	)		3,252			(29,039	)		(57,123	)
Derivative financial instruments and restricted cash		73,906			(62,534	)		70,703			(60,035	)
Other assets and liabilities, net		(41,168	)		(4,240	)		59,076			7,011
		89,157			(18,671	)		96,555			195,749
Net cash generated from operating activities		171,435			140,583			499,282			534,221
Cash flows from investments activities
Acquisition of new businesses, net of cash received and additions to investments		-			(3,900	)		(3,747	)		-
Advance for future capital increase		-			-			-			-
Addition to property, plant and equipment, software and other intangible assets		(112,267	)		(55,138	)		(600,404	)		(420,618	)
Cash from the sale of aviation fuel business		-			-			-			-
Cash from the sale of other permanent assets		277			294			672			117,731
Net cash used in investment activities		(111,990	)		(58,744	)		(603,479	)		(244,348	)

Cash flows from financing activities
Loans and financing funded		110,109			2,684			642,394			172,899
Amortization of principal and interest on loans and financing, advances from customers and Promissory Notes		(312,483	)		(61,417	)		(561,649	)		(127,849	)
Related parties		(57,925	)		(103,925	)		-			(121,359	)
Net cash generated (used) by financing activities		(260,299	)		(162,658	)		80,745			(76,309	)
Net increase (decrease) in cash and cash equivalents		(200,854	)		(80,819	)		(23,452	)		213,564
Cash and cash equivalents at the beginning of the period		285,925			388,726			1,078,366			719,356
Cash and cash equivalents at the end of the period		85,071			307,907			1,054,914			932,920

The notes are an integral part of the financial statements.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements

June 31, 2010 and 2009

(In thousands of reais)

1.	Operations

Cosan S.A. Indústria e Comércio (“Company” or “Cosan”), with principal place of business in the city of Barra Bonita, São Paulo, is a publicly-held Company, controlled by Cosan Limited, which holds 62.3% of its capital.

The primary activities of Cosan, and its subsidiaries are (i) the manufacturing and trading of sugar and ethanol, as well as energy cogeneration from sugarcane bagasse, (ii) the distribution of fuel and lubricants, and (iii) logistics transportation, warehousing and port lifting services.

The Company has 23 producing units, located in e São Paulo, Goiás and Mato Grosso do Sul States, with a nominal capacity of milling 60 million tons of sugarcane per year, producing varied qualities of raw and refined sugar, anhydrous and hydrated ethanol.

The Company, through its subsidiary Cosan Combustíveis e Lubrificantes S.A. (“Cosan CL”), operates in 45 fuel distribution bases and a lubricants plant in Brazil and ranks as one of the four biggest fuel distributors in the country, with a distribution network of nearly 1,700 gas stations across Brazil, which sell 5 billion liters of fuels, 93 million cubic meters of NGV and 135 thousand cubic meters of lubricants per year. Accordingly, the Company expanded its business model and became the first integrated renewable energy company, acting from the plantation of sugar cane to the distribution and retail sale of fuels.

Additionally, the Company provides logistics transportation, warehousing and port lifting services in the State of São Paulo through its Santos-based indirect subsidiary Rumo Logística S.A.

In February 2010 the Company signed a non-binding memorandum of understanding together with Shell International Petroleum Company Ltd. (“Shell”) whereby both companies plan to pool the Company’s sugar and ethanol assets and distribution facilities with Shell’s distribution facilities in Brazil. Pursuant to this non-binding memorandum of understanding, Shell will make a capital contribution in the amount of approximately US$1.6 billion (equivalent to R$2,882,000 at the exchange rate of June 30, 2010) within two years. This agreement will become official upon certain requirements being met and the conclusion of negotiations.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

2.	Basis of preparation and presentation of the quarterly financial statements

The Company’s quarterly financial statements were prepared based on the accounting standards adopted in Brazil and on the rules issued by the Brazilian Securities and Exchange Commission (“CVM”), observing the accounting guidelines set forth in the corporate law (Law Nº 6404/76) which include the new provisions established, amended and repealed by Laws 11638/07 and 11941/09,as well as standards, guidelines and interpretations issued by the Accounting Standards Board (“CPC”). These quarterly financial statements were approved by the Company's Board of Directors on August 6, 2010.

During 2009 the CPC issued, and CVM approved, several standards, interpretations and guidelines requiring companies to present new quarterly financial statements for the comparative year. These standards are mandatory only for fiscal years beginning on or after January 1, 2010 with the requirement to present comparative figures.

CVM, through Resolution 603, of November 10, 2009, authorized the publicly-held companies to adopt in advance these pronouncements for the year ended December 31, 2009, provided that these pronouncements were fully adopted.

Moreover, CVM also authorized the presentation of the quarterly information in 2010 in accordance with the accounting practices effective on December 31, 2009, upon disclosure of a note to the financial statements describing the main changes which could affect the financial statements on the year end, as well as estimates as regards to the possible effects on the shareholders’ equity and statement of income or clarifications for the lack of such estimates. In the case this option is adopted, the companies must present again the ITRs in 2010, as compared to 2009, also adjusted in accordance with the rules for 2010, at least as regards to the presentation of the financial statements for the year commencing as from January 2010.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

2.	Basis of preparation and presentation of the quarterly financial statements (Continued)

The Company decided to present its information for the first quarter of 2010 in accordance with the rules effective up to December 31, 2009, considering that the adjustments according to the international accounting standards require review of flows, internal controls, systems and other material aspects, which are still in progress and, therefore, the Company is not able to currently present accurate estimates related to the possible effects. However, the Company, at its best discretion, evaluated the technical pronouncements already issued and concluded that, except for the technical pronouncements referred to below, the other technical pronouncements will not adversely affect the Company’s equity and financial condition, on an individual and consolidated basis, taking into consideration the transactions up to the date this quarterly information was disclosed:

CPC 15 – Business combinations;

CPC 16 – Inventories;

CPC 20 – Loan costs;

CPC 22 – Segment reporting;

CPC 24 – Subsequent event;

CPC 26 – Presentation of financial statements;

CPC 27 – Property, plant and equipment;

CPC 29 – Biological assets and agricultural products;

CPC 37 – First time adoption of International Accounting Standards and CPC 43 Initial adoption of CPC standards 15 through 40;

CPC 38 – Financial instruments: recognition and measurement;

CPC 39 – Financial instruments: presentation;

CPC 40 – Financial instruments: disclosure

3.	Summary of Significant Accounting Policies

The quarterly information was prepared in accordance with the principles, practices and criteria adopted for the preparation of the financial statements as of March 31, 2010, except for the adoption for the first time of the hedging accounting, which quarterly information must be read together with the financial statements.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

3.	Summary of Significant Accounting Policies (Continued)

Hedge accounting

As from the quarter ended June 30, 2010, the Company adopted the hedge accounting in accordance with Directive OCPC 03– Financial instruments, as approved by Circular Letter CVM/SNC/SEP 03/2009 for the accounting of future sugarcane export revenues deemed highly probable. The effects resulting from the adoption of the hedge accounting are described in Note 20 to the financial statements.

Up to March 31, 2010, the Company has not adopted the hedge accounting method, despite of using the derivatives mainly for hedge purposes and, for this reason, the related variations on the derivative fair value were recorded directly in the statement of income, under Financial, net. As from April 1, 2010, the Company adopted the cash flow hedge to certain derivative financial instruments allocated for such purpose.

Upon such adoption, the variations on the fair value of the derivatives allocated to hedge the cash flow were directly recorded in the shareholders’ equity, as regards to the hedge portion considered effective. Afterwards, the amount recorded in shareholders’ equity is transferred to income at the same period in which the hedged item (sales revenues) affects the income statement. As regards to the market value variation of the non-effective derivatives, the fair value variations are recognized in the financial results together with the results of the other derivatives not allocated to the hedge accounting.

In the event the derivative instrument allocated for hedge accounting purposes is not effective, expires, is sold, terminated or exercised, the hedge accounting must be discontinued on a prospective basis. The gain or loss previously accumulated and recorded in shareholders’ equity will remain until the estimated transactions are carried out.

At the time of designation of the hedge relationship, it is expected that the hedge is highly effective because the critical terms of the hedging instrument and the hedged forecast transaction risks are equal and symmetrical. The highly probable forecast transaction is covered until its effective realization. At the time of designation of the hedge relationship, the allocation of derivatives covering the risk of change in the price of sugar provided for future transactions (export earnings) takes into account the commercial screen contracted in the future position.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

3.	Summary of Significant Accounting Policies (Continued)

Hedge accounting (Continued)

At each reporting date, the Company reassesses the hedge's expected effectiveness prospectively and measures the true effectiveness of the hedge retrospectively. The real effectiveness of the hedge is measured by the method of the coverage ratio on a cumulative basis (since the start of coverage). The coverage is considered highly effective if the compensation effect of the variation of the item being hedged by the hedging instrument is in the range of tolerance of 80% to 125%. The company differs in shareholders’ equity the effective portion of gains and losses on hedging instruments for the entire period of coverage until they are transferred to the result in the period of the transactions covered. The ineffective portion of hedge is transferred immediately to the financial result.

Other derivative financial instruments not allocated for hedge accounting purposes

The derivative instruments not allocated for hedge accounting purposes are stated at fair value under financial results.

Consolidation of quarterly information

The consolidated quarterly information was prepared in accordance with the basic consolidation principles, including the following main procedures: (i) elimination of asset and liability accounts amongst the consolidated companies; (ii) elimination of investments, proportionally to the parent company’s interest in the subsidiaries’ shareholders’ equity; (iii) elimination of revenues and expenses resulting from the businesses carried out amongst the consolidated companies; and (iv) elimination of unrealized revenues arising from consolidated intercompany transactions, as necessary.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

3.	Summary of Significant Accounting Policies (Continued)

Consolidation of quarterly information (Continued)

The year end for the companies included in the consolidation is the same for the Company’s year end, adjusted in order to reflect the effects for the quarter, in accordance with the accounting practices adopted for the consolidated companies according to those adopted on March 31, 2010.

The special purpose companies are consolidated when such companies are controlled by the Company. The control indicators include, among others, an evaluation of the Company’s exposure to the special purpose company’s risks and benefits.

The main consolidated companies are listed below:

	Direct and indirect interest as of
	06/30/10			03/31/10
Administração de Participações Aguassanta Ltda.		91.5	%		91.5	%
Cosan S.A Açúcar e Álcool		99.6	%		99.6	%
Águas da Ponte Alta S.A. (1)		99.6	%		99.6	%
Vale da Ponte Alta S.A.		99.6	%		99.6	%
Agrícola Ponte Alta S.A.		99.6	%		99.6	%
Cosan Centroeste S.A. Açúcar e Álcool		99.6	%		99.6	%
Barra Bioenergia S.A.		99.6	%		99.6	%
DaBarra Alimentos S.A.		99.6	%		99.6	%
Bonfim Nova Tamoio – BNT Agrícola Ltda.		99.6	%		99.6	%
Benálcool Açúcar e Álcool S.A.		99.6	%		99.6	%
Barrapar Participações Ltda.		99.6	%		99.6	%
Aliança Indústria e Comercio de açúcar e Álcool S.A.		99.6	%		99.6	%
Agrobio Investimentos e Participações S.A. (3)		99.6	%		-
Bioinvestments Negócios e Partipações S.A. (3)		99.6	%		-
Proud Participações S.A. (3)		99.9	%		-
Cosan Distribuidora de Combustíveis Ltda.		99.9	%		99.9	%
Cosan S.A. Bioenergia		100.0	%		100.0	%
Cosan International Universal Corporation		100.0	%		100.0	%
Cosan Finance Limited		100.0	%		100.0	%
Grançucar S.A. Refinadora de Açúcar		100.0	%		100.0	%
Cosan Combustíveis e Lubrificantes S.A.		100.0	%		100.0	%
Copsapar Participações S.A.		90.0	%		90.0	%
Novo Rumo Logística S.A.		92.9	%		92.9	%
Rumo Logística S.A.		92.9	%		92.9	%
Cosan Operadora Portuária S.A.		92.9	%		92.9	%
Teaçú Armazéns Gerais S.A.		92.9	%		92.9	%
Teas Terminal Exportador de Álcool de Santos S.A.		66.7	%		66.7	%
Pasadena Empreendimentos e Participações S.A. (2)		-			-
Cosan Alimentos S.A.		100.0	%		100.0	%

(1)

Year ended December 31 of each year.

(2)

Special purpose entity, controlled by the Company.

(3)

Companies established upon the payment of rural and urban properties of the plants (Note 8).

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

4.	Cash and cash equivalents

	Parent company				Consolidated
	06/30/10		03/31/10		06/30/10		03/31/10
Cash		140		247		411		384
Overnight investments		-		-		50,900		50,470
Bank checking accounts		2,262		1,767		72,940		22,740
Amounts pending foreign exchange closing		44,172		125,882		44,868		127,755
Financial investments		38,497		158,029		885,795		877,017
		85,071		285,925		1,054,914		1,078,366

The balance of Overnight investments refers to financial investments in US dollars made with highly-rated banks, are remunerated according to the Federal Funds rate and may be promptly redeemed.

Amounts pending foreign exchange closing refer to receipts of funds in foreign currency from customers located abroad, whose foreign exchange closing with the applicable financial institutions had not occurred as of the balance sheet date.

The balances of financial investments mainly correspond to investments in Bank Deposit Certificates – CDB, allowing immediate redemption, are made with highly-rated banks and accrue in average 101.3% of the Interbank Deposit Certificate – CDI.

5.	Trade accounts receivable

	Parent company						Consolidated
	06/30/10			03/31/10			06/30/10			03/31/10
Domestic		28,947			97,930			547,975			675,008
International		78,843			127,837			127,370			148,655
(-) Allowance for doubtful accounts		(984	)		(806	)		(56,218	)		(57,248	)
		106,806			224,961			619,127			766,415

6.	Inventories

	Parent company						Consolidated
	06/30/10			03/31/10			06/30/10			03/31/10
Finished goods:
Sugar		87,113			10,050			298,889			93,610
Ethanol		98,233			17,194			321,795			56,232
Fuels and lubricants		-			-			271,148			266,461
Harvest costs		134,654			171,331			367,319			434,046
Supplies and other		71,204			63,851			220,000			221,641
(-) Provision for inventory realization and obsolescence		(10,966	)		(6,783	)		(45,492	)		(25,260	)
		380,238			255,643			1,433,659			1,046,730

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

7.	Related parties

	Assets
	Parent company						Consolidated
	06/30/10			03/31/10			06/30/10			03/31/10
Cosan S.A. Açúcar e Álcool		448,868			276,121			-			-
Cosan Alimentos S.A.		-			122,679			-			-
Pasadena Empreendimentos e Participações S.A.		33,199			22,160			-			-
Rezende Barbosa S.A. Administração e Participações		-			-			86,944			87,071
Cosan Operadora Portuária S.A.		46,270			17,879			-			-
Vertical UK LLP		30,737			10,306			32,490			14,965
Other		4,463			2,238			10,061			4,234
		563,537			451,383			129,495			106,270
Current		(530,338	)		(429,223	)		(49,883	)		(24,859	)
Noncurrent		33,199			22,160			79,612			81,411

	Liabilities
	Parent company						Consolidated
	06/30/10			03/31/10			06/30/10			03/31/10
Cosan Finance Limited		688,022			668,395			-			-
Rezende Barbosa S.A. Administração e Participações		-			-			109,798			-
CCL Finance Limited		329,072			317,844			-			-
Cosan Combustíveis e Lubrificantes S.A.		63,115			38,537			-			-
Logispot Armazéns Gerais S.A.		-			-			7,496			11,244
Other		45,998			36,016			2,779			3,172
		1,126,207			1,060,792			120,073			14,416
Current		(147,092	)		(92,818	)		(120,073	)		(14,416	)
Noncurrent		979,115			967,974			-			-

	Parent company						Consolidated
	04/01/10 to 06/30/10			04/01/09 to 06/30/09			04/01/10 to 06/30/10			04/01/09 to 06/30/09
Asset balance transactions
Fund remittances, net of receipts, credit assignments and advances		205,837			275,819			(53,277	)		(75,685	)
Sales of finished products, inputs and services (1)		39,990			41,417			-			-
Purchases of finished products, inputs and services (1)		(168,744	)		(174,610	)		-			-
Sales of finished products, inputs and services to affiliate and related companies		30,919			30,991			76,502			69,059
Merged assets		-			-			-			138,682
Financial revenues		4,152			1,777			-			-
		112,154			175,394			(23,225	)		132,056
Liability balance transactions
Fund raising (payments)		34,559			72,790			8,085			(3,532	)
Purchase of sugarcane raw materials from associated company		-			-			113,742			23,618
Financial expense (revenue)		30,856			(120,989	)		-			(60,275	)
		65,415			(48,199	)		105,657			(64,324	)

(1)

It consists of operations carried out between Cosan’s direct and indirect subsidiaries included in the consolidation.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

7.	Related parties (Continued)

The purchase and sale transactions are carried out at prices and under conditions similar to those existing in the market.

The credit balance of Cosan S.A Açúcar e Álcool as of June 30, 2010, corresponds to funds remitted to its indirect subsidiary Cosan Centroeste S.A., which remittances were made for account and at the order of such subsidiary and which bear no interest.

On January 21, 2010, Pasadena Empreendimentos and Participações S.A. ("Pasadena") was incorporated. Pasadena was formed with the specific purpose of managing the gas station chain acquired by the Company. As of June 30, 2010, the Company had made advances in the amount of R$33,199 under a purchase and sale agreement covering 46 gas stations, of which 19 stations had already been acquired.

The receivable of Cosan Alimentos S.A. essentially relates to advances made for a future capital increase in that company. These advances do not accrue interest. For the quarter ended June 30, 2010, upon raising of funds with BNDES, the parent company settled such balance.

The receivable of Cosan Operadora Portuária S.A. refers to advances to freight payments. These advances do not accrue interest.

The receivable of associated company Vertical UK LLP refers to the sale of ethanol, the receipt period of which is 30 days.

The balance payable to Cosan Finance Limited refers to future sugar export prepayment loan agreements to be settled in 2014, 2015 and 2016, which are subject to the US dollar exchange variation and Libor annual interest rate, plus spread from 4.75% to 4.85% per year.

The balance payable to Rezende Barbosa S.A. Administração e Participações (“Rezende Barbosa”) refers to the purchase of sugarcane raw materials to be settled during the current year. Moreover, the balance receivable refers to the credits assumed by Rezende Barbosa, in connection with the acquisition of Cosan Alimentos.

The balance payable to CCL Finance Limited refers to prepayment contracts for future sugar exports to be settled in 2014, which is subject to US Dollar exchange variation and annual interest of 9.5%.

The balance payable to Cosan CL refers to financial funds remitted to the Company, without interest.

The balance payable to Logispot Armazéns Gerais S.A. refers to the outstanding payment of interest acquired.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

7.	Related parties (Continued)

At June 30, 2010, the Company and its subsidiary Cosan Açúcar e Álcool were lessees of approximately 68,000 hectares of related companies land (unaudited information). Furthermore, the Company has acquired, as of the quarter ended June 31, 2010, 2,420 thousand metric tonnes of sugar cane from Rezende Barbosa (unaudited information). These operations are carried out under conditions and prices similar to those prevailing in the market, calculated based on sugarcane tons per hectare, valued in accordance with the price established by CONSECANA.

8.	Investments

	Parent company
	Investees					Investor
	Shareholders’ equity		Net income for the year			Equity interest %				Investments				Equity in the results
	06/30/10		04/01/10 to 06/30/10			06/30/10		03/31/10		06/30/10		03/31/10		04/01/10 to 06/30/10			04/01/09 to 06/30/09
Administração de Participações Aguassanta Ltda.		141,393		(11	)		91.5		91.5		129,372		129,382		(10	)		1,150
Cosan S.A. Açúcar e Álcool		2,886,987		(112	)		95.1		95.1		2,744,861		2,744,968		(107	)		24,493
Copsapar Participações S.A.		210,856		14,479			90.0		90.0		189,770		173,842		15,928			(11,773	)
Novo Rumo Logística S.A.		295,247		20,342			28.8		28.8		84,017		77,924		7,166			(324	)
TEAS - Terminal Exportador de Álcool de Santos S.A. (2)		47,925		195			66.7		66.7		31,950		39,121		130			114
Cosan S.A. Bioenergia		132,859		1,225			100.0		100.0		132,859		131,634		1,225			1,963
Radar Propriedades Agrícolas S.A.		823,662		5,066			18.9		18.9		155,828		154,836		992			1,282
Cosan International Universal Corporation		614		-			100.0		100.0		614		607		-			118
Cosan Finance Limited		22,577		(863	)		100.0		100.0		22,577		23,179		(863	)		1,167
Cosanpar Participações S.A. (1)		-		-			-		-				-		-			72,212
Cosan Combustíveis e Lubrificantes S.A.		1,869,395		35,161			100.0		100.0		1,869,369		1,901,333		35,161			21,893
Cosan Alimentos S.A. (3)		257,140		(5,423	)		100.0		100.0		714,761		715,385		(5,149	)		1,651
Proud Participações S.A. (4)		58,957		-			93.4		-		55,038		-		-			-
Other investments		-		-			-		-		26,820		20,012		(1,918	)		(4,954	)
											6,157,836		6,112,223		52,555			108,992

(1)

Merged by Cosan CL on June 23, 2009;

(2)

The investment balances, as of June 30 and March 31, 2010, include the goodwill generated from the acquisition of shares in the amount of R$7,301;

(3)

As of June 30, 2010, this includes the amounts of R$365,240 (R$360,716 as of March 31, 2010) and R$92,380 (R$102,952 as of March 31, 2010) related to the advances for future capital increase and goodwill from acquisition of Curupay, respectively;

(4)

Established upon payment of rural and urban real estate properties; and

(5)

Including equity in the losses on negative liabilities, in the amount of R$ 1,918.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

8.	Investments (Continued)

As of the quarter ended June 30, 2010 and 2009, the account Investments showed the following transactions:

	Parent company						Consolidated
	04/01/10 to 06/30/10			04/01/09 to 06/30/09			04/01/10 to 06/30/10			04/01/09 to 06/30/09
Opening balances		6,112,223			4,788,932			193,123			278,209
Equity pickup		54,473			108,992			992			(3,554	)
Investment additions and advance for future capital increase		4,524			4,000			-			4,000
Payment of capital with property, plant and equipment and additions resulting from merger/spin-off		55,038			334,072			-			2,769
Investment acquisition advancement write-off		-			-			-			(100,000	)
Merger goodwill		-			(18,194	)		-			-
Dividends		(68,198	)		-			-			-
Other		(224	)		(1,660	)		(490	)		(133	)
Final balances		6,157,836			5,216,142			193,625			181,291

9.	Property, plant and equipment

			Parent company
			06/30/10							03/31/10
	Average annual depreciation rates (%)		Cost		Accumulated depreciation/ amortization			Net		Net
Land and rural properties		-		5,045		-			5,045		59,591
Machinery, equipment and installations		10		537,804		(308,859	)		228,945		214,814
Aircraft		10		13,395		(13,308	)		87		460
Vehicles		20		86,696		(43,208	)		43,488		25,682
Furniture, fixtures and computer equipment		18		31,147		(16,024	)		15,123		14,624
Buildings and improvements		4		174,728		(35,524	)		139,204		139,987
Construction in progress		-		113,365		-			113,365		101,344
Sugarcane planting costs		20		484,592		(251,790	)		232,802		233,210
Parts and components to be periodically replaced		100		103,850		(41,261	)		62,589		82,410
Other		-		416		-			416		-
				1,551,038		(709,974	)		841,064		872,122

			Consolidated
			06/30/10							03/31/10
	Average annual depreciation rates (%)		Cost		Accumulated depreciation/ amortization			Net		Net
Land and rural properties		-		210,922		-			210,922		210,429
Machinery, equipment and installations		11		3,641,854		(1,621,722	)		2,020,132		1,896,446
Aircraft		10		30,903		(13,795	)		17,108		4,995
Vehicles		19		264,103		(145,733	)		118,370		89,004
Furniture, fixtures and computer equipment		18		138,330		(93,611	)		44,719		40,007
Buildings and improvements		4		1,049,733		(307,919	)		741,814		714,588
Wagons		3		87,829		(288	)		87,541		-
Construction in progress		-		1,451,237		-			1,451,237		1,408,252
Sugarcane planting costs		20		1,523,794		(754,568	)		769,226		749,851
Parts and components to be periodically replaced		100		306,215		(108,280	)		197,935		245,178
Advances for purchase of property, plant and equipment		-		175,010		-			175,010		200,634
Other		-		2,025		-			2,025		1,681
				8,881,955		(3,045,915	)		5,836,039		5,561,065

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

9.	Property, plant and equipment (Continued)

The consolidated balance of construction in progress and advances for fixed asset purchases corresponds, substantially, to (i) investments in co-generation capacity, (ii) upgrading and expansion of industrial plants, (iii) expanding warehousing capacity, and (iv) advances for purchases of locomotives.

As of the quarters ended June 30, 2010 and 2009, the property, plant and equipment account showed the following transactions:

	Parent company						Consolidated
	04/01/10 to 06/30/10			04/01/09 to 06/30/09			04/01/10 to 06/30/10			04/01/09 to 06/30/09
Opening balances		872,122			789,259			5,561,065			3,493,947
Additions to the property plant and equipment		114,707			55,138			597,000			420,618
Write-offs		(209	)		(3,923	)		(2,353	)		(14,563	)
Transfer to intangible assets								(15,889	)
Depreciation and amortization					-			(303,784	)
Offset due to capital contribution in subsidiaries		(55,038	)
Additions due to merger/acquisition											812,985
Closing balances		841,064			768,685			5,836,039			4,516,362

10.	Intangible

	Parent company
	06/30/10							03/31/10
Goodwill (amortized on a straight-line basis until March 31, 2009)	Cost		Accumulated amortization			Net		Net
Acquisition of JVM Participações S.A.		63,720		(53,100	)		10,620		10,620
Acquisition of Grupo Mundial		127,953		(40,518	)		87,435		87,435
Payment of capital, Mundial		21,142		(6,342	)		14,800		14,800
Acquisition of Corona (ABC 125 and ABC 126)		267,824		(84,811	)		183,013		183,013
Acquisition of Usina Açucareira Bom Retiro S.A.		115,165		(33,590	)		81,575		81,575
		595,804		(218,361	)		377,443		377,443
Other intangibles
Software (amortization at the rate of 20% p. a.)		48,085		(26,128	)		21,957		22,205
		643,889		(244,489	)		399,400		399,648

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

10.	Intangible (Continued)

	Consolidated
	06/30/10							03/31/10
Goodwill (amortized on a straight-line basis until March 31, 2009)	Cost		Accumulated amortization			Net		Net
Acquisition of JVM Participações S.A.		63,720		(53,100	)		10,620		10,620
Acquisition of Cosan Açúcar e Álcool		35,242		(34,684	)		558		558
Formation of FBA		22,992		(18,585	)		4,407		4,407
Acquisition of Univalem S.A. Açúcar e Álcool		24,118		(19,100	)		5,018		5,018
Acquisition of Grupo Destivale		69,918		(27,424	)		42,494		42,494
Acquisition of Grupo Mundial		127,953		(40,518	)		87,435		87,435
Payment of capital, Mundial		21,142		(6,342	)		14,800		14,800
Acquisition of Corona		818,831		(255,815	)		563,016		563,016
Acquisition of Usina Açucareira Bom Retiro S.A.		115,165		(33,590	)		81,575		81,575
Acquisition of Usina Santa Luíza		47,053		(4,705	)		42,348		42,348
Acquisition of Benálcool		167,300		(18,053	)		149,247		149,247
Acquisition of Aliança		1,860		-			1,860		1,860
Acquisition of Cosan CL		1,522,458		(134,396	)		1,388,062		1,378,696
Acquisition of Teaçu		73,668		-			73,668		69,145
Formation of Curupay (Cosan Alimentos) (1)		92,380		-			92,380		102,952
Acquisition of Açúcar União		74,832		(57,371	)		17,461		17,461
Acquisition of Destilaria Paraguaçu		166,656		-			166,656		166,656
Subscription of shares of Nova América		121,893		-			121,893		121,893
Purchase of shares of TEAS		7,301		-			7,301		7,301
		3,574,482,054		(703,683	)		2,870,799		2,867,482
Other intangibles
Software (amortization at the rate of 20% p. a.)		98,123		(60,599	)		37,524		29,251
Other		13,703		(787	)		12,916		4,575
		111,826		(61,386	)		50,440		33,826
		3,686,308		(765,069	)		2,921,239		2,901,308

(1)

Reversal of goodwill due to the partial return of provision for losses, in the amount of R$10,572.

As of the quarters ended June 30, 2010 and 2009, the intangibles account showed the following transactions:

	Parent company						Consolidated
	04/01/10 to 06/30/10			04/01/09 to 06/30/09			04/01/10 to 06/30/10			04/01/09 to 06/30/09
Opening balances		399,648			403,918			2,901,308			2,418,753
Accretion to goodwill, net of offsets		-			18,194			3,317			85,162
Increase in software and other intangibles		1,860			-			3,404			-
Accretion from acquisitions/mergers		-			-			-			306,010
Goodwill derived from disposals		-			-			-			(85,589	)
Transfers of property, plant and equipment		-			-			15,889			-
Amortization of software and other intangibles		(2,332	)		(2,234	)		(7,946	)		-
Others		224			3,888			5,267			-
Closing balances		399,400			423,766			2,921,239,811			2,724,336

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

11.	Taxes and social contributions payable

	Parent company						Consolidated
	06/30/10			03/31/10			06/30/10			03/31/10
ICMS		952			8,865			37,938			49,197
IPI		349			886			15,419			6,379
INSS		6,943			6,933			24,011			23,891
PIS		71			1,120			4,678			8,129
COFINS		324			5,153			21,772			32,076
Installment payments – Refis IV		98,313			97,703			662,653			665,470
Income and social contribution taxes payable		-			-			6,005			2,597
Other		11,737			9,618			22,736			21,628
		118,689			130,278			795,212			809,367
Current liabilities		(30,886	)		(42,633	)		(197,350	)		(215,862	)
Noncurrent liabilities		87,803			87,645			597,862			593,505

Noncurrent amounts will become due as follows:

	Parent company				Consolidated
	06/30/10		03/31/10		06/30/10		03/31/10
13 to 24 months		12,070		11,732		64,113		60,349
25 to 36 months		8,596		9,326		60,289		57,933
37 to 48 months		6,411		6,525		54,702		54,991
49 to 60 months		6,389		6,169		54,635		51,241
61 to 72 months		6,063		6,043		53,842		51,026
73 to 84 months		5,736		5,521		45,126		44,303
85 to 96 months		5,736		5,521		41,604		38,911
As from 97 months		36,802		36,808		223,551		234,751
		87,803		87,645		597,862		593,505

The Company and its subsidiaries must comply with several conditions to continue benefiting from the installment payment programs, particularly with the regular payment of the installments as required by applicable law. The required conditions are fully complied by the Company and its subsidiaries.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

12.	Income and social contribution taxes

Reconciliation of income and social contribution tax income (expenses):

	Parent company						Consolidated
	04/01/010 to 06/30/10			04/01/09 to 06/30/09			04/01/010 to 06/30/10			04/01/09 to 06/30/09
Operating profit (loss) before income tax and social security contribution		(13,791	)		450,588			29,128			485,604
Income tax and social security contribution at nominal rate (34%)		4,689			(153,200	)		(9,904	)		(165,105	)
Adjustments made for determining the effective rate:
Equity pickup		18,521			37,057			(119	)		(1,208	)
Amortization of non-deductible goodwill					4,992			-			11,653
Non-deductible donations and contributions		(422	)		(388	)		(1,464	)		(489	)
Recognized granted options		(173	)		(1,183	)		(173	)		(1,183	)
Claims related to income tax		-			-			(2,248	)		-
Others		(105	)		(597	)		(4,599	)		(1,567	)
Total of deferred and current taxes		22,510			(113,319	)		(18,507	)		(157,899	)
Effective rate		-			25.15	%		63.54	%		32.52	%

Deferred income and social contribution tax assets:

	Parent company
	06/30/10												03/31/10
	Base			IRPJ 25%			CSSL 9%			Total			Total
Provisions for court judgments and other interim differences		148,029			37,007			13,323			50,330			50,183
Tax losses		299,906			74,976			-			74,976			82,878
Social security contribution negative basis		300,007			-			27,001			27,001			29,845
					111,983			40,324			152,307			162,906
Exchange variation		(421,828	)		(105,457	)		(37,964	)		(143,421	)		(152,320	)
Tax implications of Law No. 11,638/07		(91,491	)		(22,873	)		(8,234	)		(31,107	)		(48,997	)
Goodwill		(68,629	)		(17,157	)		(6,177	)		(23,334	)		(19,380	)
					(145,487	)		(52,375	)		(197,862	)		(220,697	)
Total deferred taxes					(33,504	)		(12,051	)		(45,555	)		(57,791	)
Current assets											12,695			12,680
Non-current assets											139,612			150,226
Non-current liabilities											(197,862	)		(220,697	)

	Consolidated
	06/30/10												03/31/10
	Base			IRPJ 25%			CSSL 9%			Total			Total
Provisions for court judgments and other interim differences		986,238			246,560			88,761			335,321			339,689
Tax losses		822,432			205,608			-			205,608			217,360
Social security contribution negative basis		834,729			-			75,126			75,126			79,375
					452,168			163,887			616,055			636,424
Exchange variation		(511,825	)		(127,955	)		(46,064	)		(174,019	)		(183,449	)
Tax implications of Law No. 11,638/07		(91,491	)		(22,874	)		(8,234	)		(31,108	)		(48,998	)
Goodwill		(400,491	)		(100,123	)		(36,044	)		(136,167	)		(114,152	)
					(250,952	)		(90,342	)		(341,294	)		(346,599	)
Total deferred taxes					201,216			73,545			274,761			289,825
Current assets											94,581			76,310
Non-current assets											521,474			560,114
Non-current liabilities											(341,294	)		(346,599	)

Deferred income and social contribution tax on accumulated loss must be realized within 10 years, according to the Company’s and its subsidiaries’ expected profitability shown in financial projections prepared by management.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

12.	Income and social contribution taxes (Continued)

Deferred income and social contribution tax assets--Continuação

The Company expects to realize non-current tax credits and debts in the course of the following years:

	Assets
	Parent company				Consolidated
	06/30/10		03/31/10		06/30/10		03/31/10
2012		10,636		10,622		97,840		84,818
2013		16,424		16,409		97,479		93,328
2014		16,355		16,340		76,804		68,303
2015 to 2017		81,098		84,688		188,452		194,445
2018 to 2019		15,099		22,167		60,899		119,220
		139,612		150,226		521,474		560,114

	Liabilities
	Parent company				Consolidated
	06/30/10		03/31/10		06/30/10		03/31/10
2012		17,453		20,132		23,573		23,245
2013		17,453		20,132		23,573		23,245
2014		17,453		20,132		23,573		23,245
2015 to 2017		52,359		60,394		123,495		69,733
2018 to 2019		93,144		99,907		147,080		207,131
		197,862		220,697		341,294		346,599

Tax credit recovery estimates were based on taxable profit projections, taking into consideration several financial and business assumptions on the balance sheet preparation date.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

13.	Loans and financing

	Financial charges (1)		Parent company				Consolidated					Guarantees (2)
Description	Index	Annual average interest rate	06/30/10		03/31/10		06/30/10		03/31/10		Final maturity	06/30/10	03/31/10

Senior Notes Due 2014	Dollar (US)	Interest of 9.5%	-		-		653,653		631,246		August/2014	-	-

Senior Notes Due 2017	Dollar (US)	Interest of 7.0%	-		-		741,477		720,573		February/2017	-	-

BNDES (3)	URTJLP	Interest of 3.1%	-		-		1,336,207		1,057,775		October/2025 March/2018 April/2018 April/2015 November/2012 January/2013 October/2012	Credit rights from electric energy sale agreements	Credit rights from electric energy sale agreements

Bank credit certificate	CDI	Interest of 0.6%	-		-		60,146		61,444		December/2011	Conditional sale	-

ACC	Dollar (US)	Interest of 1.9%	184,184		296,375		184,184		296,375		March/2011	-	-

Bonuses in perpetuity	Dollar (US)	Interest of 8.3%	820,229		810,896		820,229		810,896		-	-	-

Resolution 2471	IGP-M Fixed	Interest of 4.0% Interest of 3.0%	102,920 121		99,493 121		625,082 121		603,504 121		December/2020 October/2025	Treasury certificates and mortgaged lands	Treasury certificates and mortgaged lands

Prepayments	Dollar (US) + Libor	Interest of 6.3%	453,166		537,390		899,110		980,533		September/2014	-	-

Credit note	123.4% CDI Dollar (US)	- Interest of 6.2%	304,849 182,089		311,916 182,831		304,849 182,089		378,748 182,830		October/2012	-	-

Finame	Fixed URTJLP Dollar (US)	Interest of 4.9% Interest of 4.0% Interest of 7.6%	45,069 19,044 -		225 20,162 -		253,531 89,374 77		106,255 94,775 84		January/2022 March/2018 November/2012	Statutory lien on purchased assets	Statutory lien on purchased assets

Other	Sundry	Sundry	-		-		73,194		56,286		Sundry	Mortgage, inventories and statutory lien on purchased assets	Mortgage, inventories and statutory lien on purchased assets
Expenses incurred with security placement			(15,582	)	(18,488	)	(40,335	)	(44,014	)	-	-	-
			2,096,089		2,240,921		6,182,988		5,937,431
Current			(465,333	)	(500,142	)	(860,304	)	(800,902	)
Non-current			1,630,756		1,740,779		5,322,684		5,136,529

(1)

Financial charges as of June 30, 2010, except as indicated otherwise;

(2)

All loans and financings are secured by promissory notes and sureties posted by the Company, its subsidiaries and controlling shareholders, in addition to the collateral described above; and

(3)

These correspond to funds secured by direct and indirect subsidiaries, Cosan S.A. Bioenergia, Barra Bioenergia S.A. and Cosan Centroeste S.A. Açúcar e Álcool, for the purpose of financing cogeneration and greenfield projects.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

13.	Loans and financing (Continued)

Noncurrent loans, net of expenses with placement of notes, have the following scheduled maturities:

	Parent company				Consolidated
	06/30/10		03/31/10		06/30/10		03/31/10
13 to 24 months		347,528		333,679		667,403		612,101
25 to 36 months		358,718		510,570		657,849		748,966
37 to 48 months		7,921		33		767,603		235,191
49 to 60 months		5,005		26		379,000		849,737
61 to 72 months		8		8		150,325		113,057
73 to 84 months		8		8		870,053		825,623
85 to 96 months		18,013		8		178,415		109,472
As from 97 months		893,555		896,447		1,652,036		1,642,382
		1,630,756		1,740,779		5,322,684		5,136,529

Senior Notes due on 2014

On August 4, 2009, the indirect subsidiary CCL Finance Limited issued US$350,000 of Senior Notes in the international capital markets according to Regulations S and 144A that bear interest at a rate of 9.5% per annum, payable semi-annually in February and August of each year, from February 2010.

Senior Notes due in 2017

On January 26, 2007, wholly-owned subsidiary Cosan Finance Limited issued Senior Notes in the international capital markets under Rule 144A and Regulation S, in the amount of US$400 million. These Senior Notes bear interest at a rate of 7% per annum, payable semi-annually in February and August of each year.

Advance Against Exchange Agreements and Credit Note

Certain advances against exchange agreements and credit notes were taken out from several banking institutions and will be settled against export proceeds over 2012. These transactions bear interest at rates that vary between 1.7% and 6.2% per annum, payable semi annually at each maturity date.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

13.	Loans and financing (Continued)

Perpetual Notes

On January, 24 and February 10, 2006, the Company issued perpetual notes in the international market in accordance with Regulations S and Rule 144A, in the amount of US$450 million for qualified institutional investors. Perpetual notes are listed in the Luxemburg Stock Exchange - EURO MTF and bear interest of 8.25% per year, payable quarterly on the 15th of May, August, November and February of each year, beginning May 15, 2006. These notes may, at the discretion of the Company, be redeemed as from February 15, 2011 on any interest payment date, for their face value. Perpetual notes are secured by the Company and Cosan Açúcar e Álcool.

Resolution 2471

From 1998 to 2000, the Company and its subsidiaries renegotiated their debt related to agricultural funding with several financial institutions, thereby reducing their financial cost to annual interest rates below 10% and guaranteeing the amortization of the updated principal amount with the assignment and transfer of CTNs - Restricted Brazilian Treasury Bills redeemable on the debt maturity dates, using the tax incentive introduced by Resolution No. 2471, issued by the Central Bank of Brazil on February 26, 1998. On June 30, 2010, these certificates, classified as noncurrent assets, amounted to R$33,040 (R$31,234 as of March 31, 2010), at the Company, and R$217,550 (R$205,657 as of March 31, 2010), at consolidated. Payments pursuant to such certificates are remunerated based on the IGP-M variation plus annual interest of 12%. Upon payment of the debt, the redemption value should be similar to the amount of the renegotiated debt. Interest referring to these financings is paid annually and principal is to be entirely settled in 2020 at the Company, and in 2025 at consolidated.

Advanced payments

During the year ended March 31, 2010, the Company and its subsidiary Cosan Alimentos S.A. funded R$924,327, the equivalent to US$530,000 thousand as advances for future sugar exports to the settled in 2012 and 2014. Exchange rate variation and annual interests based on the Libor rate, plus 6.2% spread p.a. are levied over these advances.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

13.	Loans and financing (Continued)

FINAME

This refers to loans associated with the financing of machinery and equipment (FINAME – Financiamento de Máquinas e Equipamentos) obtained from several financial institutions. These loans are intended to fund capital expenditures. These loans bear interest at rates that vary between 3.0% to 5.0% per annum, payable monthly, and are secured by statutory liens on the purchased assets.

Restrictive covenants

The Company and its subsidiaries are subject to certain restrictive covenants contained in loan and financing agreements, based on certain financial indicators ascertained on a annually basis.

Restrictive covenants have been met by the Company and its subsidiaries.

14.	Provision for judicial demands

	Parent company						Consolidated
	06/30/10			03/31/10			06/30/10			03/31/10
Tax issues		40,823			40,144			403,538			397,051
Civil and labor		39,725			37,044			221,415			214,932
		80,548			77,188			624,953			611,983
Court deposits		(6,085	)		(5,632	)		(168,870	)		(167,562	)
		74,463			71,556			456,083			444,421

For the quarters ended June 30, 2010 and 2009, the provision for legal claims was as follows:

	Parent company						Consolidated
	04/01/10 to 06/30/10			04/01/09 to 06/30/09			04/01/10 to 06/30/10			04/01/09 to 06/30/09
Opening balances		71,556			236,633			444,421			1,105,899
Formation, net		3,488			592			10,656			2,890
Inflation adjustment		(131	)		3,686			2,972			12,699
Accretion from acquisitions, net of write-offs		-			-			-			16,331
Others		(450	)		(1,011	)		(1,966	)		(2,359	)
		74,463			239,900			456,083			1,135,460

The Company and its subsidiaries are party to various ongoing labor claims, civil and tax proceedings arising from the normal course of their business.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

14.	Provision for judicial demands (Continued)

Respective provisions for judicial demands were recorded considering those cases in which the likelihood of loss has been rated as probable based on the opinion of legal advisors. Management believes resolution of these disputes will have no effect significantly different than the estimated amounts accrued.

Court proceedings deemed as probable losses

The main tax judicial demands at June 30, 2010 and March 31, 2010, are as follows:

	Parent company				Consolidated
Description	06/30/10		03/31/10		06/30/10		03/31/10
IPI (i)		6,345		6,290		8,442		8,357
IPC – 89 (ii)		-		-		87,772		86,503
Finsocial offsetting (iii)		-		-		175,339		172,960
ICMS credits		16,937		16,553		66,979		60,240
PIS and Cofins		4,352		4,297		21,467		21,212
IRPJ and CSLL		797		789		797		789
Others		12,392		12,215		42,742		46,990
		40,823		40,144		403,538		397,051

(i)

During the year ended March 31, 2010, the Company and its direct and indirect subsidiaries Cosan Alimentos, Cosan Açúcar e Álcool, Bonfim Nova Tamoio – BNT Agrícola Ltda., Benalcool Açúcar e Álcool S.A. and Administração de Participações Aguassanta Ltda. opted for the payment in installments of Refis IV, related to ongoing legal demands involving undue use of IPI credit premium and other federal taxes. In addition, the Company and its subsidiaries utilize accumulated tax losses to pay these demands and the fines and interest thereof. Subsequently, the claims related to the remaining credit premium - IPI were fully paid for in installments, as well as installments of other federal taxes, which were recorded under taxes and contributions payable.

(ii)

In 1993 subsidiary Cosan CL filed a suit to challenge the balance sheet restatement index (IPC) established by the federal government in 1989, which index did not reflect the actual inflation back then. The use of this index caused the Company to supposedly overstate and overpay the IRPJ and CSLL. Cosan CL obtained a favorable preliminary order that allowed it to recalculate the balance sheet restatement, now using indexes that accurately measured the inflation over the relevant period. In doing so the company rectified the amounts of IRPJ and CSLL payable. Identified overpayments for both taxes were offset in subsequent years until 1997, when the balance was zeroed. Despite the favorable court rulings, tax authorities issued a notice of infringement to the Company challenging all tax offsets performed in 1993 and some offsets in 1994 and 1997. Given the contingent nature of this tax offsetting, associated amounts were also recorded as a provision for court rulings and have been restated against the variation of the SELIC rate.

(iii)

From June through December 1994, subsidiary Conan CL offset COFINS and several other taxes with previously paid amounts of FINSOCIAL. This offsetting was backed in a preliminary order issued by a court of competent jurisdiction in a suit brought to challenge the constitutionality of FINSOCIAL.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

14.	Provision for judicial demands (Continued)

Court proceedings deemed as probable losses (Continued)

In 1995 Cosan CL was declared exempt from COFINS levies. Thus, the company understood that past offsets of COFINS against FINSOCIAL were not in order and in 2003, based on another favorable court ruling relative to FINSOCIAL, concluded that FINSOCIAL credits previously offset against CONFINS were once again available to be offset against other tax liabilities. The Company then offset these credits against IRPJ, CSLL, CIDE, PIS, COFINS and IRRF resulting from its operations. Once again, because of the contingent nature of this procedure the Company recorded the full offset amount as a provision for court rulings until the Federal Revenue Service ratified this offsetting.

In 2008 the Federal Revenue Service dismissed the offsetting performed on the ground that Cosan CL had already used the tax credits to offset COFINS back in 1994. In view of this understanding, the management of the Company decided to challenge the administrative decisions, which is pending judgment at the Taxpayers' Council. The amount recorded as provision for court ruling has been restated against the SELIC rate.

Court proceedings deemed as possible losses

As regards tax, labor and civil claims whose likelihood of unfavorable outcome is rated as possible, and, as a consequence no provision for lawsuits was recorded in the quarterly financial information, are as follows:

	Parent company				Consolidated
	06/30/10		03/31/10		06/30/10		03/31/10
Notice of infringement – Income tax withheld at source (i)		185,062		182,824		186,597		182,824
ICMS – State VAT (ii)		42,579		33,550		337,704		322,340
IPI – Federal VAT (iii)		10,681		10,617		265,310		263,597
Offsets against IPI credits – IN 67/98 (iv)		-		-		165,549		174,867
PIS and COFINS		12,246		12,078		145,142		143,556
Civil and labor (v)		77,983		74,695		502,407		490,493
Others		42,571		33,636		137,842		124,389
		371,122		347,400		1,740,550		1,702,066

(i)

Notice of infringement – Income tax withheld at source

In September 2006 the Federal Revenue Service served another notice of infringement on the Company, this time for failure to withhold and pay income tax at source on capital gains derived from the acquisition of a subsidiary company. This notice of infringement led to an administrative proceeding which is deemed a likely loss in the opinion of the Company's legal counsels, the amount of which was not recorded as a provision in the Company's quarterly financial information.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

14.	Provision for judicial demands (Continued)

Court proceedings deemed as possible losses (Continued)

(ii)	ICMS - Tax on the Circulation of Goods and Transportation Services

This refers essentially to (a) a notice of infringement served on account of an alleged failure to pay ICMS and perform ancillary duties relative to agricultural partnership operations and processing activities outsourced to Central Paulista Açúcar e Álcool Ltda., from May through December 2006, and May through December 2007; (b) ICMS levied on granulated sugar exports which were deemed semi-processed commodities by the tax agent in charge of this assessment, and as such subject to be levied by the ICMS pursuant to the applicable regulation.

(iii) IPI - Excise Tax on Manufactured Goods

Normative Instruction SRF No. 67/98 validated a procedure whereby manufacturing plants sold several types of cane sugar, including demerara, higher refined, special refined, special extra refined and granulated refined sugars, without assessing and paying IPI from July 6, 1995 through November 16, 1997, as well as amorphous refined sugar sales from January 14, 1992 through November 16, 1997. This instruction was applied to the relevant proceedings initiated by the Federal Revenue Service, which are deemed as possible losses in the opinion of the Company's legal counsels.

(iv) Offsets against IPI credits – IN 67/98

Normative Instruction SRF No. 67/98 made it possible to obtain refund of IPI tax payments for sales of refined amorphous sugar from January 14, 1992 through November 16, 1997. In view of this rule, Cosan Açúcar and Álcool applied for offsetting amounts paid during the relevant periods against other tax liabilities of its own. However, the Federal Revenue Service denied its application for both reimbursement and offsetting of such amounts. Cosan Açúcar and Álcool challenged this ruling in an administrative proceeding.

Upon being notified to pay tax debts resulting from offset transactions in light of certain changes introduced by IN SRF No. 210/02, subsidiary Cosan Açúcar and Álcool filed a writ of mandamus and applied for a preliminary injunction seeking to stay enforceability of offset taxes, in an attempt to prevent the tax authorities from demanding the relevant tax debts in court. The preliminary injunction was granted by the competent court. The legal counsel in charge of this suit has deemed it a probable loss.

The amount offset, duly restated as of June 30, 2010, is R$164,261 (R$162,928 as of March 31, 2010). Likewise, subsidiary Cosan Alimentos S.A. holds a similar claim against the Federal Revenue Service in the amount of R$12,032, duly restated as of June 30, 2010. In view of the opinion of its legal counsels, the management of the Company has seen fit not to establish an accounting provision for the amounts involved in this lawsuit.

(v) Civil and labor

The Company and its subsidiaries are party in several civil and labor claims resulting from the normal course of its activities. On June 30, 2010, out of the total amount, R$31,303 (R$35,653 as of March 2010) in the parent company and R$90,873 (R$235,010 as of March 2010) in the consolidated represent civil claims and R$46,680 (R$39,042 as of March 2010) in the parent company and R$279,033 (R$255,483 as of March 2010) in the consolidated represent labor claims.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

15.	Accounts receivable from federal government

On February 28, 2007, subsidiary Cosan Açúcar e Álcool recognized gain of R$318,358, corresponding to a lawsuit filed against federal government claiming indemnification for damages since prices of its products, at the time the sector was subject to government control, were imposed not observing the prevailing reality of the sector created by government control itself. A final decision in favor of the subsidiary was handed down. The gain was recorded in the statement of operations for the year, the contra entry being to noncurrent assets of the Company, in receivables from federal government.

The Company awaits a final ruling on the manner of payment. This payment will be effected in the form of court-mandated government bonds which, once issued, will be settled within 10 years.

As of June 30, 2010, the assets reported relative to the suit for loss and damages and related provision for attorney's fees amounted to R$336,273 and R$40,353 (R$333,733 and R$40,048 as of March 2010), respectively.

Subsidiary Cosan Açúcar e Álcool has other claims for damages of this nature filed against the Federal Government, which are not recognized in accounting since these still represent contingent assets.

16.	Shareholders’ equity

Capital

As of June 30, 2010, the stock capital was divided into 406,560,317 (the same as of March 31, 2010) registered, book-entry shares of common stock at no par value. The authorized capital stock can be increased up to the limit of R$5,000,000 without any amendment to the by-laws upon resolution of the Board of Directors.

Dividends

On June 7, 2010, the Board of Directors’ Meeting was approved the additional distribution of dividends in the amount of R$83,431, ratified at the Shareholders’ Meeting, held on June 30, 2010, which will total R$200,000 of dividends to be distributed on August 30, 2010.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

16.	Shareholders’ equity (Continued)

Treasury shares

On June 30, 2010 the Company held in treasury 343,139 book entry common registered shares with no par value, whose market value per share, as of that date, amounted to R$22.58.

17.	Management compensation

Directors and executive officers are paid through pro-labore. The amounts related to such compensation are recorded in the statement of income for the three-month period ended June 30, 2010, in the amount of R$1,142 (R$1,311 as of June 30, 2009), under General and administrative expenses.

18.	Financial, net

	Parent company						Consolidated
	04/01/10 to 06/30/10			04/01/09 to 06/30/09			04/01/10 to 06/30/10			04/01/09 to 06/30/09
Financial expenses
Interest		(66,799	)		(93,114	)		(149,863	)		(133,144	)
Inflation adjustment expense		(2,821	)		333			(17,653	)		(4,964	)
Bank expenses		(46	)		(148	)		(648	)		(904	)
		(69,666	)		(92,929	)		(168,164	)		(139,012	)
Financial revenues
Interest		7,773			6,078			26,958			19,769
Inflation adjustment income		895			(88	)		8,125			2,139
Income from money market investments		2,251			4,199			17,966			10,612
Discounts earned		10			255			211			571
		10,929			10,444			53,260			33,091
Exchange variation
Exchange losses (1)		(23,826	)		352,778			(41,662	)		355,794
Exchange gains (1)		1,862			(24,807	)		9,436			22,743
		(21,964	)		327,971			(32,226	)		378,537
Net impact of derivatives (2)
Commodity derivatives		(9,323	)		(108,882	)		13,377			(125,515	)
Exchange and interest derivatives		(13,813	)		206,705			(5,587	)		286,332
		(23,136	)		97,823			7,790			160,817
		(103,837	)		343,309			(139,340	)		433,433

(1) Includes exchange gains (losses) on assets and liabilities denominated in foreign currency; and,

(2) Includes realized and unrealized income from transactions in futures markets, and with options, swaps and NDFs.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

19.	Other operating revenues (expenses), net

	Parent company						Consolidated
	04/01/10 to 06/30/10			04/01/09 to 06/30/09			04/01/10 to 06/30/10			04/01/09 to 06/30/09
Capital gains from disposal of equity interests, net of losses		-			-			-			93,097
Losses from business combinations		-			-			-			(28,138	)
Constitution of provision for judicial demands		(3,488	)		(592	)		(10,656	)		(2,890	)
Gain with port transactions		28			1,676			4,404			5,648
Other revenues (expenses), net		(1,157	)		1,939			3,923			4,767
		(4,617	)		3,615			(2,329	)		72,484

20.	Financial instruments

a) Risk management

The Company and its subsidiaries are exposed to market risks, especially related to volatility in the price of sugar and volatility in foreign exchange rates. The engagement of financial instruments for hedge purposes is carried out based on the analysis of the risk exposures that management intends to assume.

As of June 30, 2010 and March 31, 2010, the fair values related to the transactions with derivative financial instruments for hedge purposes or other purposes were stated at fair value based on the prices exercised in the active markets or cash flows discounted based on the market curves and were presented as follows:

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

20.	Financial instruments (Continued)

Risk management (Continued)

	Parent company y										Consolidated
	Reference value (R$ thousand)				Fair value (R$ thousand)						Reference value (R$ thousand)				Fair value (R$ thousand)
	06/30/10		03/31/10		06/30/10			03/31/10			06/30/10		03/31/10		06/30/10			03/31/10
Price risk
Good derivatives
Futures contracts		1,097,468		1,177,437		47,734			112,382			1,097,468		1,177,437		47,734			112,382
Options contracts		40,372		1,074,579		(3,298	)		(11,730	)		40,372		1,074,579		(3,298	)		(11,730	)
Swap contracts		-		100,794		-			1,081			-		100,794		-			1,081
						44,436			101,733							44,436			101,733

Exchange rate risk
Exchange rate derivatives
Futures contracts		571,660		2,103,056		2,768			471			571,660		2,103,056		2,768			471
Term contracts		1,235,111		957,149		50,259			36,559			1.235,111		957,149		50,259			36,559
Options contracts		934,502		671,502		11,102			15,719			934,502		671,502		11,102			15,719
Swap contracts		322,023		322,023		4,260			7,463			322,023		322,023		-			-
						68,389			60,212							64,129			52,749

Interest rate risk
Interest derivatives		518,790		518,790		(1,495	)		(624	)		518,790		518,790		(1,495	)		(624	)
						(1,495	)		(624	)						(1,495	)		(624	)
TOTAL						111,330			161,321							107,070			153,858
Total assets						148,767			238,024							144,507			230.561
Total liabilities						(37,437	)		(76,703	)						(37,437	)		(76.703	)

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

20.	Financial instruments (Continued)

Price risk

Price risk results from the variation on the market prices of the products sold by the Company, mainly sugar #11 and #5 or white sugar. These price variations may significantly affect the Company’s revenues. In order to mitigate this risk, the Company continuously monitors the market transactions, in order to determine in advance the price variations. The table below shows the consolidated derivative financial instruments transactions to cover the commodities price risk:

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

20.	Financial instruments (Continued)

Price risk (Continued)

Risk price : good derivatives outstanding on June 30, 2010

Derivatives

Purchased / sold

Market

Agreement

Maturity date

Reference

value

Fair value

(R$ thousand)

Balance of derivative financial instruments allocated for hedge accounting purposes

Swap

Sold

OTC

#11

Sep/10

163,446

29,901

Futures

Sold

NYBOT

#11

Sep/10

149,198

12,717

Futures

Sold

NYBOT

#11

Feb/11

123,141

4,019

Futures

Sold

NYBOT

#11

Apr/11

41,602

4,144

Futures

Sold

NYBOT

#11

Jun/11

155,670

3,864

Futures

Sold

NYBOT

#11

Sep/11

94,189

54,685

Balance of derivative financial instruments not allocated for hedge accounting purposes

Futures

Sold

LIFFE

White Sugar

Jul/10

25.915

(2,807

)

Futures

Sold

LIFFE

White Sugar

Sep/10

19.568

1,180

Futures

Sold

NYBOT

#11

Sep/10

161.012

18,397

16,769

Futures

Purchased

NYBOT

#11

Sep/10

(7.612

)

133

Futures

Purchased

NYBOT

#11

Feb/11

(145.014

)

(23,686

)

Futures

Purchased

NYBOT

#11

Apr/11

(3.477

)

(143

)

Futures

Purchased

NYBOT

#11

Jun/11

(3.371

)

(158

)

(23,854

)

Futures

Purchased

NYMEX

Jul/10

(4.254

)

133

Call

Purchased

OTC

#11

Sep/10

(4.193

)

139

Call

Purchased

OTC

#11

Sep/10

(4.432

)

139

278

Call

Sold

NYBOT/OTC

#11

Sep/10

7.716

(1,129

)

Call

Sold

NYBOT/OTC

#11

Sep/10

6.726

(792

)

Call

Sold

NYBOT/OTC

#11

Feb/11

5.444

(1,318

)

Call

Sold

NYBOT

#11

Feb/11

812

(248

)

Call

Sold

NYBOT

#11

Feb/11

289

(89

)

(3,577

)

Put

Purchased

NYBOT/OTC

#11

Set/10

6.771

5,086

Put

Purchased

NYBOT/OTC

#11

Set/10

2.364

1,900

6,986

Put

Sold

NYBOT/OTC

#11

Set/10

(1.475

)

(5,086

)

Put

Sold

NYBOT/OTC

#11

Set/10

(148

)

(1,900

)

(6,986

)

Total goods

44,435

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

20.	Financial instruments (Continued)

Foreign exchange risk

Foreign exchange risk results from the possible variations on foreign exchange rates adopted by the Company as regards to its revenues from exports, imports, debt flows and other assets and liabilities denominated in foreign currency. The Company adopts derivative transactions to manage the cash flow risks resulting from the export revenues denominated in US dollars, net of the other cash flows also denominated in foreign currency. The table below shows the outstanding consolidated positions, as of June 30, 2010, of the derivatives adopted to hedge the foreign exchange risks:

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

20.	Financial instruments (Continued)

Foreign exchange risk (Continued)

Foreign exchange rate risk : foreign exchange derivatives on June 30, 2010

Derivatives

Purchased / Sold

Market

Contract

Term

Reference

value

Fair value

(R$ thousand)

Balance of derivative financial instruments allocated for hedge accounting purposes

Term

Sold

OTC/Cetip

NDF

Jul/10

96,800

6,250

Term

Sold

OTC/Cetip

NDF

Aug/10

143,738

6,829

Term

Sold

OTC/Cetip

NDF

Sep/10

10,160

949

Term

Sold

OTC/Cetip

NDF

Sep/10

46,184

3,808

Term

Sold

OTC/Cetip

NDF

Oct/10

147,454

10,526

Term

Sold

OTC/Cetip

NDF

Dec/10

95,625

2,297

Term

Sold

OTC/Cetip

NDF

Jan/11

89,460

4,510

Term

Sold

OTC/Cetip

NDF

May/11

141,281

4,087

Term

Sold

OTC/Cetip

NDF

Jul/11

99,300

733

Term

Sold

OTC/Cetip

NDF

Aug/11

103,750

4,002

Term

Sold

OTC/Cetip

NDF

Oct/11

261,360

6,268

50,259

Balance of derivative financial instruments not allocated for hedge accounting purposes

Futures

Sold

BMFBovespa

Commercial dollar

Aug/10

275,412

1,032

Futures

Sold

BMFBovespa

Commercial dollar

Dec/10

129,182

795

Futures

Sold

BMFBovespa

Commercial dollar

Jul/11

340,953

2,121

Futures

Sold

BMFBovespa

Commercial dollar

Aug/11

78,520

486

Futures

Sold

BMFBovespa

Euro

Jul/10

15,213

)

4,427

Futures

Purchased

BMFBovespa

Commercial dollar

Dec/10

(92,273

)

(568

)

Futures

Purchased

BMFBovespa

Commercial dollar

Jul/11

(175,347

)

(1,091

)

(1,659

)

Put Onshore

Purchased

BMFBovespa

Commercial dollar

Oct/10

875,000

9,716

Put Offshore

Purchased

OTC

Commercial dollar

Feb/11

42,782

763

Put Offshore

Purchased

OTC

Commercial dollar

Feb/11

16,720

623

11,102

Total export foreign exchange transactions

64,130

Swap

Purchased

OTC/Cetip

Dollar/DI

322.023

4,260

Swap

Sold

OTC/Cetip

Dollar/DI

(322.023

)

(4,260

)

Total foreign exchange transactions

64,130

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

20.	Financial instruments (Continued)

Foreign exchange risk (Continued)

At June 30, 2010 and March 31, 2010, the Company and its subsidiaries presented the following net balance sheet exposure to US dollar:

	Consolidated
	06/30/10						03/31/10
		R$		US$ (in thousand)				R$		US$ (in thousand)
Amounts pending foreign exchange closing		44,868			24,906			127,755			71,732
Overnight		50,900			28,254			50,470			28,338
Trade notes receivable – foreign		127,370			70,702			148,655			83,467
Senior Notes due in 2014		(653,653	)		(362,838	)		(631,246	)		(354,433	)
Senior Notes due in 2017		(741,477	)		(411,589	)		(720,573	)		(404,589	)
Perpetual bonds		(820,229	)		(455,303	)		(810,896	)		(455,304	)
Other foreign currency-denominated loans		(366,273	)		(203,316	)		(479,206	)		(269,066	)
Export pre payments		(899,110	)		(499,090	)		(980,533	)		(550,552	)
Restricted cash		51,274			28,462			44,972			25,251
Foreign exchange exposure, net		(3,206,330	)		1,779,812			(3,250,602	)		(1,825,156	)

Hedge accounting effects

The Company determined its hedge accounting transactions for derivative financial instruments allocated to hedge the cash flows from VHP sugar export revenues, considering: (i) hedge classification; (ii) purpose and strategy to manage the Company’s risk in connection with the adoption of the hedge transactions; (iii) identification of the financial instrument; (iv) purpose or covered transaction; (v) nature of the risk to be covered; (vi) description of the coverage relationship; (vii) description of the relationship between the hedge and the coverage purpose; and (viii) prospective and retrospective hedge effectiveness. The Company allocated the derivative financial instruments of Sugar#11 (NYBOT or OTC) to cover the price risks and Non-Deliverable Forward (NDF) to cover the foreign exchange risks, as referred to in items (b) and (c) of this note.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

20.	Financial instruments (Continued)

Hedge accounting effects (Continued)

The Company recorded the gains and losses considered as effective for hedge accounting purposes in a specific account in shareholder’s equity, until the time the hedged item affects the net income for the year; in this case, the gain or loss of each instrument must be recorded in the net income for the year under the same account of the hedged item (in this case, sales revenues). As of June 30, 2010, the effects recorded in shareholders’ equity and estimated realizable net income are as follows:


			Realizable year
Derivative	Market	Risk		2010/2011		2011/2012		Total

Futures	OTC / NYBOT	#11		6.623		5.919			12.542
NDF	OTC/Cetip	USD		5.819		11.855			17.674
(-) Deferred tax				(4.230	)	(6.043	)		(10.273	)
Total				8.212		11.731			19.943

During the period, the statement of income was not affected due to the transactions which were not allocated for hedge accounting purposes. Moreover, the Company recorded gains in the amount of R$385 related to the non-effective portions for hedge accounting purposes in the quarter ended June 30, 2010.

Equity value adjustments	04/01/10 to 06/30/10
Cash flow hedge
Gains/(losses) for the period
Futures contracts and commodities swap		11.560
Forward foreign exchange contracts (NDF)		17.675
Adjustments to reclassification of losses/(gains) included in the statement of
income for the period (sales revenues)		982
Total effects in equity adjustments from cash flow
hedge (before differed IR/CS)		30.216
Effects of differed IR/CS on the equity adjustments		(10.274	)
		19.943

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

20.	Financial instruments (Continued)

Interest rate risk

The Company monitors fluctuations of the several interest rates to which its assets and liabilities are pegged and, in the event of increased volatility of such rates, it may engage in transactions with derivatives so as to minimize such risks. The table below shows the consolidated positions of the derivative financial instruments to cover the foreign exchange rate risk, which instruments were not allocated for hedge accounting purposes:

Price risk : interest derivatives outstanding on June 30, 2010

Derivatives

Purchased / Sold

Market

Contract

Term

Number of

agreements

Strike

Average price

Fair value

Notional

Fair value

(thousand)

(R$ thousand)

Swap

Purchased

OTC/Cetip

Fix / Libor 3 Month

1.199% / Libor 3 Month

USD 300,000

518,790

(1,495

)

518,790

(1,495

)

Credit risk

A significant portion of sales made by the Company and its subsidiaries is for a selected group of best-in-class counterparts, i.e. trading companies, fuel distribution companies and large supermarket chains.

Credit risk is managed through specific rules of client acceptance, credit rating and setting of limits for customer exposure, including the requirement of a letter of credit from major banks and obtaining actual warranties on given credit, when applicable. Management believes that the risk of credit is substantially covered by the allowance for doubtful accounts.

The Company carries out good derivative transactions in the futures and options markets at the stock exchanges of New York (NYBOT) and London (LIFFE), as well as in the over-the-counter market with selected counterparts. The Company carries out foreign exchange derivative transactions at BM&F Bovespa and over-the-counter agreements registered with CETIP with Goldman Sachs & Co, Banco Barclays S.A., BNP Paribas Commodity Futures Ltd., Newedge LLC, Macquarie Bank Ltd., ADM Investors Services International Limited (Hencorp), Prudential Bache Commodities LLC, Natixis Commodity Markets Ltd., Espirito Santo Investment do Brasil S.A., Deutsche Bank S.A. – Banco Alemão, Banco Bradesco S.A., Banco JP Morgan S.A., Banco Standard de Investimentos S.A., Banco Morgan Stanley Witter S.A. and Banco BTG Pactual S.A.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

20.	Financial instruments (Continued)

Credit risk (Continued)

Guarantee margins – The derivative transactions carried out in stock exchanges (NYBOT, LIFFE and BM&F Bovespa) require an initial margin for guarantee purposes. The brokers with which the Company trades at such stock exchanges offer credit limits to these margins. As of June 30, 2010, the total credit limit considered for initial margin is R$54,827 (R$68,646 as of March 31, 2010). In order to trade at BM&F Bovespa, the Company counted with, as of June 30, 2010, R$96,043 (R$83,042 as of March 31, 2010) through the Settlement Guarantee provided by a first-class bank. The derivative transactions carried out by the Company in the over-the-counter market do not require guarantee margins.

Debt acceleration risk

As of June 30, 2010, the Company was a party to loan and financing agreements with covenants generally applicable to these operations, including requirements related to cash generation, debt to equity ratio and others. These covenants are being fully complied with by the Company and do not place any restrictions on its operations.

Market values

As of June 30, 2010, the fair values of cash, marketable securities and trade accounts receivable and payable approximate the respective amounts recorded in the consolidated quarterly information, due to their short-term nature.

The fair value of the Senior Notes maturing in 2014 and 2017, as described in Note 13, according to their market value, were 113.60% and 105.0%, respectively, of their face value at June 30, 2010.

The fair value of Perpetual Notes as described in Note 13, according to its market value, was 99.25% of its face value at June 30, 2010.

As for the other loan and financing arrangements, their respective fair values substantially approximate the amounts recorded in the quarterly information considering that such instruments are subject to variable interest rates.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

20.	Financial instruments (Continued)

Sensitivity analysis

Pursuant to CVM Rule Nº 475 issued on December 17, 2008, following is the sensitivity analysis of the fair value of financial instruments, in accordance with the types of risks deemed to be significant by the Company:

Assumptions for the Sensitivity Analysis

For the analysis, the Company adopted three scenarios, being one probable and two that may have effects from impairment of the fair value of the Company’s derivative financial instruments. The definition of the probable scenario included the market data at June 30, 2010, the same one which determine the fair value of the derivatives at that date and therefore there are no differences in relation to the fair value of the derivative financial instruments. The possible adverse and remote scenarios were established in view of adverse impacts of 25% and 50% on the curves in the prices of the U.S. dollar and sugar:

Sensitivity Exhibit

Following is the sensitivity exhibit on the change in the fair value of the Company’s financial derivatives:

		Effects on net income
	Risk factor	Probable scenario			Possible scenario (25%)			Remote scenario (50%)
Price risk
Goods derivatives
Futures contracts:
Sale commitments	Sugar price spike		71,454			(215,516	)		(431,032	)
Purchase commitments	Sugar price decline		(23,854	)		(44,440	)		(89,013	)
Options:
Put	Sugar price spike		278			(272	)		(278	)
Call	Sugar price spike		(3,577	)		(15,103	)		(45,568	)
Call - sold	Sugar price decline		6,986			(4,957	)		(6,507	)
Swap contracts	Sugar price decline		(6,986	)		(10,767	)		(25,414	)

Exchange rate risk
Exchange rate derivatives
Futures contracts:
Sale commitments	R$/US$ exchange rate appreciation		4,427			(208,440	)		(348,810	)
Purchase commitments	R$/US$ exchange rate depreciation		(1,659	)		(66,635	)		(135,327	)
Forward contract:
Sale commitments	R$/US$ exchange rate appreciation		50,259			(295,116	)		(573,091	)
Option:
Call - purchased	R$/US$ exchange rate appreciation		11,102			(11,088	)		(11,102	)
Interest rate risk
Interest derivatives
Swap contracts	Libor curve decline		(1,495	)		(1,522	)		(3,050	)

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

21.

Insurance

At June 30, 2010, the Company and its subsidiaries maintain insurance coverage against fire, thunderbolts and explosions of any nature for the whole sugar and ethanol inventory and for specific buildings, equipment, facilities and machinery.

The Company does not foresee any difficulties to renew its insurance policies and believes that the coverage established is reasonable in terms of amounts and consistent with Brazilian industry standards.

The scope of our independent auditors work did not include an opinion on the sufficiency of the insurance coverage, which, as determined by the Company management, was considered sufficient to cover any claims.

22.	Stock option plan

At the Annual and Extraordinary General Meeting held on August 30, 2005, the Guidelines for the Outlining and Structuring of a Stock Option Plan for Company’s officers and employees were approved, thus authorizing the issue of up to 5% of the Company’s share capital. The stock option plan was designed to obtain and retain the services rendered by senior officers and employees, offering them the opportunity to become shareholders of the Company. On September 22, 2005, the Board of Directors approved the distribution of stock options corresponding to 4.302.780 common shares to be issued by the Company related to 3.25% of the share capital at the time, authorized by the Annual/Extraordinary General Meeting. On that same date, eligible officers were informed of the material terms and conditions of the share-based compensation agreement.

On September 11, 2007, the Board of Directors approved the distribution of stock options, corresponding to 450,000 common shares to be issued or purchased by the Company related to 0.24% of the share capital at the time, authorized by the Annual/Extraordinary General Meeting. On that same date, the eligible officer was informed of the material terms and conditions of the share-based compensation agreement. The remaining 1.51% may still be distributed.

On August 7, 2009, the Board of Directors approved an additional distribution of stock options, with no vesting period, corresponding to 165,657 common shares to be issued or purchased by the Company, following a change in the management members.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

22.	Stock option plan (Continued)

Based on the fair value at the issue date, exercise price is R$6.11 (six reais and eleven cents) per share, without discount. The exercise price was calculated before the above evaluation based on an expected private equity agreement based on that eventually was not made. The options are exercisable over one year period, considering a maximum percentage of 25% p.a. of total stock options offered by the Company, within a period of 5 years.

The options exercised shall be settled only upon issue of new common or treasury shares that the Company may have at each relevant date.

Should any holder of stock options cease to be an employee or manager of the Company, by death, retirement or permanent disability of the beneficiary, any options not previously vesting shall become extinct on the date that employee or officer separates from the Company. However, in the case of termination without good cause, the terminated employees shall be entitled to exercise 100% of their options referring to that particular year, on top of exercising 50% of their options in the coming year.

At June 30, 2010 options equivalent to 653,976 common shares were not exercised.

Until June 30, 2010, all stock option exercises were settled through the issuance of new common shares. Should the remaining options also be exercised through the issuance of new common shares, the current shareholders’ interest would be reduced by 0.16% after exercising all remaining options.

At June 30, 2010, R$2,450 regarding the unrecognized remuneration cost of stock options will be recognized within nearly three months (R$2,960 as of March 31, 2010, with a deadline of nearly 6 months).

23.	Pension plan

Previd Exxon - Sociedade de Previdência Privada, a closed-ended supplementary pension entity sponsored by Cosan CL, set up on December 23, 1980, engaged mainly in the supplementation of benefits within certain limits set in its formation deed, to which all employees of the sponsor and their beneficiaries are entitled as social security insured workers.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

23.	Pension plan (Continued)

Actuarial liability related to Previd Exxon was determined as set forth in NPC 26 issued by IBRACON and is recorded under non-current liabilities, as of June 30, 2010, in the amount of R$59,774 (R$61,788 as of March 31, 2010).

As of the quarter ended June 30, 2010, the contributions to Previd Exxon – Sociedade de Previdência Privada totaled R$1,668.

24.	Information per segment (consolidated)

Information per segment

The information per segment is based on the information used by Cosan’s management to evaluate the performance of the operational segments and take the decisions related to the investment of the financial resources. The Company has three segments: (i) sugar and ethanol (products resulting from the “CAA” activities; (ii) distribution of fuel and lubricants (activities performed by “CCL”); and (iii) logistics (operations performed by the indirect subsidiary “RUMO”). Each segment is administered individually in order to facilitate the understanding of the clients from different segments. The operational assets related to these segments are located solely in Brazil.

The following is a description of the Company’s operational segments.

The CAA segment’s main activities are the production and sale of a number of sugarcane byproducts, including the VHP sugar, ethanol, fuel, anhydride and hydrated ethanol. This segment also includes the activities related to the co-generation of power as from the sugarcane bagasse.

The CCL segment includes the distribution and sale of fuel and lubricants, mainly through the Esso chain located throughout Brazil, as well as convenience stores.

The RUMO segment includes the rendering of logistics services in the sugar transportation, storage and port activities, both to the CAA segment and third parties.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

24.	Information per segment (consolidated) (Continued)

Information per segment (Continued)

The information selected from statement of income and assets per segment, which information was measured in accordance with the same accounting practices adopted in the preparation of the consolidated quarterly information, is as follows:

	June 30, 2010
	CAA			CCL			Rumo			Adjustments and exclusions			Consolidated
Balance sheet
Property, plant and equipment		5,076,676			345,172			414,191			-			5,836,039
Intangible assets		1,441,150			1,406,421			73,668			-			2,921,239
Financial debt, net		(4,359,675	)		(402,847	)		(148,002	)		-			(4,910,524	)
Other assets and liabilities, net		3,009,415			533,577			(43,911	)		(2,157,185	)		1,341,896

Total assets (net of liabilities) allocated per segment (1)		5,167,566			1,882,323			295,946			(2,157,185	)		5,188,650

	March 31, 2010
	CAA			CCL			Rumo			Adjustments and exclusions			Consolidated
Balance sheet
Property, plant and equipment		4,910,863			356,170			294,032			-			5,561,065
Intangible assets		1,452,393			1,379,769			69,146			-			2,901,308
Financial debt, net		(4,113,669	)		(433,238	)		(106,501	)		-			(4,653,408	)
Other assets and liabilities, net		2,872,831			544,460			14,405			(2,083,080	)		1,348,616

Total assets (net of liabilities) allocated per segment (1)		5,122,418			1,847,161			271,082			(2,083,080	)		5,157,581

(1)

Comprising shareholders’ equity and minority interest.

	June 30, 2010
	CAA			CCL			Rumo			Adjustments and exclusions			Consolidated

Net income for the period (3 months)
Net operational revenues		1,273,643			2,781,626			105,372			(161,019	)		3,999,622
Gross profit		263,533			205,849			32,928			4,253			506,563
Sales, general and administrative expenses		(193,144	)		(133,485	)		(8,035	)		(751	)		(335,415	)
Operational results (2)		70,389			72,364			24,893			3,502			171,148
Other operational revenues (expenses), net		(2,278	)		(4,480	)		7,544			(3,115	)		(2,329	)
Other selected information
Additions to property, plant and equipment and intangible assets		461,622			14,850			123,932			-			600,404
Depreciation and amortization		169,169			16,249			3,773			-			189,191

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

24.	Information per segment (consolidated) (Continued)

Information per segment (Continued)

	June 30, 2009
	CAA			CCL			Rumo			Adjustments and exclusions			Consolidated
Net income for the period (3 months)
Net operational revenues		1,205,209			2,444,717			39,255			(123,078	)		3,566,103
Gross profit		171,930			186,975			12,885			(4,105	)		367,685
Sales, general and administrative expenses		(188,825	)		(110,692	)		(3,443	)		4,105			(298,855	)
Operational results (2)		(16,895	)		76,283			9,442			-			68,830
Other operational revenues (expenses), net		65,978			702			5,804			-			72,484
Other selected information
Additions to property, plant and equipment and intangible assets		408,382			11,529			707			-			420,618
Depreciation and amortization		157,235			8,941			3,741			-			169,917

(1)

Comprising gross profit less sales, general and administrative expenses.

Sales revenues per segment

	06/30/2010			06/30/2009
CAA
Sugar		829,331			651,046
Ethanol		356,853			479,464
Co-generation		55,372			29,405
Other		32,087			45,294
		1,273,643			1,205,209
CCL
Fuel		2,559,103			2,275,514
Lubricants		201,658			150,372
Other		20,865			18,831
		2,781,626			2,444,717
Rumo
Addition		35,016			38,175
Freight		70,356			1,080
		105,372			39,255

Adjustments and exclusions		(161,019	)		(123,078	)
		3,999,622			3,566,103

Sales revenues per region

During the quarters ended June 30, 2010 and 2009, sales revenues per region, in percentages, were as follows:

	06/30/2010			06/30/2009
Brazil		69.27	%		54.35	%
Europe		26.82	%		35.34	%
Middle East and Asia		2.12	%		1.95	%
North America		0.37	%		6.17	%
Latin America (others, except Brazil)		0.07	%		2.19	%
Others		1.35	%		-
Total		100.00	%		100.00	%

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

24.	Information per segment (consolidated) (Continued)

Main clients

CAA

Sales from this segment are relatively diluted, with solely one client representing more than 10% of the total sales of this segment for the quarters ended June 30, 2010 and 2009: SUCDEN Group, with 26.6% and 33.0% of sales, respectively.

CCL

Sales from this segment are highly diluted, without specific clients or economic groups representing 10% or more of the sales in this segment.

RUMO

For the quarters ended June 30, 2010 and 2009, 42.7% and 34.9%, respectively, of the sales of this segment were directed to the CAA segment. Moreover, during the same periods, such segment had two clients with revenues greater than 10% of the total, being (i) SUCDEN Group, representing 17.0% (21.0% as of June 30, 2009) and (ii) ED & F MAN Brasil S.A., representing 22.6% (zero as of June 30, 2009).

25.	Subsequent events

Subscription Agreement due to capital increase in Rumo Logística S.A. (“Rumo”)

On July 2, 2010, the indirect subsidiary Novo Rumo Logística S.A. (“Novo Rumo”) entered into a Subscription Agreement in connection with the investments administered by TPG Capital e Gávea Investimentos (“Investors”). The investment will take place upon the capital increase in the amount of R$400,000, to be paid into equal installments by the Investors.

Such agreement is subject to certain precedent conditions, which conditions must be complied up to September 30, 2010. Upon closing of transactions, the Investors must subscribe the shares and perform the capital contribution, as well as enter into a shareholders’ agreement. The Company holds, directly and indirectly, 92.9% of Rumo and, upon acquisition, will hold 69.7% of Rumo.

COSAN S.A. INDÚSTRIA E COMÉRCIO

Notes to the Quarterly Financial Statements (Continued)

June 31, 2010 and 2009

(In thousands of reais)

25.	Subsequent events (Continued)

Company’s capital increase

On July 29, 2010, the Board of Directors’ Meeting approved the capital increase, in the amount of R$2,748, in the context of the “Company’s Stock Option Plan”, upon the issuance of 449,819 new nominative and book-entry common shares, with no par value, based on the exercise of such option by the eligible executive officers, at the issuance price of R$6.11 per share. Due to the issuance of new shares, the Company’s capital stock increased to R$4,690,575, represented by 407,010,196 nominative and book-entry common shares, with no par value.

Approval of dividends above the minimum mandatory dividends

On July 30, 2010, the Ordinary General Meeting approved the distribution of dividends above the minimum mandatory dividends, in the amount of R$83,431, totaling R$200,000 of dividends to be paid on August 30, 2010.

BNDES financing

On August 4, 2010, BNDES approved a credit line on behalf of the indirect subsidiary Rumo, through its subsidiary Cosan Operadora Portuária S.A. (“Portuária”), in the amount of R$614,000, for investments to be performed by Portuária in the railway complex under the concession of the companies controlled by ALL – America Latina Logística S.A. and in the construction of a logistic terminal in the region of Itirapina-SP. Such credit line will be subject to annual interest of 1.92% plus TJLP, to be paid in up to 12 years.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.