Annual Report 2009 - Clariant

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Annual Report 2009 - Clariant

3AUDIT COMMITTEER.A. Shah, ChairmanDiwan A. NandaHenri SchloemerINVESTORS’ GRIEVANCE COMMITTEEDiwan A. Nanda, ChairmanPeter PalmAUDITORSDeloitte Haskins & SellsChartered AccountantsBANKERSThe Hongkong & Shanghai Banking Corpn. Ltd.Standard Chartered BankCitibank N.A.SOLICITORS & ADVOCATESCrawford Bayley & Co.REGISTRAR & SHARE TRANSFER AGENTSBOARD OF DIRECTORSR.A. Shah – ChairmanPeter Palm – Vice-Chairman & Managing DirectorBansi S. MehtaDiwan A. NandaHeiner MeierHenri SchloemerDr. Andreas WaldeB.L. Gaggar – Director Finance & Company SecretarySharepro Services (India) Pvt. Ltd.Sakinaka, Andheri (E)Mumbai – 400 072REGISTERED OFFICERavindra Annexe194, Churchgate ReclamationMumbai – 400 020WORKSDhatav, Roha, Dist. Raigad – 402 116Balkum, Thane – 400 608Kolshet Road, Thane – 400 607Kudikadu, SIPCOT P. O., Cuddalore – 607 005Singadivakkam Village, Kanchipuram – 631 561


4 Clariant Chemicals (India) LimitedAnnual Report 2009Exacting Solutions …Clariant’s customers span across a wide range of businesses thatare the market leaders in their own ways. Our diversity highlights ourvaried expertise and domain knowledge available for meeting thespecialized demands of the industry.Clariant’s textiles business, a respected market leader in India, suppliesnot just specialty chemicals for pretreatment, dyeing, printing andfinishing but also has the ability to impart special effects, from creaseresistance to moisture management as well as repellency. We cater tovaried segments like casual wear, sportswear, denim, business wear,work wear, towels, upholstery, sarees and dress materials, medicalgarments, textiles for cars, planes, trains and carpets.Clariant is the leading manufacturer and supplier of pigments andits preparations – be it for paints, plastics, printing inks, cosmetics,detergents or special applications like latex, viscose or waxes.Our high performance pigments meet the exacting demands of theautomotive, coil and coating industries. The halogen-free flameretardants from the additives range are used for protective coatings,resins, thermoplastics and polyester fibers.Our paper specialties business is the preferred supplier of opticalbrighteners, colorants and functional chemicals that impart superiorwhiteness, color, coating and strength solutions for the paper market.Our focused product range enhances both optical and functionalproperties of all kinds of paper and board. We cater to segmentslike: printing & writing, coated paper, tissue & toweling, packaging &board, newsprint, among others.Clariant is a leading supplier of leather chemicals and services in India,offering chemical and technical solutions for the complete leathermanufacturing process, from beamhouse to finishing. We meet theexacting demands of segments like automotive, shoe & fancy goods,furniture, garment, fur, etc.


6 Clariant Chemicals (India) LimitedAnnual Report 2009… for a better tomorrow!Our basket of innovative products aim at ensuring our contribution to the broader sustainable development of the world we live in.Eco-friendly solutions are integral to our pigment range – be it the lead/chrome/heavy metal free pigments for paints or the flame retardants thatare increasingly finding usage in varied applications, especially in the infrastructure sector in India. Our solutions also help conserve energy,avoid excess usage and are VOC free. Our water-based emulsions are another example.Clariant’s textile chemicals, especially for baby-wear, shirtings, bed-sheets, denims and trouser fabrics are compliant to global norms likeOekotex, GOTS, EU legislations, etc. The 4E concept focuses on environment, efficiency, ecology and economy. The multi-functional anti-graffiticoatings feature eco-friendly/energy savings and include non-fluorine compounds in formulations. Our specialized paper chemicals are wellsuitedfor manufacture of recycled paper as. The leather product range provides environment-friendly value-added solutions for the specificneeds of the industry.Clariant’s skin care formulations are based on raw materials from renewable resources; recycling concepts are used for aviation de-icingproducts, which are promoted under our ECOTAIN label. Surfactant chemistry based on ethoxylates and specialty polyglycols offer state-of-theartsolutions for the current demands of the Indian market; e.g. VOC-free, low odour and APEO-free paint additives as well as formaldehyde freepreservatives. Our green preservative combined with our state-of-the-art manufacturing facility and an elaborate technical service offers theperfect combination of product and service that enables our customers achieve exacting solutions for a better tomorrow!


Notice11will not be able to act on any such request from shareholdersdirectly for deletion/change in the bank account details.9. Members may please note that the Dividend Warrants arepayable at par at all the clearing branches of the HDFCBank Limited in India for an initial period of three monthsonly. Thereafter, the Dividend Warrant is payable only onrevalidation for a further period of three months. The membersare therefore, advised to encash Dividend Warrants withinthe initial validity period.10. Members who wish to attend the meeting are requested tobring attendance slip sent herewith, duly filled in, and thecopy of the Annual Report. Copies of the Annual Report willnot be distributed at the meeting.ANNEXURE TO THE NOTICEExplanatory Statement under Section 173 of the CompaniesAct, 1956Item No. 5At the meeting of the Board of Directors (“the Board”) of the Companyheld on October 29, 2009 the Board appointed Mr. Henri Schloemeras an additional director of the Company with effect from January1, 2010 pursuant to Section 260 of the Companies Act, 1956, readwith Article 113 of the Articles of Association of the Company,Mr. Schloemer holds office only up to the date of the forthcomingAnnual General Meeting.Notice in writing has been received from a member of the Companyalong with the prescribed deposit under Section 257 of the CompaniesAct, 1956, signifying his intention to propose Mr. Henri Schloemer asa candidate for the office of Director.The Directors recommend the Resolution for Member’s approval.No Director other than Mr. Henri Schloemer is concerned/interestedin this resolution.Item No. 6Mr. Peter Palm was appointed by the Board, as the Vice-Chairman& Managing Director of the Company, for a period of three years,with effect from January 1, 2010 on the remuneration, terms andconditions subject to the approval of members.The Directors recommend the approval of the special resolutionconcerning the appointment of Mr. Palm. None of the Directors,other than Mr. Palm, is concerned or interested in the resolution.The information in respect of the terms of remuneration andperquisites is given below:Remuneration, benefits and perquisitesi. Salary:Rs. 7,88,000/- (Rupees seven lakhs eighty eight thousandsonly) per month, which may be increased by the Board ofDirectors from time to time, subject to a maximum salary ofRs. 9,45,000/- (Rupees nine lakhs forty five thousands only)per month. Salary will be subject to the deduction of Incometax at the applicable rates, under the Income Tax Act, 1961.ii.iii.iv.Contribution to PF:Contribution to Provident Fund at the rate specified in theProvident Fund Act and Rules thereunder calculated on salarypayable per month.Commission:Subject to the overall ceilings laid down under Sections198 and 309 of the Companies Act, 1956, a fixed sum in therange of Rs. 21,00,000/- (Rupees twenty-one lakhs only) toRs. 30,00,000/- (Rupees thirty lakhs only) per annum, as maybe decided by the Board from year to year.Perquisitesa) Housing:Suitable residential accommodation, free of cost withall facilities, amenities and services (including gas,electricity, water and furnishings). In case Mr. Palmdoes not opt for Company provided accommodationat any time, he shall be reimbursed the house rentallowance of a sum not exceeding 70% of his salary.The expenditure incurred by the Company on gas,electricity, water and furnishings provided to him shallbe evaluated as per the Income Tax Rules, 1962.b) Medical Reimbursement:Reimbursement of medical expenses incurred byMr. Palm for self and family, in accordance with therules and regulations of the Company as may be inforce from time to time.c) Leave and Leave Travel Concession:Leave period of six weeks on full pay and allowances,for every twelve months of service subject to thecondition that the accumulated leave shall not beencashed. The Company will bear the full cost of leavepassage for Mr. Palm and his family once in a year toany destination in India. In case it is proposed that theleave be spent abroad, the Company will bear the fullcost of air passage by club class for Mr. Palm and hisfamily once in a year not exceeding the cost of returnpassage to his home country.d) Club Fees:Mr. Palm shall be entitled to the reimbursement offees of any two clubs in India, including admission orentrance fees and monthly or annual subscriptions.e) Personal Accident Insurance:The Company shall pay an annual premium of a sumnot exceeding Rs.15,000/- towards personal accidentinsurance policy of Mr. Palm.f) Reimbursement of expenses for returning to homecountry:Mr. Palm will be entitled to reimbursement of expensesincurred by him for self and family for returning to hishome country after completion of his tenure of officeincluding actual expenses incurred on travel and on


12 Clariant Chemicals (India) LimitedAnnual Report 2009packing, forwarding, loading/unloading as well asfreight, insurance etc. in connection with the movingof his personal effects.g) Car, Driver & Telephone:The Company will provide Mr. Palm a car and driverand telephone at his residence for use on Company’sbusiness. Use of car for private purposes and personallong distance calls on telephone shall be billed by theCompany to Mr. Palm.In case the Company is not able to provide a driver toMr. Palm, the expenses for engaging a driver will bereimbursed to him as per the Company’s rules.h) Entertainment Expenses:The Company shall reimburse entertainment expensesactually and properly incurred by Mr. Palm in the courseof the business of the Company subject to such annuallimits as may be fixed by the Board of Directors of theCompany.v) Limits on Remuneration:The remuneration as specified in clauses above shall besubject to the overall limits as specified under Sections 198,269, 309 and other applicable provisions read with ScheduleXIII of the Companies Act, 1956.vi)vii)Minimum Remuneration:In the event of the Company incurring a loss or havinginadequate profits in any financial year, the remuneration,benefits and perquisites payable or extended to Mr. Palmshall be in accordance with the provisions of Section II ofPart II of Schedule XIII to the Companies Act, 1956 as amendedfrom time to time.Termination:This agreement may be terminated by either party by giving tothe other party six months’ notice of such termination.viii) Vacation of Office:If at any time during the tenure of his appointment as theVice-Chairman & Managing Director, Mr. Palm ceases tobe in the whole time employment of the Company for anyreason whatsoever, he shall also cease to be a Director ofthe Company and simultaneously this agreement shall standterminated.ix)Sitting Fees:Mr. Palm shall not be paid sitting fees for attending themeetings of the Board of Directors of the Company.Mr. Palm is not liable to retire by rotation during his tenure asVice-Chairman and Managing Director.Item No. 7Sale of Land/Premises at BalkumIn terms of Section 293(1) (a) of the Companies Act, 1956 sale, leaseor otherwise disposal of the whole, or substantially the whole ofundertaking of the Company, or where the Company owns morethan one undertaking, of the whole or substantially the whole ofany such undertaking requires approval of the shareholders by wayof an Ordinary Resolution.The Company is holding about 36 acres of land at Balkum, Thaneand after completion of sale of Diketene and Intermediatesbusiness together with its movable assets in terms of BusinessTransfer Agreement, in January 2010, the site is currently used formanufacturing operations of Phthalo Green pigments and varioussite offices and laboratory set-up. The location earlier approvedfor use by chemical industry by the Govt. of Maharashtra, iscurrently surrounded by residential buildings. It is, therefore feltthat considering the Company’s commitment to environment,safety and health of its people and society at large, the site isnot fit for continuing the operations as chemical factory and thepotential of the premises/land at site can be better realised foruse by other commercial/residential purposes. Since developmentof infrastructure is not the core of the Company’s business, theBoard considered and thought it fit and proper that after closure,divestment or sale of its existing business operations from Balkumsite and subject to approval of shareholders, the premises/land andother assets attached thereto, may be sold in the best interest of theCompany and the value realised therefrom may be best put to usefor expansion/growth of the Company’s business.The Directors recommend the Resolution for Member’s approval.None of the Director is concerned/interested in this resolution.Item No. 8Proposal for change of registered officeAs per provisions of Section 146(2) of the Companies Act, 1956 readwith proviso (b) thereto, shifting of registered office of a companyoutside the local limits of any city or town requires approval ofshareholders by way of Special Resolution.With a view to improve co-ordination and communication betweenthe corporate, marketing and site offices, the Board of Directorsconsidered and subject to approval of shareholders, approved theproposal for shifting the registered office to Kolshet in Thane, wherethe manufacturing site, marketing offices and the technology labs ofthe Company are currently located. The proposed location is outsidethe local limits of Mumbai city and therefore requires approvalof shareholders by way of special resolution. If approved, theregistered office will be moved to Kolshet Road, P. O. Sandoz Baug,Thane 400 607 with effect from May 1, 2010.The Directors recommend the approval of the special resolution.None of the Directors is concerned or interested in the resolution.February 19, 2010.Registered Office:Ravindra Annexe,194, Churchgate Reclamation,Mumbai-400 020By Order of the Board of DirectorsFor Clariant Chemicals (India) LimitedB. L. GaggarDirector Finance & Company Secretary


13Directors’ ReportYour directors are pleased to present the Fifty-third annual reportand audited statement of accounts for the year ended December31, 2009.Financial ResultsThe financial performance of the Company for the year endedDecember 31, 2009 is summarized below:Rupees - Lakhs2009 2008Sales (Gross) 97322.24 100145.34Less: Excise duty (5188.11) (8505.87)Net sales 92134.13 91639.47Profit before exceptional items & taxation 18761.13 10776.60Less: Exceptional items (2450.46) (48.00)Profit before taxation 16310.67 10728.60Less: Provision for taxation (incl. FBT and deferred tax) (5466.34) (3732.21)Less: Short provision for taxation – Prior years (30.77) (248.09)Profit after tax 10813.56 6748.30Add: Balance brought forward from previous year 1097.40 950.36Amount available for appropriation 11910.96 7698.66Appropriations :General reserve 1081.36 674.83Interim dividend 2666.07 —Proposed final dividend 3999.11 5065.54Corporate tax on dividend (interim & final proposed) 1132.75 860.89Balance carried forward to balance sheet 3031.67 1097.40Review of OperationsThe global economic and financial crisis that began in 2008 andcontinued to affect Indian economy till first half of 2009 had acrippling impact on the global chemical industry. This has affected theCompany’s performance during the first 2 quarters of 2009. However,unexpected recovery in domestic market and excellent performancein terms of cost management has resulted into positive growthin terms of sales and benchmarking performance in net profits ofyour Company as compared to previous year. The following ratiosappropriately reflect your Company’s operational performance duringthe year under review.2009 2008Sales growth (%) 0.5 6.4Domestic sales growth (%) 2.8 7.0Export sales growth (%) (8.3) 4.0PBDIT (% to sales) 22.6 14.9PAT (% to sales) 11.7 7.4ROCE (%) 30.9 21.0Debt : Equity ratio 0.01 0.01Earning per share (Rs.) 40.56 25.31Cash earning per share (Rs.) 48.19 36.49Book value per share (Rs.) 130.45 119.14DividendDuring the year, your directors had declared interim dividend ofRs. 10 per share (100%) and the same was paid in August, 2009.Considering the excellent performance for the year and the policy fordistribution of profits to the shareholders adopted by the Company,the Board of Directors is pleased to recommend a final dividend ofRs. 15 per share (150%).The total dividend for the year ended amounts to Rs. 25 per share(250%) as compared to Rs. 19 per share (190%) paid for the previousyear. On the paid-up share capital of Rs. 2666 lakhs, the total payouton account of dividend and tax thereon for the year entails cash outflow of Rs. 7798 lakhs (previous year Rs. 5926 lakhs) and pay outof 72% of the net profit.Divestment of BusinessThe Company, during the year sold its flexible laminatingadhesive business for a total consideration of Rs. 3.6 crores toM/s. Bostik India Pvt. Ltd. The Company had also signed businesstransfer agreement (BTA) with M/s. Laxmi Organic Industries Ltd.for sale of its diketene and intermediates business located atBalkum, Thane together with movable assets, technical knowhowand non-compete undertaking for a total consideration ofRs. 13.25 crores. On receipt of full consideration, the transaction isconcluded in January 2010 and the plant is being dismantled anddelivered to the buyer.Registered OfficeThe registered office of the Company presently located atRavindra Annexe, 194, Churchgate Reclamation, Mumbai-400 020is under lease and the premises is under major repairs. For betterco-ordination and effective communication between sites, officesand laboratories, the Board has decided that subject to approval ofshareholders, the registered office of the Company be relocated atClariant owned premises at Kolshet Road, Thane-400 607 effectivefrom May 1, 2010. Shareholders are requested to approve theproposal.Balkum, Thane siteThe Board of Directors of your Company has decided that subject tothe decision on closure, divestment or sale of its existing businessoperations carried out at Balkum, Thane site and subject to approvalof shareholders, the land/premises and other assets attachedthereto, may be sold in the best interest of the Company and thevalue realised therefrom may be best put to use for growth of theCompany’s business.Shareholders are requested to consider and approve the proposal asset out in notice of the annual general meeting.


14 Clariant Chemicals (India) LimitedAnnual Report 2009Fixed DepositsThe Company has not accepted fixed deposits during the yearunder review. There were no overdue deposits except unclaimeddeposits of Rs. 6000/- as at December 31, 2009 which has beensubsequently deposited to Investor Education & Protection Fundof Government in January, 2010. As per requirements of Section205C of the Companies Act, 1956, the fixed deposits and interestunclaimed after completion of seven years are transferred tothe Investor Education and Protection Fund established by theCentral Government. There is no amount due and outstandingto be credited to Investor Education and Protection Fund as onDecember 31, 2009.Subsidiary CompanyThe audited accounts of the wholly owned subsidiary, ChemtreatComposites India Private Limited along with Auditors Report thereon,and the statement pursuant to Section 212 of the Companies Act,1956, is a part of this annual report.Consolidated Financial StatementsIn accordance with the Accounting Standards (AS-21), notifiedby the Companies (Accounting Standards) Rules, 2006, theconsolidated financial statements covered in this annual reportby the Company include financial information of its subsidiaryChemtreat Composites India Private Limited and forms part of thisannual report.Management Discussion and Analysis ReportThe Management Discussion and Analysis Report forming part ofDirectors’ Report for the year under review, as stipulated underClause 49 of the listing agreement with stock exchanges, forms partof the annual report.Corporate GovernanceThe Company is committed to maintain the highest standardsof corporate governance. The report on corporate governance asstipulated under clause 49 of the listing agreement forms part ofthe annual report. The requisite certificate from the auditors of theCompany confirming compliance with the conditions of corporategovernance as stipulated under the aforesaid clause is attached tothis report.Particulars of EmployeesThe statement giving particulars of employees, as requiredunder Section 217(2A) of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975 as amended,forms part of this report. However, having regard to the provisionsof Section 219(1)(b)(iv) of the said Act, the annual report excludingthe aforesaid statement is being sent to all the members of thecompany. Any member interested in obtaining a copy of thisstatement may write to the company secretary at the registeredoffice of the Company.DirectorsConsequent upon termination of agreement of Mr. Heiner Meier, asVice-Chairman and Managing Director, the Board at its meeting heldon October 29, 2009 considered and appointed Mr. Peter Palm asVice-Chairman and Managing Director of the Company effective fromJanuary 1, 2010. The Board wishes to place on records its sincereappreciation for Mr. Meier’s valuable contribution since integrationof Clariant group companies in India and welcomes the appointmentof Mr. Palm in his place. Mr. Peter Lindner, who was first appointedas director of the Company on October 25, 2001 and Mr. WalterKindler, who was appointed as director on February 20, 2009 to fillup the casual vacancy caused by resignation of Mr. Dominik Strebelresigned from the Board with effect from January 1, 2010.The Boardat the meeting held on October 29, 2009 appointed Mr. Heiner Meieras director to fill up the casual vacancy caused by resignation ofMr. Lindner and Mr. Henri Schloemer as additional director witheffect from January 1, 2010. The Company has received noticeunder Section 257 of the Companies Act, 1956 from a shareholderproposing Mr. Henri Schloemer as a director of the Company.In accordance with the provisions of the Companies Act, 1956 andthe articles of association of the Company, Diwan Arun Nanda, thedirector of the Company is due to retire at the forthcoming annualgeneral meeting, and being eligible, has offered himself for reappointment.Details of the directors seeking re-appointment are providedin the Corporate Governance Report forming part of this report, asrequired under Clause 49 of the listing agreement with the stockexchanges.Directors’ Responsibility StatementIn terms of Section 217(2AA) of the Companies Act, 1956 yourdirectors confirm that:(a) in the preparation of the annual accounts, the applicableaccounting standards have been followed;(b)(c)(d)they have selected such accounting policies and applied themconsistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair view ofthe state of affairs of the Company as at December 31, 2009and of the profit of the Company for that year;they have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with theprovisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraudand other irregularities;they have prepared the annual accounts on a going concernbasis.Conservation of Energy, Research and Development,Technology Absorption, Foreign Exchange Earnings andOutgoInformation required under section 217(1)(e) of the Companies Act,1956 read with the Companies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988 is annexed hereto andforms part of the report.


Directors’ Report15AuditorsM/s. Deloitte Haskins & Sells, Chartered Accountants, retires at theconclusion of the ensuing annual general meeting and being eligible,offer themselves for re-appointment. Members are requested toappoint the auditors and fix the remuneration payable to them.Cost AuditThe Board of Directors, in pursuance of an order under section 233Bof the Companies Act, 1956 issued by the Central Government, hasappointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, ascost auditors to audit the cost accounts maintained by the Companyin respect of Dyes and Intermediates for bulk drugs for the financialyear 2009.AcknowledgementThe Board of Directors place on record its sincere appreciation forthe dedicated efforts put in by all employees, their commitment andcontribution ensuring sustained operations that your Company hasachieved in most difficult and challenging environment during theyear. Your directors would like to record their sincere appreciationfor the support and co-operation that your Company received fromall the distributors, suppliers and business associates whom yourCompany regards as partners in progress.The Board of directors also express their appreciation of theassistance and co-operation extended by the bankers and unstintedsupport received from Clariant group companies.Your directors thank the members for their confidence in theCompany.Mumbai, February 19, 2010For and on behalf of the Board of DirectorsR. A. ShahChairmanAnnexure toDirectors’ ReportInformation as per section 217(1)(e) read with Companies (Disclosureof Particulars in the Report of Board of Directors) Rules, 1988and forming part of the Directors' report for the year endedDecember 31, 2009.FORM-AParticulars with respect to conservation of energyA. Power and fuel consumption:1. Electricity:a) Purchased:2009 2008Units (in ‘000 KwH) 49592 51119Total amount (Rs. Lakhs) 2605 2316Rate per Unit (Rs.) 5.25 4.53b) Own Generation:2. Coali) Through diesel generatorUnits (in ‘000 KwH) 1650 1138Units per Litre of diesel oil 3.28 3.19Cost per Unit (Rs.) 10.58 11.56ii) Through Steam turbine/ generator Nil NilQuantity (MT) 6178 3825Total cost (Rs. Lakhs) 365 250Average rate (Rs. per Kg.) 5.90 6.543. Furnace Oil (including L.S.H.S.)Quantity (MT) 3712 2549Total Cost (Rs. Lakhs) 755 698Average rate (Rs. per Kg.) 20.40 27.384. Other internal generation Nil Nil5. Agro mass briquettesQuantity (MT) 8200 14475Total cost (Rs. Lakhs) 334 537Average rate (Rs. per Kg.) 4.08 3.716. Lignite / Fire woodQuantity (MT) 2190 3083Total cost (Rs. Lakhs) 35 48Average rate (Rs. per Kg.) 1.58 1.54B. Consumption per unit of production:The Company manufactures a wide variety of products. Theproducts before reaching the finished final stage pass throughvarious operations in the different plants. It is, therefore, notfeasible to furnish the information in respect of consumptionper unit of production.


16 Clariant Chemicals (India) LimitedAnnual Report 2009FORM-BForm of disclosure of particulars with respect to TechnologyAbsorption, Research & Development (R & D).Research & Development1. Specific Areas in which R&D carried out by theCompany:R&D focused on two major aspects i.e. improved products andcost reduction. In the competitive market of specialty chemicalsand colorants it is very much necessary to develop productswith better application properties and ease of application.Improved product safety of products, especially for exports,was another important area in which R & D worked. With theincreasing cost of raw materials, fuel and energies R & D’sefforts were directed towards optimization of the processesand operations of pigments, dyes, intermediates, surfactantsand other specialty chemicals from cost reduction point ofview.2. Benefits derived as a result of the above R & D:The new as well as improved products created additionalbusiness and also helped to achieve customers’ satisfaction.Process optimization lead to substantial cost reduction.Development of eco-friendly processes resulted in lowerquantity of effluent and emission. Introduction of non toxic/nonhazardous products conforming to product safety regulationsresulted in higher and sustainable exports.3. Future plan of action:R & D will continue focus on projects leading to further costreduction, improved product safety and ecology.4. Expenditure on R & D:2. Benefits derived as a result of the above efforts, e.g. productimprovement, cost reduction, product development, importsubstitution etc.Benefits derived from these efforts include processrationalization, product quality improvement, importsubstitution and overall cost reduction.3. In case of imported technology (imported during the last5 years reckoned from the beginning of the financial year),following information may be furnished.(a) Technology imported : Nil(b) Year of import : N.A.(c) Has technology been fully absorbed? : N.A.Foreign Exchange Earnings and Outgo2009Rs. Lakhs2008Rs. Lakhs1. Total foreign exchange earned 18064.41 19734.022. Total foreign exchange used 23689.50 22923.72Mumbai, February 19, 2010For and on behalf of the Board of DirectorsR. A. ShahChairman2009Rs. Lakhs2008Rs. Lakhs(a) Capital 3.36 9.93(b) Revenue 224.20 323.29(c) Total 227.56 333.22(d)Total R & D Expenditure aspercentage of total turnover 0.25% 0.36 %Technology absorption, adaptation and innovation:1. Efforts, in brief, made towards technology absorption,adaptation and innovation:The R & D department absorbs the knowledge of chemicaltechnology from various sources such as know-how fromthe parent company and its worldwide affiliates, our ownexperimental data bank, published literature etc. andthereafter adapts the same to the Company's infrastructure.While adapting technology care has to be taken that it suitsthe locally available raw materials and production plants. Alsoit is to be ensured that the raw material specifications are not‘over demanding’ and the raw material cost is affordable. Thenew/improved technology is used to effect improvements tothe products and processes as well as for the containment ofpollution.


17Management Discussion & AnalysisFinancial and Operational PerformanceThe year 2009 began with a very high degree of uncertaintyand volatility in the Indian as well as the global economy. Thesentiments, however, started improving in the later part of theyear with pick up in domestic demand. Despite all the challenges,recession and downturns in the business all around the world,your Company was able to sustain its business performance andregistered positive growth in sales and exceptional improvement innet results. While domestic sales grew by 2.8%, export sales werelower by 8.3%. Of the total sales revenue of the Company for theyear, 18.6% is contributed by exports. Efficient cost management atall levels resulted in an impressive growth of 51.5% in profit beforedepreciation, interest, exceptional items and tax (PBDIT) and 60.2% innet profit after tax (PAT) over the previous year. The overall efficiencyhas resulted into improvement in PBDIT from 15% to 22.6% andPAT from 7.4% to 11.7% of sales as compared to the previous year.These results in the tough macroeconomic environment reflect thestrength of the Company in the market place.The Company has further consolidated its market leadership in thehighly competitive textile chemicals and leather dyes sectors. It isconstantly improving its market presence in other industry segmentsit participates in.The Company remains a zero debt company with no long-termborrowings. Short-term borrowings are restricted to the needbased working capital requirements. The Company has created abenchmark in efficient management of working capital. The year endratio of inventory to sales of 8.3%, receivables to sales of 15.7%and net working capital (NWC) to sales of 7.6% is one of the bestin the specialty chemical industry. Net cash flow from operatingactivities during the year was Rs. 17108 lakhs. Funds surplus to theoperational needs have been prudently invested to earn reasonablereturns with a high degree of safety. A sum of Rs. 12125 lakhs(previous year Rs. 5459 lakhs) stands invested in debt schemes ofmutual funds at the end of the year.During the year under review, all the plants had smooth operationsand the capacity utilisation was on need-based requirement. TheCompany sold its non-core business of flexible laminating adhesivesand entered into a business transfer agreement for sale of itsdiketene and intermediate business. Both these businesses duringthe year contributed Rs. 8568 lakhs by way of net sales.Achievement of ISO 9001, ISO 14001 and OHSAS–ISO 18001certification from SQS (Swiss Association for Quality ManagementSystem) for the Company’s Management Systems and for EnvironmentManagement and Safety in its operations reflects yours Company’scontinuous commitment towards quality, safety and sustainableenvironment friendly approach.Business Segments and PerformanceIn accordance with the Accounting Standard – 17 notified by theCompanies (Accounting Standards) Rules, 2006, the Company hasreclassified its range of products into two reportable businesssegments based on characteristics of products, production processesand the class of customers.1. Intermediates and Colours:The intermediates and colours segment comprises ofpigments, pigment preparations, additives, intermediates andmasterbatches.Clariant offers a wide range of products for optimal colourand performance solutions. High performance pigments servea variety of industries including the automotive, architectural,cosmetics, packaging and printing trades and the productportfolio includes pigment preparations, special dyes, flameretardants, high quality waxes and polymer additives.The pigments and additives businesses of the Companydeal in pigments, their dispersions and diketene derivatives.They have a strong presence in organic pigments servingthe needs of the paints, printing-inks, plastics, rubber,detergents, cosmetics and other industries. Besides being animportant player in diketene chemistry, it has niche productsin the colourant range to meet specific customer needs. TheCompany’s manufacturing facilities and state of art technicalservice laboratories provide cutting edge technology whichhelps in realizing the goals set by Clariant, for sustainablegrowth of the business. The Company is focusing on thepromotion of lead- and chrome-free pigments and is spreadingthe awareness on use of non-halogenated flame retardants.The pigment and additives businesses of the company, duringthe year, had good domestic growth of 6%, however negativegrowth of 20% in exports resulted into net growth of -3%over the previous year.The Clariant’s masterbatches business is a world leader inproviding colour and additive concentrates and performancesolutions for the plastic industry and holds strong positionsin the packaging, consumer goods, automotive and fibersegments.The masterbatches business of the Company services theplastic processing industry covering the product range of colourconcentrates, additive masterbatches and special mixtures ofpigments, additives, dispersing and wetting agents whichhave applications in a variety of industrial and consumerproducts such as automotive, packaging of pharmaceuticals,personal care, food & beverage products, packagingfilm & sheet, agriculture appliances, electrical connectors,


18 Clariant Chemicals (India) LimitedAnnual Report 2009wire & cables, medical equipment, household and consumerproducts, food services, toys, fibers & filaments, compound/ MRP and construction etc. Clariant is recognized as animportant supplier of specialty and tailor made masterbatchesfor the processing of polymers like LDPE, HDPE, HM-HDPE,PP, PVC, Nylon, PET, PBT and monofilaments, multi-filaments,staple and nonwoven fibers for technical textile applications.The masterbatches business, during the year, had an excellentgrowth of 36% over the previous year. In order to cater to themarket potential of it’s product range, the Company is in theprocess of expanding the capacities and setting up a greenfield manufacturing facility in MIDC, Ambernath.The total sales under this segment of Rs. 39267 lakhsfor the year comprises of pigments and additives ofRs. 32866 lakhs, masterbatches of Rs. 5318 lakhs andfunctional intermediates Rs. 1083 lakhs. The ratio of domesticsales to export sales was 73:27. The segment contributes43% to the total sales and registered a negative growth of2.2% over previous year.2. Dyes and Specialty Chemicals:The Segment comprises of specialty chemicals and dyesfor the textile, leather and paper industry and performancechemicals for personal care and industrial applications.Clariant’s textile, leather and paper chemicals businessesadd value through functionality and aesthetics to the textile,leather and paper industries and provide solutions to meetcustomers’ needs across the entire production chain in theuser industry.The Textile business serves textile producers as well asretailers and brand owners with products and services forpre-treatment, sizing, fibre finishing, dyeing and printing tofinishing. Clariant’s expertise in dyes and specialty chemicalsmakes the Company a perfect partner in every step of thetextile process chain from fiber to finish. Clariant’s globalservice Archroma® provides a solution to manage colourstandards along the whole textile chain and significantlyaccelerates time to market. The Company is the market leaderin the segment of textile chemicals.The Leather business develops and serves the market needs ofdyes and chemicals to process, treat and colour leathers and tocreate specific effects and fulfil the performance requirementsof specific leather products. Market leadership in India in theleather business is fortified with a comprehensive range ofdyes and wet end chemicals that cater to the retanning,dyeing and finishing of all types of leather.Clariant is the market leader in colourants and opticalbrighteners for paper and it’s specialty chemicals providesolutions, e.g. improve the strength of recycled paper. TheCompany has established itself as one of the preferredsuppliers of dyes, optical brightening agents, surface andprocess chemicals for the domestic paper industry.During the year, the businesses of textile, leather and paperhad overall growth of 5% driven mainly by export growth of100% over the previous year.Clariant’s product portfolio based on surfactants, polymersand active ingredients provide products and solutions for theoil and gas industry and key ingredients for the home care andcosmetic sector. A wide variety of global industries, such asdetergent, cosmetics, oil, gas, construction, agriculture, metalworking, mining, paint and aviation sectors use high-techfunctional chemicals in their products. Clariant is a dominantplayer in the lubricant segment supplying brake fluids, enginecoolants and specialty additives and is a preferred supplierof specialty ingredients for skin and hair care, wet wipes andselected pharmaceutical applications in the personal caresegment. The Company is a leading supplier of biocides to thecoating and construction industries and a solution provider forsolvent recovery systems.Given the product range, the strong brand image created bythe parent company coupled with capabilities of providingtechnical services in product development and applicationprocess, the Company is well positioned in this businesssegment.The total sales under this segment of Rs. 52867 lakhs forthe year comprises of Rs. 46352 lakhs (87.7%) from domesticand Rs. 6515 lakhs (12.3%) from export sales. The Dyes andSpecialty Chemicals segment has contributed 57% of totalsales revenue for the year registering a growth of 2.7% overprevious year.The segment wise financial performance of the Company issummarised below:(Rs. Lakhs)Segments 2009% to TotalSales 2008% to TotalSalesIntermediates & Colours 39267 43% 40169 44%Dyes & Specialty Chemicals 52867 57% 51470 56%Total 92134 100% 91639 100%Internal Control SystemsThe Company has a comprehensive system of internal controls tosafeguard the Company’s assets against loss from unauthorized useand ensure proper authorization of financial transactions. The systemis designed to provide a high degree of assurance regarding theeffectiveness and efficiency of operations, the reliability of financialcontrols and compliance with applicable laws and regulations. Theorganization is well structured and the policy guidelines are welldocumented with pre-defined authority where monetary decision isinvolved. Structured management information and reporting systemstogether with an exhaustive budgetary control process for all majoroperational activities form part of the overall control mechanismto ensure that requisite information related to all operations arereported and are available for control and review.The Company has established a well laid out policy to maintainthe highest standards of environment, safety and health whilemaintaining operational integrity. This policy is strictly adhered toas per Clariant guidelines at all manufacturing sites.


Management Discussion & Analysis19The Company, with a view to encourage independent approach, hasoutsourced the function of internal auditors to qualified professionals,who conduct operational and system audits in accordance with anaudit plan adopted by the audit committee. Internal auditors aspart of their assignment, evaluate and assess the adequacy andeffectiveness of internal control measures and the compliance withpolicies, plans and statutory requirements. The internal audit reportsare reviewed at audit committee meetings and appropriate action onthe recommendations is initiated by the management.Human ResourcesHuman resources continue to be an invaluable and intangible assetand key success factor for the Company to grow and sustain it’smarket position in a highly competitive and challenging environment.Clariant firmly believes that people are the pivotal force behindthe growth and excellence in business operations. The overallperformance and the market position, the Company enjoys are theresult of the aggregate strength of it’s people.The Company during the year, paid special attention to developmentalactivities comprising of sharpening of skills and abilities, developingacademic and professional knowledge and cultivating appropriatebehavioral skill sets, such as improving interpersonal relations,team building abilities, effective communication and presentationskills. Focus on developing leadership skills and building talent forthe future and the process of improving organizational and humancapability through competency mapping of managerial positions in allareas of the company’s operations, continued as a major initiative.The Company has put great emphasis on the project “ClariantExcellence” and has trained 4 black belts and 21 green belts in theLean Six Sigma process to identify further opportunities of costsavings and process improvements.The Company is committed to provide the right environment toit’s employees to work and to inculcate a sense of ownership andpride.Cordial relations built on the strength of mutual trust and faithin each other, prevailing at all locations, helped the Company indownsizing the work force, earlier engaged in operations, whichare discontinued at Cuddalore in Tamilnadu and Balkum in Thane.The voluntary retirement scheme, offering one of the best packagesprevalent in the industry, announced by the Company was wellresponded to and a sum of Rs. 2810 lakhs were paid during the yearto 161 employees at all levels in the organisation. The total numberof employees on the rolls of the Company as at December 31, 2009was 945 against 1,172 on December 31, 2008.Industry Structure and DevelopmentThe Indian chemicals and petrochemicals industry is worth aboutUS$ 78 billion. The industry with investments worth US$ 60 billion,contributes 3% to India’s GDP and 14% to total exports, employsaround 1 million is the largest in Asia and 12th in the world. Till therecent slowdown, the industry was growing at 6%-10% per year,as against the global average of 3%-4%. The industry exports morethan 50% of its production and thus is deeply connected to the globaleconomy. However, India’s share in global exports and imports isless than 2%. The industry had an export growth rate of 27%, whichhas come down to 16%, as a result of the global economic crisis.Half of the chemical market is currently occupied by basic chemicalssuch as petrochemicals and fertilizers. The rest comprises evenlyof specialty chemicals such as paints, dyestuffs and intermediatesand knowledge chemicals such as pharmaceuticals, bio chemicalsand agro chemicals. The growth rate of basic chemicals is 7-8% butthat of specialty and knowledge chemicals is 13-15% and a greatexpectation is placed on its future growth.India has achieved considerable progress in the production of basicorganic and inorganic chemicals, pesticides, paints, dyestuffs andintermediates, petrochemicals, fine and specialty chemicals andtoiletry products. With the slash in tariffs, the Indian chemicalindustry with well-built systems and segment focused operations islikely to benefit further. It is not only the country’s oldest industry,but contributes to India’s growing economy in a phenomenal way.The industry is highly diversified and serves the basic needs ofmany different industry verticals like natural gas, water, oil, metals,minerals, air, oil, etc and all these verticals eventually bring into themarketplace an array of products. The companies manufacturing highvalue chemicals and compliant with industrial quality standards, arecapable of making their mark not just in India but in the overseasmarkets as well.Indian dyes are in demand world over. Pigments and Dyes areprimarily used in paints, inks, textiles, leather, paper, foodstuffs andpolymers. The textile industry accounts for the largest consumptionof dyestuffs. India has emerged as a global supplier of dyestuffs anddye intermediates, particularly for reactive, acid, vat and direct dyesapproximately 6% of the world production. The total market of paintand dyes is about US$ 1 billion with a growth rate of about 10%.The dyestuff market is highly fragmented with high concentrationin Maharashtra and Gujarat. There are about 25 large and mediumplayers, which cover 50% market share, while 2000 other organizedplayers contribute the balance 50%. The per capita consumption ofdyestuff is very low in India (400 gms) as compared to the developedcountries (15 kgs). The plastics & polymer segment is growing steadilywith a very high potential of domestic consumption. It remains oneof the fastest growing markets in the recent past. Many overseasplastic processors have started investing in India for exports aswell as for domestic consumption. However, the capacities of theseplants remain small.The Indian textile industry size is estimated to expand significantlyfrom the present US$ 50 billion and it accounts for around 4% ofthe Gross Domestic Products (GDP), 14% of Industrial production andover 13% of the country’s total export earnings. The textile industryis capital intensive and in recent years it has invested significantlyon capital assets by acquiring sophisticated new machinery. Thishas gone a long way towards upgrading products to internationalstandards and massive investment is expected further. All this hasenabled the industry to entrench itself firmly and make an entryinto the society of top fashion, formal and leisurewear garments.India is emerging as a one stop shop for all textiles and clothingrequirements. Clariant is a market leader in textile chemicals andhas a significant presence in all segments of the industry includingtechnical textiles.


20 Clariant Chemicals (India) LimitedAnnual Report 2009World trade in leather is estimated at about US$ 150 billion andIndia’s share is US$ 3.5 billion despite having the advantage of alarge labour force and a wide raw material base. Dwindling exportsin the wake of the global demand slump and stiff competition fromcountries like China and Vietnam have resulted into a fall in leatherexports by 17% in dollar terms and 8% in Rupee terms during thenine months ended December 31, 2009 when compared with thesame period a year ago and the industry expects that the exportsduring 2009-10 will show a decline of about 10-15%. Contrary to thedismal show by the Indian leather industry, the Company has doneextremely well with a strong growth in exports led by Clariant Groupdemand. The Company has a wide product range for leather dyeingand finishing chemicals to cater to the market needs for a variety ofproducts and is the market leader in wet end chemicals.The Rs. 16000 crore Indian paper industry is currently investing oncapacity expansion, pollution control measures and environmentalmanagement plans. The total paper demand in the country accordingto industry estimates is about 94 lakh tonnes a year with packagingcontributing to about 24% and newsprint 20%. Clariant’s paperbusiness offers a wide range of high performance products forimproving whiteness, strength, strong and bright shades withexcellent printability.The Indian paint industry has seen remarkable changes during thelast decade. In this period, almost every major multinational hasestablished or entrenched their presence, incumbents have builton their market position and the industry has become far moresophisticated in terms of the products it manufactures, the way itsells to customers and the range of technologies it uses. Overallpaint demand in India has grown 1.5 times the GDP growth, thoughsome segments have done better. The Company has positioneditself as preferred supplier of pigments, additives and intermediatesto major paint, coatings and ink manufacturing companies in thecountry.The personal care sector in India is set for a lot of action by wayof expansion in capacity, fast replacement of product portfolio andinvestment in research and development projects to sustain itsgrowth momentum in the Rs. 9500 crore personal care businesses.Clariant with its strong global presence is looking forward forimproving its position in this segment.The Company has diversified product ranges catering to the needsof variety of user industries and these are classified into two broadbusiness segments of Intermediates and Colours and Dyes andSpecialty Chemicals. Details on these segments are described inthis report under ‘Segment wise performance’.OutlookIn spite of deceleration from 9% GDP growth to about 7% GDPgrowth in 2009-10, India remains the second largest growingeconomy in the world. The index of industrial production has surgedby an incredible 16.8% in December 2009 against a contraction of0.2% a year ago. For the period April-December 2009, the averageindustrial growth rate worked out to 8.6%, much better than thegrowth of 3.6% during the same period in 2008. Based on the growthrate of the broad industry groups, the trend during the current yearis encouraging.The Indian chemical industry is on a high growth trajectory andthrough a series of efforts, expected to achieve USD 100 billionin the upcoming years. The industry today is into manufacturingof a wide range of goods including fine and specialty chemicals,drugs and pharmaceuticals, dyes and pigments, agrochemicalsand fertilizers, pesticides, plastics and petrochemicals etc. and itscontribution to the Indian manufacturing sector is about 18%. Thepositive factor for the Indian chemical industry is the demand for itsproducts that is largely driven by the domestic market. Consideringthe very low per capita consumption ratio, it has great potential forfast growth and with its inherent strengths of low cost and highlyqualified workforce, it is expected to play the role of an export baseto Europe and Middle East. However, the industry is yet to makeits presence felt in a significant way in the international marketsand factors like global recession and financial crises had significantimpact on the manufacturing and export sector of the industry.Although 2009 has seen enough challenges, recession anddownturns, the Company has withstood all such pressures andstrongly positioned itself to meet the challenges of the future. Whilesome of the effects of the global economic scenario still persist, 2010promises to be much better to forge ahead. Considering the strongpresence in different market segments, it’s technological abilityto provide solutions to user industries, rapid response in adaptingto change in fashion and preference of people, global affiliationand brand image of Clariant world-wide, the future outlook of theCompany’s business is positive and sustainable growth is expectedin coming years.Opportunities and ThreatsThe overall performance of the Indian chemical industry evenwhen the world is reeling under financial and economic recessionis satisfactory given the performance in the domestic markets.Global recession is a reminder call for domestic industries to upgradethe quality of products, technical services, cost competitivenessand processing efficiencies, etc. Although small in size, the Indianchemical industry is a net exporter. Per capita consumption ineach of its industry segment is very low and is about 1/10thof world average, thus hold strong potential to grow in domesticmarkets.To counter the negative fallout of the global slowdown on the Indianeconomy, the Government responded by providing a substantial fiscalexpansion in the form of tax relief to boost demand and increasedexpenditure on public projects. In view of good performance byindustries, financial stimulus if rolled back, could affect domesticdemand in certain sectors for a temporary period.The Business environment for the chemical industry globally hasbeen changing very fast and if the Indian chemical businesses haveto hold against competition they have to change and adopt theirstrategies, methodology of working and organisational structure.China is becoming the biggest threat to the Indian chemical industrywith their excess capacity and controlled exchange rate of Yuan,making Indian products uncompetitive.The area of challenge and concerns which the Indian chemical industrywill need to face are non-tariff barriers, by way of internationaltreaties, which at times appear well and innocuous but have been


22 Clariant Chemicals (India) LimitedAnnual Report 2009Report on Corporate GovernanceCompany’s philosophyClariant Chemicals (India) Ltd., part of the Clariant Group, committedto the highest standards of Corporate Governance, has over the yearspractised good corporate governance and is committed to createvalue to all its shareholders. The Company is driven by its corevalues, viz. ethical practices, concern for people at work, delight ofcustomers and striving to meet the stakeholders’ expectations andsocietal aspirations.The Company believes that governance should be functioningbeyond compliances, adherence to regulatory frame work, financialprudence and should create fair and transparent processes andreporting systems. The focused approach, professionalism of Boardand fair and transparent processes have led your Company to newheights. Corporate Governance has been strengthened by formulatingand adopting Code of Conduct for directors and senior members ofmanagement. The Company makes best efforts to use best-in-classtechnology, focus on providing solution and service to its customersthereby creating value chain, promote highest levels of safety in itsoperations, maintain better health of its employees, provide a cleanenvironment for sustainable development and meet the objectives ofshareholders by providing them fair returns and value.1. Group Structure:Your Company is an affiliate of Clariant AG, Switzerland, a globalleader in the field of specialty chemicals represented on five continentswith over 100 group companies and headquartered in Muttenznear Basel. In accordance with the Group‘s business structure, theCompany operates in four business divisions viz. TLP (Textile, Leather& Paper), P&A (Pigments and Additives), Functional Chemicals andMasterbatches and these are classified in two business segmentsIntermediates & Colours and Dyes & Specialty Chemicals.2. Board of Directors2.1 Composition and the Changes:The Company as on December 31, 2009 had seven Directorscomprising of six non-executive Directors includingChairman. The day to day management of the Companyis conducted by Vice-Chairman and Managing Directorsubject to supervision and control of the Board ofDirectors. The independent Directors take active part in theBoard and Committee Meetings, which adds valuein the decision making process of the Board ofDirectors.Mr. Heiner Meier led the team of management as Vice-Chairman & Managing Director for the year. However, upontermination of his agreement, Mr. Peter M. Palm is appointedas the Vice-Chairman and Managing Director in his place witheffect from January 1, 2010. Mr. Dominik Strebel resignedduring the year and Mr. Walter Kindler was appointed inthe casual vacancy caused by his resignation. However,Mr. Kindler resigned as Director as of December 31, 2009and Mr. Henri Schloemer is appointed as Additional Directoreffective from January 1, 2010. Mr. Peter Lindner resignedas of December 31, 2009 and Mr. Heiner Meier is appointedwith effect from January 1, 2010, in the casual vacancycaused by resignation of Mr. Lindner.The composition and category of the Board of Directors asat December 31, 2009, the number of other directorships/committee memberships held by them and also theattendance of the Directors at the Board meetings of theCompany is as under:No. of other Directorships and Committee memberships/Particulars of AttendanceChairmanships in Indian Public Companies#Name of the Director CategoryNumber of Board meetings Last AGM held Other Directorships* as Committee CommitteeHeld Attended on April 29, 2009 on December 31, 2009 Memberships ChairmanshipsMr. R. A. ShahNon-Executive6 6 Attended 14 10 5DIN 00009851IndependentMr. H. MeierExecutive 6 6 Attended None 1 NoneDIN 00726512Mr. P. LindnerNon-Executive 6 1 Attended None None NoneDIN 01417833Dr. A. WaldeNon-Executive 6 0 Not Attended None None NoneDIN 01417867Mr. B. S. MehtaNon-Executive6 6 Attended 14 10 5DIN 00035019IndependentDiwan A. NandaNon-Executive6 4 Attended 5 3 1DIN 00034744IndependentMr. Dominik Strebel Non-Executive 1 0 NA None None NoneDIN 01859786Mr. Walter Kindler Non-Executive 5 1 Attended None None NoneDIN 02511867* This excludes alternate directorships/directorships in private limited companies, foreign companies and companies governed by Section 25 of the Companies Act, 1956 wherever applicable.# It excludes committees other than Audit Committee, Shareholders/Investor Grievance Committee and companies other than public limited company but includes committee membership/ chairmanshipin Clariant Chemicals (India) Ltd.


Report on Corporate Governance232.2 Profile of Members of the Board of Directors beingappointed/re-appointed:Mr. Peter PalmMr. Peter Palm a German national has done his Certificateof Business Administration from Chamber of CommerceFrankfurt Am Main awarded in 1970 and completedmanagement training in UK, Switzerland and other countries.Before joining the Company as Vice-Chairman and ManagingDirector he had international postings in India, Afghanistan,Sri Lanka, Saudi Arabia, Nigeria, South Africa and sincethe year 2005 he was Country President of Clariant UK &Ireland.Diwan A. NandaDiwan A. Nanda, a gold medalist from the IndianInstitute of Management, Ahmedabad has over 40 yearsof vast experience in marketing & advertising and hasheld various positions in academics and advertising.He started his career in marketing in Hindustan LeverLimited and later founded ‘Rediffusion’ an advertisingagency in 1973 and is on the board of Rediff.com India Ltd.and Eveready Industries (India) Ltd. He is the recipient ofAAAI Premnarayan award for outstanding contribution toadvertising in India in 2002.Dr. Henri SchloemerDr. Henri Schloemer, a German national, received hisdoctorate degree in Business Administration from theGerman University of Bochum. He joined Clariant 1998and later became CFO for Clariant’s German operations. In2007 he was appointed as Managing Director of ClariantGermany and later in 2009 became Head of the CorporateAffairs department at Clariant’s headquarters in Muttenz,Switzerland, responsible for strategy, mergers & acquisitionsand worldwide regions for Clariant.2.3 Board Meetings and Agenda:In compliance with the provisions of clause 49 of thelisting agreement, the Board meets at least once in everyquarter to review the performance and to deliberate andconsider other items on the agenda. Six meetings wereheld during the year on February 20, 2009, April 29, 2009,May 14, 2009, July 24, 2009, October 29, 2009 andDecember 14, 2009.The agenda of the Board of Directors’ Meeting interaliaincludes the following:• Annual revenue and capital investment budgets;• The unaudited quarterly, half-yearly financial resultsand the audited annual accounts of the Company,both consolidated and on a standalone basisincluding segment wise revenue, results and capitalemployed;• Declaration of dividend;• Sale of material nature, of investments, assets,business, which is not in normal course ofbusiness;• Investment in capital projects of material nature;• The minutes of the Board meetings of subsidiarycompany;• Minutes of the meetings of Board, Audit andInvestors’ grievance committees, as also theresolutions passed by circulation;• Internal audit reports and the status onimplementation of suggestions;• Cost audit and secretarial audit reports;• Proposals for joint venture, collaboration, merger &acquisition, if any;• Making of loans or investment of surplus funds;• Appointment of statutory auditors, cost auditors &internal auditors;• Appointment of key management positions belowthe Board level;• Issues relating to shareholders – such as ratificationof transfers, demat status, pending grievances,issue of duplicate share certificates, etc.;• Materially important show cause, demand,prosecution and penalty notices;• Fatal or serious accidents, dangerous occurrences,any material effluent or pollution problems;• Defaults in payment of statutory dues, if any;• Review of Foreign exchange exposure and exchangerate movement, if material;• Contracts in which Director(s) are deemed to beinterested;• Matters requiring statutory/Board approvals;• Review of related party transactions;• Status on compliance of regulatory/statutory andlisting requirements;• Issue/revocation of Power of Attorney;• Commission payable to Directors;• General notices of interest of Directors;• Appointment of Managing and other Directors.3. Board Committees:The Board has constituted two committees viz., Auditcommittee and Investor Grievance Committee. The roles andresponsibilities assigned to these committees covered underthe terms of reference approved by the Board are subject toreview by the Board from time to time and the minutes ofthe meetings of these committees are reviewed and takennote by the Board. The details as to the composition, termsof reference, number of meetings and related attendanceetc. of these committees are provided below.


24 Clariant Chemicals (India) LimitedAnnual Report 20093.1 Audit committee:3.1.1 Composition:Mr. R. A. Shah, Diwan A. Nanda and Mr. H. Schloemer arethe members of the Audit Committee after January 1, 2010.Mr. Dominik Strebel was member of the Audit Committeetill February 20, 2009 and consequent upon his resignationMr. Walter Kindler was inducted as member of AuditCommittee till December 31, 2009. Mr. R. A. Shah chairsthe committee. The statutory auditors, internal auditors andcost auditors are also invited to attend the audit committeemeetings from time to time. The composition of the Auditcommittee meets the requirements of Section 292A ofthe Companies Act, 1956 and Clause 49 of the ListingAgreement.Mr. H. Meier, the then Vice-Chairman & Managing Directorattended the Audit Committee meetings as special invitee.Mr. B. L. Gaggar, Director Finance & Company Secretaryrepresents the finance function and also acts as Secretaryto the committee. All major variances affecting theperformance of the Company are discussed and explained.During the year four meetings of the Audit Committee wereheld on February 20, 2009, April 29, 2009, July 24, 2009 andOctober 29, 2009.Attendance at Audit Committee meetings:Name of Director Category Status Number of MeetingsHeldAttendedMr. R. A. Shah Independent Chairman 4 4Diwan A. Nanda Independent Member 4 4Mr. Dominik Strebel(Up to February 20, 2009)Mr. W. Kindler(from February 20, 2009)Non-Independent Member 1 0Non-Independent Member 3 13.1.2 Scope of Audit Committee:The Audit Committee assists the Board in fulfillingits obligations relating to corporate accounting andreporting practices, financial and accounting controls andpresentation of financial statements and thus provideseffective supervision of the financial reporting process. Thecommittee also reviews the appointment, independenceand performance of statutory auditors, the performance ofinternal auditors and the Company’s internal control andrisk management policies. The terms of reference of theaudit committee are in accordance with clause 49(II) (D) ofthe listing agreement entered into with the relevant stockexchanges and include:(i)Overseeing the Company’s financial reportingprocess and the disclosure of its information toensure that the financial statements are correct,sufficient and credible;(ii)(iii)Recommending to the Board, the appointment, reappointmentand, if required, the replacement orremoval of statutory auditors and fixation of fee foraudit and other services;Reviewing with the management, the annualfinancial statements before submission to the Boardfor approval.The Audit Committee is empowered to exerciseits rights under clause 49(II)(C) and also reviewsvarious information prescribed under clause 49(II)(E)of the listing agreement entered into with therelevant Stock Exchanges.3.2 Remuneration Committee:The Company has not constituted a remuneration Committeeas compensation/remuneration payable to the directors areapproved by the shareholders in the general meeting.The Company has no pecuniary relationship or transactionwith its Non-executive directors other than payment ofcommission, which has been approved by the shareholdersand payment of dividend on equity shares, if any, held bydirectors in the Company. The Company has been seekinglegal consultations from M/s. Crawford Bayley & Co.,Advocates & Solicitors on various matters and a sum ofRs. 33,06,705 (Previous year Rs. 3,65,363) has been paid asprofessional fees to the said firm during the year ended atDecember 31, 2009. Mr. R. A. Shah, who is the Chairmanof the Company, is the senior partner of the said firm.The aforesaid professional fee is not considered materialenough that may have potential conflict with the interestof the Company and to impinge on the independence ofMr. Shah.The details of remuneration paid to Directors for the yearended December 31, 2009 is as follows:Rupees (in Lakhs)Name of DirectorSittingfeesSalary,Perquisites,Contributionto ProvidentFundCompensationfor lossof officeCommissionTotalMr. R. A. Shah 0.50 – – 4.00 4.50Mr. H. Meier – 149.51 40.83 26.75 217.09Mr. B. S. Mehta 0.45 – – 3.00 3.45Diwan A. Nanda 0.50 – – 3.00 3.50The Company has no scheme for grant of stock options tothe Directors.3.3 Investors’ Grievance Committee:The Investor’s Grievance Committee, during the year,comprised of Diwan A. Nanda non-executive independentdirector as Chairman and Mr. H. Meier Vice-Chairman& Managing Director as a member. Consequent uponthe termination of agreement with Mr. H. Meier,


Report on Corporate Governance25Mr. Peter Palm replaces as member of the committeeeffective from January 1, 2010.The committee, inter alia,approves issue of duplicate share certificates and overseesand reviews all matters connected with transfer of sharesof the Company. The committee also looks into redressalof shareholders’ complaints related to transfer of shares,non receipt of annual report and dividend warrant etc. Thecommittee monitors implementation and compliance ofthe Company’s Code of Conduct for prohibition of insidertrading in pursuance of SEBI (Prohibition of Insider Trading)Regulations, 1992. The committee met twice on April 29,2009 and October 29, 2009 during the year and these wereattended by both the members.To expedite the process of physical transfer of shares,the Board has delegated the authority to Mr. B. L. GaggarDirector Finance & Company Secretary who is thecompliance officer of the Company. In accordance withthe authority granted by the Board, Mr. Gaggar deals withtransfer/transmission of physical shares, split/sub-divisionand consolidation of physical shares and rematerialisationof shares. The physical transfers of shares are ratified atthe Board meetings.M/s. Sharepro Services (India) Private Limited, the Registrarand Share Transfer Agents, deals with all shareholdersrelated matters for both physical and demat holding. TheCompany has retained the services of a practicing CompanySecretary to perform Secretarial Audit every quarter. Nonon-compliance from established procedures is reported.Pursuant to Clause 41 of the Listing Agreements, investorgrievance redressal status is reported every quarter to theStock Exchanges and the numbers of unattended grievancesare published in the news papers along with financialresults.There was one investor complaint pending as onDecember 31, 2009 which is being attended.4. Subsidiary CompanyThe Company does not have material non-listed subsidiarywhose turnover or net worth (i.e. paid-up capital and freereserves) exceeds 20% of the consolidated turnover ornet worth respectively, of the listed holding Company.Chemtreat Composites India Private Limited, a wholly ownedsubsidiary Company, has its production base at Khopoli,in the Maharashtra state. As a majority shareholder, theCompany nominates its representatives on the Board of thesubsidiary company and monitors the performance throughquarterly review of financial statements by Audit committeeand review of minutes of the Board meeting by Company’sBoard.Mr. Heiner Meier, Mr. Walter Kindler and Mr. B. L. Gaggarwere the Directors of Chemtreat Composites India PrivateLtd. Upon resignations of Mr. Meier and Mr. Kindler witheffect from January 1, 2010, Mr. Peter Palm and Mr. HenriSchloemer are nominated as the Directors on the board ofsubsidiary company.5. General Body Meetings:Location, date and time of the Annual General Meetingsof the Company held during the preceding 3 years and theSpecial Resolutions passed thereat are as follows:AGM Venue Date andTime50th51st52ndY. B. ChavanAuditorium,Gen. JagannathBhosale Marg,Next to SachivalayaGymkhana,Mumbai 400 021Y. B. ChavanAuditorium,Gen. JagannathBhosale Marg,Next to SachivalayaGymkhana,Mumbai 400 021Y. B. ChavanAuditorium,Gen. JagannathBhosale Marg,Next to SachivalayaGymkhana,Mumbai 400 021April 19, 20074.00 p.m.April 17, 20084.00 p.m.April 29, 20094.00 p.m.Special ResolutionsPassedNo special resolution.i) Enhancement of theborrowing limits of theCompany fromRs. 125 crores to Rs. 300crores.ii) Payment of commissionto the Directors otherthan Managing Director.i) Re-appointment ofMr. H. Meier as theVice-Chairman &Managing Director.ii) Amendment of Articlesof Association of theCompany.There was no postal ballot conducted during 2009 and anyof the preceding three years.6. Disclosures:6.1 Materially significant related party transactions:The Company has not entered into any transactions ofmaterial nature, with its promoters, the directors, or thesenior management personnel, their subsidiaries or relativesetc. that may have potential conflict with the interests ofthe Company. The disclosure in respect of related partytransactions is provided in the notes to the accounts. Allcontracts with the Clariant affiliates entered into duringthe year are in the normal course of business and have nopotential conflict with the interest of the company at largeand are carried out on an arm’s length basis at fair marketvalue.6.2 Code of ConductThe Board of Directors has adopted the Code of Conductfor Directors and senior management personnel and thesame has been placed on the Company’s website. TheCode has been circulated to all the members of the Boardand senior management personnel and the complianceof the same is affirmed by them annually. In addition, astandard international Code of Business Conduct formulatedby Clariant Group is applicable to all employees of theCompany.


Report on Corporate Governance278.5 Listing of Shares:Shares of the Company are listed on Bombay Stock ExchangeLtd. (BSE) and National Stock Exchange of India Limited(NSE).The Company has paid the listing fees upto March 31, 2010to both the Stock Exchanges.8.6 Stock Code:Name of the StockExchangeStock CodeBSE CLARICHEM Rs. 467.90NSE CLNINDIA Rs. 470.40Closing Price as on31.12.2009Company Registration Number with ROC/Ministry ofCorporate AffairsCIN : L24110MH1956PLC010806ISIN : INE492A010298.7 Stock Market Data Price Rupees per share:MonthBombay Stock Exchange(BSE)2009 High Rs. Low Rs. Volume(Nos.)National Stock Exchange(NSE)High Rs. Low Rs. Volume(Nos.)January 179.90 145.00 92853 179.65 145.00 39013February 175.90 144.30 563745 175.50 146.10 413017March 205.00 164.00 934184 205.00 162.70 346991April 213.85 153.00 344594 214.40 170.00 415259May 246.00 175.10 454303 245.80 180.10 418189June 277.00 224.05 305460 272.80 225.25 155536July 318.65 233.00 248523 326.40 234.50 122695August 320.00 279.00 157878 314.75 280.00 141513September 367.00 308.00 229551 367.00 309.00 183248October 389.90 350.00 204675 390.00 351.05 124781November 422.95 360.10 176262 424.00 352.50 132042December 485.00 349.90 600612 485.00 400.10 5699418.8 Performance of Company’s shares to broad basedindex (BSE Sensex):8.9 Address for correspondence:Registrar & Share Transfer Agents:M/s. Sharepro Services (India) Pvt. Limited,A) 13-AB, Samhita Warehousing Complex,Gala No. 52-562nd Floor, Sakinaka Tel. Exchange Lane,off Andheri-Kurla Road,Sakinaka,Mumbai-400 072.Tel: 022-6772 0400/6772 0300,Fax: 022-2859 1568, 2850 8927Email: sharepro@shareproservices.comContact Person: Mrs. Indira Karkera/ Miss PriyaE-mail ID under clause 47(f) of theListing Agreement :Clariant@shareproservices.comB) Investor Relations:912, Raheja Centre,Free Press Journal Road,Nariman Point,Mumbai-400 021.Tel.: 022-2288 1568/69, 6613 4700Fax: 022-22825484The shareholders having physical shares are requestedto ensure that any correspondence for change ofaddress, change of bank mandates etc. should besigned by the first named shareholder. You are furtherrequested to send supporting documents such as proof ofresidence, copy of PAN card whenever change of addressis to be effected.In case where the shares of the Company are held in electronicform (that is, in dematerialised form), all communicationsconcerning rematerialisation of shares, transfer andtransmission, dividends, change of address, furnishingof alterations in bank account details, nominations, ECScredit of dividend amount to shareholders’ bank account orother inquiries should be addressed only to the DepositoryParticipant (DP) with whom demat account is maintained,quoting client ID number and not to the Company or the R&TAgent . This is because once the shares are dematerialisedthey become fungible i.e., they lose their distinct identitysuch as the folio number, the certificate number, thedistinctive share numbers, etc. and the corresponding creditfor number of shares is given to the individual shareholderin his account with the concerned DP.For any assistance from the Company, members maycontact Mr. S. P. Bhattu, Assistant Company Secretary atthe registered office of the Company.Tel. No. 022-22022161/2283 0882


28 Clariant Chemicals (India) LimitedAnnual Report 20098.10 Shareholding Pattern as on December 31, 2009Sr.No.CategoryA. Promoter's Holding:No. ofShares heldPercentage ofShareholdingForeign Promotersi Ebito Chemiebeteiligungen AG 8167080 30.63ii Clariant International AG 6075000 22.79iii Clariant Participations AG 2660000 9.98Sub-Total 16902080 63.40B. Institutional Investorsi Mutual Funds / UTI 1151551 4.32ii Financial Institutions / Banks 20067 0.07iii Insurance Companies 479588 1.80iv Foreign Institutional Investors 58815 0.22Sub-Total 1710021 6.41C. Non-Institutional Investorsi Bodies Corporate 1489332 5.59ii Individualsa) individual shareholders holding 5748845 21.56nominal share capital up toRs.1 lakhb) individual shareholders holding 669395 2.51nominal share capital inexcess of Rs. 1 lakhiii othersa) Non-Resident (Non-Rep) 72270 0.27b) Non-Resident (Rep) 48168 0.18c) Trust 18784 0.07d) OCB 1850 0.01Sub-Total 8048644 30.19TOTAL 26660745 100.002,56,09,068 shares of the Company are held in dematerialisedform constituting 96.06% of the paid-up capital, as atDecember 31, 2009. The total number of shareholders as onBenpos date of December 31, 2009 is 30,656.8.11 Details of Members holding > 1 % of the paid upcapital of the CompanySr.NoNameAs atDecember 31, 2009No. ofsharesAs atDecember 31, 2008% No. ofshares1. Ebito Chemiebeteiligungen AG 8167080 30.63 8167080 30.632. Clariant International AG 6075000 22.79 6075000 22.793. Clariant Participations AG 2660000 9.98 2660000 9.984. UTI (thru its various schemes) 572000 2.15 566297 2.125. Finquest Securities Pvt. Ltd.(Held under 4 folios)%535766 2.01 Nil Nil6. UTI Master Value Fund 264243 0.99 289071 1.088.12 Distribution of shareholdings as at December 31, 2009No. of equity sharesheldShareholdersEquity Shares heldNumbers % No. of shares %1 – 500 28190 91.956 2836121 10.638501 – 1000 1436 4.684 1069610 4.0121001 – 2000 575 1.876 833575 3.1272001 – 3000 157 0.512 394096 1.4783001 – 4000 83 0.271 293416 1.1014001 – 5000 69 0.225 320948 1.2045001 – 10000 84 0.274 598984 2.24710001 & above 62 0.202 20313995 76.194Total 30656 100.000 26660745 100.0008.13 Dematerialisation of shares and liquidityNames of Depositories for dematerialisation of equityshares:Name of the DepositoryNational Securities Depositories Limited (NSDL)Central Depository Services (India) Limited (CDSL)ISIN No.INE492A01029INE492A01029Trading in equity shares of the Company is permitted only indematerialised form.8.14 ADRs/GDRs/WarrantsThe Company has not issued any GDRs/ADRs/Warrants orany other convertible instruments.8.15 Plant Locations:(i) The Company’s manufacturing facilities are located at(ii)(a)(b)(c)(d)Balkum Village, Thane-400 608 (Maharashtra)Kolshet Road, Thane-400 607 (Maharashtra)113/114, MIDC, A.V.P.O. Dhatav, Roha,Dist. Raigad-402 116 (Maharashtra)Kudikadu, P.O., Cuddalore-607 005 (Tamil Nadu)(e) Singhadivakkam Village, Kanchipuram-631 561(Tamil Nadu)The Company’s wholly owned subsidiary company’s(Chemtreat Composites India Private Limited) plantis located at Village Savaroli Survey No. 109,110, 112 Kharpada Road, Tal Khalapur, KhopoliDist. Raigad-410 203 (Maharashtra)9. Additional Information:9.1 Dividend for the year ended December 31, 2009:The final dividend recommended by the Board for the yearwill be paid after approval of shareholders at the forthcomingAnnual General Meeting to all those shareholders whosenames appear – in respect of shares held in demat form, asbeneficial owner, as per details furnished by the depositoriesas at the end of the business on April 12, 2010 and


Report on Corporate Governance29In respect of shares held in physical form as members in theregister of members of the Company after giving effect to allvalid share transfers lodged with the share transfer agenton or before April 12, 2010. The Company will dispatch thedividend warrants on or after April 24, 2010.9.2 Unpaid / Unclaimed Dividend:In terms of the amended provisions of Section 205C of theCompanies Act, 1956 the Company is obliged to transferdividends which remain unpaid or unclaimed for the periodof seven years from the date of declaration of dividendto the credit of the Investor Education and ProtectionFund established by the Central Government. Accordingly,the Company has transferred unpaid/unclaimed dividendup to the financial year 2001-2002 to the fund and no claimshall lie against the Company or the fund in respect ofdividends remaining unclaimed or unpaid and transferred tothe Fund.Members are hereby informed that the seven years periodfor payment of the dividend pertaining to financial year2002-2003 will expire on 24.07.2010 and thereafter theamount standing to the credit in the said account will betransferred to the ‘Investor Education and Protection Fund’ ofthe Central Government. Members are therefore requestedto encash the dividend at the earliest.Dates of transfer of unclaimed dividend to the FundFinancial Year/periodDate of PaymentDate of completion ofseven years2002-2003 25.07.2003 24.07.20102003-2004 30.07.2004 29.07.20112004-2005 29.07.2005 28.07.20122005-2006 27.07.2006 26.07.2013April-Dec. 2006 19.04.2007 18.04.20142007 17.04.2008 16.04.20152008 29.04.2009 28.04.20162009 (Interim) 24.07.2009 23.07.20169.4 Nomination Facility:A member can nominate a person who shall have rightsto shares and/or amount payable in respect of sharesregistered in his name in the event of his death. This facilityis available to the members of the Company. The saidform can be obtained from the Company’s Share transferagent or downloaded from the website of the Companyat www.clariant.in9.5 Consolidation of folios and avoidance of multiplefolios:Members having multiple folios are requested to consolidatetheir folios into single folio and for this purpose send requestalong with the original certificates along with a request tothe Share Transfer Agent specifying the folio number underwhich they desire to hold the shares.9.6 ComplianceThe Company has complied with all requirements ofregulatory authorities. No penalties/strictures were imposedon the Company by stock exchanges or SEBI or any statutoryauthority on any matter related to capital market during thelast three years.10. CEO/CFO CertificationThe Vice-Chairman & Managing Director and the DirectorFinance & Company Secretary have provided annualcertificate on financial reporting and internal controls tothe Board pursuant to clause 49. They have also providedquarterly certificates on financial results while placing thefinancial results before the Board pursuant to Clause 41.Mumbai, February 19, 2010On behalf of the Board of DirectorsR. A. ShahChairman9.3 Bank Mandate:Electronic Clearing Services (ECS) is a method of payment ofdividend whereby the amount due to investors can directlybe credited into their bank accounts, without having toissue paper instruments. It is fast and there is no scope forloss of dividend warrants in transit and possible fraudulentencashment.In case of shares held in physical form the bank details maybe sent to the registrar & share transfer agents. In case ofshares held in demat form, the bank details provided by theDepository Participant (DP) with whom the demat accountis maintained will be applicable. All previous instructionsgiven by you to the Company in respect of ECS and bankdetails will stand superseded by the ECS details recordedwith your DP.


30 Clariant Chemicals (India) LimitedAnnual Report 2009Auditors’ Certificate on Corporate GovernanceTo The Members of Clariant Chemicals (India) LimitedWe have examined the compliance of conditions of Corporate Governance by Clariant Chemicals (India) Limited, for the year endedDecember 31, 2009 as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchange(s).The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to proceduresand implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither anaudit nor an expression of opinion on the financial statements of the Company.In our opinion and to the best of our information and according to the explanations given to us and based on the representations made bythe Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated inthe above mentioned Listing Agreement.We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with whichthe Management has conducted the affairs of the Company.For Deloitte Haskins & SellsChartered AccountantsReg. No. 117365WA. C. KhannaPartnerMumbai, 19th February, 2010 Membership No.: 17814


31Auditors’ ReportTo the Members of Clariant Chemicals (India) Limited1. We have audited the attached Balance Sheet of Clariant Chemicals(India) Limited, as at December 31, 2009 and also the Profit andLoss Account and the Cash Flow Statement for the year endedon that date annexed thereto. These financial statements are theresponsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements based onour audit.2. We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that weplan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing theaccounting principles used and significant estimates made bythe management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.(d)(e)(f)in our opinion, the Balance Sheet, Profit and Loss Accountand Cash Flow Statement dealt with by this report complywith the Accounting Standards referred to in sub-section(3C) of Section 211 of the Companies Act, 1956;on the basis of the written representations received fromthe directors, as on December 31, 2009 and taken onrecord by the Board of Directors, we report that noneof the directors of the Company is disqualified as onDecember 31, 2009 from being appointed as a director,in terms of clause (g) of sub-section (1) of Section 274 ofthe Companies Act, 1956; andin our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by the CompaniesAct, 1956, in the manner so required and give a true andfair view in conformity with the accounting principlesgenerally accepted in India:3. As required by the Companies (Auditor’s Report) Order, 2003 (the‘Order’) issued by the Central Government of India in terms ofsub-section (4A) of Section 227 of the Companies Act, 1956, weenclose in the annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order to the extent applicable tothe Company.4. Further to our comments in the Annexure referred to in paragraph3 above, we report that:(i)(ii)(iii)in the case of the Balance Sheet, of the state ofaffairs of the Company as at December 31, 2009;in the case of the Profit and Loss Account, of theprofit of the Company for the year ended on thatdate; andin the case of the Cash Flow Statement, of the cashflows for the year ended on that date.(a)(b)(c)we have obtained all the information and explanations,which to the best of our knowledge and belief werenecessary for the purposes of our audit;in our opinion, proper books of account as required bylaw have been kept by the Company, so far as appearsfrom our examination of the books;the Balance Sheet, Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement withthe books of account;Mumbai: February 19, 2010For Deloitte Haskins & SellsChartered AccountantsRegistration No. 117365WA. C. KhannaPartnerMembership No. 17814


32 Clariant Chemicals (India) LimitedAnnual Report 2009Annexure to the Auditors’ Report[Referred to in paragraph 3 of the Auditors’ Report of even date to the members of Clariant Chemicals (India) Limitedon the financial statements for the year ended December 31, 2009.](i) (a) The Company has maintained proper records showingfull particulars including quantitative details andsituation of fixed assets.(b)(c)The Company has a programme of physical verificationof fixed assets. As per the said programme, certainassets were physically verified during the year. In ouropinion, the frequency of verification is reasonablehaving regard to the size of the Company and thenature of its assets. According to the information andexplanations given to us, no material discrepancieswere noticed on such verification.In our opinion, fixed assets disposed off during theyear were not substantial. Therefore, the provisionsof clause 4(i)(c) of the Order are not applicable tothe Company.(ii) (a) The inventories have been physically verified duringthe year by the management except for stocks lying atthird party locations for which confirmations have beenobtained and for goods-in-transit. In our opinion, thefrequency of verification is reasonable.(b)(c)The procedures of physical verification of inventoriesfollowed by the management are reasonable andadequate in relation to the size of the Company andthe nature of its business.In our opinion and according to the information andexplanations given to us, the Company is maintainingproper records of inventory. The discrepancies noticedon verification between the physical stocks and thebook records were not material and have been properlydealt with in the books of account.(iii) (a) As informed, the Company has not granted any loans,secured or unsecured to Companies, firms or otherparties covered in the register maintained underSection 301 of the Companies Act, 1956. Accordingly,sub-clause (b), (c) and (d) of clause 4(iii) of the Orderare not applicable.(iv)covered in the register maintained under Section 301of the Companies Act, 1956. Accordingly, sub-clause (f)and (g) of clause 4(iii) of the Order are not applicable.In our opinion and according to the information and explanationsgiven to us, having regard to the explanations that some of theitems purchased are of a special nature and suitable alternativesdo not exist for obtaining comparable quotations, there areadequate internal control systems commensurate with the sizeof the Company and the nature of its business with regard topurchases of inventory and fixed assets and with regard to thesale of goods and services. Further, the basis of our examinationand according to the information and explanations given to us,we have neither come across nor have we been informed ofany instance of major weaknesses in the aforesaid internalcontrol systems.(v) (a) In our opinion and according to the information andexplanations given to us, the particulars of contracts orarrangements referred to in Section 301 of the CompaniesAct, 1956 have been entered in the register required to bemaintained under that Section.(vi)(b)In our opinion and according to the information andexplanations given to us, the transactions made inpursuance of such contracts and arrangements enteredin the register maintained under Section 301 of theCompanies Act, 1956 have been made at the priceswhich are reasonable having regard to the prevailingmarket prices at the relevant time except in case of sometransactions where alternate source of supply did not existand therefore, no comparison of prices was possible.In our opinion and according to the information and explanationsgiven to us, the Company has complied with the provisions ofSections 58A, 58AA or any other relevant provisions of theCompanies Act, 1956 and the Companies (Acceptance of Deposits)Rules, 1975 with regard to the deposits accepted from the public.As informed to us, no order has been passed by the Company LawBoard or National Company Law Tribunal or Reserve Bank of Indiaor any Court or any other Tribunal.(b)According to the information and explanations givento us, the Company has not taken any loans, securedor unsecured, from companies, firms or other parties(vii)In our opinion, the Company has an internal audit systemcommensurate with the size of the Company and nature of itsbusiness.


Annexure to the Auditors’ Report33(viii)We have broadly reviewed the books of account maintained by theCompany pursuant to the Rules made by the Central Governmentfor the maintenance of cost records under Section 209(1)(d) ofthe Companies Act, 1956 and are of the opinion that prima faciethe prescribed records have been maintained and the prescribedaccounts are in the process of being made up. We have not,however, made a detailed examination of the records with a viewto determining whether they are accurate or complete.(ix) (a) According to the records of the Company, Provident Fund,Investor Education and Protection Fund, Employees’ StateInsurance, Income-tax, Sales-tax, Wealth tax, Service tax,Custom duty, Excise duty, Cess and other material statutorydues applicable to it have been generally regularlydeposited during the year with the appropriate authorities.According to the information and explanations given tous, no undisputed amounts payable in respect of abovewere in arrears, as at December 31, 2009 for a periodof more than six months from the date on which theybecame payable.(b)Name ofStatute(Nature ofDues)Sales Tax(Tax/ Penalty/Interest)According to the records of the Company, Income-tax,Sales-tax, Wealth tax, Service tax, Customs duty, Exciseduty and Cess as applicable which have not been depositedon account of dispute are as follows:Period towhich theamountRelates1992-93, 2001-02,2002-03, 2003-04CommissionarateForum where dispute is pendingAppellateauthorities& TribunalHighCourt(Rs. In Lakhs)TotalAmount354.25 – – 354.251999-00 – 17.88 – 17.881996-97,1997-98,1998-99– – 2.27 2.27Total 354.25 17.88 2.27 374.40The CentralExcise Act(Tax/ Penalty/Interest)1994-97, 2000-2001, 2004-2005,2006- 2007408.64 – – 408.641999-00, 2000-04 –- 33.75 – 33.75Total 408.64 33.75 – 442.39ServiceTax2005-06 0.52 – – 0.522004-05 – 5.12 – 5.12Total 0.52 5.12 – 5.64IncomeTax (Tax/Interest)A.Y. 1987-88,1992-93 , 1994-95,2000-01, 2001-02,2003-04,2004-05,2005-06 & 2006-07A.Y. 1995-96,2000-01, 2003-04602.23 – – 602.23– 248.15 – 248.15Total 602.23 248.15 – 850.38(x)The Company does not have any accumulated losses at the endof the financial year and has not incurred cash losses during(xi)(xii)(xiii)(xiv)(xv)(xvi)the financial year covered by our audit and in the immediatelypreceding financial year.In our opinion and according to the information and explanationsgiven to us, the Company has not defaulted in repayment of duesto financial institution, banks or debenture holders.Based on our examination of the records and the information andexplanations given to us, the Company has not granted any loansand advances on the basis of security by way of pledge of shares,debentures and other securities.In our opinion, the Company is not a chit fund or a nidhi/ mutualbenefit fund/ society. Therefore, the provisions of clause 4(xiii) ofthe Order are not applicable to the Company.In our opinion, the Company is not dealing in or trading in shares,securities, debentures and other investments. Accordingly, theprovisions of clause 4(xiv) of the Order are not applicable tothe Company.In our opinion and according to the information and explanationsgiven to us, the Company has not given any guarantees for loanstaken by others from banks or financial institutions.In our opinion and according to the information and explanationsgiven to us, no term loans were acquired during the reportingperiod by the Company.(xvii) According to the information and explanations given to us and onan overall examination of the balance sheet of the Company, wereport that no funds raised on short-term basis have been usedfor long-term investment.(xviii) According to the information and explanations given to us, theCompany has not made any preferential allotment of shares toparties and companies covered in the register maintained underSection 301 of the Companies Act, 1956.(xix)(xx)(xxi)The Company has not issued any secured debentures. Thereforethe provisions of clause 4(xix) of the Order are not applicable tothe Company.The Company has not raised any money by way of public issueduring the year. Therefore, the provisions of clause 4(xx) of theOrder are not applicable to the Company.According to the information and explanations given to us, nofraud on or by the Company has been noticed or reported duringthe course of our audit.Mumbai: February 19, 2010For Deloitte Haskins & SellsChartered AccountantsRegistration No. 117365WA. C. KhannaPartnerMembership No. 17814


34 Clariant Chemicals (India) LimitedAnnual Report 2009Balance Sheetas at 31st December, 2009Schedule31-12-09Rs. Lakhs31-12-08Rs. LakhsSOURCES OF FUNDSShareholders’ fundsShare capital 1 2666.07 2666.07Reserves and surplus 2 32113.18 29097.5534779.25 31763.62Loan fundsUnsecured loans 3 204.78 309.07204.78 309.07Deferred tax liability – Net (See note 6, Schedule 17) — 254.9434984.03 32327.63APPLICATION OF FUNDSFixed assets 4Gross block 34975.65 38797.09Less : Accumulated depreciation and impairment 21085.35 23390.54Net block 13890.30 15406.55Capital work-in-progress and advances, etc. 590.72 1053.8314481.02 16460.38Fixed assets held for disposal (See note 26, Schedule 17) 792.34 —Investments 5 12449.95 5784.47Deferred tax asset – Net (See note 6, Schedule 17) 275.72 —Current assets, loans and advancesInventories 6 7665.03 10543.98Sundry debtors 7 14459.63 13210.41Cash and bank balances 8 1696.62 842.31Loans and advances 9 6320.49 6397.9630141.77 30994.66Less : Current liabilities and provisionsLiabilities 10 16572.90 12844.86Provisions 11 6583.87 8067.0223156.77 20911.88Net current assets 6985.00 10082.7834984.03 32327.63Notes on balance sheet and profit and loss account 17Per our report attachedFor Deloitte Haskins & SellsChartered AccountantsA. C. KhannaPartnerMumbai, 19th February, 2010For and on behalf of the BoardR. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. Nanda DirectorB. L. Gaggar Director Finance & Company SecretaryMumbai, 19th February, 2010


35Profit and Loss Accountfor the year ended 31st December, 20092009Rs. Lakhs2008Rs. LakhsScheduleINCOMESales – Gross 97322.24 100145.34Less : Excise duty 5188.11 8505.87Sales – Net 92134.13 91639.47Other income 12 2630.82 2533.6894764.95 94173.15EXPENDITURECost of materials 13 54523.49 58150.05Personnel cost 14 6158.71 7229.91Interest (Net) 15 16.67 (18.29)Depreciation/Amortisation 4 1896.35 2251.60Impairment of fixed assets 4 136.98 728.62Other expenditure 16 14178.36 15842.8976910.56 84184.78Less : Service charges recovered 906.74 788.2376003.82 83396.55PROFIT BEFORE EXCEPTIONAL ITEMS AND TAXATION 18761.13 10776.60Exceptional items (See note 23, Schedule 17) 2450.46 48.00PROFIT AFTER EXCEPTIONAL ITEMS AND BEFORE TAXATION 16310.67 10728.60Provision for taxationCurrent tax 5958.00 3792.00Deferred tax (530.66) (178.29)Fringe benefit tax 39.00 118.50(Excess)/Short provision for taxation in respect of earlier years 30.77 248.09PROFIT AFTER TAXATION 10813.56 6748.30Balance brought forward from previous year 1097.40 950.36AVAILABLE FOR APPROPRIATION 11910.96 7698.66APPROPRIATED AS FOLLOWSGeneral reserve 1081.36 674.83Interim dividend 2666.07 —Proposed dividend (Final) 3999.11 5065.54Corporate tax on dividend (Interim & Final) 1132.75 860.89Balance carried to the balance sheet 3031.67 1097.4011910.96 7698.66Notes on balance sheet and profit and loss account 17Basic and Diluted earnings per share (Rupees) (See note 15, Schedule 17) 40.56 25.31Face value per share (Rupees) 10.00 10.00Per our report attached to the Balance SheetFor Deloitte Haskins & SellsChartered AccountantsA. C. KhannaPartnerMumbai, 19th February, 2010For and on behalf of the BoardR. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. Nanda DirectorB. L. Gaggar Director Finance & Company SecretaryMumbai, 19th February, 2010


36 Clariant Chemicals (India) LimitedAnnual Report 2009Cash Flow Statementfor the year ended 31st December, 2009A. CASH FLOW FROM OPERATING ACTIVITIES :2009Rs. Lakhs2008Rs. LakhsNet Profit after exceptional items and before taxation 16310.67 10728.60Adjustments for :Depreciation/Amortisation 1896.35 2251.60Impairment of fixed assets 136.98 728.62Unrealised foreign exchange (gain)/loss (Net) (32.89) 59.96Interest income (83.20) (171.67)Dividend income (407.90) (171.56)Loss/(profit) on sale of assets (Net) (80.31) (20.66)Loss/(profit) on sale of investments (Net) (0.21) (0.29)Provision for doubtful debts/advances (Net) 29.39 200.11Provision for leave encashment (126.69) 4.52Provision for ex-gratia gratuity (15.21) 4.24Provision for gratuity (186.30) 267.80Interest expenses 99.87 153.38Assets written-off 100.69 390.63Operating profit before working capital changes 17641.24 14425.28Adjustments for :Trade and other receivables (1050.90) 653.07Inventories 2878.95 727.06Trade, other payables and provisions 3693.84 (4447.67)Cash generated from operations 23163.13 11357.74Direct taxes paid – (Net of refunds) (6055.45) (3288.52)Net cash from operating activities 17107.68 8069.22B. CASH FLOW FROM INVESTING ACTIVITIES :Purchase of fixed assets (1005.00) (2669.18)Sale of fixed assets 138.31 49.71Purchase of investments (95164.44) (42571.83)Sale of investments 88499.17 39730.92Loans given to subsidiary (31.00) (75.00)Loans repaid by subsidiary 1.00 —Interest received 83.20 171.67Dividend received 407.90 171.56Net Cash used in investing activities (7070.86) (5192.15)


Cash Flow Statement37C. CASH FLOW FROM FINANCING ACTIVITIES :2009Rs. Lakhs2008Rs. LakhsRepayment of borrowings (104.29) (98.09)Interest paid (93.33) (147.17)Dividend/dividend tax paid (8984.89) (3109.75)Net Cash used in financing activities (9182.51) (3355.01)NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 854.31 (477.94)CASH AND CASH EQUIVALENTS AS AT BEGINNING OF THE YEAR 842.31 1320.25CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR (See note 3) (Refer Schedule 8) 1696.62 842.31Notes:1. The Cash flow has been prepared under the “Indirect Method” as set out in Accounting Standard – 3 on Cash flow statement notified by theCompanies (Accounting Standards) Rules, 2006.2. Direct taxes paid are treated as arising from operating activities and are not bifurcated between investing and financing activities.3. Cash and cash equivalents at the end of the year include current account balances with banks of Rs. 221.71 lakhs (Previous Year : Rs. 161.63 lakhs)which are restricted in use on account of unclaimed dividend/fixed deposit/interest on fixed deposit.4. Figures for the previous year have been regrouped wherever necessary to conform to the current year’s classification.Per our report attached to the Balance SheetFor Deloitte Haskins & SellsChartered AccountantsA. C. KhannaPartnerMumbai, 19th February, 2010For and on behalf of the BoardR. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. Nanda DirectorB. L. Gaggar Director Finance & Company SecretaryMumbai, 19th February, 2010


38 Clariant Chemicals (India) LimitedAnnual Report 2009Schedulesforming part of the Balance SheetSCHEDULE 1 : SHARE CAPITAL 31-12-09Rs. Lakhs31-12-08Rs. LakhsAuthorised30000000 equity shares of Rs. 10/- each 3000.00 3000.00Issued and subscribed26660745 equity shares of Rs. 10/- each fully paid 2666.07 2666.07Notes:Of the above :(a) 15010745 equity shares issued as fully paid up pursuant to a contract for a consideration other than cash.(b) 8167080 equity shares are held by EBITO Chemiebeteiligungen AG.6075000 equity shares are held by Clariant International AG.2660000 equity shares are held by Clariant Participations AG.The ultimate holding company being Clariant AG, Switzerland.(c) 6690610 equity shares were allotted as fully paid up bonus shares by capitalisation of Rs. 669.06 lakhs from general reserve.SCHEDULE 2 : RESERVES AND SURPLUS 31-12-09Rs. LakhsCapital reserve31-12-08Rs. LakhsAs per last Balance sheet 730.11 730.11Capital redemption reserveAs per last Balance sheet 137.50 137.50Securities premium accountAs per last Balance sheet 3545.65 3545.65Investment allowance reserveAs per last Balance sheet 20.00 20.00Less : Transfer to general reserve 20.00 —— 20.00General reserveAs per last Balance sheet 23566.89 22892.06Add : Transfer from Investment allowance reserve 20.00 —Transfer from Profit and loss account 1081.36 674.8324668.25 23566.89Profit and loss account 3031.67 1097.4032113.18 29097.55SCHEDULE 3 : UNSECURED LOANS 31-12-09Rs. LakhsFrom others:31-12-08Rs. LakhsInterest-free sales tax deferral scheme granted by State Industries Promotion Corporationof Tamil Nadu Limited (Repayable within one year Rs. 99.50 lakhs, Previous Year: Rs. 104.29 lakhs) 204.78 309.07204.78 309.07


Schedules forming part of the Balance Sheet39SCHEDULE 4 : FIXED ASSETSAs at31-12-08GROSS BLOCK DEPRECIATION / AMORTISATION / IMPAIRMENT NET BLOCKAdditions/AdjustmentsDeductions/AdjustmentsAs at31-12-09As at31-12-08Deductions/AdjustmentsFor theyearImpairment(See note 2)As at31-12-09As at31-12-09Rs. LakhsAs at31-12-08Tangible AssetsLand freehold 145.02 — — 145.02 — — — — — 145.02 145.02Land leasehold 14.88 — — 14.88 4.50 — 0.16 — 4.66 10.22 10.38Buildings 6771.07 299.06 4.91 7065.22 2313.36 1.77 171.48 136.98 2620.05 4445.17 4457.71Plant, machinery, equipment etc. 28909.15 1068.26 5013.19 24964.22 18878.89 4073.89 1550.35 — 16355.35 8608.87 10030.26Furniture, fixtures and officeappliances 2260.06 88.48 148.71 2199.83 1627.14 140.79 137.20 — 1623.55 576.28 632.92Vehicles 696.91 12.31 122.74 586.48 566.65 122.07 37.16 — 481.74 104.74 130.26Total 38797.09 1468.11 5289.55 34975.65 23390.54 4338.52 1896.35 136.98 21085.35 13890.30Previous year 36413.30 3398.81 1015.02 38797.09 21005.66 595.34 2251.60 728.62 23390.54 15406.55Capital work-in-progress 550.23 1030.37Advances against capital orders 40.49 23.46590.72 1053.8314481.02 16460.38Notes:1. Buildings include Rs. 0.12 lakh (Previous Year : Rs. 0.12 lakh) being the cost of shares and bonds in co-operative housing societies.2. In accordance with the provisions of the Accounting Standard – 28 on Impairment of Assets notified by the Companies (Accounting Standards) Rules 2006, the Company has identifiedcertain fixed assets that were impaired mainly on account of economic performance and viability of such assets which does not have any value in use. Accordingly during current year animpairment loss of Rs. 136.98 lakhs in respect of Dyes and Specialty Chemicals segment (Rs. 12.47 lakhs) and Intermediates and Colours segment (Rs. 124.51 lakhs) has been recognisedin the profit and loss account. (Previous Year Rs. 728.62 lakhs in respect of Intermediates and Colours segment)SCHEDULE 5 : INVESTMENTS (AT COST) (Contd.) 31-12-09Rs. Lakhs31-12-08Rs. LakhsNon Trade – UnquotedLong TermIn Subsidiary Company500000 (Previous Year: 500000) fully paid equity shares of Rs. 10/- eachin Chemtreat Composites India Private Limited 325.00 325.00Total Long Term 325.00 325.00CurrentIn fully paid units of Rs. 10/- each9825217 (Previous Year : Nil) Birla Sun Life Saving Fund – Daily Dividend 983.19 —8883589 (Previous Year : Nil) HDFC Treasury Advantage Fund – Whole Sale Fund – Dividend-Daily 891.16 —4742864 (Previous Year : Nil) HDFC F R I F – STP – Whole Sale Fund – Dividend-Daily 478.12 —9776175 (Previous Year : Nil) DWS Ultra Short Term Fund – Dividend-Daily 979.37 —9019717 (Previous Year : Nil) DWS Cash Opportunity Fund – Dividend-Daily 904.16 —9695701 (Previous Year : Nil) JM Money Manager Fund – Super Plus Plan – Dividend-Daily 970.08 —4038543 (Previous Year : Nil) IDFC Money Manager Fund – Dividend-Daily 403.91 —9471776 (Previous Year : Nil) LIC MF Income Plus Fund – Dividend-Daily 947.18 —9197118 (Previous Year : Nil) LIC MF Saving Plus Fund – Dividend-Daily 919.71 —9847865 (Previous Year : Nil) LIC MF Floater Fund – Dividend-Daily 984.80 —


40 Clariant Chemicals (India) LimitedAnnual Report 2009SCHEDULE 5 : INVESTMENTS (AT COST) (Contd.) 31-12-09Rs. Lakhs31-12-08Rs. LakhsNil (Previous Year : 9346248) Birla Sun Life Short Term Fund – Institutional – Daily Dividend — 935.14Nil (Previous Year : 7999333) Fidelity Cash Fund – Institutional – Daily Dividend — 800.13Nil (Previous Year : 7754587) HDFC Liquid Fund Premium Plan – Dividend-Daily — 950.70Nil (Previous Year : 5571131) Reliance Medium Term Fund – Daily Dividend — 952.41In fully paid units of Rs. 100/- each863340 (Previous Year : Nil) ICICI Prudential Flexible Income Premium Plan Fund – Daily Dividend 912.85 —957923 (Previous Year : Nil) ICICI Prudential Floating Rate Plan D – Daily Dividiend 958.12 —In fully paid units of Rs. 1000/- each91249 (Previous Year : Nil) Reliance Money Manager Fund – Institutional Plan – Daily Dividend 913.53 —65341 (Previous Year : 89206) DSP BlackRock Floating Rate Fund – Institutional Plan – Daily Dividend 653.77 892.0622483 (Previous Year : Nil) UTI Floating Rate Fund STP – Daily Dividend 225.00 —Nil (Previous Year : 83357) TATA Liquid Super High Investment Fund – Daily Dividend — 929.03Total Current 12124.95 5459.47Total Investments – Unquoted 12449.95 5784.47Following are the Investments which have been purchased and sold during the year :January to December 2009Nos. Rs. LakhsNon trade Current – unquotedIn fully paid units of Rs. 10/- eachReliance Medium Term Fund DDR 9798769 1675.15Reliance Liquid Fund Treasury Plan I.P. DDR 23021439 3519.33Kotak Liquid Fund : Institutional Premium Plan DDR 26435819 3232.60Kotak Floater Long Term – Daily Dividend 19001414 1915.30Kotak Flexi Debt Fund – Daily Dividend 9537367 958.27Birla Sun Life Saving Fund Inst DDR 11422101 1142.99Birla Sun Life Short Term Fund DDR 166799 16.69Birla Sun Life Cash Plus Inst DDR 30607458 3066.71JM High Liquidiy Fund – Super Inst Plan Daily Dividend 32701851 3275.58JM Money Manager Fund – Super Plus Plan Daily Dividend 24681333 2469.44TATA Floater Fund – Daily Dividend 22027430 2210.58DWS Insta Cash Plus Fund – Institutional Plan DDR 30962987 3109.02DWS Ultra Short Term Fund – Institutional Plan DDR 12471955 1249.16ICICI Prudential MF Plan Super Institutional Plan Daily Dividend 38359058 3836.40ICICI Prudential MF Flexible Income Plan – Premium Daily Dividend 17761278 1877.99ICICI Prudential MF Floating Rate Fund Daily Dividend 9896815 989.89


Schedules forming part of the Balance Sheet41Following are the Investments which have been purchased and sold during the year : (Contd.)January to December 2009Nos. Rs. LakhsHDFC Cash Mangement Fund – Saving Plus – DDR 19417490 2065.32HDFC Cash Mangement Fund – Treasury Advantage Plan – Wholesale DDR 24687274 2476.50HDFC F R I F STF – Wholesale DDR 4959875 500.00HDFC Liquid Fund Premium Plan DDR 31033067 3804.59Canara Robeco Liquid Fund – I.P. – Daily Dividend 14698674 1475.89Canara Robeco Treasury Advantage Fund – I.P. – Daily Dividend 3870373 480.20Fidelity Cash Fund – I.P. – Daily Dividend 10815492 1081.82Fidelity Ultra Short Term Debt Fund – I.P. – Daily Dividend 19065377 1906.82IDFC Money Treasury Fund – I.P.C. – Daily Dividend 13954500 1395.66IDFC Money Treasury Fund – I.P.B. – Daily Dividend 29175520 2938.06IDFC Cash Fund – Super I.P.C – Daily Dividend 8998490 900.07IDFC Cash Fund – I.P. – Daily Dividend 37097892 3925.55SBI – SHF – Ultra Short Term Fund – I.P. – Daily Dividend 17816624 1782.55SBI – Magnum Insta Cash Fund – Daily Dividend 15543795 2603.63LIC Liquid Fund – DDR 40459389 4442.48LIC MF Income Plus Fund – DDR 8641648 864.16LIC MF Floater Rate S T Fund – DDR 16254850 1625.49FORTIS Money Plus Inst Plan Fund – DDR 10382401 1038.56FORTIS Overnight Fund – DDR 10287689 1029.08In fully paid units of Rs. 100 /- eachICICI Prudential MF Liquid Plan Super Institutional Plan – Daily Dividend 955874 956.08In fully paid units of Rs. 1000 /- eachTATA Treasury Manager Fund Ship – Daily Dividend 90536 914.70TATA Liquidity Management Ship Fund – Daily Dividend 182296 2031.73DSP BlackRock Floating Rate Fund – I.P. – Daily Dividend 151974 1520.55DSP BlackRock Cash Manager Fund – I.P. – Daily Dividend 214595 2146.17UTI Treasury Advantage Fund – I.P. – Daily Dividend 169324 1693.44UTI Liquid Cash Plan – I.P. – Daily Dividend 234959 2395.29UTI Floating Rate Fund STP DDR 49961 500.00


42 Clariant Chemicals (India) LimitedAnnual Report 2009SCHEDULE 6 : INVENTORIES 31-12-09Rs. Lakhs31-12-08Rs. LakhsAt lower of cost and net realisable value (As certified by the Management)Stores and spare parts 187.66 241.35Raw materials 2114.96 3281.75Packing materials 104.13 98.56Finished goods 4422.91 5718.63Work-in-progress 835.37 1203.697665.03 10543.98SCHEDULE 7 : SUNDRY DEBTORS 31-12-09Rs. Lakhs31-12-08Rs. LakhsSecured (Considered good)Over six months 5.68 9.02Other debts 1570.88 1349.061576.56 1358.08Unsecured (Considered good, unless otherwise stated)Over six months (Including doubtful debts Rs. 246.31 lakhs; Previous Year : Rs. 280.89 lakhs) 328.62 396.73Other debts 12800.76 11736.4913129.38 12133.22Less : Provision for doubtful debts 246.31 280.8914459.63 13210.41SCHEDULE 8 : CASH AND BANK BALANCES 31-12-09Rs. Lakhs31-12-08Rs. LakhsCash on hand 4.18 6.63Cheques on hand 49.27 82.05With scheduled banks:On current accounts 1010.83 582.13On fixed deposit accounts 632.34 171.501643.17 753.631696.62 842.31


Schedules forming part of the Balance Sheet43SCHEDULE 9 : LOANS AND ADVANCES 31-12-09Rs. Lakhs31-12-08Rs. Lakhs(Unsecured – Considered good, unless otherwise stated)Advances and loans to the subsidiary (See note 25, Schedule 17) 688.35 709.47Advances recoverable in cash or in kind or for value to be received 3517.98 3672.17Less : Provision for doubtful advances 63.97 —3454.01 3672.17VAT set off admissible 99.67 52.51Advance payment of Income tax (Net of provision for taxation) 1768.95 1648.55Balances with customs and excise on current account 309.51 315.266320.49 6397.96SCHEDULE 10 : CURRENT LIABILITIES 31-12-09Rs. LakhsSundry creditors :31-12-08Rs. LakhsDue to micro enterprises and small enterprises (See Note 7, Schedule 17) 361.14 82.25Due to others 14127.02 11157.1314488.16 11239.38Deposits 1863.03 1443.85Unpaid dividends* 221.61 160.90Unclaimed fixed deposits* 0.06 0.15Unpaid interest on matured fixed deposits* 0.04 0.5816572.90 12844.86* There is no amount due and outstanding to be credited to Investor Education and Protection FundSCHEDULE 11 : PROVISIONS 31-12-09Rs. Lakhs31-12-08Rs. LakhsEmployee benefits:Leave encashment 365.02 491.71Gratuity 200.73 387.03Ex-gratia gratuity 69.21 84.42Others:Provision for taxation (Net of advance payment of Income tax) 1270.15 1177.43Proposed dividend (Final) 3999.11 5065.54Corporate tax on proposed dividend (Final) 679.65 860.896583.87 8067.02


44 Clariant Chemicals (India) LimitedAnnual Report 2009Schedulesforming part of the Profit and Loss AccountSCHEDULE 12 : OTHER INCOME 2009Rs. Lakhs2008Rs. LakhsDividend on current non-trade investments 407.90 171.56Export incentives 420.13 482.72Profit on sale of fixed assets (Net) 80.31 20.66Cash discounts 39.40 36.15Rental income 398.25 364.66Indenting commission 589.29 634.52Profit on sale of current investments (Net) 0.21 0.29Miscellaneous 695.33 823.122630.82 2533.68SCHEDULE 13 : COST OF MATERIALS 2009Rs. Lakhs2008Rs. LakhsRaw materials consumed 38450.19 42048.52Packing materials consumed 2275.54 2204.63Purchases of finished goods 12133.72 13003.39(Increase)/Decrease in stocks of finished goods and work-in-progress :Opening stockFinished goods 5718.63 6625.64Work-in-progress 1203.69 1190.196922.32 7815.83Less : Closing stockFinished goods 4422.91 5718.63Work-in-progress 835.37 1203.695258.28 6922.321664.04 893.5154523.49 58150.05SCHEDULE 14 : PERSONNEL COST 2009Rs. Lakhs2008Rs. LakhsSalaries, wages, bonus, etc. 4677.67 5256.71Contribution/Provision for provident fund, superannuation scheme, gratuity fund, etc. 551.95 1028.20Welfare expenses 929.09 945.006158.71 7229.91


Schedules forming part of the Profit & Loss Account45SCHEDULE 15 : INTEREST (NET) 2009Rs. Lakhs2008Rs. LakhsInterest PaidOthers 99.87 153.3899.87 153.38Less : Interest received (Gross) :Others (Tax deducted at source Rs. 12.69 Lakhs; Previous Year : Rs. 7.71 Lakhs) 83.20 171.6783.20 171.6716.67 (18.29)SCHEDULE 16 : OTHER EXPENDITURE 2009Rs. Lakhs2008Rs. LakhsStores and spare parts etc. consumed 605.63 597.94Repairs and maintenance:Plant and machinery 707.88 886.37Buildings 218.64 216.51Others 153.33 176.59Power and fuel 4574.37 4464.92Rent (including lease payments) (See note 16, Schedule 17) 555.90 582.10Rates and taxes (including water charges) 516.03 658.00Insurance 69.27 109.83Clearing, forwarding and transport 1309.07 1490.65Travelling and conveyance 873.15 962.82Commission 175.82 250.64Cash discount 11.76 22.37Other discounts on sales 684.65 1324.79Assets written-off 100.69 390.63Provision for doubtful debts/advances (Net) 29.39 200.11Excise duty (324.39) (376.11)Exchange loss (Net) 162.28 172.63Miscellaneous (See note 18, Schedule 17) 3754.89 3712.1014178.36 15842.89


46 Clariant Chemicals (India) LimitedAnnual Report 2009NotesSCHEDULE 17 : Notes on the Balance Sheet and Profit and Loss Account for the year ended 31st December, 20091. Significant Accounting PoliciesThe financial statements are prepared at historical cost on the accrual basis of accounting and in accordance with the standards on accountingnotified by the Companies (Accounting Standards) Rules, 2006 and referred to in Section 211(3C) of the Companies Act, 1956.The significant accounting policies are as follows :I. Revenue RecognitionII.III.IV.The Company recognises sale of goods on transfer of significant risks and rewards of ownership of the goods to the buyer. Sales arenet of excise duty, sales tax and trade discounts, wherever applicable.Dividend income on investments is accounted for when the right to receive the payment is established.Excise DutyExcise duty payable on products is accounted for at the time of despatch of goods from the factories but is accrued for stocks held atthe year end.Excise Duty related to the difference between the closing stock and opening stock of finished goods has been recognised separately inthe profit and loss account under schedule of ‘Other Expenditure’.Research and DevelopmentRevenue expenditure on research and development is written off in the profit and loss account in the year in which it is incurred. Capitalexpenditure on research and development is treated in the same way as expenditure on fixed assets.Employee Benefits(a)Short term employee benefit obligations are estimated and provided for.(b) Post employment benefits and other long term employee benefits :Defined contribution plans :Company’s contribution to provident fund, superannuation fund, employee state insurance and other funds are determined underthe relevant schemes and/or statute and charged to revenue.Defined benefit plans and compensated absences :Company’s liability towards gratuity, ex-gratia gratuity and compensated absences are actuarially determined at each balancesheet date using the projected unit credit method. Actuarial gains and losses are recognised in revenue.V. Voluntary Retirement SchemeVI.Expenditure incurred on voluntary retirement scheme is charged to revenue in the year in which it is incurred.Fixed Assets and Depreciation/Amortisation(a)(b)(c)(d)All fixed assets are stated at cost less depreciation, wherever applicable. Cost comprises the purchase price and any otherattributable cost of bringing the asset to its working condition for its intended use. Borrowing cost relating to funds borrowedfor acquisition of qualifying assets for the year upto the date the assets are put to use is included in cost.The cost of leasehold land is amortised over the period of the lease.Intangible assets are being amortised equally over a period of three years.Depreciation has been calculated on the straight line method at the rates and in the manner specified in Schedule XIV of theCompanies Act, 1956 except for :(i) certain items of furniture, fixture, air conditioners, plant, machinery and equipment on which a depreciation rate of 20%on straight line method is applied,


Notes47VII.VIII.IX.(e)(ii)(iii)electronic data processing (EDP) hardware such as servers on which a depreciation rate of 20% and for other EDPequipments including personal computers and printers on which depreciation rate of 25% on straight line method is applied,Motor Cars on which depreciation rate of 25% on straight line method is applied.Fixed Assets held for disposal are stated at lower of net book value and net realisable value.Impairment of AssetsThe carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based oninternal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its estimated recoverableamount. The recoverable amount is greater of the asset’s net selling price and value in use. In assessing the value in use, the estimatedfuture cash flows are discounted to the present value using the weighted average cost of capital. Previously recognised impairment lossis further provided or reversed depending on changes in circumstances.InventoriesInventories are valued at the lower of cost and estimated net realisable value after providing for obsolescence. The cost of inventoriesis generally arrived at on the following basis :Raw materials, packing materials, trading items and stores and spares – Weighted average costFinished goods and work-in-progress – Absorption costing at works costSundry Debtors/Loans and AdvancesSundry debtors and loans and advances are stated after making adequate provision for doubtful debts/advances.X. InvestmentsXI.XII.XIII.XIV.Long term investments are stated at cost less provision for diminution in value, other than temporary. Current investments are statedat the lower of cost and fair value. Dividends are accounted for when the right to receive the dividend payment is established.LeasesLeases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified asoperating leases. Operating lease payments are recognised as an expense in the Profit and Loss Account on a straight-line basis overthe lease term.Foreign Currency Translations(a)(b)(c)Monetary items denominated in foreign currency are translated at the exchange rate prevailing on the last day of the accountingyear. In respect of items covered by forward contracts, the premium or discount arising at the inception of such a forwardexchange contract is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellationof such a forward exchange contract is recognised as income or expense for the period. Foreign currency transactions areaccounted at the rate prevailing on the date of transaction.Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using theexchange rate at the date of transaction.Income TaxGain or loss arising out of translation/conversion is taken credit for or charged to the Profit and Loss Account.Income-tax expense comprises current tax and deferred tax charge or credit. The current tax is determined as the amount of taxpayable in respect of the estimated taxable income for the year. The deferred tax charge or credit is recognised using prevailingenacted or substantively enacted tax rates. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets arerecognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extentthere is reasonable certainty of realisation in future. Deferred tax assets/liabilities are reviewed at each Balance Sheet date based ondevelopments during the year and available case laws, to reassess realisation/liabilities.Contingencies/ProvisionsProvision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resourcesembodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisionsexcept in respect of employee benefits are not discounted to its present value and are determined based on best estimate of theexpenditure required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjustedto reflect the current best estimate. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying theeconomic benefit is remote.


48 Clariant Chemicals (India) LimitedAnnual Report 20092. Segment Information for the year ended 31st December, 2009 (As required by Accounting Standard (AS) – 17 Segment Reporting) :(a) The Company is organised into two primary business segments mainly :(i)(ii)Intermediates and Colours : Includes pigment dyestuffs and their dispersion, Intermediates for dyes, pesticides andpharmaceuticals and masterbatches for plastics and nylon fibers.Dyes and Specialty Chemicals : Includes dyestuff synthetic resins, binder materials, auxiliaries and chemicals.(b) The secondary segments of the Company are geographical segments mainly :(i)(ii)IndiaOutside India(c)Segments have been identified and reported taking into account the nature of products and services, the differing risk and returns, theorganisation structure, and the internal financial reporting system.(d) (i) Segment Revenue and Results :The expenses which are not directly attributable to the business segment are shown as unallocated corporate cost.(ii) Segment assets and liabilities :Segment assets include all operating assets used by the business segment and consist principally of fixed assets, debtors andinventories. Segment liabilities primarily include creditors and other liabilities.(iii)Assets and liabilities that cannot be allocated among the segments are shown as a part of unallocable corporate assets andliabilities respectively.Information about Primary Business Segments : (Contd.)Intermediates& Colours*2009Rs. LakhsDyes andSpecialtyChemicalsTotalIntermediates& Colours*2008Rs. LakhsDyes andSpecialtyChemicalsRevenue (Net)External Sales/Revenue 39266.95 52867.18 92134.13 40169.07 51470.40 91639.47ResultsSegment Results 8477.04 10694.37 19171.41 4704.42 7026.57 11730.99Unallocated Corporate Expenses (Net) (801.51) (1144.24)Operating Profits 18369.90 10586.75Interest Income/Dividend income 491.10 343.23Interest Expenses (99.87) (153.38)Profit Before Exceptional Items and Taxation 18761.13 10776.60Exceptional Items (See note 23, Schedule 17) (2450.46) (48.00)Profit Before Taxation After Exceptional Items 16310.67 10728.60Current Tax/Deferred Tax (5427.34) (3613.71)Fringe benefit Tax (39.00) (118.50)Short provision for taxation in respect of earlier years (30.77) (248.09)Profit After Tax 10813.56 6748.30Other InformationSegment Assets 19429.34 19802.95 39232.29 20989.52 21564.60 42554.12Unallocated Corporate Assets 16863.84 9036.84Total Assets 56096.13 51590.96Segment Liabilities 6597.21 8997.45 15594.66 4585.83 8026.18 12612.01Unallocated Corporate Liabilities 1817.98 1505.08Total Liabilities 17412.64 14117.09Total


Notes49Information about Primary Business Segments : (Contd.)Intermediates& Colours*2009Rs. LakhsDyes andSpecialtyChemicalsTotalIntermediates& Colours*2008Rs. LakhsDyes andSpecialtyChemicalsCapital Expenditure 668.46 322.11 990.57 1413.84 1220.14 2633.98Unallocated Corporate Capital Expenditure 14.43 35.20Total Capital Expenditure 1005.00 2669.18Depreciation/Amortisation 1008.70 818.63 1827.33 1132.43 1032.82 2165.25Impairment of Fixed Assets 124.51 12.47 136.98 728.62 — 728.62Unallocated Corporate Depreciation 69.02 86.35Total Depreciation/Amortisation/Impairment 2033.33 2980.22Non Cash Expenses other thanDepreciation/Amortisation/Impairment 61.72 63.93 125.65 541.04 296.07 837.11Unallocated Corporate Non Cash Expenses otherthan Depreciation/Amortisation/Impairment 64.28 33.20Total Non Cash Expenses other thanDepreciation/Amortisation/Impairment 189.93 870.31Information about Secondary Segments :India2009Rs. LakhsOutsideIndia2008Rs. LakhsTotal India OutsideIndiaExternal Sales 75032.64 17101.49 92134.13 72991.30 18648.17 91639.47Segment Assets 35612.25 3620.04 39232.29 39578.46 2975.66 42554.12Additions to Fixed Assets 990.57 — 990.57 2633.98 — 2633.98Notes :1. Total Assets exclude the following :(a) Advance payment of Income Tax Rs. 1768.95 lakhs (Rs. 1648.55 lakhs)(b) Deferred Tax Assets (Net) Rs. 275.72 lakhs (Rs. Nil)2. Total Liabilities exclude the following :(a) Proposed Dividend Rs. 3999.11 lakhs (Rs. 5065.54 lakhs)(b) Corporate Tax on proposed dividend Rs. 679.65 lakhs (Rs. 860.89 lakhs)(c) Provision for Taxation Rs. 1270.15 lakhs (Rs. 1177.43 lakhs)(d) Deferred Tax Liability (Net) Rs. Nil (Rs. 254.94 lakhs)* Products hitherto reported under “Masterbatches” segment is now reported under “Intermediates & Colours” segment since the products aresimilar in nature.TotalTotal3. Related Party Disclosure as required by AS-18 “Related Party Disclosures” are given below :Relationship :(a) Holding Company :EBITO Chemiebeteiligungen AG, Clariant International AG and Clariant Participations AG, together hold 63.40% equity shares in theCompany, the ultimate holding company being Clariant AG, Switzerland.(b) Subsidiary of the Company :The Company has subsidiary Chemtreat Composites India Pvt. Ltd. – 100% shareholding.


50 Clariant Chemicals (India) LimitedAnnual Report 2009(c) Other related parties in the Clariant group where common control exists and with whom the company has transactions :Fellow Subsidiary Companies :Clariant (Argentina) SAClariant Masterbatches (Italia) S.p.A.Clariant (Australia) Pty. Ltd.Clariant Masterbatches (Shanghai) Ltd.Clariant (Canada) Inc.Clariant Masterbatches (Thailand) Ltd.Clariant (China) Ltd.Clariant Masterbatches Benelux SAClariant (Colombia) SAClariant Masterbatches HuningueClariant (Egypt) SAEClariant Masterbatches Ireland LimitedClariant (Gulf) FZEClariant Masterbatches Norden ABClariant (Japan) K.K.Clariant Masterbatches UK Ltd.Clariant (Korea) Ltd.Clariant Oil Services UK Ltd.Clariant (Malaysia) Sdn BhdClariant Pigments (Korea) Ltd.Clariant (Maroc) S.A.Clariant Pigments (Tianjin) Ltd.Clariant (Mexico) S.A. de C.V.Clariant Prodotti (Italia) S.p.A.Clariant (Pakistan) Ltd.Clariant Production (France)Clariant (Singapore) Pte. Ltd.Clariant Production UK Ltd.Clariant (Thailand) Ltd.Clariant Produkte (Deutschland) GmbHClariant (Tianjin) Ltd.Clariant Produkte (Schweiz) AGClariant (Uruguay) SAClariant S.A.Clariant Chemicals (China) Ltd.Clariant Southern Africa (Pty.) Ltd.Clariant Chemicals (Taiwan) Co., Ltd.Clariant Specialty Chemicals (Zhenjiang) Co., Ltd.Clariant Colorquímica (Chile) Ltd.Clariant Specialty Fine Chemicals (France)Clariant CorporationClariant Trading (China) Ltd.Clariant Distribution UK Ltd.Clariant Venezuela, S.A.Clariant Distribuzione (Italia) S.p.A.Dick Peters B.V.Clariant Export AGK.J. QuinnClariant Ibérica Producción S.A.PT Clariant IndonesiaClariant Masterbatch Ibérica S.A.Clariant (Türkiye) Boya ve Kimyevi Maddeler Sanayi ve Ticaret A.S.Clariant Masterbatches (Deutschland) GmbH(d) Key Management Personnel :H. Meier : Vice-Chairman & Managing Director (upto 31.12.2009)During the year following transactions were entered into with related parties : (Contd.)(i) Holding Company, Subsidiary Company and Fellow Subsidiaries : (Contd.)2009Rs. Lakhs2008Rs. LakhsHolding Company :Transactions during the year :Clariant International AGSale of goods 1501.15 1742.65Purchase of goods 9234.75 7673.84Services rendered 377.62 324.08Services received 699.34 644.13Dividend paid 1761.75 607.50Expenses recovered 1.51 19.46EBITO Chemiebeteiligungen AGDividend Paid 2368.46 816.71Clariant Participations AGDividend Paid 771.40 266.00Balances outstanding as at the year end :Amount payable 1142.51 984.03Amount receivable 449.12 676.53Subsidiary Company :Transactions during the year :Chemtreat Composites India Pvt. Ltd.Sale of goods — 0.41Sale of capital goods — 16.87Purchase of goods — 0.20Services rendered 115.94 115.00Loan given during the year 31.00 75.00Loan repaid during the year 1.00 —Amount receivable 688.35 709.47


Notes51During the year following transactions were entered into with related parties : (Contd.)(i) Holding Company, Subsidiary Company and Fellow Subsidiaries : (Contd.)2009Rs. Lakhs2008Rs. LakhsFellow Subsidiaries :Transactions during the year :Sale of goodsClariant Produkte (Deutschland) GmbH 1419.66 2338.86Clariant Corporation 1157.42 2158.91Clariant (China) Ltd. 2895.33 1524.41PT Clariant Indonesia 1170.42 811.89Others 4369.00 3944.64Purchase of goodsClariant (Tianjin) Ltd. 51.95 170.67Clariant (China) Ltd. 771.38 1008.24Clariant Corporation 44.82 127.58Others 474.29 211.87Purchase of capital goodsClariant Masterbatches (Deutschland) GmbH 5.27 170.08Clariant Masterbatches (Italia) S.p.A. 10.00 23.34Clariant Production UK Ltd. 2.97 —Sale of capital goodsClariant Produkte (Deutschland) GmbH 50.47 —Services rendered and othersClariant Export AG 308.38 283.67Clariant Produkte (Deutschland) GmbH 0.54 70.55Others 40.52 44.70Expenses recoveredClariant Produkte (Deutschland) GmbH — 4.49PT Clariant Indonesia 0.22 —Clariant (Singapore) Pte. Ltd. 0.05 —Others — 0.78Services received and othersPT Clariant Indonesia 18.49 8.19Clariant (Singapore) Pte. Ltd. 20.67 29.65Clariant Southern Africa (Pty.) Ltd. 27.35 8.86Clariant Produkte (Deutschland) GmbH — 8.93Clariant S.A. — 10.51Clariant (Gulf) FZE 11.37 2.77Others 16.55 17.83Expenses reimbursedPT Clariant Indonesia 0.76 —Clariant (Malaysia) Sdn Bhd 1.63 —Balances outstanding as at the year end :Amount payable 424.20 520.37Amount receivable 2453.27 1441.32(ii) Key Management Personnel :Remuneration 217.09 164.97Payable balance 67.58 26.75


52 Clariant Chemicals (India) LimitedAnnual Report 20094. Contingent liabilities not provided for :31-12-2009Rs. Lakhs31-12-2008Rs. LakhsI. (a) in respect of income tax mattersdecided against the Company, in respect of which the Company is in further appeal 1458.40 856.16decided in favour of the Company against which the department is in appeal 14.78 14.78(b) in respect of sales tax matters 578.58 494.22(c) in respect of excise matters 448.03 455.66(d) in respect of bills of exchange discounted with banks1119.58 29.60[since realised Rs. 778.63 lakhs (Rs. 17.73 lakhs)](e) Other matters in dispute 2.25 2.25(f) Disputed Labour matters – Amount not ascertainedIn respect of items (a) to (c), (e) & (f) future cash outflows in respect of contingent liabilities is determinable only on receipt of judgementspending at various forums/authorities.II. On 15th February 2005, the Company had received an order of the Tahsildar, Thane demanding Rs. 120.70 lakhs for the lease of land toThane Municipal Corporation, Fire Brigade and Maharashtra State Electricity Board without obtaining prior permission in writing againstwhich the Company had filed a writ petition on 23rd February 2005 before the Bombay High Court. The Hon’ble High Court has grantedinterim stay in terms of the petition on 14th July 2005.31-12-2009Rs. Lakhs31-12-2008Rs. Lakhs5. Estimated amount of contracts remaining to be executed on capital account and notprovided for 134.25 148.316. Deferred Taxes :The major components of deferred tax assets and deferred tax liabilities are set out below :31-12-2009Rs. Lakhs31-12-2008Rs. LakhsDeferred Tax Assets(a) Provision for doubtful debts 105.50 95.50(b) Provision for retirement benefits 215.89 327.47(c) Expenses allowable for tax purposes when paid 53.54 53.54(d) Integration expenses 15.74 78.70(e) Payment/Provision for Voluntary retirement scheme 1184.64 552.46(f) Others — 1.231575.31 1108.90Deferred Tax LiabilitiesDepreciation/Amortisation/Impairment (1299.59) (1363.84)Deferred Tax Assets/(Liabilities) – Net 275.72 (254.94)7. Disclosure required under the Micro, Small and Medium Enterprises DevelopmentAct, 2006 (the Act) are given as follows :31-12-2009Rs. Lakhs31-12-2008Rs. Lakhs(a) Principal amount due 361.14 82.25Interest due on the above — —(b) Interest paid during the year beyond the appointed day — —(c) Amount of interest due and payable for the period of delay in making payment withoutadding the interest specified under the Act — —(d) Amount of interest accrued and remaining unpaid at the end of the year — —(e) Amount of further interest remaining due and payable even in the succeeding years,untill such date when the interest dues as above are actually paid to the smallenterprise for the purpose of disallowance as a deductible expenditure underSection 23 of the Act — —The above information and that given in Schedule-10 ‘Current Liabilities’ regarding microenterprises and small enterprises has been determined on the basis of information availablewith the Company. This has been relied upon by the auditors. No Interest has been accruedfor delayed payments, if any.


Notes538. Disclosure in respect of Derivative Instruments :The Company uses Forward Exchange Contracts to hedge its exposure in foreign currency. The information on derivative instruments is as follows :(a)(b)Amount inforeign currency31-12-2009 31-12-2008Amount Amount inRs. Lakhs foreign currencyAmountRs. LakhsForward Exchange Contracts outstanding as atCurrencyUSD/INR (Sale) 750000 350.53 500000 251.03EUR/INR (Purchase) 200000 135.60 — —Foreign currency exposures not covered by a derivativeinstrument(i) Amount receivable on account of export of goods and services :CurrencyUSD 7195779 3354.49 5653335 2743.73EUR 207550 139.49 124555 85.12CHF 278569 126.06 320046 146.813620.04 2975.66(ii) Amount payable on account of import of goods and services :CurrencyUSD 1813887 843.96 2366286 1144.07EUR 1598195 1074.12 1618387 1106.89CHF 352103 159.33 337817 154.96GBP — — 14742 10.382077.41 2416.309. (a) Amount paid/payable by the Company to Directors (including Managing Director) as remuneration for services renderedin any capacity :2009Rs. Lakhs2008Rs. LakhsDirectors’ sitting fees 1.45 0.90Salaries 137.76 136.17Commission 36.75 34.75*Compensation for loss of office 40.83 —Provident fund 11.35 1.89Other perquisites and benefits in cash or in kind 0.40 0.16228.54 173.87* Actual paid during the year Rs. 25.49 lakhs and Rs. 9.26 lakhs reversed during the year.(b) Computation of net profit for commission payable to the Directors in accordance with Section 198 of the CompaniesAct, 1956 :2009Rs. Lakhs2008Rs. LakhsProfit after tax as per profit and loss account 10813.56 6748.30Add : Provision for taxation-Net 5497.11 3980.30Managerial remuneration 228.54 173.87Wealth tax 2.50 5.00Voluntary retirement scheme compensation 2810.46 48.00Impairment of fixed assets 136.98 728.62Provision for doubtful debts/advances (net) 29.39 200.118704.98 5135.9019518.54 11884.20Less : Profit on sale of investments 0.21 0.29Income from sale of flexible laminating adhesives business 360.00 —Capital Profit on sale of fixed assets 48.88 9.93409.09 10.22Net profit as per Section 198 19109.45 11873.98Commission :To Vice-Chairman & Managing DirectorRestricted to sum as determined by the Board of Directors. 26.75 26.75*To Directors who are not in whole-time employment of the Company @ 1% of net profiti.e. Rs. 191.09 lakhs (Rs. 118.74 lakhs)Restricted to sum as determined by the Board of Directors. 10.00 8.0036.75 34.75* Actual paid during the year Rs. 17.49 lakhs


54 Clariant Chemicals (India) LimitedAnnual Report 200910. Capacities and production :2009 2008Class of goodsAnnualInstalledAnnualInstalledCapacity ProductionCapacity ProductionM. Tonnes # M. Tonnes * # M. Tonnes # M. Tonnes * #(a) Intermediates and Colours 28027 15690 29455 20934(b) Dyes and Specialty Chemicals 66660 50201 63070 42979* Excluding captive consumption# At different concentrationsNotes :1. The classification between the class of goods and the installed capacities have been certified by the Vice-Chairman & ManagingDirector on which the auditors have placed reliance, this being a technical matter.2. Licensed capacity per annum not indicated due to the abolition of Industrial Licenses as per Notification No. 477(E) dated 25th July, 1991issued under The Industries (Development and Regulations) Act, 1951.11. Purchase of finished goods :2009 2008Class of goods Quantity Value Quantity ValueM. Tonnes * Rs. Lakhs M. Tonnes * Rs. LakhsTrading Items :Dyes, Chemicals, Pigments, Masterbatches, etc. 7241 12133.72 7528 13003.39* Includes 532 M. Tonnes (797 M. Tonnes) used for captive consumption.12. Raw materials consumed :2009 2008Quantity Value Quantity ValueM. Tonnes Rs. Lakhs M. Tonnes Rs. Lakhs(a) Acetic acid glacial 9777 2741.79 9831 3139.24(b) Others (None of the items individually35708.40 38909.28exceed 10% of the total value of rawmaterials consumed)38450.19 42048.52Note : Raw materials consumed have been arrived at after write down of certain items and excess/shortage on physical verification.13. Consumption of raw materials :2009 2008% of total Value % of total ValueConsumption Rs. Lakhs Consumption Rs. Lakhs(a) Raw materials :Imported 33.70 12956.32 31.79 13365.31Indigenous 66.30 25493.87 68.21 28683.21100.00 38450.19 100.00 42048.52(b) Components and spare parts referred to in Paragraph 4D (c) of Schedule VI of the Companies Act, 1956 are assumed to be incorporatedin the goods produced and not those used for maintenance of plant and machinery.14. Sales, Opening and Closing Stock :Class of goods Opening Stock Closing Stock Sales (inclusive ofexcise duty)QuantityM. TonnesValueRs. LakhsQuantityM. TonnesValueRs. LakhsQuantityM. TonnesValueRs. Lakhs(a) Intermediates and Colours 777 2774.40 564 1651.62 15903 39838.43(770) (2382.95) (777) (2774.40) (20927) (43478.44)(b) Dyes and Specialty Chemicals 1617 1458.51 1860 1265.37 49958 42855.95(2903) (2327.94) (1617) (1458.51) (44265) (40773.80)(c) Trading items (including dyes, chemicals,pigments, masterbatches, etc.) 828 1485.72 889 1505.92 6648 14627.86(1171) (1914.75) (828) (1485.72) (7074) (15893.10)5718.63 4422.91 97322.24(6625.64) (5718.63) (100145.34)


Notes552009Rs. Lakhs2008Rs. Lakhs15. Earnings per share :(a) Net profit after taxation 10813.56 6748.30(b) Number of equity shares outstanding 26660745 26660745(c) Basic and Diluted earnings per share (Rupees) 40.56 25.31(d) Face value per share (Rupees) 10.00 10.0016. Assets taken on lease on or after 1st April, 2001 :(a) In respect of operating leases, where lease agreements have been formally entered into,lease payments recognised in the profit and loss account for the year are as follows.Office premises, vehicles and computers 382.43 377.91(b) There are no restrictions such as those concerning dividends, additional debt and furtherleasing, imposed by the lease agreements entered into by the Company.(c) Contingent rent payments in respect of vehicles are dependent upon the excess ofactual usage, if any, over stipulated usage.(d) The total of future minimum lease payments under non-cancellable operating leases areas follows :For a period not later than one year 285.05 326.65For a period later than one year and not later than five years 254.37 343.68Total 539.42 670.3317. Expenditure on Research and Development :(a) Capital expenditure 3.36 9.93(b) Revenue expenditure charged to profit and loss account 224.20 323.29227.56 333.2218. Miscellaneous Expenses in Schedule 16 : Other expenditure include :Auditors’ remuneration and expenses : (Excluding Service tax)(a) Audit fees 22.00 22.00(b) Company law matters 0.15 —(c) Taxation services 0.23 —(d) Other services 28.20 32.25(e) Out-of-pocket expenses 0.45 0.1151.03 54.3619. Value of imports (C.I.F.) :(a) Raw materials and trading items 16908.62 19144.01(b) Components and spare parts 10.87 11.28(c) Capital goods 104.49 394.1920. Expenditure in foreign currency (subject to deduction of tax where applicable) :(a) Commission 177.65 142.98(b) Interest 6.58 57.22(c) Others (includes exchange loss) 1579.68 1483.8321. Remittance in foreign currency on account of dividend :Number of non-resident shareholders where direct remittances have been made by the Company 3 3Number of shares on which dividend is remitted 16902080 16902080Year to which dividend relates2009 (Interim) 1690.21 —2008 (Final) 3211.40 —2007 (Final) — 1690.2122. Earnings in foreign exchange :(a) Exports (F.O.B.) 16612.73 18185.95(b) Know-how 132.71 155.09(c) Sale of capital goods 50.47 —(d) Others (insurance, freight, commission, claims, exchange gain etc.) 1268.50 1392.9823. Exceptional items in Profit & Loss Account include :Termination benefits to Employees 2810.46 48.00Income from sale of flexible laminating adhesives business (360.00) —2450.46 48.00


56 Clariant Chemicals (India) LimitedAnnual Report 200924. Employee Benefits :2009Rs. Lakhs2008Rs. LakhsFunded Unfunded Funded Unfunded(a) Defined benefit Plans - As per Actuarial valuation as on December 31, 2009 :Gratuity(i) Expenses recognised in the statement of Profit and Loss Account for the year1. Current service cost 181.10 4.17 190.63 4.362. Interest cost 178.36 6.86 142.81 6.013. Expected return on plan assets (204.25) — (194.58) —4. Net actuarial (gain)/loss recognised during the year (133.86) 4.54 234.40 (5.81)5. Expense/(Income) recognised in profit & loss account 21.35 15.57 373.26 4.56[Gratuity expense/(income) have been recognised in Contribution/Provision for provident fund, superannuation scheme, gratuity fundetc. in “Personnel Cost” under Schedule 14](ii) Actual return on plan assets for the year1. Expected return on plan assets 204.25 — 194.58 —2. Actuarial gain/(loss) on plan assets (38.87) — 39.51 —3. Actual return on plan assets 165.38 — 234.09 —(iii) Net Asset/(Liability) recognised in the Balance Sheet as at the year end1. Present value of the defined benefit obligation 2342.20 69.21 2940.12 84.422. Fair value of plan assets 2141.47 — 2553.09 —3. Net Asset/(Liability) recognised in the balance sheet (200.73) (69.21) (387.03) (84.42)(iv) Change in defined benefit obligation during the year1. Present value of obligation at the beginning of the year 2940.12 84.42 2551.45 80.182. Current service cost 181.10 4.17 190.63 4.363. Interest cost 178.36 6.86 142.81 6.014. Benefits paid (784.65) (30.78) (218.68) (0.32)5. Actuarial (gain)/loss on obligation (172.73) 4.54 273.91 (5.81)6. Present value of obligation as at the end of the year 2342.20 69.21 2940.12 84.42(v) Changes in fair value of plan asset during the year1. Fair value of plan assets as at the beginning of the year 2553.09 — 2432.22 —2. Expected return on plan assets 204.25 — 194.58 —3. Contributions made 207.65 — 105.46 —4. Benefits paid (784.65) — (218.68) —5. Actuarial gain/(loss) on plan assets (38.87) — 39.51 —6. Fair value of plan assets as at the end of the year 2141.47 — 2553.09 —(vi) Major categories of Plan Assets as a percentage of total plan assets1. Central government securities 29.64% — 24.84% —2. State government securities 12.32% — 10.03% —3. Private sector bonds 20.90% — 15.21% —4. Special deposit scheme 25.54% — 21.69% —5. Cash at bank 1.15% — 1.10% —6. Investment in insurance companies 22.06% — 22.67% —7. Others (11.61%) — 4.46% —(vii) Actuarial assumptions1. Discount rate 8.0% 8.0% 7.0% 7.0%2. Expected Rate of return on plan assets 8.0% — 8.0% —3. Salary escalation 4.0%-6.0% 4.0%-6.0% 4.0%-6.0% 4.0%-6.0%(viii) Experience adjustments1. Experience adjustments on plan assets (38.87) — — —2. Experience adjustments on plan liabilities (49.77) 4.54 — —


Notes5724. Employee Benefits : (Contd.)(a)Defined benefit Plans - As per Actuarial valuation as on December 31, 2009 : (Contd.)2009Rs. Lakhs2008Rs. LakhsOther long term benefitsThe defined benefit obligations which are provided for but not funded are as under :Compensated Absence/Leave Salary 365.02 491.71(b) Gratuity is administered through duly constituted and approved independent trusts andalso through Group gratuity scheme with Life Insurance Corporation of India(c) Future salary increases considered in acturial valuation take in to account inflation,seniority, promotion and other relevant factors, such as supply and demand in theemployment market(d) Basis used to determine expected rate of return on plan assets :The expected rate of return on plan assets is based on market expectation, at thebeginning of the year, for returns over the entire life of the related obligation.(e) Accounting standard 15 (Revised 2005) "Employee Benefits" requires the disclosure ofexperience adjustments for past four years, however, the information is given only for thecurrent year.(f) During the year the Company has recognised the following amounts in the Profit & Lossaccount in Schedule 14 :Salaries, wages, bonus includes compensated absences 49.17 93.02Contribution/Provision for provident fund, superannuation scheme, gratuity fund etc. includes :Provident Fund & Family Pension 275.30 278.81Superannuation Fund 239.24 370.57Gratuity Fund 36.92 377.82Other funds 0.49 1.0025. Advances and loans to the subsidiary of Rs. 688.35 lakhs (Rs. 709.47 lakhs) is due from Chemtreat Composites India Private Ltd. Maximumamount due during the year Rs. 750.22 lakhs (Rs. 786.22 lakhs). This amount is interest free and repayable on demand.26. The Company has entered into an agreement with Laxmi Organic Industries Ltd. on May 15, 2009 for the sale of its business of Diketene anddownstream intermediate products together with removable plant and equipment. On receipt of full consideration, the transaction has beenconcluded in January 2010.27. Figures for the previous year have been regrouped wherever necessary to conform to the current year’s classification.28. The figures in brackets are those in respect of the previous accounting year.For and on behalf of the BoardR. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. Nanda DirectorB. L. Gaggar Director Finance & Company SecretaryMumbai, 19th February, 2010


58 Clariant Chemicals (India) LimitedAnnual Report 2009Statement pursuant to Part IV of Schedule VI to The Companies Act, 1956Balance Sheet Abstract and Company’s General Business ProfileI. Registration DetailsII.III.IV.Registration No. 1 1 – 1 0 8 0 6 State Code 1 1Balance Sheet Date 3 1 – 1 2 – 2 0 0 9Date Month YearCapital raised during the year (Amount in Rs. Thousands)Public Issue N I L Right Issue N I LBonus Issue N I L Private Placement N I LPosition of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)Total Liabilities* 5 8 1 4 0 8 0 Total Assets 5 8 1 4 0 8 0Sources of FundsPaid-up Capital 2 6 6 6 0 7 Reserves and Surplus 3 2 1 1 3 1 8Secured Loans N I L Unsecured Loans 2 0 4 7 8Application of FundsNet Fixed Assets 1 5 2 7 3 3 6 Investments 1 2 4 4 9 9 5Net Current Assets** 7 2 6 0 7 2 Miscellaneous Expenditure N I LAccumulated Losses N I L*Including Shareholder’s funds ** Includes Deferred tax Assets (net) Rs. 27572Performance of Company (Amount in Rs. Thousands)Turnover (Gross Revenue) @ 9 4 7 6 4 9 5 Total Expenditure 7 8 4 5 4 2 8@ Includes Other Income Rs. 263082+ – Profit Before Tax + – Profit After TaxP 1 6 3 1 0 6 7 P 1 0 8 1 3 5 6Earnings Per Share in Rs.** 4 0 . 5 6 Dividend Rate % 2 5 0** Earnings per share has been computed by dividing profit after tax by the total number of issued equity shares as at the year end.V. Generic Names of Three Principal Products of CompanyItem Code No. 3 2 0 4 1 7 . 5 1Product Description H O S T A P E R M G R E E N G N XItem Code No. 2 9 2 4 1 0 . 1 9Product Description A C E T O A C E T M O N O M E T H Y L A M I D E 7 0 %Item Code No. 2 9 1 5 9 0 . 0 0Product Description A C E T O A C E T I C M E T H Y L E S T E RStatement Pursuant to Section 212 of the Companies Act, 1956For and on behalf of the BoardR. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. NandaDirectorB. L. Gaggar Director Finance & Company SecretaryMumbai, 19th February, 2010Name of the Subsidiary CompanyChemtreat Composites India Private Limited1. Financial year of the Subsidiary Company January 2009 – December 20092. Total issued and paid-up Share Capital of the Subsidiary Company(a) Issued 500,000 equity shares of Rs. 10/- each(b) Subscribed and Paid-up 500,000 equity shares of Rs. 10/- each3. Extent of Interest of Clariant Chemicals (India) Limited at the end of the financial year 100%4. Net aggregate amount of profits (Loss) of the Subsidiary Company not dealt with in theaccounts of the Clariant Chemical (India) Limited(a) for the current financial year Rs. (52.39) Lakhs(b) for the previous financial years Rs. 10.92 LakhsFor and on behalf of the BoardR. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. NandaDirectorB. L. Gaggar Director Finance & Company SecretaryMumbai, 19th February, 2010


Chemtreat Composites India Private LimitedAnnual Report 200959Directors‘ ReportAnnexure to Directors‘ ReportYour directors are pleased to present the 23rd annual report and audited statement of accoduntsfor the year ended December 31, 2009.Financial ResultsThe financial performance of the Company for the year ended December 31, 2009 is summarizedbelow:Rs. ‘0002009 2008Revenue 33,086 40,707Expenditure (38,325) (50,859)Loss before taxation (5,239) (10,152)Less: Provision for taxation (incl. deferred tax) – (6,345)Loss after tax (5,239) (3,807)Add: Balance brought forward from previous year 1,092 4,899Balance carried forward to balance sheet (4,147) 1,092Review of OperationsThe Company is a 100% Export Oriented Unit. The global economic & financial crisisaffected the Company’s performance. Sales were down at Rs. 298.5 Lakhs as againstRs. 384.9 Lakhs in the previous year.However, the Company continued its efforts of exploring new markets and succeeded inestablishing new market segments in India and Australia.DividendThe Board has not recommended any dividend for the year.Particulars of EmployeesThere are no employees in respect of whom information pursuant to section 217(2A) of theCompanies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 asamended.DirectorsMr. Dominik Strebel resigned with effect from February 20, 2009 and Mr. Walter Kindler wasappointed in his place. Mr. Heiner Meier , Mr. Walter Kindler and Mr. B L Gaggar were theDirectors of the Company as on December 31, 2009.Mr. Heiner Meier resigned with effect from January 1, 2010 and Mr. Peter Palm was appointedin his place. Mr. Walter Kindler resigned with effect from January 1, 2010 and Dr. H. Schloemerwas appointed in his place.Directors’ Responsibility StatementIn terms of section 217 (2AA) of the Companies Act, 1956 your directors confirm that:(a) in the preparation of the annual accounts, the applicable accounting standards have beenfollowed;(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair view ofthe state of affairs of the Company as at December 31, 2009 and of the loss of the Companyfor that year;(c) they have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.(d) they have prepared the annual accounts on a going concern basis.Conservation of Energy, Research and Development, Technology Absorption,Foreign Exchange Earnings and OutgoInformation required under section 217(1)(e) of the Companies Act, 1956 read with the Companies(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto andforms part of the report.AuditorsM/s. Deloitte Haskins & Sells, Chartered Accountants, retire at the conclusion of the ensuingAnnual General Meeting and being eligible offers themselves for re-appointment.For and on behalf of the Board of DirectorsP. Palm B. L. GaggarMumbai, February 19, 2010 Director DirectorInformation as per section 217(1)(e) read with Companies (Disclosure of Particulars in the Reportof Board of Directors) Rules, 1988 and forming part of the Directors' report for the year endedDecember 31, 2009.FORM-AParticulars with respect to conservation of energyA. Power and fuel consumption:1. Electricity:(a) Purchased:2009 2008Units (in ‘000 KwH) 327 278Total amount (Rs. Lakhs) 17.66 14.87Rate per Unit (Rs.) 5.39 5.35(b) Own Generation:(i)Through diesel generatorUnits (in ‘000 KwH) 6.99 20.89Units per Litre of diesel oil 1.49 1.67Cost per Unit (Rs.) 23.75 22.57(ii) Through Steam turbine/generator Nil Nil2. Furnace Oil (including L.S.H.S.)Quantity (MT) 9.05 14.02Total Cost (Rs. Lakhs) 3.21 5.32Average rate (Rs. per Kg.) 35.47 37.973. Other internal generation Nil NilB. Consumption per unit of production:The Company manufactures a wide variety of products. The products before reaching thefinished final stage pass through various operations in the different plants. It is, therefore,not feasible to furnish the information in respect of consumption per unit of production.FORM-BForm of disclosure of particulars with respect to Technology Absorption, Research &Development (R&D)Research & Development1. Specific Areas in which R&D carried out : Development of the pigmented polysilazaneby the Companyand chrome replacement coatings.2. Benefits derived as a result of the above : Introduction of new products for IndianR & DRailways & automotive industry.3. Future plan of action : Development of various coatings colours forIndian Railways and chrome replacementcoatings for automotive parts.Technology absorption, adaptation and innovation:1. Efforts, in brief, made towards technology : New synthesis are successfully adopted &absorption, adaptation and innovation scaled up with Group Support.2. Benefits derived as a result of the above : The new products can be used as high qualityefforts, e.g. product improvement, cost chemicals in pharma applications.reduction, product development, importsubstitution etc.3. In case of imported technology (imported :during the last 5 years reckoned from thebeginning of the financial year), followinginformation may be furnished(a) Technology imported : Polysilazanes manufacture and formulations(b) Year of import : 2006(c) Has technology been fullyabsorbed?Foreign Exchange Earnings andOutgo: Formulations technology transfer wassuccessfully adopted and standardized in2007.: Refer Schedule 14: of Notes to Accounts ItemNos. 14 to 16For and on behalf of the Board of DirectorsP. Palm B. L. GaggarMumbai, February 19, 2010 Director Director


60 Chemtreat Composites India Private LimitedAnnual Report 2009Auditors‘ ReportTo the Members of Chemtreat Composites India PrivateLimited1. We have audited the attached Balance Sheet of Chemtreat Composites India PrivateLimited as at December 31, 2009, and also the Profit and Loss Account and the Cash FlowStatement for the year ended on that date annexed thereto. These financial statements arethe responsibility of the Company’s management. Our responsibility is to express an opinionon these financial statements based on our audit.2. We conducted our audit in accordance with auditing standards generally accepted in India.Those Standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includesexamining on test basis, evidence supporting the amounts and disclosure in the financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by the management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.3. As required by the Companies (Auditor’s Report) Order, 2003, (‘the Order’) issued by theCentral Government of India in terms of sub- section (4A) of Section 227 of the CompaniesAct, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4and 5 of the said Order to the extent applicable to the Company.4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:(a) we have obtained all the information and explanation, which to the best of our knowledgeand belief were necessary for the purposes of our audit;(b) in our opinion, proper books of account as required by law have been kept by theCompany, so far as appears from our examination of the books;(c) the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with bythis report are in agreement with the books of accounts;(d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report comply with the Accounting Standards referred to insub-section (3C) of Section 211 of the Companies Act, 1956;(e) on the basis of the written representations received from the directors, as onDecember 31, 2009, and taken on record by Board of Directors, we report thatnone of the directors of the Company are disqualified as on December 31, 2009from being appointed as director, in terms of clause (g) of sub-section (1) ofSection 274 of the Companies Act, 1956; and(f) in our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:(i) in the case of the Balance Sheet, of the state of affairs of the Company as atDecember 31, 2009;(ii) in the case of the Profit and Loss Account, of the loss of the Company for the yearended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on thatdate.For Deloitte Haskins & SellsChartered AccountantsRegistration No. 117365WA. C. KhannaPlace : MumbaiPartnerDate : 19th February, 2010 Membership No.: 17814ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS’ REPORT TO THEMEMBERS OF CHEMTREAT COMPOSITES INDIA PRIVATE LIMITED ON THE FINANCIALSTATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2009(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.(b) The Company has a programme of physical verification of Fixed assets. As per the saidprogramme, certain assets were physically verified during the last year. In our opinion,the frequency of verification is reasonable having regard to the size of the Companyand the nature of its assets. According to the information and explanations given tous, no material discrepancies were noticed on such verification.(c) As per information and explanations given to us, there are no fixed assets disposedoff during the year. Therefore, the provisions of clause 4 (i)(c) of the Order are notapplicable to the Company.(ii) (a) The Inventories have been physically verified during the year by the management. Inour opinion, the frequency of verification is reasonable.(b) In our opinion, the procedures of physical verification of the inventories followed bythe management are reasonable and adequate in relation to the size of the Companyand the nature of its business.(c) In our opinion and according to the information and explanations given to us, theCompany is maintaining proper records of inventory. The discrepancies noticed onverification between the physical stocks and the book records were not material andhave been properly dealt with in the books of account.(iii) (a) According to the information and explanations given to us, the Company has notgranted any loans, secured or unsecured, to companies, firms or other parties coveredin the register maintained under Section 301 of the Companies Act, 1956. Accordingly,sub-clauses (b), (c) and (d) are not applicable.(b) According to the information and explanations given to us, the Company has not takenany loans, secured or unsecured, from companies, firms or other parties covered inthe register maintained under Section 301 of the Companies Act, 1956. Accordingly,sub-clauses (f) and (g) are not applicable.(iv) In our opinion and according to the information and explanations given to us, having regard tothe explanations that certain items purchased / sold are of special nature for which suitablealternative sources do not exist for obtaining comparative quotations, there are adequateinternal control systems commensurate with the size of the Company and the nature of itsbusiness with regard to purchase of inventory and fixed assets and for the sale of goods.Further, on the basis of our examination of the books and records of the Company carriedout in accordance with the auditing standards generally accepted in India and according tothe information and explanations given to us, we have neither come across nor have beeninformed of any continuing failure to correct major weaknesses in the aforesaid internalcontrol system.(v) (a) In our opinion and according to the information and explanations given to us, therehave been no contracts or arrangements referred to in Section 301 of the Act duringthe year to be entered in the register required to be maintained under Section 301 ofthe Companies Act, 1956.(b) Sub-clause (b) is not applicable.(vi) In our opinion and according to the information and explanations given to us, the Companyhas not accepted any deposits from the public within the meaning of Section 58A and58AA or any other relevant provisions of the Companies Act, 1956 and the Companies(Acceptance of Deposits) Rules 1975. Therefore, the provisions of clause 4 (vi) of the Orderare not applicable to the Company.(vii) The Company does not have an internal audit system; however the internal control systemsare comensurate with the size and the nature of its business.(viii) We are informed that the Central Government has not prescribed maintenance of cost recordsunder Section 209(1)(d) of the Companies Act, 1956 in respect of the Company's business.Therefore, the provisions of clause 4 (viii) of the Order are not applicable to the Company(ix) (a) According to the records of the Company, Provident Fund, Investor Educationand Protection Fund, Employees’ State Insurance, Income tax, Sales tax,Wealth tax, Service tax, Customs duty, Excise duty, cess and other material statutorydues applicable to it have been generally regularly deposited during the reportingperiod with the appropriate authorities.According to the information and explanations given to us, no undisputed amountspayable in respect of above were in arrears, as at December 31, 2009 for a period ofmore than six months from the date they became payable.(b) According to the information and explanations given to us and the records of theCompany examined by us, there are no dues of income tax, sales tax, wealth tax,service tax, customs duty, excise duty and cess that have not been deposited onaccount of any dispute.(x) In our opinion, the accumulated losses of the company are less than fifty percent of itsnetworth and it has incurred cash losses during the year covered by our audit and also inthe immediately preceding financial year.(xi) In our opinion and according to the information and explanations given to us, there were noborrowings or dues payable to any financial institution or bank or debenture holders duringthe reporting year.(xii) Based on our examination of the records and the information and explanations given to us,the Company has not granted any loans and advances on the basis of security by way ofpledge of shares, debentures and other securities. Therefore, the provisions of clause 4 (xii)of the Order are not applicable to the Company.(xiii) In our opinion, the Company is not a chit fund or nidhi/mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Order are not applicable tothe Company.(xiv) In our opinion the Company is not dealing in or trading in shares, securities, debenturesand other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are notapplicable to the Company.(xv) In our opinion and according to the information and explanations given to us, theCompany has not given any guarantee for loans taken by others from banks or financialinstitutions. Accordingly, the provisions of clause 4 (xv) of the Order are not applicable tothe Company.(xvi) In our opinion and according to the information and explanations given to us, there are noterm loans raised during the year under audit and hence, the provisions of clause 4 (xvi) ofthe Order are not applicable to the Company.(xvii)According to the information and explanations given to us and on an overall examination ofthe balance sheet of the Company, we report that funds raised on short-term of Rs. 52,692(‘000) have been used for long-term investment.(xviii) According to the information and explanations given to us, the Company has not madeany preferential allotment of shares to parties and Companies covered in the registermaintained under Section 301 of the Companies Act, 1956.(xix) The Company has not issued any secured debentures. Therefore, the provisions of clause 4(xix) of the Order are not applicable to the Company.(xx)(xxi)The Company has not raised any money by public issue during the year. Therefore, theprovisions of clause 4 (xx) of the Order are not applicable to the Company.According to the information and explanations furnished by the management, which havebeen relied upon by us, no fraud on or by the Company has been noticed or reported to/bymanagement during course of our audit.For Deloitte Haskins & SellsChartered AccountantsRegistration No. 117365WA. C. KhannaPlace : MumbaiPartnerDate : 19th February, 2010 Membership No.: 17814


61Balance Sheetas at 31st December, 2009Profit and Loss Accountfor the year ended 31st December, 2009Schedule31-12-09Rs. '00031-12-08Rs. '000SOURCES OF FUNDSShareholders' fundsShare capital 1 5,000 5,000Reserves and surplus 2 4,956 6,0489,956 11,048Loan fundsUnsecured loans 3 66,000 63,00075,956 74,048APPLICATION OF FUNDSFixed assets 4Gross block 82,039 79,811Less : Accumulated depreciation 21,686 14,774Net block 60,353 65,037Capital work-in-progress and advances, etc. 2,295 2,56162,648 67,598Current assets, loans and advancesInventories 5 9,921 8,757Sundry debtors 6 2,952 953Cash and bank balances 7 1,639 7,964Loans and advances 8 1,656 72616,168 18,400Less : Current liabilitiesLiabilities 9 7,007 11,9507,007 11,950Net current assets 9,161 6,450Profit and loss account 4,147 –75,956 74,048Notes on Balance Sheet and Profit and LossAccount 14INCOMESchedule2009Rs. '0002008Rs. '000Sales – Gross 30,213 38,487Less : Excise duty 362 –Sales – Net 29,851 38,487Other income 10 3,235 2,220EXPENDITURE33,086 40,707Cost of materials 11 3,540 11,619Interest Paid 12 45 –Depreciation 4 6,912 6,816Other expenditure 13 27,828 32,42438,325 50,859LOSS BEFORE TAXATION (5,239) (10,152)Provision for taxationDeferred tax – (6,345)LOSS AFTER TAXATION (5,239) (3,807)Balance brought forward fromprevious year 1,092 4,899Balance carried to the balance sheet (4,147) 1,092Notes on Balance Sheet and Profit and LossAccount 14Basic and Diluted earnings per share(Rupees)Face value per share(Rupees)(10.48) (7.61)10.00 10.00Per our report attachedFor and on behalf of the BoardFor Deloitte Haskins & Sells P. Palm DirectorChartered AccountantsA. C. KhannaPartnerB. L. Gaggar DirectorMumbai, 19th February, 2010 Mumbai, 19th February, 2010


62 Chemtreat Composites India Private LimitedAnnual Report 2009Cash Flow Statementfor the year ended 31st December, 2009Schedulesforming part of the Balance Sheet2009Rs. '0002008Rs. '000A. CASH FLOW FROM OPERATING ACTIVITIES :Net Loss before taxation (5,239) (10,152)Adjustments for :Depreciation 6,912 6,816Unrealised foreign exchange (gain)/ loss (Net) 35 25VAT setoff admissible written-off – 2,822Service tax recoverable written off – 1,228Interest expenses 45 –Assets written-off – 235Operating profit before working capital changes 1,753 974Adjustments for :Trade and other receivables (2,964) 699Inventories (1,164) 9,802Trade, other payables and provisions (4,943) (5,849)Cash used in operations (7,318) 5,626Direct taxes paid- (Net of refunds) – (13)Net cash used in operating activities (7,318) 5,613B. CASH FLOW FROM INVESTING ACTIVITIES :Purchase of fixed assets (1,962) (6,156)Net Cash used in investing activities (1,962) (6,156)C. CASH FLOW FROM FINANCING ACTIVITIES :Loan received from Holding Company 3,100 7,500Loans repaid to Holding Company (100) –Interest paid (45) –Net Cash from financing activities 2,955 7,500Net increase in cash and cash equivalents (A+B+C) (6,325) 6,957Cash and cash equivalents as at beginning of the year 7,964 1,007Cash and cash equivalents as at the end of the year(Refer Schedule 7) 1,639 7,964Notes :1. The Cash flow has been prepared under the "Indirect Method" as set out in AccountingStandard-3 on Cash flow statement notified by the Companies (Accounting Standards)Rules, 2006.2. Direct taxes paid are treated as arising from operating activities and are not bifurcatedbetween investing and financing activities.3. Figures for the previous year have been regrouped wherever necessary to conform tothe current year's classification.Per our report attached to the Balance Sheet For and on behalf of the BoardFor Deloitte Haskins & Sells P. Palm DirectorChartered AccountantsA. C. Khanna B. L. Gaggar DirectorPartnerMumbai, 19th February, 2010 Mumbai, 19th February, 2010SCHEDULE 1 : SHARE CAPITAL 31-12-09Rs. '00031-12-08Rs. '000Authorised5,00,000 Equity shares of Rs. 10/- each 5,000 5,000Issued and subscribed5,00,000 Equity shares of Rs. 10/- each fully paid up 5,000 5,000Notes :Of the above :(a) The entire issued equity share capital is held by Clariant Chemicals (India) Limited, theholding company, ultimate holding company being Clariant AG, Switzerland.(b) 296,400 equity shares of Rs. 10/- each, were allotted as fully paid up bonus shares bycapitalisation of Rs. 2,964,000 from Securities premium account.SCHEDULE 2 : reserves and surplus 31-12-09Rs. '00031-12-08Rs. '000Securities premium accountAs per last Balance sheet 4,956 4,956Profit and loss account – 1,0924,956 6,048SCHEDULE 3 : UNSECURED LOANS 31-12-09Rs. '000Demand loan (Interest free)31-12-08Rs. '000From the holding company 66,000 63,00066,000 63,000SCHEDULE 4 : FIXED ASSETS Rs. '000GROSS BLOCK DEPRECIATION NET BLOCKAs at31-12-2008Additions Deductions As at31-12-2009As at31-12-2008Deductions For theyearAs at31-12-2009As at31-12-2009As at31-12-2008Tangible AssetsLand freehold 884 – – 884 – – – – 884 884Buildings 12,161 – – 12,161 410 – 198 608 11,553 11,751Plant, machinery, equipment etc. 64,949 2,219 – 67,168 14,176 – 6,617 20,793 46,375 50,773Furniture, fixtures and office appliances 1,817 9 – 1,826 188 – 97 285 1,541 1,629Total 79,811 2,228 – 82,039 14,774 – 6,912 21,686 60,353Previous year 76,447 3,663 299 79,811 8,022 64 6,816 14,774 65,037Capital work-in-progress 785 1,885Advances against capital orders 1,510 6762,295 2,56162,648 67,598


63Schedulesforming part of the Balance SheetSCHEDULE 5 : INVENTORIES 31-12-09Rs. '00031-12-08Rs. '000At lower of cost and net realisable value(As certified by the Management)Stores and spare parts 616 715Raw materials 4,611 5,863Packing materials 52 40Finished goods 4,364 2,139Work-in-progress 278 –9,921 8,757SCHEDULE 6 : SUNDRY DEBTORS 31-12-09Rs. '000Unsecured – Considered good31-12-08Rs. '000Over six months 222 –Other debts 2,730 953[includes Rs. Nil; Previous Year Rs. 26 ('000) due from holdingCompany]2,952 953SCHEDULE 7 : CASH AND BANK BALANCES 31-12-09Rs. '00031-12-08Rs. '000Cash on hand 1 3With Scheduled Banks :On current accounts 1,638 7,9611,639 7,964SCHEDULE 8 : LOANS AND ADVANCES 31-12-09Rs. '000(Unsecured – considered good, unless otherwise stated)31-12-08Rs. '000Advances recoverable in cash or in kind or for value to bereceived 820 463VAT set off admissible 522 –Advance payment of Income tax (Net of provision for taxation) 44 44Balances with customs and excise on current account 270 2191,656 726SCHEDULE 9 : CURRENT LIABILITIES 31-12-09Rs. '000Sundry creditors31-12-08Rs. '000Due to micro enterprises and small enterprises – –(See Note 6, Schedule 14)Due to holding company 2,835 7,973Due to others 4,172 3,9777,007 11,950Schedulesforming part of the Profit and Loss AccountSCHEDULE 10 : OTHER INCOME 2009Rs. '0002008Rs. '000Exchange Gain (Net) – 1,434Income from Services rendered 980 –Sale of By-Product 114 183[excluding Excise Duty Rs. 18 ('000); Previous Year Rs. 29 ('000)]Sale of Packing Materials to Holding Company – 20Sale of Waste/Scrap Materials – 204Sundry Credit Balances Written back – 242Insurance Claim 2,001 –Miscellaneous income 140 1373,235 2,220SCHEDULE 11 : COST OF MATERIALS 2009Rs. '0002008Rs. '000Raw materialsOpening Stock 5,863 8,525Purchases 4,444 1,645Less : Closing stock (4,611) (5,863)Raw material Consumption 5,696 4,307Packing materialsOpening Stock 40 48Purchases 359 257Less : Closing stock (52) (40)Packing material Consumption 347 265Finished goodsOpening Stock 2,139 8,975Less : Closing stock (4,364) (2,139)(2,225) 6,836Work-in-progressOpening Stock – 211Less : Closing stock (278) –(278) 2113,540 11,619SCHEDULE 12 : INTEREST PAID 2009Rs. '0002008Rs. '000Interest PaidOthers 45 –45 –SCHEDULE 13 : OTHER EXPENDITURE 2009Rs. '0002008Rs. '000Stores and Spare parts etc. consumed 642 871Repairs and maintenance :Plant and machinery 489 987Others * 1,188 1,147Power and fuel 2,140 2,043Rates and taxes (including water charges) 387 106Insurance * 13 82Clearing, forwarding and transport * 2,828 4,316Personnel Cost * 8,394 9,441Travelling and conveyance * 2,567 2,802Commission 401 –Legal, professional & consultancy (See Note 8, Schedule 14) 2,551 3,237Assets written-off – 235Excise duty 201 161Exchange loss (Net) 629 –Personnel protection and safety expense 1,185 1,039Labour charges * 2,000 1,152IT related cost * 1,474 162VAT Set off Admissible Written off – 2,822Service Tax Recoverable written off – 1,228Miscellaneous * 739 59327,828 32,424* See Note 17, Schedule 14


64 Chemtreat Composites India Private LimitedAnnual Report 2009Notesschedule 14 : Notes on the Balance Sheet and Profit and Loss Account for the year ended 31st December, 20091. Significant Accounting PoliciesThe financial statements are prepared at historical cost on the accrual basis ofaccounting and in accordance with the standards on accounting notified by theCompanies (Accounting Standards) Rules, 2006 and referred to in Section 211(3C) ofthe Companies Act, 1956.The significant accounting policies are as follows :I. Revenue RecognitionThe Company recognises sale of goods on transfer of significant risks andrewards of ownership of the goods to the buyer. Sales are net of excise duty,sales tax and trade discounts, wherever applicable.Dividend income on investments is accounted for when the right to receive thepayment is established.II.Excise DutyExcise duty payable on products is accounted for at the time of dispatch of goodsfrom the factories but is accrued for stocks held at the year end.Excise Duty related to the difference between the closing stock and openingstock of finished goods has been recognized separately in the profit and lossaccount under schedule of ‘Other Expenditure’.IX.(B) The current tax, if any, is determined as the amount of tax payable in respectof the estimated taxable income for the period.(C) The deferred tax charge or credit is recognised, using prevailing enacted orsubstantively enacted tax rates. Where there are unabsorbed depreciationor carry forward losses, deferred tax assets are recognised only if there isvirtual certainty of realisation of such assets. Other deferred tax assets arerecognised only to the extent there is reasonable certainty of realisation infuture. Deferred tax assets/liabilities are reviewed at each Balance Sheetdate based on developments during the reporting period and available caselaws, to reassess realization/liabilities.Provisions/ContingenciesProvision is recognised when the Company has a present obligation as a resultof past event; it is probable that an outflow of resources embodying economicbenefit will be required to settle the obligation, in respect of which a reliableestimate can be made. Provisions are not discounted to its present value andare determined based on best estimate of the expenditure required to settle theobligation at the Balance Sheet date. These are reviewed at each Balance Sheetdate and adjusted to reflect the current best estimate. A contingent liabilityis disclosed, unless the possibility of an outflow of resources embodying theeconomic benefit is remote.III.IV.Employee Benefits/Leave EncashmentAs there are no permanent employees of the Company, no provision for employeebenefits/leave encashment is required to be made.Fixed Assets and Depreciation(A) All fixed assets are stated at cost less accumulated depreciation.(B) The cost comprises the purchase price and any other attributable cost ofbringing the asset to its working condition for its intended use.(C) Depreciation on the fixed asset is provided on the straight line method atthe rates and in the manner specified in Schedule XIV of the Companies Act,1956, except for:(a) Plant, machinery and equipment (except Laboratory equipment, FireFighting and Weighing Machine) over their useful life of 10 Years asdetermined by the Company on a Straight Line Basis.(c) Computers and Printers on which 25% straight line method is applied.V. InventoriesInventories are valued at the lower of cost and estimated net realisable valueafter providing for obsolescence. The cost of inventories is generally arrived aton the following bases :Raw materials, packing materials,trading items and store and spares : Weighted average costFinished goods and work-in-progress : Absorption costing at works costVI. Sundry Debtors/Loans and AdvancesSundry debtors and loans and advances are stated after making adequateprovision for doubtful debts/advances, if any.VII.Foreign Currency Translations(A) Foreign currency transactions are accounted at the rate prevailing on thedate of transaction.(B) Monetary items denominated in foreign currency, are translated at theexchange rate prevailing on the last day of the reporting period.(C) Non-monetary items other than fixed assets, which are carried in terms ofhistorical cost denominated in a foreign currency, are reported using theexchange rate at the date of transaction.(D) Gain or loss arising out of translation/conversion is taken credit for orcharged to the Profit and Loss Account.VIII. Income Tax(A) Income-tax expense comprises current tax and deferred tax charge orcredit.2. Segment Information for the year ended 31st December, 2009 (As required byAccounting Standard (AS) - 17 Segment Reporting)(a) The Company operates in only one primary business segment of SpecialityChemicals i.e. manufacturing synthetic resins Consequently, disclosure forprimary segment under AS 17 – Segment Reporting is not applicable to theCompany.(b) The secondary segments of the Company are geographical segments mainly :(i) India(ii) Outside IndiaInformation about Secondary Segments :India2009Rs’000OutsideIndiaTotal2008Rs’000India OutsideIndiaTotalExternal sales 4,335 25,516 29,851 – 38,487 38,487Segment assets 76,309 2,463 78,772 85,027 927 85,954Additions to fixed assets 1,962 – 1,962 6,156 – 6,156Note : Total assets exclude the Advance payment of Income Tax Rs. 44 (‘000)[Previous year Rs. 44 (‘000)].3. Related Party Disclosure as required by AS-18 “Related Party Disclosures”are given below :A. Relationship :(a) Holding Company :Clariant Chemicals (India) Limited, holds 100% equity shares in theCompany.EBITO Chemiebeteiligungen AG, Clariant International AG and ClariantParticipations AG together hold 63.40% equity shares in the ClariantChemicals (India) Limited, The ultimate holding company is Clariant AG,Switzerland.(b) Other related parties in the Clariant group where common controlexists and with whom the company has transactions :Clariant Advanced Materials GmbH Clariant Life Science Molecules(Florida) Inc.Clariant CorporationKion Specialty PolymersClariant (Japan) KK(c) Key Management Personnel :H. J. Meier – Director (upto December 31, 2009).


Notes65B. During the year following transactions were entered into with related parties :Name of party Year Sale ofGoodsPurchaseof goodsServicesreceivedPurchaseof FixedAssetsLoanstakenLoansRepaidAmountPayable at theyear end #Rs. '000Amountreceivable at theyear endClariant Chemicals (India) Ltd. 2009 – – 11,594 – 3,100 100 68,835 –2008 * 20 48 11,500 2,176 7,500 – 70,973 26Clariant Advanced Material GmbH 2009 7,364 – – – – – – 23022008 17,243 – – – – – – 910Clariant (Japan) KK 2009 3221 – – – – – – 682008 256 – – – – – – 17Kion Specialty Polymers 2009 – – – – – – – –2008 7,242 – – – – – – –Clariant Corporation 2009 8188 – – – – – – –2008 9,021 – – – – – – –Clariant Life Science Molecules (Florida) Inc. 2009 – 1200 – – – – – –2008 – – – – – – – –# Included in Unsecured Loan Rs. 66,000 ('000); [Previous Year Rs. 63,000 ('000)], Sundry Creditors Rs. 2,835 ('000); [Previous Year Rs.7,973 ('000)] .* Sale of packing material.31-12-2009Rs. '00031-12-2008Rs. '0004. Estimated amount of contracts remaining to beexecuted on capital account and not providedfor (Net of advances) 4,490 5,3255. Deferred taxes :During the year ended 31st December 2009, theCompany has incurred losses resulting in unabsorbcarry forward tax losses. The Company is eligible fora tax holiday under section 10B of the Indian IncometaxAct, 1961. Though the management is confidentof generating profits in the future, there is currentlyno convincing evidence of virtual certainty that theCompany would reverse the tax loss carry forwardbeyond the tax holiday period. Accordingly theCompany has not recognised any deferred tax assetsresulting from the carry forward tax losses. Further,deffered tax liability on account of timing differencesin case of depreciation does not arise by virtue ofexplanation 6 to Sec. 43 (6) of the Indian IncometaxAct, 1961 where the book depreciation shall bedeemed to be the depreciation actually allowed underthe Income-tax Act.6. Disclosure required under the Micro, Smalland Medium Enterprises Development Act, 2006(the Act) are given as follows :(a) Principal amount due — —Interest due on the above — —(b) Interest paid during the year beyond the appointedday — —(c) Amount of interest due and payable for the periodof delay in making payment without adding theinterest specified under the Act — —(d) Amount of interest accrued and remaining unpaidat the end of the year — —(e) Amount of further interest remaining due andpayable even in the succeeding years, untill suchdate when the interest dues as above are actuallypaid to the small enterprise for the purpose ofdisallowance as a deductible expenditure undersection 23 of the Act — —The above information and that given inSchedule- 9 'Liabilities' regarding micro enterprise andsmall enterprises has been determined on the basisof information available with the Company. This hasbeen relied upon by the auditors.7. Earnings per share :(a) Net loss after taxation (Rupees '000) (5,239) (3,807)(b) Number of equity shares outstanding 500,000 500,000(c) Basic and Diluted loss per share (In Rupees) (10.48) (7.61)(d) Face value per share (In Rupees) 10 1031-12-2009Rs. '00031-12-2008Rs. '0008. Legal, professional & consultancy in Schedule13 : Other expenditure include :Audit fees and fees for other services : (Excludingservice tax)(a) Audit fees 300 300(b) Other services 300 525600 8259. Capacity and production :Class of goodsAnnualInstalledCapacityM. Tonnes2009 2008Production*M. TonnesAnnualInstalledCapacityM. TonnesProduction*M. TonnesSynthetic Resins 750.000 16.253 750.000 10.675* Excluding captive consumption and recovered solvents 5.44 M.Tonnes.Notes :1. The classification between the class of goods and the installed capacity have beencertified by the Director on which the auditors have placed reliance, this being atechnical matter.2. Licensed capacity per annum not indicated due to the abolition of IndustrialLicenses as per Notification No. 477(E) dated 25th July, 1991 issued under TheIndustries (Development and Regulations) Act 1951.10. Sales , Opening and Closing Stock :Class of goods Opening Stock Closing Stock Sales(Inclusive of exciseduty)QuantityM. TonnesValue Quantity*Rs. ‘000 M. TonnesValue Quantity**Rs. ‘000 M. TonnesValueRs. ‘000Synthetic Resins 2.617 2,139 9.298 4,364 9.034 30,213(8.054) (8,975) (2.617) (2,139) (16.069) (38,487)** Excludes free samples 0.091 M. Tonnes (Previous Year 0.037 M. Tonnes) andmaterial lost in transit 0.369 M. Tonnes (Previous Year Nil).* Excludes write-off 0.078 M.Tonnes (Previous Year 0.006 M. Tonnes).11. Raw Materials consumed :QuantityM.Tonnes2009 2008ValueRs. ‘000QuantityM.TonnesValueRs. ‘000(a) Silanes 25.137 4,696 4.811 2,855(b) Others * 1,000 1,4525,696 4,307* None of the items individually exceed 10% of the total value of raw materialsconsumed


66 Chemtreat Composites India Private LimitedAnnual Report 200912. Consumption of raw materials :2009 2008% of total Value % of totalConsumption Rs. ‘000 ConsumptionValueRs. ‘000(a) Raw materials :Imported 47.15 2,686 46.46 2,001Indigenous 52.85 3,010 53.54 2,306100.00 5,696 100.00 4,307(b) Components and spare parts referred to in Paragraph 4D (c ) of Schedule VI of theCompanies Act, 1956 are assumed to be incorporated in the goods produced andnot those used for maintenance of plant and machinery.13. Disclosure in respect of Derivative Instruments :(a) During the year, the Company has not used any derivative Instruments to hedge itsexposure in foreign currency.(b) Foreign currency exposures not covered by a derivative instrument.Amount receivable on account of export of goods and services.31-12-2009 31-12-2008Currency Amount in Rs. ‘000 Amount in Rs. ‘000foreign currencyforeign currencyUSD 3,450 161 – –EUR 34,248 2,302 13,549 9272,463 92731-12-2009Rs. '00031-12-2008Rs. '00014. Value of imports (C.I.F.) :Raw materials 1,458 –15. Earnings in foreign exchange :(a) Exports (F.O.B.) 23,903 35,604(b) Insurance and freight 1,613 2,883(c) Exchange gain (net) – 1,434Statement pursuant to Part IV of Schedule VI to The Companies Act, 1956Balance Sheet Abstract and Company’s General Business Profile31-12-2009Rs. '00031-12-2008Rs. '00016. Expenditure in foreign currency :(a) Exchange Loss (net) 629 –(b) Product registration fee 169 –17. The Company has entered in to a cost sharingagreement dated 30th May, 2006 with the holdingcompany for reimbursement of costs and accordinglyexpenses of Rs. 11,594 (‘000) [Previous Year :Rs. 11,500 (‘000)] have been reimbursed by the Companyand included in Schedule 13 : Other Expenditure underthe respective expense head as follows :Expense headPersonnel cost 8,080 9,143Travelling and conveyance 1,725 1,962IT related cost 1,475 162Repairs and maintenance – Others 45 32Labour charges 93 62Clearing, forwarding & transport 6 –Miscellaneous expenses 170 139Total 11,594 11,50018. Figures for the previous year have been regrouped wherever necessary to conform tothe current year’s classification.For and on behalf of the BoardP. Palm DirectorB. L. Gaggar DirectorMumbai, 19th February, 2010I. Registration DetailsRegistration No. 1 1 – 4 3 2 3 5 State Code 1 1II.III.Balance Sheet Date 3 1 – 1 2 – 2 0 0 9Date Month YearCapital raised during the year (Amount in Rs. Thousands)Public Issue N I L Right Issue N I LBonus Issue N I L Private Placement N I LPosition of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)Total Liabilities* 8 2 9 6 3 Total Assets 8 2 9 6 3Sources of FundsPaid-up Capital 5 0 0 0 Reserves and Surplus 4 9 5 6Secured Loans N I L Unsecured Loans 6 6 0 0 0Application of FundsNet Fixed Assets 6 2 6 4 8 Investments N I LNet Current Assets 9 1 6 1 Miscellaneous Expenditure N I LIV.Accumulated Losses 4 1 4 7*Including Shareholders’ fundsPerformance of Company (Amount in Rs. Thousands)Turnover (Gross Revenue) @ 3 3 0 8 6 Total Expenditure 3 8 3 2 5@ Includes Other Income Rs. 3235+ – Profit Before Tax + – Profit After TaxP 5 2 3 9 P 5 2 3 9Earnings Per Share in Rs.** ( 1 0 . 4 8 ) Dividend Rate % N I L** Earnings per share has been computed by dividing profit after tax by the total number of issued equity shares as at the year end.V. Generic Names of Three Principal Products of CompanyItem Code No. Product Description 3 9 1 0 0 0 1 0 – C L A R I A N T K I O N M L 3 3 / C 12Item Code No. Product Description 3 9 1 0 0 0 1 0 – C L A R I A N T K I O N H T T 1 8 0 0Item Code No. Product Description 3 9 1 0 0 0 9 0 – T U T O P R O M M A T T H DFor and on behalf of the BoardP. Palm DirectorMumbai, 19th February, 2010 B. L. Gaggar Director


Clariant Chemicals (India) Limited — Consolidated67Auditors‘ Report to the MembersAuditors’ Report to the Board of Directors of Clariant Chemicals (India) Limited on the Consolidated FinancialStatements of Clariant Chemicals (India) Limited1. We have audited the attached Consolidated Balance Sheet ofClariant Chemicals (India) Limited and its subsidiary (the ClariantChemicals (India) Limited Group), as at 31st December, 2009 andalso the Consolidated Profit and Loss Account and the ConsolidatedCash Flow Statement for the year ended on that date annexedthereto. These financial statements are the responsibility ofClariant Chemicals (India) Limited’s management. Our responsibilityis to express an opinion on these financial statements based onour audit.2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those Standards requirethat we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining on a testbasis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonablebasis for our opinion.3. We report that the consolidated financial statements havebeen prepared by the Clariant Chemicals (India) Limited’smanagement in accordance with the requirements of AccountingStandard (AS) 21, Consolidated Financial Statements, notified bythe Companies (Accounting Standards) Rules, 2006.4. In our opinion and to the best of our information and according tothe explanations given to us, the attached Consolidated FinancialStatements give a true and fair view in conformity with theaccounting principles generally accepted in India:(i)(ii)in the case of the Consolidated Balance Sheet, of the stateof affairs of the Clariant Chemicals (India) Limited Group asat 31st December, 2009;in the case of the Consolidated Profit and Loss Account, ofthe profit of the Clariant Chemicals (India) Limited Group forthe year ended on that date; and(iii) in the case of the Consolidated Cash Flow Statement,of the cash flows of the Group for the year ended onthat date.Mumbai: 19th February, 2010For Deloitte Haskins & SellsChartered AccountantsRegistration No. 117365WA. C. KhannaPartnerMembership No.: 17814


68 Clariant Chemicals (India) Limited — ConsolidatedAnnual Report 2009Consolidated Balance Sheetas at 31st December, 2009Schedule31-12-09Rs. Lakhs31-12-08Rs. LakhsSOURCES OF FUNDSShareholders' fundsShare capital 1 2666.07 2666.07Reserves and surplus 2 32061.13 29097.6034727.20 31763.67Loan fundsUnsecured loans 3 204.78 309.07204.78 309.07Deferred tax liability – Net (See note 6, Schedule 17) — 254.9434931.98 32327.68APPLICATION OF FUNDSFixed assets 4Gross block 36017.85 39816.46Less : Accumulated depreciation and impairment 21301.71 23538.07Net block 14716.14 16278.39Capital work-in-progress and advances, etc. 606.22 1072.5415322.36 17350.93Fixed assets held for disposal (See note 14, Schedule 17) 792.34 —Investments 5 12124.95 5459.47Deferred tax asset – Net (See note 6, Schedule 17) 275.72 —Current assets, loans and advancesInventories 6 7764.24 10631.55Sundry debtors 7 14489.15 13219.68Cash and bank balances 8 1713.01 921.95Loans and advances 9 5648.70 5695.7529615.10 30468.93Less : Current liabilities and provisionsLiabilities 10 16614.62 12884.63Provisions 11 6583.87 8067.0223198.49 20951.65Net current assets 6416.61 9517.2834931.98 32327.68Notes on balance sheet and profit and loss account 17Per our report attachedFor Deloitte Haskins & SellsChartered AccountantsA. C. KhannaPartnerMumbai, 19th February, 2010For and on behalf of the BoardR. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. Nanda DirectorB. L. Gaggar Director Finance & Company SecretaryMumbai, 19th February, 2010


69Consolidated Profit and Loss Accountfor the year ended 31st December, 20092009Rs. Lakhs2008Rs. LakhsScheduleINCOMESales – Gross 97624.37 100529.74Less : Excise duty 5191.73 8505.81Sales – Net 92432.64 92023.93Other income 12 2663.17 2530.2695095.81 94554.19EXPENDITURECost of materials 13 54558.89 58265.63Personnel cost 14 6158.71 7229.91Interest (Net) 15 17.12 (18.29)Depreciation/Amortisation 4 1965.18 2319.55Impairment of fixed assets 4 136.98 728.62Other expenditure 16 14340.70 16037.7977177.58 84563.21Less : Service charges recovered 790.80 673.2376386.78 83889.98PROFIT BEFORE EXCEPTIONAL ITEMS AND TAXATION 18709.03 10664.21Exceptional items (See note 12, Schedule 17) 2450.46 48.00PROFIT AFTER EXCEPTIONAL ITEMS AND BEFORE TAXATION 16258.57 10616.21Provision for taxationCurrent tax 5958.00 3792.00Deferred tax (530.66) (241.74)Fringe benefit tax 39.00 118.50(Excess)/Short provision for taxation in respect of earlier years 30.77 248.09PROFIT AFTER TAXATION 10761.46 6699.36Balance brought forward from previous year 1097.45 999.35Available for Appropriation 11858.91 7698.71APPROPRIATED AS FOLLOWSGeneral reserve 1081.36 674.83Interim dividend 2666.07 —Proposed dividend (Final) 3999.11 5065.54Corporate tax on dividend (Interim & Final) 1132.75 860.89Balance carried to the balance sheet 2979.62 1097.4511858.91 7698.71Notes on balance sheet and profit and loss account 17Basic and Diluted earnings per share (Rupees) (See note 8, Schedule 17) 40.36 25.13Face value per share (Rupees) 10.00 10.00Per our report attached to the Balance SheetFor Deloitte Haskins & SellsChartered AccountantsA. C. KhannaPartnerMumbai, 19th February, 2010For and on behalf of the BoardR. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. Nanda DirectorB. L. Gaggar Director Finance & Company SecretaryMumbai, 19th February, 2010


70 Clariant Chemicals (India) Limited — ConsolidatedAnnual Report 2009Consolidated Cash Flow Statementfor the year ended 31st December, 2009A. CASH FLOW FROM OPERATING ACTIVITIES :2009Rs. Lakhs2008Rs. LakhsNet Profit after exceptional items and before taxation 16258.57 10616.21Adjustments for :Depreciation/Amortisation 1965.18 2319.55Impairment of fixed assets 136.98 728.62Unrealised foreign exchange (gain)/loss (Net) (32.54) 60.21Interest income (83.20) (171.67)Dividend income (407.90) (171.56)Loss/(profit) on sale of assets (Net) (80.31) (9.58)Loss/(profit) on sale of investments (Net) (0.21) (0.29)Provision for doubtful debts/advances (Net) 29.39 200.11Provision for leave encashment (126.69) 4.52Provision for ex-gratia gratuity (15.21) 4.24Provision for gratuity (186.30) 267.80Interest expenses 100.32 153.38Assets written-off 100.69 392.98Operating profit before working capital changes 17658.77 14394.52Adjustments for :Trade and other receivables (1131.92) 647.54Inventories 2867.31 825.08Trade, other payables and provisions 3695.79 (4453.14)Cash generated from operations 23089.95 11414.00Direct taxes paid – (Net of refunds) (6055.45) (3288.65)Net cash from operating activities 17034.50 8125.35B. CASH FLOW FROM INVESTING ACTIVITIES :Purchase of fixed assets (1024.62) (2719.66)Sale of fixed assets 138.31 38.63Purchase of investments (95164.44) (42571.83)Sale of investments 88499.17 39730.92Interest received 83.20 171.67Dividend received 407.90 171.56Net Cash used in investing activities (7060.48) (5178.71)


Consolidated Cash Flow Statement71C. CASH FLOW FROM FINANCING ACTIVITIES :2009Rs. Lakhs2008Rs. LakhsRepayment of borrowings (104.29) (98.09)Interest paid (93.78) (147.17)Dividend/dividend tax paid (8984.89) (3109.75)Net Cash used in financing activities (9182.96) (3355.01)NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 791.06 (408.37)CASH AND CASH EQUIVALENTS AS AT BEGINNING OF THE YEAR 921.95 1330.32CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR (See note 3) (Refer Schedule 8) 1713.01 921.95Notes :1. The Cash flow has been prepared under the "Indirect Method" as set out in Accounting Standard-3 on Cash flow statement notified by theCompanies (Accounting Standards) Rules, 2006.2. Direct taxes paid are treated as arising from operating activities and are not bifurcated between investing and financing activities.3. Cash and cash equivalents at the end of the year include current account balances with banks of Rs. 221.71 lakhs (Previous Year : Rs. 161.63 lakhs)which are restricted in use on account of unclaimed dividend/fixed deposit/interest on fixed deposit.4. Figures for the previous year have been regrouped wherever necessary to conform to the current year's classification.Per our report attached to the Balance SheetFor Deloitte Haskins & SellsChartered AccountantsA. C. KhannaPartnerMumbai, 19th February, 2010For and on behalf of the BoardR. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. Nanda DirectorB. L. Gaggar Director Finance & Company SecretaryMumbai, 19th February, 2010


72 Clariant Chemicals (India) Limited — ConsolidatedAnnual Report 2009Schedulesforming part of the Consolidated Balance SheetSCHEDULE 1 : SHARE CAPITAL 31-12-09Rs. LakhsAuthorised31-12-08Rs. Lakhs30000000 equity shares of Rs. 10/- each 3000.00 3000.00Issued and subscribed26660745 equity shares of Rs. 10/- each fully paid 2666.07 2666.07Notes :Of the above :(a)(b)(c)15010745 equity shares issued as fully paid up pursuant to a contract for a consideration other than cash.8167080 equity shares are held by EBITO Chemiebeteiligungen AG.6075000 equity shares are held by Clariant International AG.2660000 equity shares are held by Clariant Participations AG.The ultimate holding company being Clariant AG, Switzerland.6690610 equity shares were allotted as fully paid up bonus shares by capitalisation of Rs. 669.06 lakhs from general reserve.SCHEDULE 2 : RESERVES AND SURPLUS 31-12-09Rs. LakhsCapital reserve31-12-08Rs. LakhsAs per last Balance sheet 730.11 730.11Capital redemption reserveAs per last Balance sheet 137.50 137.50Securities premium accountAs per last Balance sheet 3545.65 3545.65Investment allowance reserveAs per last Balance sheet 20.00 20.00Less : Transfer to General Reserve 20.00 —— 20.00General reserveAs per last Balance sheet 23566.89 22892.06Add : Transfer from Investment allowance reserve 20.00 —Transfer from Profit and loss account 1081.36 674.8324668.25 23566.89Profit and loss account 2979.62 1097.4532061.13 29097.60SCHEDULE 3 : UNSECURED LOANS 31-12-09Rs. LakhsFrom others :31-12-08Rs. LakhsInterest-free sales tax deferral scheme granted by State Industries Promotion Corporationof Tamil Nadu Limited (Repayable within one year Rs. 99.50 lakhs, Previous Year : Rs. 104.29 lakhs) 204.78 309.07204.78 309.07


Consolidated Schedules73SCHEDULE 4 : FIXED ASSETSAs at31-12-08GROSS BLOCK DEPRECIATION/AMORTISATION/IMPAIRMENT NET BLOCKDeductions/ As at As at Deductions/ For the year Impairment As at As atAdjustments 31-12-09 31-12-08 Adjustments(See note 2) 31-12-09 31-12-09Additions/AdjustmentsRs. LakhsAs at31-12-08Intangible AssetsGoodwill on consolidation 225.44 — — 225.44 — — — — — 225.44 225.44Tangible AssetsLand freehold 153.86 — — 153.86 — — — — — 153.86 153.86Land leasehold 14.88 — — 14.88 4.50 — 0.16 — 4.66 10.22 10.38Buildings 6892.68 299.06 4.91 7186.83 2317.46 1.77 173.46 136.98 2626.13 4560.70 4575.22Plant, machinery, equipment etc. 29554.46 1091.00 5013.19 25632.27 19020.44 4073.89 1616.23 — 16562.78 9069.49 10534.02Furniture, fixtures andoffice appliances 2278.23 88.57 148.71 2218.09 1629.02 140.79 138.17 — 1626.40 591.69 649.21Vehicles 696.91 12.31 122.74 586.48 566.65 122.07 37.16 — 481.74 104.74 130.26Total 39816.46 1490.94 5289.55 36017.85 23538.07 4338.52 1965.18 136.98 21301.71 14716.14Previous Year 37403.21 3431.26 1018.01 39816.46 21085.88 595.98 2319.55 728.62 23538.07 16278.39Capital work-in-progress 550.63 1042.32Advances against capital orders 55.59 30.22606.22 1072.5415322.36 17350.93Notes :1 Buildings include Rs. 0.12 lakhs (Previous Year : Rs. 0.12 lakhs) being the cost of shares and bonds in co-operative housing societies.2. In accordance with the provisions of the Accounting Standard 28 on Impairment of Assets notified by the Companies (Accounting Standards) Rules 2006, the Company has identifiedcertain fixed assets that were impaired mainly on account of economic performance and viability of such assets which does not have any value in use. Accordingly during current year animpairment loss of Rs. 136.98 lakhs in respect of Dyes and Specialty Chemicals segment (Rs. 12.47 lakhs) and Intermediates and Colours segment (Rs. 124.51 lakhs) has been recognisedin the profit and loss account. (Previous Year Rs. 728.62 lakhs in respect of Intermediates and Colours segment).SCHEDULE 5 : INVESTMENTS (AT COST) 31-12-09Rs. Lakhs31-12-08Rs. LakhsNon Trade – UnquotedCurrentIn fully paid units of Rs. 10/- each9825217 (Previous Year : Nil) Birla Sun Life Saving Fund – Daily Dividend 983.19 —8883589 (Previous Year : Nil) HDFC Treasury Advantage Fund-Whole Sale Fund – Dividend – Daily 891.16 —4742864 (Previous Year : Nil) HDFC F R I F – STP-Whole Sale Fund – Dividend – Daily 478.12 —9776175 (Previous Year : Nil) DWS Ultra Short Term Fund – Dividend – Daily 979.37 —9019717 (Previous Year : Nil) DWS Cash Opportunity Fund – Dividend – Daily 904.16 —9695701 (Previous Year : Nil) JM Money Manager Fund – Super Plus Plan – Dividend-Daily 970.08 —4038543 (Previous Year : Nil) IDFC Money Manager Fund – Dividend – Daily 403.91 —9471776 (Previous Year : Nil) LIC MF Income Plus Fund – Dividend – Daily 947.18 —9197118 (Previous Year : Nil) LIC MF Saving Plus Fund – Dividend – Daily 919.71 —9847865 (Previous Year : Nil) LIC MF Floater Fund – Dividend – Daily 984.80 —Nil (Previous Year : 9346248) Birla Sun Life Short Term Fund – Institutional – Daily Dividend — 935.14Nil (Previous Year : 7999333) Fidelity Cash Fund-Institutional – Daily Dividend — 800.13Nil (Previous Year : 7754587) HDFC Liquid Fund Premium Plan – Dividend-Daily — 950.70Nil (Previous Year : 5571131) Reliance Medium Term Fund – Daily Dividend — 952.41In fully paid units of Rs. 100/- each863340 (Previous Year : Nil) ICICI Prudential Flexible Income Premium Plan Fund – Daily Dividend 912.85 —957923 (Previous Year : Nil) ICICI Prudential Floating Rate Plan D – Daily Dividend 958.12 —In fully paid units of Rs. 1000/- each91249 (Previous Year : Nil) Reliance Money Manager Fund – Institutional Plan – Daily Dividend 913.53 —65341 (Previous Year : 89206) DSP BlackRock Floating Rate Fund – Institutional Plan – Daily Dividend 653.77 892.0622483 (Previous Year : Nil) UTI Floating Rate Fund STP – Daily Dividend 225.00 —Nil (Previous Year : 83357) TATA Liquid Super High Investment Fund – Daily Dividend — 929.03Total Current 12124.95 5459.47Total Investments – Unquoted 12124.95 5459.47


74 Clariant Chemicals (India) Limited — ConsolidatedAnnual Report 2009SCHEDULE 6 : INVENTORIES 31-12-09Rs. LakhsAt lower of cost and net realisable value (As certified by the Management)31-12-08Rs. LakhsStores and spare parts 193.82 248.50Raw materials 2161.07 3340.38Packing materials 104.65 98.96Finished goods 4466.55 5740.02Work-in-progress 838.15 1203.697764.24 10631.55SCHEDULE 7 : SUNDRY DEBTORS 31-12-09Rs. Lakhs31-12-08Rs. LakhsSecured (Considered good)Over six months 5.68 9.02Other debts 1570.88 1349.06Unsecured (Considered good, unless otherwise stated)1576.56 1358.08Over six months (Including doubtful debts Rs. 246.31 lakhs; Previous Year : Rs. 280.89 lakhs) 330.84 396.73Other debts 12828.06 11745.7613158.90 12142.49Less : Provision for doubtful debts 246.31 280.8914489.15 13219.68SCHEDULE 8 : CASH AND BANK BALANCES 31-12-09Rs. Lakhs31-12-08Rs. LakhsCash on hand 4.19 6.66Cheques on hand 49.27 82.05With scheduled banks :On current accounts 1027.21 661.74On fixed deposit accounts 632.34 171.501659.55 833.241713.01 921.95


Consolidated Schedules75SCHEDULE 9 : LOANS AND ADVANCES 31-12-09Rs. Lakhs31-12-08Rs. Lakhs(Unsecured – considered good, unless otherwise stated)Advances recoverable in cash or in kind or for value to be received 3526.18 3676.80Less : Provision for doubtful advances 63.97 —3462.21 3676.80VAT set off admissible 104.89 52.51Advance payment of Income tax (Net of provision for taxation) 1769.39 1648.99Balances with customs and excise on current account 312.21 317.455648.70 5695.75SCHEDULE 10 : CURRENT LIABILITIES 31-12-09Rs. LakhsSundry creditors :31-12-08Rs. LakhsDue to micro enterprises and small enterprises (See Note 7, Schedule 17) 361.14 82.25Due to others 14168.74 11196.9014529.88 11279.15Deposits 1863.03 1443.85Unpaid dividends* 221.61 160.90Unclaimed fixed deposits* 0.06 0.15Unpaid interest on matured fixed deposits* 0.04 0.5816614.62 12884.63* There is no amount due and outstanding to be credited to Investor Education and Protection FundSCHEDULE 11 : PROVISIONS 31-12-09Rs. LakhsEmployee Benefits :31-12-08Rs. LakhsLeave encashment 365.02 491.71Gratuity 200.73 387.03Ex-gratia gratuity 69.21 84.42Others :Provision for taxation (Net of advance payment of Income tax) 1270.15 1177.43Proposed dividend (Final) 3999.11 5065.54Corporate tax on proposed dividend (Final) 679.65 860.896583.87 8067.02


76 Clariant Chemicals (India) Limited — ConsolidatedAnnual Report 2009Schedulesforming part of the Consolidated Profit and Loss AccountSCHEDULE 12 : OTHER INCOME 2009Rs. Lakhs2008Rs. LakhsDividend on current non-trade investments 407.90 171.56Export incentives 420.13 482.72Profit on sale of fixed assets (Net) 80.31 9.58Cash discounts 39.40 36.15Rental income 398.25 364.66Indenting commission 589.29 634.52Profit on sale of current investments (Net) 0.21 0.29Miscellaneous 727.68 830.782663.17 2530.26SCHEDULE 13 : COST OF MATERIALS 2009Rs. Lakhs2008Rs. LakhsRaw materials consumed 38507.15 42091.18Packing materials consumed 2279.01 2207.08Purchases of finished goods 12133.72 13003.39(Increase)/Decrease in stocks of finished goods and work-in-progress :Opening stockFinished goods 5740.02 6715.39Work-in-progress 1203.69 1192.30Less : Closing stock6943.71 7907.69Finished goods 4466.55 5740.02Work-in-progress 838.15 1203.695304.70 6943.711639.01 963.9854558.89 58265.63SCHEDULE 14 : PERSONNEL COST 2009Rs. Lakhs2008Rs. LakhsSalaries, wages, bonus, etc. 4677.67 5256.71Contribution/Provision for provident fund, superannuation scheme, gratuity fund, etc. 551.95 1028.20Welfare expenses 929.09 945.006158.71 7229.91


Consolidated Schedules77SCHEDULE 15 : INTEREST (NET) 2009Rs. LakhsInterest Paid2008Rs. LakhsOthers 100.32 153.38Less : Interest received (Gross) :100.32 153.38Others (Tax deducted at source Rs. 12.69 Lakhs; Previous Year : Rs. 7.71 Lakhs) 83.20 171.6783.20 171.6717.12 (18.29)SCHEDULE 16 : OTHER EXPENDITURE 2009Rs. Lakhs2008Rs. LakhsStores and Spare parts etc. consumed 612.05 606.65Repairs and maintenance :Plant and machinery 712.77 896.24Buildings 218.64 216.51Others 164.76 187.74Power and fuel 4595.77 4485.35Rent (including lease payments) (See note 9, Schedule 17) 555.90 582.10Rates and taxes (including water charges) 519.90 659.06Insurance 69.40 110.65Clearing, forwarding and transport 1337.29 1533.81Travelling and conveyance 881.57 971.22Commission 179.83 250.64Cash discount 11.76 22.37Other discounts on sales 684.65 1324.79Assets written-off 100.69 392.98Provision for doubtful debts/advances (Net) 29.39 200.11Excise duty (322.38) (374.50)Exchange loss (Net) 168.57 158.29Miscellaneous (See note 11, Schedule 17) 3820.14 3813.7814340.70 16037.79


78 Clariant Chemicals (India) Limited — ConsolidatedAnnual Report 2009Notes to the Consolidated Financial Statementsschedule 17 : Notes on the Consolidated Balance Sheet and Profit and Loss Account for the year ended 31st December, 20091. Significant Accounting PoliciesBASIS OF PREPARATIONThe Consolidated Financial Statements are prepared in accordance with Accounting Standard (AS) 21 on Consolidated Financial Statementsnotified by Companies (Accounting Standards) Rules, 2006. The Consolidated Financial Statements comprise the financial statements of ClariantChemicals (India) Limited and its subsidiary viz. Chemtreat Composites India Private Limited (voting power-100%). The said Company becamesubsidiary on and from February 13, 2006. This subsidiary company is incorporated in India.The financial statements are prepared at historical cost on the accrual basis of accounting and in accordance with the standards on accountingnotified by the Companies (Accounting Standards) Rules, 2006 and referred to in Section 211(3C) of the Companies Act, 1956.The significant accounting policies are as follows :I. Revenue RecognitionThe Company recognises sale of goods on transfer of significant risks and rewards of ownership of the goods to the buyer. Sales are netof excise duty, sales tax and trade discounts, wherever applicable.Dividend income on investments is accounted for when the right to receive the payment is established.II.III.IV.Excise DutyExcise duty payable on products is accounted for at the time of despatch of goods from the factories but is accrued for stocks held atthe year end.Excise Duty related to the difference between the closing stock and opening stock of finished goods has been recognised separately inthe profit and loss account under Schedule of ‘Other Expenditure’.Research and DevelopmentRevenue expenditure on research and development is written off in the profit and loss account in the year in which it is incurred. Capitalexpenditure on research and development is treated in the same way as expenditure on fixed assets.Employee Benefits(a)(b)Short term employee benefit obligations are estimated and provided for.Post employment benefits and other long term employee benefits:Defined contribution plans :Company’s contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under therelevant schemes and/or statute and charged to revenue.Defined benefit plans and compensated absences :Company’s liability towards gratuity, ex-gratia gratuity and compensated absences are actuarially determined at each balance sheetdate using the projected unit credit method. Actuarial gains and losses are recognised in revenue.V. Voluntary Retirement SchemeExpenditure incurred on voluntary retirement scheme is charged to revenue in the year in which it is incurred.VI.Fixed Assets and Depreciation/Amortisation(a)All fixed assets are stated at cost less depreciation, wherever applicable. Cost comprises the purchase price and any otherattributable cost of bringing the asset to its working condition for its intended use. Borrowing cost relating to funds borrowed foracquisition of qualifying assets for the year upto the date the assets are put to use is included in cost.


Notes to the Consolidated Financial Statements79(b)(c)(d)(e)The cost of leasehold land is amortised over the period of the lease.Intangible assets except Goodwill on consolidation are being amortised equally over a period of three years.Depreciation has been calculated on the straight line method at the rates and in the manner specified in Schedule XIV of theCompanies Act, 1956 except for :(i)(ii)certain items of furniture, fixture, air conditioners, plant, machinery and equipment on which a depreciation rate of 20% onstraight line method is applied,electronic data processing (EDP) hardware such as servers on which a depreciation rate of 20% and for other EDP equipmentsincluding personal computers and printers on which depreciation rate of 25% on straight line method is applied,(iii) Motor Cars on which depreciation rate of 25% on straight line method is applied.Fixed Assets held for disposal are stated at lower of net book value and net realisable value.VII.VIII.IX.Impairment of AssetsThe carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based oninternal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its estimated recoverableamount. The recoverable amount is greater of the asset’s net selling price and value in use. In assessing the value in use, the estimatedfuture cash flows are discounted to the present value using the weighted average cost of capital. Previously recognised impairment lossis further provided or reversed depending on changes in circumstances.InventoriesInventories are valued at the lower of cost and estimated net realisable value after providing for obsolescence. The cost of inventoriesis generally arrived at on the following basis :Raw materials, packing materials, trading items and stores and spares – Weighted average costFinished goods and work-in-progress – Absorption costing at works costSundry Debtors/Loans and AdvancesSundry debtors and loans and advances are stated after making adequate provision for doubtful debts/advances.X. InvestmentsLong term investments are stated at cost less provision for diminution in value, other than temporary. Current investments are stated atthe lower of cost and fair value. Dividends are accounted for when the right to receive the dividend payment is established.XI.XII.XIII.LeasesLeases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified asoperating leases. Operating lease payments are recognised as an expense in the Profit and Loss Account on a straight-line basis over thelease term.Foreign Currency Translations(a) Monetary items denominated in foreign currency are translated at the exchange rate prevailing on the last day of the accountingyear. In respect of items covered by forward contracts, the premium or discount arising at the inception of such a forward exchangecontract is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation of such a forwardexchange contract is recognised as income or expense for the period. Foreign currency transactions are accounted at the rateprevailing on the date of transaction.(b) Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchangerate at the date of transaction.(c) Gain or loss arising out of translation/conversion is taken credit for or charged to the Profit and Loss Account.Income TaxIncome-tax expense comprises current tax and deferred tax charge or credit. The current tax is determined as the amount of tax payablein respect of the estimated taxable income for the year. The deferred tax charge or credit is recognised using prevailing enacted orsubstantively enacted tax rates. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised onlyif there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonablecertainty of realisation in future. Deferred tax assets/liabilities are reviewed at each Balance Sheet date based on developments duringthe year and available case laws, to reassess realisation/liabilities.


80 Clariant Chemicals (India) Limited — ConsolidatedAnnual Report 2009XIV.Contingencies/ProvisionsProvision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resourcesembodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisionsexcept in respect of employee benefits are not discounted to its present value and are determined based on best estimate of theexpenditure required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjustedto reflect the current best estimate. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying theeconomic benefit is remote.2. Segment Information for the year ended 31st December, 2009 (As required by Accounting Standard (AS)-17 Segment Reporting) :(a) The Company is organised into two primary business segments mainly :(i) Intermediates and Colours :Includes pigment dyestuffs and their dispersion, Intermediates for dyes, pesticides and pharmaceuticals and master batches forplastics and nylon fibers.(ii) Dyes and Specialty Chemicals :Includes dyestuff synthetic resins, binder materials, auxiliaries and chemicals.(b) The secondary segments of the Company are geographical segments mainly :(i) India(ii) Outside India(c)Segments have been identified and reported taking into account the nature of products and services, the differing risk and returns, theorganisation structure, and the internal financial reporting system.(d) (i) Segment Revenue and Results :The expenses which are not directly attributable to the business segment are shown as unallocated corporate cost.(ii) Segment assets and liabilities :Segment assets include all operating assets used by the business segment and consist principally of fixed assets, debtors andinventories. Segment liabilities primarily include creditors and other liabilities.(iii) Assets and liabilities that cannot be allocated among the segments are shown as a part of unallocable corporate assets andliabilities respectively.Information about primary business segments :Intermediates&Colours*2009Rs. LakhsDyes andSpecialtyChemicalsTotalIntermediates&Colours *2008Rs. LakhsDyes andSpecialtyChemicalsRevenue (Net)External Sales/Revenue 39266.95 53165.69 92432.64 40169.07 51854.86 92023.93ResultsSegment Results 8477.04 10758.66 19235.70 4704.42 7040.26 11744.68Unallocated Corporate Expenses (Net) (917.45) (1270.32)Operating profits 18318.25 10474.36Interest Income/Dividend Income 491.10 343.23Interest Expenses (100.32) (153.38)Profit before Exceptional Items and Taxation 18709.03 10664.21Exceptional items (See note 12, Schedule 17) (2450.46) (48.00)Profit before Taxation After Exceptional Items 16258.57 10616.21Current Tax/Deferred Tax (5427.34) (3550.26)Fringe Benefit Tax (39.00) (118.50)Short provision for taxation in respect of earlier years (30.77) (248.09)Profit after Tax 10761.46 6699.36Total


Notes to the Consolidated Financial Statements81Information about primary business segments : (Contd.)Intermediates&Colours*2009Rs. LakhsDyes andSpecialtyChemicalsTotalIntermediates&Colours *2008Rs. LakhsDyes andSpecialtyChemicalsOther InformationSegment Assets 19429.34 20580.09 40009.43 20989.52 22413.01 43402.53Unallocated Corporate Assets 16075.93 8227.81Total Assets 56085.36 51630.34Segment Liabilities 6597.21 9039.17 15636.38 4585.83 8065.95 12651.78Unallocated Corporate Liabilities 1817.98 1505.08Total Liabilities 17454.36 14156.86Capital Expenditure 668.46 316.36 984.82 1413.84 1240.40 2654.24Unallocated Corporate Capital Expenditure 14.43 35.20Total Capital Expenditure 999.25 2689.44Depreciation/Amortisation 1008.70 887.46 1896.16 1132.43 1100.77 2233.20Impairment of Fixed Assets 124.51 12.47 136.98 728.62 — 728.62Unallocated Corporate Depreciation 69.02 86.35Total Depreciation/Amortisation/Impairment 2102.16 3048.17Non-cash Expenses other than Depreciation/Amortisation/Impairment 61.72 63.93 125.65 541.04 298.42 839.46Unallocated Corporate Non-cash Expenses other thanDepreciation/Amortisation/Impairment 64.28 33.20Total Non-cash Expenses other thanDepreciation/Amortisation/Impairment 189.93 872.66Information about Secondary Segments :2009Rs. Lakhs2008Rs. LakhsTotalIndia Outside India Total India Outside India TotalExternal Sales 75075.99 17356.65 92432.64 72990.89 19033.04 92023.93Segment Assets 36364.76 3644.67 40009.43 40417.60 2984.93 43402.53Additions to Fixed Assets 984.82 — 984.82 2654.24 — 2654.24Notes :1 Total assets exclude the following :(a) Advance payment of income tax Rs. 1769.39 lakhs (Rs. 1648.99 lakhs).(b) Deferred tax assets (Net) Rs. 275.72 lakhs (Rs. Nil).2 Total liabilities exclude the following :(a) Proposed dividend Rs. 3999.11 lakhs (Rs. 5065.54 lakhs).(b) Corporate tax on proposed dividend Rs. 679.65 lakhs (Rs. 860.89 lakhs).(c) Provision for taxation Rs. 1270.15 lakhs (Rs. 1177.43 lakhs).(d) Deferred tax liability (Net) Rs. Nil (Rs. 254.94 lakhs).* Products hitherto reported under “Masterbatches” segment is now reported under “Intermediates & Colours” segment since the products aresimilar in nature.


82 Clariant Chemicals (India) Limited — ConsolidatedAnnual Report 20093. Related Party Disclosure as required by AS-18 “Related Party Disclosures” are given below :Relationship :(a) Holding Company :EBITO Chemiebeteiligungen AG, Clariant International AG and Clariant Participations AG, together hold 63.40% equity shares in theCompany, the ultimate holding company being Clariant AG, Switzerland.(b) Other related parties in the Clariant group where common control exists and with whom the company has transactions :Fellow Subsidiary Companies :Clariant (Argentina) SAClariant Masterbatches (Italia) S.p.A.Clariant (Australia) Pty. Ltd.Clariant Masterbatches (Shanghai) Ltd.Clariant (Canada) Inc.Clariant Masterbatches (Thailand) Ltd.Clariant (China) Ltd.Clariant Masterbatches Benelux SAClariant (Colombia) SAClariant Masterbatches HuningueClariant (Egypt) SAEClariant Masterbatches Ireland LimitedClariant (Gulf) FZEClariant Masterbatches Norden ABClariant (Japan) K.K.Clariant Masterbatches UK Ltd.Clariant (Korea) Ltd.Clariant Oil Services UK Ltd.Clariant (Malaysia) Sdn BhdClariant Pigments (Korea) Ltd.Clariant (Maroc) S.A.Clariant Pigments (Tianjin) Ltd.Clariant (Mexico) S.A. de C.V.Clariant Prodotti (Italia) S.p.A.Clariant (Pakistan) Ltd.Clariant Production (France)Clariant (Singapore) Pte. Ltd.Clariant Production UK Ltd.Clariant (Thailand) Ltd.Clariant Produkte (Deutschland) GmbHClariant (Tianjin) Ltd.Clariant Produkte (Schweiz) AGClariant (Uruguay) SAClariant S.A.Clariant Advanced Materials GmbHClariant Southern Africa (Pty.) Ltd.Clariant Chemicals (China) Ltd.Clariant Specialty Chemicals (Zhenjiang) Co., Ltd.Clariant Chemicals (Taiwan) Co., Ltd.Clariant Specialty Fine Chemicals (France)Clariant Colorquímica (Chile) Ltda.Clariant Trading (China) Ltd.Clariant CorporationClariant Venezuela, S.A.Clariant Distribution UK Ltd.Dick Peters B.V.Clariant Distribuzione (Italia) S.p.A.K. J. QuinnClariant Export AGPT Clariant IndonesiaClariant Ibérica Producción S.A.Clariant Life Science Molecules (Florida) Inc.Clariant Masterbatch Ibérica S.A.Clariant (Türkiye) Boya ve Kimyevi Maddeler Sanayi ve Ticaret A.S.Clariant Masterbatches (Deutschland) GmbH(c) Key Management Personnel :H. Meier : Vice-Chairman & Managing Director (upto 31.12.2009)During the year following transactions were entered into with related parties :(i) Holding Company and Fellow Subsidiaries :2009Rs. Lakhs2008Rs. LakhsHolding Company :Transactions during the year :Clariant International AGSale of goods 1501.15 1742.65Purchase of goods 9234.75 7673.84Services rendered 377.62 324.08Services received 699.34 644.13Dividend paid 1761.75 607.50Expenses recovered 1.51 19.46EBITO Chemiebeteiligungen AGDividend Paid 2368.46 816.71Clariant Participations AGDividend Paid 771.40 266.00Balances outstanding as at the year end :Amount payable 1142.51 984.03Amount receivable 449.12 676.53


Notes to the Consolidated Financial Statements83During the year following transactions were entered into with related parties : (Contd.)(i) Holding Company and Fellow Subsidiaries :2009Rs. Lakhs2008Rs. LakhsFellow Subsidiaries :Transactions during the year :Sale of goodsClariant Produkte (Deutschland) GmbH 1419.66 2338.86Clariant Corporation 1239.30 2321.54Clariant (China) Ltd. 2895.33 1524.41PT Clariant Indonesia 1170.42 811.89Others 4474.85 4119.63Purchase of goodsClariant (Tianjin) Ltd. 51.95 170.67Clariant (China) Ltd. 771.38 1008.24Clariant Corporation 44.82 127.58Others 486.29 211.87Purchase of capital goodsClariant Masterbatches (Deutschland) GmbH 5.27 170.08Clariant Masterbatches (Italia) S.p.A. 10.00 23.34Clariant Production UK Ltd. 2.97 —Sale of capital goodsClariant Produkte (Deutschland) GmbH 50.47 —Services rendered and othersClariant Export AG 308.38 283.67Clariant Produkte (Deutschland) GmbH 0.54 70.55Others 40.52 44.70Expenses recoveredClariant Produkte (Deutschland) GmbH — 4.49PT Clariant Indonesia 0.22 —Clariant (Singapore) Pte. Ltd. 0.05 —Others — 0.78Services received and othersPT Clariant Indonesia 18.49 8.19Clariant (Singapore) Pte. Ltd. 20.67 29.65Clariant Southern Africa (Pty.) Ltd. 27.35 8.86Clariant Produkte (Deutschland) GmbH — 8.93Clariant S.A. — 10.51Clariant (Gulf) FZE 11.37 2.77Others 16.55 17.83Expenses reimbursedPT Clariant Indonesia 0.76 —Clariant (Malaysia) Sdn Bhd 1.63 —Balances outstanding as at the year endAmount payable 424.20 520.37Amount receivable 2476.97 1450.59(ii) Key Management Personnel :Remuneration 217.09 164.97Payable balance 67.58 26.75


84 Clariant Chemicals (India) Limited — ConsolidatedAnnual Report 20094. Contingent liabilities not provided for :31-12-2009Rs. Lakhs31-12-2008Rs. LakhsI. (a) in respect of income tax mattersdecided against the Company, in respect of which the Company is in further appeal 1458.40 856.16II.decided in favour of the Company against which the department is in appeal 14.78 14.78(b) in respect of sales tax matters 578.58 494.22(c) in respect of excise matters 448.03 455.66(d) in respect of bills of exchange discounted with banks1119.58 29.60[since realised Rs. 783.61 lakhs (Rs.17.73 lakhs)](e) Other matters in dispute 2.25 2.25(f) Disputed labour matters – Amount not ascertained.In respect of items (a) to (c), (e) & (f) future cash outflows in respect of contingent liabilities is determinable only on receipt of judgementspending at various forums/authorities.On 15th February 2005, the Company had received an order of the Tahsildar, Thane demanding Rs.120.70 lakhs for the lease of land toThane Municipal Corporation, Fire Brigade and Maharashtra State Electricity Board without obtaining prior permission in writing againstwhich the Company had filed a writ petition on 23rd February 2005 before the Bombay High Court. The Hon’ble High Court has grantedinterim stay in terms of the petition on 14th July 2005.31-12-2009Rs. Lakhs31-12-2008Rs. Lakhs5. Estimated amount of contracts remaining to be executed on capital account and notprovided for 179.15 201.566. Deferred taxes :The major components of deferred tax assets and deferred tax liabilities are set out below :31-12-2009Rs. Lakhs31-12-2008Rs. LakhsDeferred tax assets(a) Provision for doubtful debts 105.50 95.50(b) Provision for retirement benefits 215.89 327.47(c) Expenses allowable for tax purposes when paid 53.54 53.54(d) Integration expenses 15.74 78.70(e) Payment/Provision for voluntary retirement scheme 1184.64 552.46(f) Others — 1.231575.31 1108.90Deferred tax liabilitiesDepreciation/Amortisation/Impairment (1299.59) (1363.84)Deferred Tax assets/(liabilities) – Net 275.72 (254.94)7. Amount paid/payable by the Company to Directors (including Managing Director) as remuneration for services rendered in anycapacity :2009Rs. Lakhs2008Rs. LakhsDirectors’ sitting fees 1.45 0.90Salaries 137.76 136.17Commission 36.75 34.75*Compensation for loss of office 40.83 —Provident fund 11.35 1.89Other perquisites and benefits in cash or in kind 0.40 0.16228.54 173.87* Actual paid during the Year Rs. 25.49 lakhs and Rs. 9.26 lakhs reversed during the year.


Notes to the Consolidated Financial Statements858. Earnings Per Share :2009Rs. Lakhs2008Rs. Lakhs(a) Net profit after taxation 10761.46 6699.36(b) Number of equity shares outstanding 26660745 26660745(c) Basic and Diluted earnings per share (Rupees) 40.36 25.13(d) Face value per share (Rupees) 10.00 10.009. Assets taken on lease on or after 1st April, 2001 :(a)(b)(c)(d)2009Rs. Lakhs2008Rs. LakhsIn respect of operating leases, where lease agreements have been formally entered into,lease payments recognised in the profit and loss account for the year are as follows.Office premises, vehicles and computers 382.43 377.91There are no restrictions such as those concerning dividends, additional debt and furtherleasing, imposed by the lease agreements entered into by the Company.Contingent rent payments in respect of vehicles are dependent upon the excess of actualusage, if any, over stipulated usage.The total of future minimum lease payments under non-cancellable operating leases areas follows :For a period not later than one year 285.05 326.65For a period later than one year and not later than five years 254.37 343.68Total 539.42 670.3310. Expenditure on Research and Development :2009Rs. Lakhs2008Rs. Lakhs(a) Capital expenditure 3.36 9.93(b) Revenue expenditure charged to profit and loss account 224.20 323.29227.56 333.2211. Miscellaneous Expenses in Schedule 16 : Other expenditure include :Auditors’ remuneration and expenses : (Excluding Service tax)2009Rs. Lakhs2008Rs. Lakhs(a) Audit fees 25.00 25.00(b) Company law matters 0.15 —(c) Taxation services 0.23 —(d) Other services 31.20 37.50(e) Out-of-pocket expenses 0.45 0.1157.03 62.6112. Exceptional items in Profit & Loss Account include :2009Rs. Lakhs2008Rs. LakhsTermination benefits to Employees 2810.46 48.00Income from sale of flexible laminating adhesives business (360.00) —2450.46 48.00


86 Clariant Chemicals (India) Limited — ConsolidatedAnnual Report 200913. Employee Benefits :2009Rs. Lakhs2008Rs. LakhsFunded Unfunded Funded Unfunded(a) Defined benefit Plans – As per Actuarial valuation as on December 31, 2009 :Gratuity(i) Expenses recognised in the statement of Profit and Loss Account for the year1. Current Service Cost 181.10 4.17 190.63 4.362. Interest Cost 178.36 6.86 142.81 6.013. Expected return on Plan Assets (204.25) — (194.58) —4. Net acturial (Gain)/Loss recognised during the year (133.86) 4.54 234.40 (5.81)5. Expense/(Income) recognised in Profit & Loss Account 21.35 15.57 373.26 4.56[Gratuity expense/(income) have been recognised in Contribution/Provision forprovident fund, superannuation scheme, gratuity fund etc. in “Personnel Cost”under Schedule 14](ii) Actual return on Plan Assets for the year1. Expected return on Plan Assets 204.25 — 194.58 —2. Actuarial Gain/(Loss) on Plan Assets (38.87) — 39.51 —3. Actual return on Plan Assets 165.38 — 234.09 —(iii) Net Asset/(Liability) recognised in the Balance Sheet as at the year end1. Present Value of the Defined Benefit Obligation 2342.20 69.21 2940.12 84.422. Fair Value of Plan Assets 2141.47 — 2553.09 —3. Net Asset/(Liability) recognised in the Balance Sheet (200.73) (69.21) (387.03) (84.42)(iv) Change in Defined Benefit Obligation during the year1. Present Value of Obligation at the beginning of the year 2940.12 84.42 2551.45 80.182. Current Service Cost 181.10 4.17 190.63 4.363. Interest Cost 178.36 6.86 142.81 6.014. Benefits Paid (784.65) (30.78) (218.68) (0.32)5. Actuarial (Gain)/Loss on obligation (172.73) 4.54 273.91 (5.81)6. Present Value of Obligation as at the end of the year 2342.20 69.21 2940.12 84.42(v) Changes in fair value of Plan Asset during the year1. Fair Value of Plan Assets as at the beginning of the year 2553.09 — 2432.22 —2. Expected return on Plan Assets 204.25 — 194.58 —3. Contributions made 207.65 — 105.46 —4. Benefits paid (784.65) — (218.68) —5. Actuarial Gain/(Loss) on Plan Assets (38.87) — 39.51 —6. Fair value of Plan Assets as at the end of the year 2141.47 — 2553.09 —(vi) Major categories of Plan Assets as a percentage of Total Plan Assets1. Central Government Securities 29.64% — 24.84% —2. State Government Securities 12.32% — 10.03% —3. Private Sector Bonds 20.90% — 15.21% —4. Special Deposit Scheme 25.54% — 21.69% —5. Cash at Bank 1.15% — 1.10% —6. Investment in Insurance Companies 22.06% — 22.67% —7. Others (11.61%) — 4.46% —(vii) Actuarial Assumptions1. Discount Rate 8.0% 8.0% 7.0% 7.0%2. Expected Rate of return on Plan Assets 8.0% — 8.0% —3. Salary Escalation 4.0%-6.0% 4.0%-6.0% 4.0%-6.0% 4.0%-6.0%(viii) Experience Adjustments1. Experience Adjustments on Plan Assets (38.87) — — —2. Experience Adjustments on Plan Liabilities (49.77) 4.54 — —


Notes to the Consolidated Financial Statements8713. Employee Benefits : (Contd.)(a)(b)(c)(d)(e)(f)2009Rs. Lakhs2008Rs. LakhsDefined benefit Plans – As per Actuarial valuation as on December 31, 2009 : (Contd.)Other Long Term BenefitsThe Defined Benefit obligations which are provided for but not funded are as under:Compensated Absence/Leave Salary 365.02 491.71Gratuity is administered through duly constituted and approved independent trusts andalso through Group gratuity scheme with Life Insurance Corporation of IndiaFuture salary increases considered in acturial valuation take in to account inflation,seniority, promotion and other relevant factors, such as supply and demand in theemployment marketBasis used to determine expected rate of return on plan assets:The expected rate of return on plan assets is based on market expectation, at thebeginning of the year, for returns over the entire life of the related obligation.Accounting standard 15 (Revised 2005) “Employee Benefits” requires the disclosure ofexperience adjustments for past four years, however, the information is given only forthe current year.During the year the Company has recognised the following amounts in the Profit & LossAccount in Schedule 14 :Salaries, wages, bonus etc. includes compensated absences 49.17 93.02 Contribution/Provision for provident fund, superannuation scheme, gratuity fund etc.includes :Provident Fund & Family Pension 275.30 278.81Superannuation Fund 239.24 370.57Gratuity Fund 36.92 377.82Other Funds 0.49 1.0014. The Company has entered into an agreement with Laxmi Organic Industries Ltd. on May 15, 2009 for the sale of its business of Diketene anddownstream intermediate products together with removable plant and equipment. On receipt of full consideration, the transaction has beenconcluded in January 2010.15. Figures for the previous year have been regrouped wherever necessary to conform to the current year’s classification.16. The figures in brackets are those in respect of the previous accounting year.For and on behalf of the BoardR. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. Nanda DirectorB. L. Gaggar Director Finance & Company SecretaryMumbai, 19th February, 2010


88 Clariant Chemicals (India) LimitedAnnual Report 2009Financial Performance10 Years‘ Highlights(Rs. Million)Financial Year Ended 31st DecemberFinancial Year Ended 31st March2009 2008 2007 ****2006 ***2006 2005 2004 2003 2002 2001I. OPERATING RESULTGross Sales 9732.2 10014.5 9517.1 7538.9 9246.5 4035.2 4083.4 3821.7 3310.1 3301.9Net Sales 9213.4 9163.9 8614.4 6870.4 8479.1 3656.1 3746.8 3492.8 2990.1 2991.8Gross Earnings Before Depreciation/Impairment and Taxation +2079.4 +1375.7 +1021.3 +655.7 893.1 472.5 380.0 343.7 273.0 236.8Profit Before Taxation #1631.1 #1072.9 #493.3 #507.8 648.4 *357.8 249.5 214.7 141.6 114.8Profit After Taxation 1081.4 674.8 317.9 328.7 403.9 155.9 335.7 149.7 90.6 89.8Equity Dividend 666.5 506.6 266.6 479.9 293.3 69.9 69.9 69.9 58.3 46.6II.FINANCIAL POSITIONGross Fixed Assets 3556.6 3985.1 3819.6 3831.7 3850.2 2105.6 1934.0 1973.8 1930.3 1912.7Net Fixed Assets 1527.3 1646.0 1719.1 1651.8 1601.6 837.2 737.7 804.8 862.9 935.0Investments 1245.0 578.4 294.3 465.0 1132.6 464.5 204.5 85.0 85.0 87.4Net Current Assets 698.5 1008.3 1164.8 1128.2 1198.7 743.5 741.5 843.3 982.1 1017.2Equity 266.6 266.6 266.6 266.6 **266.6 116.5 116.5 116.5 116.5 116.5Reserves 3211.3 2909.8 2827.6 2835.8 3054.4 1605.7 1529.6 1272.7 1200.6 1303.9Shareholders' Fund 3477.9 3176.4 3094.2 3102.4 3321.0 1722.2 1646.1 1389.2 1317.1 1420.4Loans and Deferred Payment Credits 20.5 30.9 40.7 62.1 559.4 339.4 110.4 236.4 474.0 619.2Capital Employed 3498.4 3207.3 3134.9 3164.5 3880.4 2061.6 1756.5 1625.6 1791.1 2039.6III.PER EQUITY SHAREEarnings (Rupees) #40.56 #25.31 #11.92 #12.33(NotAnnualised)15.15 13.30 28.82 12.96 7.97 7.45Dividend 25 19 10 18 11 6 6 6 5 4# After exceptional items+ Before exceptional items* Before prior period items** Including share capital suspense account*** In view of the amalgamation w.e.f. April 1, 2005, the figures of the year 2006 are not directly comparable to those of earlier years.**** Figures are for nine months ended December 31, 2006


www.clariant.inClariant Chemicals (India) LimitedRavindra Annexe194 Churchgate ReclamationMumbai 400 020

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