Annual Report 2006 - Clariant

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Annual Report 2006 - Clariant

Clariant Chemicals (India) LimitedName of the Stock Exchange Stock Code No. ISINBSE CLARICHEM INE492A01029NSE CLNINDIA INE492A01029Address for correspondenceRegistrar & Share Transfer Agents :M/s Sharepro Services (India) Pvt. Ltd.Satam Estate, 3 rd FloorAbove Bank of BarodaChakala, Andheri (E)Mumbai – 400 099Tel: 2821 5168 / 69Fax: 2837 5646e-mail ID under Clause 47 (f) of Listing agreementclariant@shareproservices.comCompany :Clariant Chemicals (India) LimitedRavindra Annexe194, Churchgate ReclamationMumbai – 400 020.Tel: 2202 2161Fax: 2202 9781Contact Person:Mrs. Indira Karkera/Mr. B. DinkarContact Person:Mr. Satish P. BhattuAsst. Company SecretaryAnnual General MeetingDay and Date : Thursday, April 19, 2007Time : 04.00 p.m.Venue : Y. B. Chavan AuditoriumGeneral Jagannath Bhosale MargNext to Sachivalaya GymkhanaMumbai – 400 021Book Closure Dates : April 5, 2007 to April 19, 2007 (Both days inclusive)


Clariant Chemicals (India) LimitedCorporarporate InformationBOARD OF DIRECTORSMr. R. A. Shah – ChairmanMr. H. Meier – Vice-Chairman & Managing DirectorMr. B. S. MehtaDiwan A. NandaMr. K. J. BharuchaMr. P. LindnerDr. A. WaldeMr. W. MohrCHIEF FINANCIAL OFFICER & COMPANY SECRETARYMr. Sunil K. NayakAUDIT COMMITTEEMr. R. A. Shah – ChairmanDiwan A. NandaMr. K. J. BharuchaINVESTORS’ GRIEVANCE COMMITTEEDiwan A. Nanda – ChairmanMr. H. MeierSOLICITORSCrawford Bayley & Co.BANKERSThe Hongkong & Shanghai Banking Corpn. Ltd.Standard Chartered BankCitibank N.A.BOARD COMMITTEEMr. K. J. Bharucha – ChairmanMr. H. MeierMANAGEMENT COMMITTEEMr. H. Meier – ChairmanMr. Sunil K. NayakMr. A. K. PrasadDr. G. G. PatkarDr. S. SiddhanMr. S. S. PatilREGISTERED 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 561AUDITORSA. F. Ferguson & Co., Chartered AccountantsINTERNAL AUDITORSMahajan & Aibara, Chartered AccountantsREGISTRAR & SHARE TRANSFER AGENTSSharepro Services (India) Pvt. Ltd.Satam EstateChakala, Andheri (E)Mumbai-400 0991


Clariant Chemicals (India) LimitedNoticeNOTICE is hereby given that the Fiftieth Annual GeneralMeeting of the Members of Clariant Chemicals (India)Limited will be held at Y. B. Chavan Auditorium,General Jagannath Bhosale Marg, Next to SachivalayaGymkhana, Mumbai – 400 021 on Thursday, April 19, 2007 at04.00 p.m. to transact the following business:Ordinary Business:1. To consider and adopt the Balance Sheet as atDecember 31, 2006 and the Profit and Loss Accountfor the period of nine months ended on that datetogether with the Reports of the Directors and Auditorsthereon.2. To declare a dividend.3. To appoint M/s. A. F. Ferguson & Co., CharteredAccountants, as the Auditors of the Company to holdoffice from the conclusion of this Annual GeneralMeeting upto the conclusion of the next AnnualGeneral Meeting and to authorise the Board ofDirectors to fix their remuneration.4. To appoint a Director in place of Mr. R. A. Shah, whoretires by rotation and being eligible, offers himself forre-appointment.5. To appoint a Director in place of Mr. P. Lindner, whoretires by rotation and being eligible, offers himself forre-appointment.Notes:1. A MEMBER ENTITLED TO ATTEND AND VOTEAT THE MEETING IS ENTITLED TO APPOINT APROXY TO ATTEND AND VOTE INSTEAD OF HIMSELFAND THE PROXY NEED NOT BE A MEMBER OF THECOMPANY.Proxies in order to be effective, should be dulycompleted, stamped and must be received at theregistered office of the Company not less than 48 hoursbefore the meeting.2. Profiles of the Directors being reappointed asrequired under clause 49 of the listing agreement areprovided in the report on Compliance of CorporateGovernance.3. The Register of Members and Share Transfer Books ofthe Company will remain closed from Thursday, April 5,2007 to Thursday, April 19, 2007, both days inclusive, forthe purpose of payment of dividend, if declared at theAnnual General Meeting.4. The dividend on shares as recommended by theBoard of Directors, if declared at the meeting, will bepaid:(i)in respect of shares held in demat form, on thebasis of beneficial ownership as per detailsfurnished by the Depositories, as at the end of thebusiness on April 4, 2007 and6. To appoint a Director in place of Diwan A. Nanda, whoretires by rotation and being eligible, offers himself forre-appointment.(ii)in respect of shares held in physical form to thosemembers whose names appear on the Register ofMembers of the Company after giving effect to allvalid share transfers lodged with the sharetransfer agent on or before April 4, 2007. TheCompany will dispatch the dividend warrants on orafter April 20, 2007.February 22, 2007Registered Office:Ravindra Annexe194, Churchgate ReclamationMumbai 400 0202By Order of the BoardFor Clariant Chemicals (India) LimitedSunil K. NayakChief Financial Officer& Company Secretary5. The amount outstanding in unpaid dividend account inrespect of financial year 1999-2000 will be transferredto the ‘Investor Education and Protection Fund’maintained with the Central Government after the endof 7 years in April, 2007. Members who have still notencashed their dividend are requested to do so at theearliest.6. In case of any change of particulars includingaddress, bank mandate and nomination for sharesheld in demat form, should be notified only to therespective Depository Participants where the memberhas opened his/her demat account. The Company or its


Noticeshare transfer agent will not act on any direct requestfrom these members for change of such details.However requests for any change in particulars inrespect of shares held in physical form should be sentto the Registrars & Share Transfer Agents of theCompany.7. Members holding shares in demat form may pleasenote that the bank account details given by them totheir Depository Participants (DPs) and passed on tothe Company by such DPs would be printed on thedividend warrants of the concerned members.However, if any member(s) wants to receive dividend inany other bank account, he/she should change/correct the bank account details with his/herconcerned DP. The Company will not be able to act onany such request from shareholders directly fordeletion/change in the bank account details.8. Members may please note that the dividend warrantsare payable at par at the designated branches of theBank printed on the reverse of the dividend warrant foran initial period of three months only. Thereafter, thedividend warrant on revalidation is payable only atlimited centres/branches of the said bank. Themembers are therefore, advised to encash dividendwarrants within the initial validity period.9. Copies of Annual Reports will be sent to those memberswhose names appear on the Register as on March 9,2007. The members who acquire shares thereafterare requested to collect their copies from theRegistered Office of the Company.10. Members who wish to attend the meeting arerequested to bring attendance slip sent herewith, dulyfilled in, and the copy of the annual report. Copies of theannual report will not be distributed at the meeting.3


Clariant Chemicals (India) LimitedDirectors’ Report to the MembersThe Directors present herewith their Fiftieth Annual Reportand the Audited Statement of Accounts of the Company forthe nine months period ended December 31, 2006.1. Performance of the CompanyApril 2006 toApril 2005 toDecember 2006 March 2006Rs. lakhsRs. lakhsTurnover 68704 85596Other Income 2432 2813Total Revenue 71136 88409Profit before Interest,Depreciation and TaxInterest 6605 78935(4)Depreciation (1535) (2447)Profit before Tax 5077 6484Provision for Taxation— Current Tax (1250) (2238)— Deferred Tax (456) (38)— Fringe Benefit Tax (85) (228)— Excess provision fortaxation in respect ofearlier years — 59Profit after Tax 3286 4039Balance brought forwardfrom previous year 3866 4171Amount availablefor appropriation 7152 8210The Directors havemade the followingappropriations therefrom:(a) General Reserve 330 1000(b) Proposed dividend 4799 2933(c) Corporate Tax onProposed Dividend 673 411Balance carriedforward to BalanceSheet 1350 3866Note: Figures for the current period are for nine months andtherefore are not strictly comparable with the previousperiod of twelve months.2. Change of Accounting YearThe accounting year has been changed from April-March to January-December. Therefore, the accountshave been drawn up for nine months for the periodended December 31, 2006.3. Post-Merger Integration ProcessThe Company achieved significant success in unifyingthe former subsidiaries into a single integratedorganisation. Without compromising its focus on itsmarkets and customers, the Company was able tointegrate its businesses, adopt uniform processes4and practices, rationalise areas of overlap andduplication and reap the benefit of synergies. This waslargely achieved through continuous and opencommunications and personal interaction at all levelsby the senior management team of the Company.The integration efforts culminated with the successfulimplementation of the SAP WINS system across all thebusinesses, sites and locations. SAP WINS is thesystem that is used globally by Clariant and after goinglive on January 4, 2007, Clariant Chemicals (India)Limited is in a position to reap the numerous ongoingbenefits of being part of the global system.4. Subsidiary CompanyThe Statement pursuant to Section 212 of theCompanies Act, 1956, relating to wholly-ownedsubsidiary of the Company, viz., Chemtreat CompositesIndia Private Limited, is attached along with theAccounts of the Company.In the context of the mandatory requirement to presentconsolidated accounts, which provides members witha consolidated position of the Company including itssubsidiaries, at the first instance, members are beingprovided with the report and Accounts of the Companyand the consolidated accounts as contemplated bySection 219 of the Companies Act, 1956 and AccountingStandard 21 issued by the Institute of CharteredAccountant of India. Members who wish to receive thefull Report and Accounts including the Report andaccounts of the subsidiary will be provided with uponreceipt of a written request.5. DividendThe Board of Directors is pleased to recommend for theapproval of shareholders, a dividend of Rs. 18/- perequity share of the face value of Rs. 10/- each includinga ‘Golden Jubilee’ special dividend of Rs. 10/- perequity share.This would involve a cash outflow of Rs. 5472 lakhsincluding tax on dividend of Rs. 673 lakhs against theprevious year outflow of Rs. 3344 lakhs including tax ondividend of Rs. 411 lakhs. The dividend, if approved, willbe paid to the shareholders whose names appear onthe Register of Members, determined with reference tothe book closure from April 5, 2007.6. Finance6.1 Term LoanNo long term loan was taken during the year. Termloan of Rs.125 lakhs was repaid during the year.6.2 Fixed DepositsAs at December 31, 2006 an aggregate of Rs.1.28lakhs representing 18 deposits which hadremained unpaid pending instructions from thedepositors concerned.


Directors’ ReportAs per requirements of Section 205C of the CompaniesAct, 1956 the fixed deposits and interest unclaimedafter completion of seven years is transferred tothe Investor Education and Protection Fund (IEPF)established by the Central Government. There is noamount due and outstanding to be credited to InvestorEducation and Protection Fund.MANAGEMENT DISCUSSION AND ANALYSIS7. Financial and operational performance7.1 The performance and the key ratios of theCompany is provided in the following table:Sr.April 2006 to(Rs in lakhs)April 2005 toNo. December 2006 March 20061. Turnover 68704 855962. Other Income 2432 28133. Total Revenue 71136 884094. Total Expenditure(excluding Interest &Depreciation) 64531 794745. PBDIT (3-4) 6605 89356. Depreciation 1535 24477. Interest (7) 48. PBT (5-6-7) 5077 64849. Taxes 1791 244510. PAT (8-9) 3286 4039Note: Figures for the current period are for nine months and therefore arenot strictly comparable with the previous period of twelve months.Key RatiosSr.April 2006 toApril 2005 toNo. December 2006 March 20061. PBDIT/Total Revenue (%) 9.29 10.112. PBT/Total Revenue (%) 7.14 7.333. PAT/Total Revenue (%) 4.62 4.574. EPS (Rupees) 12.33 15.15(Not annualised) (Annualised)5. ROCE (%) Annualised 13.85 10.416. Debt/Equity Ratio 0.02 0.177. Inventory Turnover(No. of times) Annualised 7.15 6.838. NWC/Total Revenue (%)Annualised 10.86 12.967.2 Segment-wise Performance:The specialty chemicals industry comprises of awide range of products from textile dyes andchemicals, leather dyes and chemicals, paperchemicals, rubber chemicals, masterbatches,pigments, additives, electronic chemicals, finechemicals, water treatment chemicals, adhesivesetc.7.2 (a)Intermediates and ColoursThe Company deals in pigment dyestuffsand their dispersions, intermediates for dyes,pesticides and pharmaceuticals. The Companyhas a strong presence in organic pigments andserves the needs of the paints, printing inks,plastics, rubber, detergents, cosmetics andother industries. It is a leader in diketenechemistry and has the capacity to manufacturelarge volumes of this important building block,in a wide range of derivative forms. It istherefore a pre-eminent player in the diketenebased intermediates business in India.The total sales under this segment for thenine months period were Rs. 25563 lakhs.Export sales have contributed 44 per cent ofthe overall sales. Pigment dyestuffs andintermediates for dyes constitute 90 per centof the total sales under this segment.(b)Dyes and Specialty ChemicalsClariant’s specialty chemicals help enhancethe performance, look and feel of the finalproducts of its customers and add protectionand strength to such products.Textile, leather, paper, detergents and cleaning,personal care products are amongst thenumerous end uses that are served by theCompany with a wide range of specialtychemicals.The total sales under this segment for thenine months period was Rs 41351 lakhscontributing 60 per cent in the total sales ofthe Company.(c)MasterbatchesThe Masterbatches segment of the Companydeals in colour and additive concentrates andspecial mixtures of these compounds for useby the automotive, textile and technical fibers,electronic and electrical devices, homeappliances, toys, medical devices, sportinggoods and packaging. The segment hasrecorded sales of Rs. 1790 lakhs.Segment wise performance(Rs in lakhs)April 2006 toApril 2005 toDecember 2006 % March 2006 %Intermediatesand colours 25563 37 35510 41Dyes and SpecialtyChemicals 41351 60 48401 57Masterbatches 1790 3 1685 2Total 68704 100 85596 1005


Clariant Chemicals (India) Limited8. Industry Structure and DevelopmentWith revenues of approximately US$ 28 billion, thechemical industry in India constitutes 6.7% of GDPand 10% of exports. By 2010, it aspires to achievea size of US$ 100 billion. The Indian specialty chemicalssegment is worth US$ 7 billion and according to aKPMG report has the potential to grow to US$ 27 billionby 2010. Most specialty chemical companies inIndia operate in textile dyes and chemicals, leatherdyes and chemicals, paper chemicals, rubberchemicals, masterbatches, pigments, additives,electronic chemicals, fine chemicals, polymerisates,pharmaceutical intermediates, adhesives and watertreatment chemicals.The specialty chemicals sector is characterised byan innovation culture that regularly develops andlaunches new high value functional chemicals. Theproducers are customer-focused and aim to provideunique products that give their customers a distinctadvantage or benefit. The dyestuffs segment hastraditionally been one of the largest in the industry andcontinues to be crucial because of its forward andbackward linkages with a number of other industries.However, the bulk of the action is in the textilepre-treatment and finishing chemicals areas, whereprofitability is governed by constant innovation andnew product development.9. Opportunities and ThreatsWith its strong technical skills and low costmanufacturing, India is fast becoming a preferredoutsourcing choice for knowledge based chemicals. Ithas the ability to be a large player in the globalspecialty chemicals industry and a dominant player inselect segments such as pharmaceuticals, custommanufacturing and contract research. The specialtychemicals industry is continuously faced with aprice-cost squeeze due largely to the relentlessincrease in raw material and energy costs. In itsattempt to be a global player, the industry is trying tobuild distinctive customer service competencies andbecome cost efficient.The laws regarding safety, health and environmentstandards are becoming increasingly stringent everyday. Various new retailer standards, as well as thenew legislation, the Registration Evaluation andAuthorisation of Chemicals (REACH) require a plethoraof data to be provided by companies engaged ininternational trade. Exporters, particularly those in thetextile and leather industry are increasingly requiringchemical manufacturers to provide adequatecertification that their products are fully compliant withall statutory requirements. The Company has investedRs. 35 million to set up a world class Product SafetyLaboratory with excellent testing facilities andprocesses that enable it to undertake a comprehensive6range of tests encompassing process tests, ecologicaltests and test for banned and restricted substances.These tests cover the entire gamut of postmanufacturing hazards of products – such as duringdrying, milling, packing, storage, transport and ultimateuse at the customers’ facilities.10. OutlookThe Indian economy, with an expected growth rate ofaround 9.2% in 2006-07 is amongst the fastest growingin the world. According to a recent update of theGoldman Sach’s BRIC’s report, productivity growth willhelp India sustain over 8% growth until 2020 and makeits economy the second largest in the world, ahead ofthe US, by 2050. India’s per capita GDP in dollars willquadruple from 2007 to 2020. Such a scorching growthforecast spells improved demand for consumer goodssuch as textiles, leather, paints as also for automobiles,housing, construction, packaging and other industrialsectors and will lead to a sharp increase in demand forspecialty chemicals. With all the main markets that theCompany services showing strong growth impulse, thefuture outlook for most of our businesses will continueto be encouraging.Textile: The textile and clothing industry is valued atUS$ 46 billion and is projected to grow to US$ 85 billionby 2010. There has been regular increase ininvestments in the textile sector during the last two tothree years and investments in the year 2006 areestimated to reach a level of US$ 6 billion.The apparel industry is already the largest foreignexchange earning sector, contributing 12% of thecountry’s total exports. The 10% cap on Chinese textileexports to the US will continue till 2008 and is expectedto afford India a window of advantage. Many of theworld’s leading brands are sourcing products fromIndia and the country has clearly emerged as aflourishing outsourcing centre for the textiles andapparel industries to meet global requirements. India ispoised to strengthen its position as a player in hometextiles with an over three fold jump expected inexports by 2010. It’s home textile exports areforecasted to rise to US$ 10 billion by 2010 from US$ 3billion in 2005.Leather: The leather industry has seen good growth inthe past, as the government has developed policies toboost exports of leather. The Council for LeatherExports expects exports to cross US$ 3 billion mark in2006-07 and has set a target of US$ 7 billion for 2010-11.The council has strengthened its marketing efforts andthe main areas of growth for 2007 are expected to be inshoe uppers and upholstery. There has been a positiveresponse from Italian, Chinese and Taiwanesecompanies for investing in shoe and leather goodsmanufacturing units.


Directors’ ReportPaper: The paper industry in India is highly fragmentedwith only about 45% of the market controlled byorganised players. No green field expansion projectsare expected shortly but all the major big paper millsare expanding the capacity of their existing plants.Demand for paper has been rising steadily over thepast few years, in the wake of the booming economy,as consumer spending on education, newspapers andpackaged consumer products increases. India has aper capita consumption of paper of about 7 kg. ascompared to more than 30 kg. in China and 300 plus kg.in the United States. Collectively, the Indian paperindustry amounted to approximately 7.2 million tonnesin 2005-06. The industry is expected to grow at over10% in the financial year 2008.Paints: The Indian paints industry currently valued atUS$ 2 billion expects strong growth from theconstruction and housing sector to keep industryplayers buoyant in the years ahead. It has helped theindustry attain an average growth of 8 - 9% in the lastfour years. The decorative paints segment is likely togrow at 30% driven by the construction and housingboom. The per capita consumption of paints in India isvery low at about 0.5 kg. per annum when comparedwith 4 kg. per capita in south-east Asian nations and22 kg. in developed countries.India, a predominantly decorative paints market,has also been seeing a big growth in the industrialpaints segment propelled by the surge in automobilebuying. Indian automobile makers currently make onemillion automobiles per year and this segmentaccounts for 50% of the demand for industrial paints.Consumer buying of various other goods is going up. Beit floor coatings for the pharmaceutical or foodsindustry, road marking paints, high performancecoatings for the petrochemical and other relatedsectors, powder coating for doors — off take of allthese paints is moving upward and providing goodprospects for our organic pigments, additives andbiocides for coatings.Packaging: The packaging industry is serviced by thepigments, additives and masterbatches businesses.Increased affluence has made more productsaffordable to a larger section of the population. Thenewfound prosperity and changing life styles hasresulted in a booming market for convenienceproducts, both in the foods and non-foods sectors. Thisin turn has led to a growing market for convenientpacking materials, easy-to-pour dispensing caps etc.With Indians becoming more health conscious, there isalso a move towards packaged, branded productsrather than the unpackaged formats. The packagingindustry has good potential and over the next five yearsis expected to grow at 8 to 10% per annum. The Indianmarket for packaging materials is estimated at aroundRs. 400 billion per annum. Of this, the consumerpackaging market of the country is valued at aroundRs. 180 billion.Construction: In order to sustain an 8% annual growthrate, the country will need, among other things, robustand world-class infrastructure. Overall, infrastructureinvestments are expected to rise from Rs. 1,700 billionin the financial year 2005 to Rs. 2,200 billion bythe financial year 2008. Of this, the roads sectoris expected to contribute as much as 34%, orRs. 757 billion. The roads sector is one that is expectedto see the maximum action in the infrastructuresegment.11. Threats, Risks and ConcernsThe risk framework involves identifying risks acrosseach of the business processes of the Company.As with any business organisation, the Company’sactivities expose it to a variety of risks.11.1 Product and environmental risksRisk arising from product liability is protectedthrough insurance policies or limited throughcontractual agreements wherever possible.Risk associated with protection of environment,safety of operations and health of people at workis monitored regularly with reference to statutoryregulations prescribed by the governmentauthorities and guidelines defined by Clariant.The Company does not merely fulfill the legalrequirements concerning emission, waste waterand waste disposal, but actually works to evenstricter self imposed standards.11.2 Financial risksFinancial risk management is carried out by thetreasury department under policies approved bythe Board of Directors. Written policies foroverall foreign exchange risk and investingexcess liquidity are in place.11.3 Market Risks11.3.1 FOREX risk: The Company is exposed toforex risks arising from various currencyexposures, primarily with respect to USD,GBP, Euro and Swiss Franc. The Companyhas an appropriate policy in place andcovers the risk partly through hedging bymeans of forward transactions.11.3.2 Interest risk: Interest risk mainly arisesfrom financial debt. The policy is toborrow in fixed rate instruments providedthe risk of rising interest rates is seen tobe material. Downside interest viewsallow for a lower fixed rate portion ofinterest bearing financial debt.7


Clariant Chemicals (India) Limited811.3.3 Liquidity risk: Sufficient and not excessivecash and marketable securities are keptand investment is made mainly in debtoriented mutual funds.11.3.4 Credit risk: Credit risk policy is in place toensure that sale of products is made tocustomers after an appropriate creditlimit allocation process.11.4 Litigation RisksThe outcome of litigation in matters of tax law orin any other statutory obligation cannot bepredicted and therefore poses a risk. In thiscontext, too, insurance policies, liquidityreserves and credit lines limit the risk for theCompany.11.5 IT RisksInformation Technology risk is associated withfailure of the system network resulting indisruption of operations and consequential lossof business. The Company’s business criticalsoftware is operated on a server with regularmaintenance and back-up of data. The globalcommunication network is managed centrallyand is equipped to deal with failures andbreakdowns. Updated tools are regularly loadedto ensure virus free environment.Cautionary StatementStatements in this Report particularly those which relateto “Management Discussion & Analysis” may constituteforward looking statements within the meaning ofapplicable laws and regulations. Actual results maydiffer materially from those expressed or implied inthe statement since the Company’s operations areinfluenced by many external and internal factors beyondthe control of the Company.12. Internal Control Systems and their adequacyThe Company has a proper and adequate system ofinternal controls to ensure that all assets aresafeguarded and protected against loss fromunauthorised use or disposition and that transactionsare authorised, recorded and reported quickly. TheCompany has established well defined written policiesand processes across the organisation pertaining to allmajor activities including authority for approvals. In allcases where a monetary decision is involved variouslimits and authority are in place. A structuredManagement Information System together with anexhaustive budgetary control system covering allmajor operations form part of the overall controlmechanism that ensures the requisite informationrelated to operations is being reported and is availablefor control and review.M/s. Mahajan & Aibara, Chartered Accountants isthe internal auditor for the Company. To ensureindependence and objective functioning, the internalauditors report directly to the Audit Committee of theBoard. The internal auditors independently evaluateadequacy of internal control systems. Based on theaudit observations and suggestions, follow up andremedial measures are being taken including theincreased area of coverage, if necessary.13. Cost RecordsAs per government directives, the Company’s costrecords in respect of Dyes and Pharma intermediatesfor the year ended December 31, 2006 are beingaudited by cost auditors M/s. Nanabhoy & Co. whowere appointed by board with the approval of CentralGovernment.14. Human ResourcesDuring the year, the Company focused on continuingthe integration and harmonisation of various HRsystems applicable to management staff such asthe Perquisite/Benefit Structure, the PerformanceManagement System, Leave Rules and Local BonusPlan.HR supported the Businesses and Functions rationalisetheir business processes and manpower. TheCompany’s headcount as on December 31, 2006 was1431 (March 31, 2006 – 1490).15. Particulars of EmployeesThe statement giving particulars of employees, asrequired under Section 217(2A) of the Companies Act,1956 read with the Companies (Particulars ofEmployees) Rules, 1975 forms part of this report.However, as per the provision of Section 219 (1)(b)(iv) ofthe Companies Act, 1956, the report and the statementof accounts are being sent to all shareholdersexcluding the above statement. Any shareholderinterested in obtaining a copy of this statement maywrite to the Company Secretary at the RegisteredOffice of the Company.16. Corporate Governance(i) The disclosures as required under the CorporateGovernance have been furnished as a part of thisreport. The Company has taken the requisite stepsto comply with the recommendations concerningCorporate Governance. All board members andsenior managerial personnel have affirmedcompliance with the code of conduct for thecurrent year.(ii) As a Listed Company, necessary measures aretaken to comply with the Listing Agreements withthe Stock Exchanges. A report on CorporateGovernance together with a certificate of


Directors’ Reportcompliance from the Auditors, forms part of thisreport.17. Directors(i) In accordance with the provisions of theCompanies Act, 1956 and the Articles ofAssociation of the Company, Mr. R. A. Shah,Mr. P. Lindner and Diwan A. Nanda are due toretire at the forthcoming Annual General Meeting,and being eligible, have offered themselves forre-appointment.(ii) Details of the Directors seeking re-appointmentas required under Clause 49 VI of the ListingAgreements entered into with the StockExchanges are provided in the CorporateGovernance Report forming part of this Report.18. Conservation of energy, technology absorption andforeign exchange earnings and outgoStatements giving the particulars relating toconservation of energy, technology absorption andforeign exchange earnings and outgo, as requiredunder the Companies (Disclosure of Particulars in theBoard of Directors’ Report) Rules, 1988 are annexed.19. Socially ResponsibleEven as the Company’s main objective is to increasestakeholder value, it has not lost sight of its widersocial obligations. Long before the term CorporateSocial Responsibility became fashionable, theCompany followed an unwritten policy of providingsupport to various local community developmentinitiatives — be it in the form of contributing to theconstruction of a hospital at Roha or planting saplingsto promote ecological balance.The Company’s efforts continue to be focused on thequality of life of the people in and around its variousgeographical locations. During the nine months, theCompany provided significant financial and materialsupport to the various social, cultural, educational,health and safety initiatives of the communities in andaround Thane, Roha, Cuddalore and Kanchipuram.20. Directors’ Responsibility StatementPursuant to Section 217(2AA) of the Companies Act,1956, the Directors to the best of their knowledge andbelief confirm that:(a) in the preparation of the annual accounts, theapplicable accounting standards have beenfollowed along with proper explanation relating tomaterial departure;(b) appropriate accounting policies have beenselected and applied consistently and have madejudgments and estimates that are reasonable andprudent, so as to give a true and fair view of thestate of affairs of the Company as at December 31,2006 and of the profit of the Company for the ninemonths period ended December 31, 2006;(c) proper and sufficient care has been taken for themaintenance of adequate accounting records inaccordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of theCompany and for preventing and detecting fraudand other irregularities;(d) the accounts for the nine months period endedDecember 31, 2006 have been prepared on a ‘goingconcern’ basis.21. AuditorsThe auditors M/s. A.F. Ferguson & Co., CharteredAccountants retire at the conclusion of the ensuingAnnual General Meeting and are eligible forre-appointment. As required under the provisions ofSection 224(1B) of the Companies Act, 1956, theCompany has obtained confirmation from the auditorsproposed to be appointed that their re-appointment, ifmade, would be in conformity with the limits specifiedin the said Section.22. AcknowledgementThe Board of Directors wishes to express its gratitudeand record its sincere appreciation of the dedicatedefforts of all the employees, their commitment andprofessionalism despite the challenging environment.The Company continued to receive co-operation andunstinted support from the customers, distributors,suppliers and other business partners.The Directors take this opportunity to express theirgrateful appreciation of the excellent assistance andco-operation received from Government bodies,bankers and ongoing support received from Clariantgroup companies. The Directors are thankful to theesteemed shareholders for their support and theconfidence reposed in the Company.Mumbai, February 22, 2007For and on behalf of the Board of Directors,R. A. ShahChairman9


Clariant Chemicals (India) LimitedAnnexure to the Directors’ ReportInformation as per Section 217(1)(e) read with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988 and formingpart of the Directors’ Report for the nine months period ended December31, 2006.FORM-AParticulars with respect to Conservation of EnergyCurrentPreviousParticularsPeriodYearApril 2006 toApril 2005 toDecember 2006 March 2006A. POWER, FUEL AND WATERCONSUMPTION:1. Electricity:(a) Purchased Units (in ‘000 Kwh) 37107 47986Total amount (Rs. in lakhs) 1586 1801Rate per Unit (Rs.) 4.27 3.75(b) Own Generation:(i) Through Diesel GeneratorUnit (in ‘000 Kwh) 493 643Units/litre of diesel oil 3.41 3.24Per unit cost of diesel (Rs.) 9.34 9.22(ii) Through Steam Turbine/GeneratorNILNIL2. CoalNILNIL3. Furnace Oil and LSHSQuantity (MT) 3560 5224Total Amount (Rs. lakhs) 651 802Average rate (Rs. / Kg.) 18.29 15.354. OthersNILNIL5. Agro Mass BriquettesQuantity - (Tonnes) 11108 11975Total Amount (Rs. in lakhs) 372 369Rate Per Unit / Rs. Kg. 3.35 3.086. Lignite/Fire WoodQuantity (Tonnes) 1455 2414Cost (Rs. lakhs) 20 34Rate Per Kg. 1.37 1.40B. CONSUMPTION PER UNIT OF PRODUCTION:The Company manufactures a wide variety of products. The productsbefore reaching the finishing stage pass through various operations inthe different plants. It is, therefore, not feasible to furnish theinformation in respect of consumption per unit of production.Conservation of Energy• Installation of Variable Frequency Drives on various processequipment for power savings.• Mercury Vapour Lamps (MVL) replaced by high efficient energysaving Compact Fluorescent Lamps (CFL).• Installation of solar street lights.• Close loop arrangements in vacuum pumps for water savings reuse.• Use of agro briquettes in addition to coal.• Close control on boiler parameters for reduction of fuelconsumption.· • Installation of Air Manager on compressed air system for reductionof power consumption.• Installation of energy efficient pumps for cooling water circulation.• Recycling of ice melted water in ice plant.• Various modifications in ice plant for reduction in powerconsumption.• Modifications in WWTP for reduced water and power consumption.• Installation of transparent roofing to provide more day light, andelimination of electricity during day time.• Relocation of certain utilities nearer to production at Balkamresulted in substantial reduction of electricity consumption.Additional investment and proposals planned:• Co-gen Plant for producing own electricity and steam to face thepower crisis as well as uninterrupted power supply for productionplants.10• To evaluate the possibility of using Reverse Osmosis system forrecovery of water.• Well designed and full fledged warehouse to take care of highervolumes.• Enhancement of Waste Water PlantImpact on operationThe adoption of energy conservation measures indicated above hasresulted in substantial savings in the energy cost.FORM BForm of disclosure of particulars with respect to Absorption ofTechnology, Research & Development (R & D)Research & Development (R & D):1. Specific areas in which R & D carried out by the Company :The R & D department continued to direct its efforts towards thedevelopment of technology for fine chemicals for active ingredients inagro and pharma products, pigments, pigment preparations,surfactants and auxiliaries meant for the local and export markets. TheCompany is also carrying out contract research for the Clariant Group.2. Benefits derived as a result of the above R & D:R & D work resulted in enrichment of the Company’s product rangewith promising new products and higher value addition due to costreduction by way of process improvements, energy savings andreduction of chemical waste.3. Future plan of action:R & D activities will be further strengthened. The infrastructure hasbeen improved. New “state of the art” equipment for analysis andapplication has been procured.4. Expenditure on R & DRs. lakhs(a) Capital 23.90(b) Revenue 358.07(c) Total 381.97(d) Total R & D expenditureas a percentage of total turnover 0.56%Technology absorption, adaptation and innovation:1. Efforts in brief, made towards technology absorption, adaption andinnovation:The R & D department absorbs the knowledge of chemical technologyfrom various sources such as know-how from the parent company andits worldwide affiliates, their own experimental data bank, publishedliterature etc. and thereafter adapts the same to the Company’sinfrastructure, effects improvements to the products and processes ofthe Company including containment of pollution and control ofeffluents.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 process rationalisation,product quality improvement, import substitution and overall costreduction.3. In case of imported technology (imported during the last 5 yearsreckoned from the beginning of the financial year), followinginformation may be furnished.(a) Technology imported : NIL(b) Year of import : N.A.(c) Has technology fully absorbed : N.A.Foreign Exchange Earnings and OutgoRs. lakhs1. Total foreign exchange earned : 17198.122. Total foreign exchange used : 15658.45Mumbai, February 22, 2007For and on behalf of Board of DirectorsR. A. ShahChairman


Corporate GovernanceCOMPANY’S CORPORATE GOVERNANCE PHILOSOPHYThe corporate governance process at Clariant Chemicals(India) Limited (CCIL) seeks to optimize economic resultswhile meeting the aspirations of all its key stakeholdergroups and the expectations of the society in which itoperates.Clariant’s Corporate Governance structure, systems andprocesses are based on two core principles:1. Management must have the executive freedom to drivethe enterprise forward without undue restraints; and2. This freedom of management should be exercised witha framework of effective accountability.The Company believes that any meaningful policy onCorporate Governance must empower the executivemanagement of the Company. At the same time,Governance must create a mechanism of checks andbalances to ensure that the decision-making powers vestedin the executive management are used with care andresponsibility to meet stakeholders’ aspirations and societalexpectations.The Company’s business goals very closely approximate thecorporate philosophy eloquently articulated in Clariant’svision, mission and values statements. The Company hasalways aimed to be the leading service-driven company andthe preferred partner in the specialty chemicals industry inIndia. Our commitment to service has contributed in nosmall measure to the success of our customers. Wecombine leading edge technology and innovation withsuperior applications and customer service skills.The way we conduct our day to day operations providestrue testimony to the values enumerated by Clariant:! Customer Focus! Personal Engagement! Team Orientation! Innovation! Shareholder Commitment! Integrity! SustainabilityThis bedrock of values guides our thinking and behaviourand has helped us create wealth for our primarystakeholders, viz., customers, employees and owners in asocially responsible way. We aim to maximise the long termvalue for our shareholders through achieving businessexcellence.We adhere to the highest business ethics, comply withstatutory and regulatory requirements and are committed totransparency in our business dealings. We uphold the rightsof each of the stakeholder groups for information on thebusiness and the financial performance of the Company andstrive to meet these needs in a consistent and regularmanner.Trusteeship recognizes that large corporations, whichrepresent a coalition of interests, namely those of theshareholders, other providers of capital, businessassociates and employees, have both an economic and asocial purpose, thereby casting the responsibility on theBoard of Directors to protect and enhance shareholdervalue, as well as fulfill obligations to other stakeholders.Inherent in the concept of trusteeship is the responsibility toensure equity, namely, that the rights of all shareholders,large or small, are protected.Transparency means explaining the Company’s policiesand actions to those to whom it has responsibilities.Externally, this means maximum appropriate disclosureswithout jeopardizing the Company’s strategic interests andinternally, this means openness in the Company’srelationship with its employees and in the conduct of itsbusiness. CCIL believes that the transparency enhancesaccountability.Empowerment is a process of unleashing creativity andinnovation throughout the organisation by truly vestingdecision-making powers at the most appropriate levels andas close to the scene of action as feasible, thereby helpingactualise the potential of its employees. Empowerment isa key concomitant of CCIL’s first core principle ofgovernance that management must have the freedomto drive the enterprise forward. CCIL believes thatempowerment combined with accountability proves animpetus to performance and improves effectiveness,thereby enhancing shareholder value.Control ensures that freedom of management is exercisedwithin a framework of checks and balances and is designedto prevent misuse of power, facilitate timely management ofchange and ensure effective management of risks. CCILbelieves that control is an essential element of its secondcore principle of governance that the freedom ofmanagement should be exercised within a framework ofappropriate checks and balances.Value-driven and transparent management is thefoundation for a successful business. At Clariant this isreflected in a responsible and efficiently structuredorganisation, in its management, and in control processes.The Company has established an efficient and transparentdivision of tasks and responsibilities, effective controlinstruments and an open information policy as a proof of itscommitment, fairness and responsibility as a businesspartner.At Clariant it is a kind of self-disciplinary code designed tosecure the ultimate goal of making the Company a valuedriven organisation.11


Clariant Chemicals (India) Limited1. Group Structure:Clariant is a global leader in the field of specialtychemicals. Clariant Chemicals (India) Limited is anaffiliate of Switzerland based Clariant group, whichis represented on five continents with over 100group companies, employs about 21,500 people andis headquartered in Muttenz near Basel. ClariantChemicals (India) Limited operates in the followingsegments: Intermediates and Colours, Dyes andSpecialty Chemicals and Masterbatches.2. Board of Directors:In accordance with the law, the Board of Directorsis the apex management body of the Company. TheBoard acts as the nerve centre of the organisation,in addition to reviewing and approving specificcorporate actions as required by law (e.g.,declaration of dividends and approval of accounts)is actively involved in reviewing and guidingcorporate strategy and major plans of action,monitor implementation of plans and corporateperformance, ensuring the integrity of theCompany’s accounting and financial reportingsystems and over viewing compliance with alllegislations applicable to the business.2.1 CompositionAs provided in Article 109 of the Articles ofAssociation of the Company the number of memberson the Board should not exceed twelve.12As on December 31, 2006 the Board consists ofeight members including three independentdirectors. The Chairman of the Board isNon-executive director. The Board comprises ofeminent professionals drawn from diverse fields.None of the directors is related to each other.During the nine months period ended on December31, 2006 all the members of the Board are nonexecutiveexcept Mr. H. Meier.The Board members are expected to attend andparticipate in the Board meetings and Committeemeetings in which they are members.Dr. A. Walde, Mr. W. Mohr and Mr. P. Lindner asmembers on the Board of Directors represent theinterest of parent Company.2.2 Election and terms of officeAs on December 31, 2006 all the Directors exceptMr. H. Meier are subject to retirement by rotation.Mr. H. Meier was appointed as Vice-Chairman &Managing Director on contractual basis for a periodof three years commencing from April 1, 2006.The following table gives the date of appointment/re-appointment of members of the Board ofDirectors:Name of DirectorsMr. R. A. ShahMr. H. Meier 01.04.2006Mr. K. J. Bharucha 27.07.2006Mr. P. LindnerDr. A. Walde 27.07.2006Mr. B. S. Mehta 27.07.2006Diwan A. NandaMr. W. Mohr 27.07.2006Date of appointment/re-appointment29.07.2004 to be re-appointedon the date of AGM28.07.2005 to be re-appointed onthe date of AGM24.03.2006 to be re-appointed onthe date of AGM2.3 Profile of Members of the Board of Directors beingre-appointedMr. R. A. ShahMr. R. A. Shah is a Solicitor and Senior Partner ofM/s. Crawford Bayley & Co., Solicitors & Advocates,Mumbai. He joined the Board of the Company inAugust 1976. He specialises in a broad spectrum ofCorporate Laws in general, with special focus onforeign investments, joint ventures, technology andlicence agreements, intellectual property rights,mergers and acquisitions, industrial licensing,antitrust laws and company law. He is a member ofthe Managing Committee of Bombay Chamber ofCommerce, Indo-German Chamber of Commerce.He is the Chairman of the Audit Committee of theCompany.Names of other companies in which Mr. R. A. Shahholds Directorships as at December 31, 2006:Name of the Company/FirmAbbott India Ltd.Godfrey Philips India Ltd.Modicare Ltd.Pfizer Ltd.Roche Scientific Co. (I) Pvt. Ltd.Colgate Palmolive India Ltd.The Bombay Dyeing & Mfg. Co. Ltd.BASF India Ltd.Deepak Fertilisers & PetrochemicalsCorporation Ltd.Asian Paints Ltd.Nicholas Piramal India Ltd.Procter & Gamble Hygiene andHealth Care Ltd.Nature of interestDirectorChairmanAlternate DirectorChairmanChairmanVice-ChairmanDirectorDirectorDirectorDirectorDirectorDirector


Corporate GovernanceName of the Company/FirmNature of interestRPG Life Sciences Ltd.Alternate DirectorCentury Enka Ltd.Alternate DirectorSchrader Duncan Ltd.Alternate DirectorUhde India Ltd.Alternate DirectorWokhardt Ltd.DirectorSociety of Indian Law FirmsPresident(Western Region)Bombay Chamber of Commerce Committee MemberIndo German Chamber of Commerce Committee MemberCrawford Bayley & Co.PartnerJumbo World Holdings Ltd.Director(Foreign Company)BASF Polyurethanes India Ltd. Alternate DirectorGillette India Ltd.DirectorLupin Ltd.DirectorAtul Ltd.Alternate DirectorACC Ltd.DirectorMr. P. LindnerMr. P. Lindner holds a Diploma in IndustrialBusiness from the Chamber of Commerce, Frankfurtam Main, Germany. He has relevant experience ofover 35 years in the specialty chemical business. Heis presently the Region President, Special Markets,Clariant International Ltd. Mr. Lindner joined theBoard of the Company in October, 2001.Diwan A. NandaDiwan A. Nanda, is gold medalist from the IndianInstitute of Management, Ahmedabad. He has over40 years of vast experience in marketing andadvertising. He started his career in Marketing inHindustan Lever Limited and founded Rediffusion anadvertising agency in 1973. Diwan A. Nanda hasheld various positions in academic and advertising.He is the recipient of AAAI Premnarayan award foroutstanding contribution to advertising in India in2002. He is also on the Board of the followingCompanies as at December 31, 2006:Name of the Company/FirmNature of interestRediffusion DY & R Pvt. Ltd.Rediffusion DY & R Pvt. Ltd., Sri LankaRediffusion Holdings Pvt. Ltd.Rediff.com India Ltd.Wunderman India Pvt. Ltd.Everest Brand Solutions Pvt. Ltd.Klaas Equipment Pvt. Ltd.Arion Horse Co. Pvt. Ltd.Showdiff Worldwide Pvt. Ltd.Eveready Industries (India) Ltd.King Fisher Airlines Ltd.Mastek LimitedDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirector2.4 Board MeetingsIn compliance with the provisions of clause 49 of thelisting agreement, the Board meets at least onceevery quarter to review the performance and todeliberate and consider other items on the agenda.During the nine months under review, four meetingswere held on:May 30, 2006;July 27, 2006;September 14, 2006 andOctober 30, 2006.The meetings of the Board of Directors arescheduled well in advance and are held at Mumbaiwhere the registered office of the Company issituated. The Chief Financial Officer & CompanySecretary in consultation with the Vice-Chairmanand Managing Director prepares a detailed agendafor the meeting. The board papers comprising theagenda along with the draft of relevant resolutions,documents and explanatory notes, whereverrequired are sent at least a week in advance to allthe Directors. The members of the Board are free torecommend inclusion of any matter in the agenda fordiscussion. This enables the Board to discharge itsresponsibilities effectively and take informeddecisions. The draft minutes of the meetingconfirmed by the Chairman is circulated to all themembers generally within two weeks after theconclusion of the meeting. The information generallyprovided to the Board for its consideration andapprovals include:• Minutes of the meetings of Board, Audit andInvestors Grievance Committees including thatof subsidiary company;• Commission payable to Directors;• Quarterly, half yearly and annual financialresults of the Company and its businesssegments;• Cost Audit report/Secretarial audit report;• Annual budget and performance targets;• Opportunities for merger and acquisition;• Appointment of statutory, secretarial auditor,cost auditor and internal auditor;• Appointment of key management positions;• Issues relating to workmen and executivessuch as settlements, increments, special loans/advances;• Issues relating to shareholders — such asratification of transfers, demat status, pendinggrievances, issue of duplicate sharecertificates, etc.;13


Clariant Chemicals (India) Limited• Materially important show cause, demand,prosecution and penalty notices;• Review of foreign exchange exposures andexchange rate movement, if material;• Contracts in which Director(s) are deemed to beinterested;• Defaults in payment of statutory dues, if any;• Matters requiring statutory/board approvals;• Status on compliance of any regulatory orstatutory nature or listing requirement;• Issue/revocation of Power of Attorney;• General disclosure of interest.The requirement that a Director shall not be amember of more than 10 committees and Chairmanof more than 5 committees has been complied withwhile constituting the Committees of Directors.The following table gives the attendance of theDirectors at the Board meetings of the Company andalso the other Directorship and Chairmanship/membership in Board committees.2.5 Board CommitteeSince March 24, 2006, Mr. K. J. Bharucha is theChairman of the Board Committee and Mr. H. Meieris a member.During the period of nine months ended onDecember 31, 2006 one meeting was held on June 8,2006 and both the members were present in theaforesaid meeting. The committee usually looks intoraising short term borrowings/deposits anddeployment of surplus funds, if any, and similarissues.2.6 Management CommitteeThe board of Directors of the company providesleadership and strategic guidance, while theManagement Committee administers the affairs ofthe Company’s business on a day to day basis. Thecommittee consists of Vice-Chairman & ManagingDirector, Chief Financial Officer & CompanySecretary and the respective Head of businesses.The Management committee is chaired byDirectors Attendance Record and Directorships*Particulars ofAttendanceNo. of other Directorships and Committeesmemberships/Chairmanships inIndian Public Companies#Name of theDirectorCategoryNumber ofBoardMeetingsLastOtherAGMDirectorshipsheld onas on27.7.06 31.12.06CommitteeMembershipsCommitteeChairmanshipsHeldAttendedMr. R. A. Shah Non-Executive Independent 4 3 Attended 14 8 5Mr. H. Meier Executive 4 4 Attended None 1 NoneMr. K. J. Bharucha Non-Executive 4 4 Attended 3 1 NoneMr. P. Lindner Non-Executive 4 1 Attended None None NoneDr. A. Walde Non-Executive 4 1 Attended None None NoneMr. B. S. Mehta Non-Executive Independent 4 4 Attended 14 10 5Diwan A. Nanda Non-Executive Independent 4 2 Attended 4 2 1Mr. W. Mohr Non-Executive 4 1 Attended None None None* This excludes alternate Directorships/Directorships in private limited companies, foreign companies and companies governed by Section 25 of theCompanies Act, 1956 where applicable.# It excludes committees other than Audit Committee, Shareholders/Investor Grievance Committee and companies other than public limited companybut includes committee membership/chairmanship in Clariant Chemicals (India) Ltd.14


Corporate GovernanceMr. H. Meier, Vice-Chairman & Managing Directorand includes following members:Mr. H. MeierMr. S. K. NayakMr. A. K. PrasadDr. G. G. PatkarDr. S. SiddhanMr. S. S. PatilManagement CommitteeVice-Chairman & Managing DirectorCFO & Company SecretaryBusiness – Textiles, Leather & PaperBusiness – Pigments & AdditivesBusiness – FUN & LSCBusiness – Masterbatches3. Audit committee:3.1 CompositionThe audit committee was formed in 2001 and hasbeen reconstituted over the years as per the legalrequirements from time to time. During the periodunder review, Mr. R. A. Shah, Non-ExecutiveIndependent Director, Diwan A. Nanda,Non-Executive Independent Director andMr. K. J. Bharucha, Non-Executive Director werethe three members appointed for the committeeeffective from 25.03.2006. Mr. R. A. Shah chairs thecommittee. Mr. K. J. Bharucha being CharteredAccountant has accounting/financial managementexpertise. The statutory auditors, internal auditorsand cost auditors are also invited to attend the auditcommittee meetings from time to time.Vice-Chairman & Managing Director attends theAudit Committee meetings. Mr. Sunil K. Nayak, ChiefFinancial Officer & Company Secretary representsthe finance function and also acts as Secretary tothe committee. All major variances affecting theperformance of the Company are discussed andexplained. During the period under review, threemeetings of the Audit Committee were held on:May 23, 2006; (adjourned for May 29, 2006)*July 27, 2006 andOctober 30, 2006.All the meetings were attended by Mr. H. Meier,Vice-Chairman and Managing Director andMr. Sunil K. Nayak, CFO & Company Secretary.Attendance of Audit Committee meetings:Name of DirectorCategoryStatusHeldNumber ofMeetingsAttendedMr. R. A. Shah Independent Chairman 3 3Diwan A. Nanda Independent Member 3 3Mr. K. J. BharuchaNon-Independent Member 3 3* Mr. R. A. Shah participated in this meeting throughteleconferencing.3.2 Scope of Audit CommitteeThe Audit Committee acts as a link between thestatutory and internal auditors and the Boardof Directors. The Audit Committee makesrecommendations to the Board within the delegatedauthority. The terms of reference of the auditcommittee are in accordance with clause 49(II) ofthe listing agreement entered into with the relevantstock exchanges and include:• Effective supervision of financial reportingprocesses;• Ensuring completeness of coverage, accurate,timely and proper disclosure of financialreporting;• Review of annual, half yearly and quarterlyfinancial results before submission to theBoard;• Review of cost audit report;• Review of adequacy of internal audit andcontrol and actions arising out of reports;• Ensure compliance with accounting standards,and with listing agreements with respect to thefinancial statements;• Discussion with statutory and internal auditorson the scope of audit, general observations,significant findings and follow-up thereon;• Recommending the appointment of statutoryauditors and approval of payments to statutoryauditors for any other services;• Statement of significant related partytransactions;In fulfilling the above role, the Audit Committee haspowers to investigate any activity within its terms ofreference, to seek information from employees andto obtain outside legal and professional advice. Thedraft minutes of the audit committee meetings arecirculated among members before the same isconfirmed and placed before the Board.4. Remuneration Committee:The Company has not constituted a remunerationCommittee as all compensation/remunerationpayable to the Directors are approved by theshareholders in the general meeting.The Company has no pecuniary relationship ortransaction with its Non-executive Directors otherthan payment of commission and sitting fees, whichhas been approved by the shareholders andpayment of dividend on equity shares, if any, held byDirectors in the Company. The Company has soughtthe expert legal advice of M/s. Crawford Bayley &Co., Solicitors & Advocates in certain matters and asum of Rs. 30.44 lakhs has been paid as professionalfees to the said firm during the period of nine months15


Clariant Chemicals (India) Limitedended at December 31, 2006. Mr. R. A. Shah,who is the Chairman of the Company, is the seniorpartner of the said firm. The aforesaid professionalfees is not considered material enough that mayhave potential conflict with the interest of theCompany and to impinge on the independence ofMr. R. A. Shah.Mr. K. J. Bharucha was the Managing Director ofthe Company for the past several years. He is a nonexecutiveDirector in the Company from April 1, 2006onwards. The Company has paid Rs. 154.20 lakhs tohim as non compete fees during the current period.The remuneration structure of Mr. H. J. Meier,Vice-Chairman & Managing Director, head of theorganisation, is based on performance and definedcriteria. The yearly increments are decided by theBoard of Directors within the limits approved by themembers pursuant to provisions of the CompaniesAct, 1956. The remuneration comprises of salary,fixed and variable commission linked withperformance, perquisites and benefits as perCompany rules, contribution to provident fund,superannuation fund and gratuity. The servicecontract with the Vice-Chairman & ManagingDirector is for a period of three years ending onMarch 31, 2009 with a notice period of six months byeither of the party for termination.In accordance with the resolution passed at annualgeneral meeting held on July 28, 2005 theshareholders have approved the payment ofcommission to non-executive Directors subject tothe provisions of Section 198, 309 and otherapplicable provisions of the Companies Act, 1956.The Company has accordingly provided for thecommission to its non-executive independentDirectors in addition to sitting fees for the meetingsof board and committees attended by them exceptin case of Mr. P. Lindner, Dr. A. Walde andMr. W. Mohr (who represent the Clariant group)and hence, do not draw any remuneration from theCompany.The details of remuneration paid to the directors forthe nine months period ended December 31, 2006are as under:RupeesName of DirectorSittingfeesSalary & Commis-Provi-Perqui-sion dent &sitesSuperannua-tionFundsTotalMr. R. A. Shah 25,000 NIL 2,00,000 NIL 2,25,000Mr. H. Meier NIL 96,01,000 15,75,000 NIL 111,76,000Mr. B. S. Mehta 20,000 NIL 2,00,000 NIL 2,20,000Diwan A. Nanda 35,000 NIL 2,00,000 NIL 2,35,000Mr. K. J. Bharucha 42,000 NIL 2,00,000 NIL 2,42,0005. Investors’ Grievance Committee:The members of Investor’s Grievance Committeecomprise of Diwan A. Nanda non-executiveindependent director as Chairman and Mr. H. MeierVice-Chairman & Managing Director as a member.The committee oversees share transfers andmonitors redressal of shareholder/investorcomplaints received by the Company and theirresolution. The committee met two times (July 27,2006 and October 30, 2006) during the period of ninemonths.To expedite the process of physical transfer ofshares the Board has delegated the authority toMr. Sunil K. Nayak, Chief Financial Officer &Company Secretary who is the compliance officer ofthe Company. The physical transfers of sharesapproved are ratified at the subsequent Boardmeeting.In accordance with the authority granted by theBoard, Mr. Nayak deals with the following mattersconcerning shareholders at least once in a fortnight:• Transfer/Transmission of physical shares• Split/Sub-division and Consolidation of physicalshares• Rematerialisation of sharesM/s. Sharepro Services (India) Private Limited, theRegistrar and Share Transfer Agents, deals with allshareholder related matters whether it relates to thephysical or demat form.The Company has retained the services of apracticing Company Secretary to independentlyverify and audit the share transfer records andregister of members every quarter. No materiallysignificant non-compliance from establishedprocedures is reported.During the period under review, the Companyreceived one complaint through stock exchanges/SEBI and the same has been resolved. Apart fromthis complaint, communications received fromshareholders are generally pertaining to non-receiptof dividend warrants, transfer of physical shares/change of address/bank mandate/revalidationof dividend warrant/consolidation/split/remat/exchange of shares etc. All of these have beenanswered and redressed to the satisfaction ofshareholders. There was no investor grievancewhich remained unattended and pending as onDecember 31, 2006. The Board has consented to theunderstanding that complaints of non-receipt ofDividend, Annual Reports, and the refund of fixeddeposits and interest on fixed deposits etc., will notbe treated as complaints under Clause 49 (G) (iii), asthe Company’s liability is discharged when therelevant articles are posted at the last known16


Corporate Governanceaddress of the investor. And that in the above casesthe letters received from the investors will beserviced in addition to the responsibility underclause 49 of the Listing Agreement, as investorfriendly measure beyond the legal obligations.Attendance of Investors’ Grievance CommitteeMeetings:Name ofDirectorCategoryStatusNumber of MeetingsHeld AttendedDiwan A. Independent Chairman 2 2NandaMr. H. Meier Executive Member 2 2Details of Complaints received and attendedduring the period of nine months endedDecember 31, 2006Nature of ComplaintNo. of complaintsNo. of complaintsreceivedredressedNon-receipt ofInterest in open offer 1 16. Subsidiary Company:Chemtreat Composites India Private Limitedcommenced commercial production in September2006.The copy of the minutes of the Board Meetings ofChemtreat Composites India Private Limited areplaced in the subsequent Board Meetings.7. General Body Meetings:The last three Annual General Meetings of theCompany were held on the following dates andtimes:AGMVenueDateTime47th Y. B. Chavan Auditorium 29.07.2004 4.00 p.m.Gen. Jagannath BhosaleMarg, Mumbai 400 02148th Y. B. Chavan Auditorium 28.07.2005 4.00 p.m.Gen. Jagannath BhosaleMarg, Mumbai 400 02149th Y. B. Chavan Auditorium 27.07.2006 3.00 p.m.Gen. Jagannath BhosaleMarg, Mumbai 400 0218. Disclosures:8.1 The Company has not entered into any transactionsof material nature, with its promoters, the directors,or the management committee members, theirsubsidiaries or relatives etc. that may have potentialconflict with the interests of the Company. Thedisclosure in respect of related party transactions isprovided in the notes to the accounts. All contractswith the affiliates entered into during the periodunder review which are in the normal course ofbusiness and have no potential conflict with theinterest of the company at large and are carried outon an arm’s length basis at fair market value.8.2 Code of ConductThe Board of Directors has adopted the code ofconduct for Directors and Senior Management andthe same has been placed on the Company’swebsite. All Board members and seniormanagement personnel have affirmed compliancewith the code of conduct for the period underreview.8.3 Prohibition of Insider TradingThe Company has framed its Insider TradingRegulations wherein rules for the preservation ofprice sensitive information, pre-clearance of trade,monitoring and implementation are framed. Thiscode is applicable to all Directors and suchemployees of the Company who are expected tohave access to unpublished price sensitiveinformation relating to the Company. Transaction fordealing in the prescribed volume of the security ofthe Company during the prescribed time requiresprior approval from the Company.Name of DirectorShares held by the Directors as atDecember 31, 2006Number ofDetails of sharesshares held bought/sold duringApril-December, 2006Mr. R. A. Shah NIL NILMr. H. Meier NIL NILMr. B. S. Mehta NIL NILDiwan A. Nanda NIL NILMr. P. Lindner NIL NILMr. A. Walde NIL NILMr. W. Mohr NIL NILMr. K. J. Bharucha 50 NIL8.4 Special ResolutionsAt the 49th Annual General Meeting held onJuly 27, 2006 a special resolution was passed forre-appointments of Directors who were appointedduring the year as additional Director or in thecasual vacancy caused by the resignation ofDirectors.At the 48th Annual General Meeting held on July 28,2005 a special resolution was passed to increasethe sitting fees and the commission payable tonon-executive Directors.At the 48th Annual General Meeting held on July 28,2005 a special resolution was passed amending theArticles of Association.There was no postal ballot conducted during thethree years.17


Clariant Chemicals (India) Limited9. Means of communication:• The Company has 30,743 shareholders as onDecember 31, 2006. The main channel ofcommunication to the shareholders is throughannual report which includes inter alia, theDirectors’ Report, the Report on CorporateGovernance, audited financial results.• The Annual General Meeting is the principalforum for face-to-face communication withshareholders, where the board responds to thespecific queries of the shareholders.• Six Monthly results for the period ended onSeptember 30, 2006 were sent to all theshareholders through an investor newsletter‘The Review’.• Quarterly results are approved by the Board ofDirectors and submitted to the StockExchanges in terms of the requirements ofclause 41 of the Listing Agreement.• Quarterly results are published the day after theBoard Meeting, after approval of the Board, inany two of the prominent English andvernacular publication, such as EconomicTimes/Business Standard/Free Press Journal/Maharashtra Times/Nav Shakti/Sakal, as perthe availability of space.• The website of the Companywww.clariantindia.com acts as the primarysource of information regarding the operationsof the Company. Quarterly financial results andmedia releases are being displayed on theCompany’s website. Periodic discussions wereheld with analysts and institutional investorsduring the period.• The financial results and shareholding patternfor each quarter are also provided on the SEBIwebsite www.sebiedifar.nic maintained byNational Informatics Centre and can beretrieved from this web site.• A Management Discussion and Analysis Reportwhich includes the risk management policiesfollowed by the Company is included as a partof Director’s report.10. General shareholder information:10.1 Annual General MeetingDate and Time:Thursday, April 19, 2007 at 04.00 p.m.18Venue:Y. B. Chavan Auditorium, General JagannathBhosale Marg, Next to Sachivalaya Gymkhana,Mumbai-400 021.10.2 Voting rightsIn terms of Articles 93 to 105 of the Articles ofAssociation of the Company, every member presentin person or proxy, attorney or representative at thegeneral meeting of the members shall have thefollowing voting rights:• On a show of hands: one vote for a memberpresent in person;• On a poll: one vote for each equity shareregistered in the name of the member or held bythe beneficial owner;• Proxy has no right to speak.10.3 Financial CalendarThe Company’s current financial year is based onnine months beginning from April to December 2006.Announcement of Audited/Unaudited Results:April toJanuary toDecember, 2006 December 2007(Proposed)January-MarchLast week of April,2007April-June 27.07.2006 Last week of July,2007July-September 30.10.2006 Last week ofOctober, 2007October-December 22.02.2007 Last week ofFebruary, 2008Annual General 19.04.2007 Last week of April,Meeting 200810.4 Dates of Book ClosureApril toDecember 2006January to December2007 (Proposed)Book Closure April 5, 2007 to Second fortnight ofdates April 19, 2007 April, 2008(Both daysinclusive)Payment of On or after Immediately afterDividend April 20, 2007 AGM10.5 Listing of SharesShares of the Company are listed on Bombay StockExchange Ltd., Mumbai (BSE) and National StockExchange of India Limited (NSE).The Company has paid the listing fees upto March31, 2007 to both the Stock Exchanges.10.6 Stock CodeName of theExchangeStockClosing PriceCode No. as on31.12.2006Date ofEx-DividendBSE CLARICHEM 337.15 April 3, 2007NSE CLNINDIA 336.50 April 3, 2007


Corporate Governance10.7 Stock Market Data Rupees per shareMonthBombay StockNational StockExchange (BSE) Exchange (NSE)HighLowVolumeHighLowVolumeRs.Rs.Nos.Rs.Rs.Nos.April ‘06 378.00 335.00 35363 381.00 325.00 34004May 389.00 300.05 44651 400.10 300.00 23846June 325.95 236.00 613264 322.00 235.00 42849July 282.25 226.60 84776 278.75 230.00 160115August 325.00 240.35 85790 327.90 245.20 43583September 325.00 282.00 61278 318.90 281.10 31434October 337.00 294.00 137797 359.00 295.00 124148November 331.85 295.20 215276 324.00 292.50 185506December 357.80 295.00 2806079 350.00 291.30 282624For any assistance from the Company, membersmay contact Mr. Satish P. Bhattu, Asst. CompanySecretary, at Ravindra Annexe, 194, ChurchgateReclamation, Mumbai-400 020. The Companyperiodically reviews the operations of registrar &share transfer agents and an independent audit/verification is carried by qualified professional forefficiency and effectiveness of services at regularintervals.10.10 Share Transfer SystemTransfer of shares held in physical mode isprocessed by Sharepro Services (India) PrivateLimited and approved by CFO & Company Secretarypursuant to the powers delegated to him by theBoard of Directors of the Company.During the period of nine months ended December31, 2006, 18 approvals for transfer/transmissionof 31,020 shares in physical mode were accordedwith an average interval of 15 days betweenapprovals.10.8 Performance of Company Shares to broad basedindex (BSE Sensex)10.11 Shareholding pattern as on 31.12.2006Percentageof Share-holdingCategoryNo. ofEquitysharesheldA. Promoters’ HoldingPromotersForeign Promoters(i) EBITO Chemiebeteiligungen AG 8167080 30.63(ii) Clariant International AG 6075000 22.79(iii) Clariant Participations AG 2660000 9.98Sub-Total 16902080 63.40B. Institutional Investors(a) Mutual Funds 2834095 10.6310.9 Address for correspondenceRegistrar & Share Transfer Agents:M/s. Sharepro Services (India) Pvt. Ltd.Satam Estate, 3rd Floor, Above Bank of BarodaChakala, Andheri (E)Mumbai-400 099.Tel: 28215168/69, Fax: 28375646Contact Person: Mrs. Indira Karkera/Mr. B. Dinkaremail ID under clause 47(f) of Listing agreement:Clariant@shareproservices.comAll queries for shares held in physical form onlyshould be forwarded to Registrar & Transfer Agents(R & T Agent) at the above mentioned address.(b) Financial Institutions 894165 3.35General Insurance Corporationof India and its subsidiariesNationalised Banks 15922 0.06(c) Foreign Institutional Investors 4398 0.02Sub-Total 3748580 14.06C. Others(a) Domestic Companies 465314 1.75(b) Non-Resident Indians/OverseasCorporate Bodies 96344 0.36(c) Indian Public 5448427 20.43Sub-Total 6010085 22.54D. Public Holding (B+C) 9758665 36.60Total 26660745 100.0019


Clariant Chemicals (India) Limited10.12 Details of Members holding > 1% of the paid upcapital of the Company as on 31.12.200620NameNo. of %shares1. EBITO Chemiebeteiligungen AG 8167080 30.632. Clariant International AG 6075000 22.793. Clariant Participations AG 2660000 9.984. Templeton M.F. A/c. Franklin IndiaFlexicap Fund 800000 3.005. UTI (through its various schemes) 346004 1.306. Prudential ICICI Trust Ltd. TAX Plan 603929 2.277. The New India Assurance Co. Ltd. 290054 1.098. UTI Master Value Fund 289508 1.0910.13 Distribution of shareholdings as on 31.12.2006No. of equityshares heldShareholdersEquity Shares heldNumbers % No. of %shares1-500 28558 92.893 2785747 10.449501-1000 1348 4.385 968828 3.6341001-2000 529 1.721 756455 2.8372001-3000 126 0.410 317788 1.1923001-4000 50 0.163 172333 0.6464001-5000 50 0.163 230400 0.8645001-10000 41 0.133 294568 1.10510001 & above 41 0.133 21134626 79.272Total 30743 100 26660745 10010.14 Dematerialisation of shares and liquidityNames of Depositories for dematerialisation ofequity sharesName of the DepositoryNational Securities Depositories Limited (NSDL)Central Depository Services (India) Limited (CDSL)ISIN No.INE492A01029INE492A01029Trading in equity shares of the Company is permittedonly in dematerialised form.In case shares of the Company are held inelectronic form (that is, in dematerialised form), allcommunications concerning rematerialisation ofshares transfer and transmission, dividends,change of address, furnishing of alterations in bankaccount details, nominations, ECS credit of dividendamount to shareholders’ bank account or otherinquiries should be addressed only to theDepository Participant (DP) with whom demataccount is maintained, quoting client ID numberand not to the Company or the R & T Agent. This isbecause once the shares are dematerialised theybecome fungible i.e., they lose their distinct datarelating to the folio number, the certificate number,the distinctive share numbers, etc. and thecorresponding credit for number of shares is givento the individual shareholder in his account with theconcerned DP. As and when required by theCompany, the share transfer agents obtains detailsregarding beneficial owner data includingaddresses from the National Securities DepositoryLimited or the Central Depository Services (India)Limited.As on December 31, 2006, in all 1,92,33,440 sharesconstituting 72.14 per cent of the total issued capitalis held in demat form.10.15 ADRs/GDRs/WarrantsThe Company has not issued any GDRs/ADRs/Warrants or any other convertible instruments.10.16 Plant LocationsThe Company’s manufacturing facilities are locatedat:(a) 113/114, MIDC, A.V.P.O. Dhatav, Roha,Dist. Raigad-402 116 (Maharashtra)(b) Balkum Village, Thane-400 608 (Maharashtra)(c) Kolshet Road, Thane-400 607 (Maharashtra)(d) Kudikadu, SIPCOT, P.O., Cuddalore-607 005(Tamil Nadu)(e) Singadivakkam Village, Kanchipuram-631 561(Tamil Nadu)11. Additional Information:11.1 Dividend for the period of nine months endedDecember 31, 2006The dividend recommended by the Board for thecurrent period under review will be paid afterapproval of shareholders at the forthcoming AnnualGeneral Meeting to all those shareholders whosenames appear:(i) in respect of shares held in demat form, asbeneficial owner, as per details furnished bythe Depositories as at the end of the businesson April 4, 2007 and(ii) in respect of shares held in physical form asmembers in the Register of Members of theCompany after giving effect to all valid sharetransfers lodged with the share transfer agenton or before April 4, 2007. The Companywill dispatch the dividend warrants on or afterApril 20, 2007.


Corporate Governance11.2 Unpaid/Unclaimed DividendIn terms of the amended provisions of Section 205Cof the Companies Act, 1956 the Company is obligedto transfer dividends which remain unpaid orunclaimed for period of seven years (from the date ofdeclaration of dividend) to the credit of the InvestorEducation and Protection Fund established by theCentral Government. Accordingly, the Company hastransferred unpaid/unclaimed dividend up to thefinancial year 1998-99 to the Fund and no claim shalllie against the Company or the Fund in respect ofdividends remaining unclaimed or unpaid andtransferred to the Fund.Members are hereby informed that the 7 yearsperiod for payment of the dividend pertaining tofinancial year 1999-2000 is going to expire on April27, 2007 and thereafter the amount standing to thecredit in the said account will be transferred to the‘Investor Education and Protection Fund’ of theCentral Government. Members are thereforerequested to encash the dividend at the earliest.Dates of transfer of unclaimed dividend to the FundFinancial YearDate of PaymentDate of completionof 7 years1999-2000 28.04.2000 27.04.20072000-2001 27.07.2001 26.07.20082001-2002 26.07.2002 25.07.20092002-2003 25.07.2003 24.07.20102003-2004 30.07.2004 29.07.20112004-2005 29.07.2005 28.07.20122005-2006 27.07.2006 26.07.201311.3 Bank MandateElectronic Clearing Services (ECS) is a method ofpayment of dividend whereby the amount due toinvestors can directly be credited into their bankaccounts, without having to issue paperinstruments. It is fast and there is no scope for lossof dividend warrants in transit and possiblefraudulent encashment.In case of shares held in physical form the bankdetails may be sent to the registrar and sharetransfer agents. In case of shares held in dematform the bank details provided by the DepositoryParticipant (DP) with whom the demat accountis maintained will be applicable. All previousinstructions given by you to the Company in respectof ECS and bank details will stand superseded by theECS details recorded with your DP.11.4 Nomination FacilityA member can nominate a person who shall haveall rights of shares and/or amount payable inrespect of shares registered in his name in the eventof his death. This facility is available to the membersof the Company. The said form can be obtainedfrom the Company’s Share transfer agent ordownloaded from the website of the Company atwww. clariantindia.com.11.5 Consolidation of folios and avoidance of multiplefoliosMembers having multiple folios are requested toconsolidate their folios into single folio and for thepurpose send the original certificates along with arequest to the Share Transfer Agent specifying thefolio number under which they desire to hold theshares.11.6 ComplianceThe Company has complied with all requirements ofregulatory authorities. No penalties/strictures wereimposed on the Company by Stock Exchanges orSEBI or any Statutory authority on any matter relatedto capital market during the last three years.12. Non-Mandatory RequirementsThe Company has adopted the non-mandatoryrequirements in respect of Shareholder rightsby furnishing half-yearly report to eachshareholder.21


Clariant Chemicals (India) LimitedDECLARATIONDeclaration by the Vice-Chairman & Managing Director under Clause 49 of the Listing Agreement regarding Adherenceto the Code of ConductIn accordance with sub-clause I (D) of Clause 49 of the Listing Agreement with the Stock Exchanges, I hereby confirm that,all the Directors and the Senior Management Personnel of the Company have affirmed compliance with their respectivecodes of conduct as applicable to them, for the financial period from April to December, 2006.Mumbai, February 22, 2007Clariant Chemicals (India) LimitedH. MEIERVice-Chairman & Managing DirectorCEO/CFO CERTIFICATIONAs required by sub clause V of Clause 49 of the Listing Agreement with the Stock Exchanges, we have certified to theBoard that for the Financial period of nine months ended December 31, 2006 the Company has complied with therequirements of the said sub clause.Clariant Chemicals (India) LimitedClariant Chemicals (India) LimitedH. MEIER SUNIL K. NAYAKVice-Chairman & Managing DirectorChief Financial Officer & Company SecretaryMumbai, February 22, 200722Auditors’ 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 thenine months ended December 31, 2006, as stipulated in Clause 49 of the Listing Agreement of the said Company with theStock Exchange(s).The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination waslimited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditionsof Corporate Governance. It is neither an audit 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 therepresentations made by the Directors and the Management, we certify that the Company has complied with theconditions of Corporate Governance as stipulated in the abovementioned Listing Agreement.We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency oreffectiveness with which the Management has conducted the affairs of the Company.For A. F. FERGUSON & CO.Chartered AccountantsA. C. KhannaPartnerMumbai, February 22, 2007 Membership No.: 17814


Auditors’ Report to the Members1. We have audited the attached Balance Sheet ofClariant Chemicals (India) Limited, as at December 31,2006 and also the Profit and Loss Account and theCash Flow Statement for the nine months periodended on that date annexed thereto. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express anopinion on these financial statements based on ouraudit.2. We conducted our audit in accordance with auditingstandards generally accepted in India. ThoseStandards require that we plan and perform the auditto obtain reasonable assurance about whetherthe financial statements are free of materialmisstatement. An audit includes examining, on atest basis, evidence supporting the amounts anddisclosures in the financial statements. An audit alsoincludes assessing the accounting principles usedand significant estimates made by the management,as well as evaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.3. On the basis of the written representations receivedfrom the directors, as on December 31, 2006 and takenon record by the Board of Directors, we report thatnone of the directors of the Company are disqualifiedas on December 31, 2006 from being appointed as adirector, in terms of clause (g) of sub-section (1) ofSection 274 of the Companies Act, 1956.4. As required by the Companies (Auditor’s Report)Order, 2003 (the ‘Order’) issued by the CentralGovernment of India in terms of sub-section (4A) ofSection 227 of the Companies Act, 1956, we enclose inthe annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order to the extentapplicable to the Company.(b)(c)(d)(e)knowledge and belief were necessary for thepurposes of our audit;in our opinion, proper books of account asrequired by law have been kept by the Company,so far as appears from our examination of thebooks;the Balance Sheet, Profit and Loss Account andCash Flow Statement dealt with by this reportare in agreement with the books of account;in our opinion, the Balance Sheet, Profit andLoss Account and Cash Flow Statement dealtwith by this report comply with the AccountingStandards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956;in our opinion and to the best of our informationand according to the explanations given to us,the said accounts give the information requiredby the Companies Act, 1956, in the manner sorequired and give a true and fair view inconformity with the accounting principlesgenerally accepted in India:(i) in the case of the Balance Sheet, of thestate of affairs of the Company as atDecember 31, 2006;(ii) in the case of the Profit and Loss Account,of the profit of the Company for the ninemonths period ended on that date; and(iii) in the case of the Cash Flow Statement, ofthe cash flows for the nine months periodended on that date.For A. F. FERGUSON & CO.Chartered Accountants5. Further to our comments in the Annexure referred toin paragraph 4 above, we report that:(a) we have obtained all the information andexplanations, which to the best of ourMumbai: 22nd February, 2007A. C. KhannaPartnerMembership No.: 17814Annexure to the Auditors’ Report(Referred to in paragraph 4 of the Auditors’ Report of evendate to the members of Clariant Chemicals (India) Limited onthe financial statements for the nine months period endedDecember 31, 2006.)(i) (a) The Company has maintained proper recordsshowing full particulars including quantitativedetails and situation of fixed assets.(b) The Company has a programme of physicalverification of fixed assets. As per the said(c)programme, certain assets were physicallyverified during the year. In our opinion, thefrequency of verification is reasonable havingregard to the size of the Company and the natureof its assets. According to the informationand explanations given to us, no materialdiscrepancies were noticed on such verification.In our opinion, fixed assets disposed off duringthe year were not substantial. Therefore, the23


Clariant Chemicals (India) Limited24provisions of clause 4(i)(c) of the Order are notapplicable to the Company.(ii) (a) The inventories have been physically verifiedduring the year by the management except forstocks lying at third party locations for whichconfirmations have been obtained and forgoods-in-transit. In our opinion, the frequency ofverification is reasonable.(b) The procedures of physical verification ofinventories followed by the management arereasonable and adequate in relation to the size ofthe Company and the nature of its business.(c) In our opinion and according to the informationand explanations given to us, the Company ismaintaining proper records of inventory. Thediscrepancies noticed on verification betweenthe physical stocks and the book records werenot material and have been properly dealt with inthe books of account.(iii) (a) According to the information and explanationsgiven to us, the Company has granted an interestfree unsecured loan, repayable on demand to acompany (wholly owned subsidiary) covered inthe register maintained under Section 301 of theCompanies Act, 1956. The maximum amountinvolved during the period and the year endbalance was Rs. 735 lakhs.(b) In our opinion and according to the informationand explanations given to us, having regard to thefact that the company is a wholly ownedsubsidiary, the rate of interest and other termsand conditions are not, prima facie, prejudicial tothe interest of the Company.(c) According to the information and explanationsgiven to us, the interest-free loan repayable ondemand as referred to in (iii)(a) above has not yetbeen demanded. Accordingly, sub-clause (d) isnot applicable.(d) According to the information and explanationsgiven to us, the Company has not taken any loans,secured or unsecured, from companies, firms orother parties covered in the register maintainedunder Section 301 of the Companies Act, 1956.Accordingly, sub-clause (f) and (g) are notapplicable.(iv)In our opinion and according to the information andexplanations given to us, having regard to theexplanations that some of the items purchased are ofa special nature and suitable alternatives do not existfor obtaining comparable quotations, there areadequate internal control systems commensuratewith the size of the Company and the nature of itsbusiness with regard to purchases of inventory andfixed assets and with regard to the sale of goods andservices. Further, on the basis of our examination andaccording to the information and explanations givento us, we have neither come across nor have we beeninformed of any instance of major weaknesses in theaforesaid internal control systems.(v) (a) In our opinion and according to the informationand explanations given to us, the particularsof contracts or arrangements referred to inSection 301 of the Companies Act, 1956 have beenentered in the register required to be maintainedunder that Section.(b) In our opinion and according to information andexplanations given to us, the transactionsmade in pursuance of such contracts andarrangements entered in the register maintainedunder Section 301 of the Companies Act, 1956have been made at the prices which arereasonable having regard to the prevailingmarket prices at the relevant time except in caseof some transactions where alternate source ofsupply did not exist and therefore, no comparisonof prices was possible.(vi)(vii)(viii)In our opinion and according to the information andexplanations given to us, the Company has compliedwith the provisions of Sections 58A, 58AA or any otherrelevant provisions of the Companies Act, 1956 andthe Companies (Acceptance of Deposits) Rules, 1975with regard to the deposits accepted from the public.As informed to us, no order has been passed by theCompany Law Board or National Company LawTribunal or Reserve Bank of India or any Court or anyother Tribunal.In our opinion, the Company has an internal auditsystem commensurate with the size of the Companyand nature of its business.We have broadly reviewed the books of accountmaintained by the Company pursuant to the Rulesmade by the Central Government for the maintenanceof cost records under Section 209(1)(d) of theCompanies Act, 1956 and are of the opinion that primafacie the prescribed records have been maintainedand the prescribed accounts are in the process ofbeing made up. We have not, however, made adetailed examination of the records with a view todetermining whether they are accurate or complete.(ix) (a) According to the records of the Company,Provident Fund, Investor Education andProtection Fund, Employees’ State Insurance,Income tax, Sales tax, Wealth tax, Service tax,Custom Duty, Excise Duty, Cess and othermaterial statutory dues applicable to it have been


Annexure to theAuditors’ Report(b)generally regularly deposited during the yearwith the appropriate authorities. According to theinformation and explanations given to us, noundisputed amounts payable in respect of abovewere in arrears, as at December 31, 2006 for aperiod of more than six months from the date onwhich they became payable.According to the records of the Company,Income tax, Sales tax, Wealth tax, Service tax,Customs duty, Excise duty and Cess asapplicable which have not been deposited onaccount of dispute are as follows:(Rs. lakhs)Name of Period to Forum where dispute is pendingStatute which the Appellate(Nature amount Commissionarate authorities High Court Totalof Dues) Relates & Tribunal amount(xiii)(xiv)(xv)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 anidhi/mutual benefit fund/society. Therefore, theprovisions of clause 4(xiii) of the Order are notapplicable to the Company.In our opinion, the Company is not dealing in ortrading in shares, securities, debentures andother investments. Accordingly, the provisions ofclause 4(xiv) of the Order are not applicable to theCompany.In our opinion and according to the information andexplanations given to us, the Company has not givenany guarantees for loans taken by others from banksor financial institutions.1992-93,Sales Tax 2001-02 to 235.91 — — 235.91(Tax/Penalty/ 2003-04Interest) 1999-2000 — 24.02 — 24.02& 1994-951996-97 to1998-99 — — 2.27 2.27Total 235.91 24.02 2.27 262.201981-84,The Central 1994-95,Excise Act 1997-98, — 323.20 — 323.20(Tax/Penalty/ 1999-2000Interest) to 2004-051999-2000,2003-04 to2005-06 263.29 — — 263.29Total 263.29 323.20 — 586.49Service Tax 2004-05 0.52 11.24 — 11.76Total 0.52 11.24 — 11.76Income Tax 2001-02 to 335.02 — — 335.02(Tax/Interest) 2004-051992-93,1995-96,1997-98, — 142.85 — 142.852000-01 &2002-03Total 335.02 142.85 — 477.87(x)The Company does not have any accumulated lossesat the end of the financial period and has not incurredcash losses during the financial period covered by ouraudit and in the immediately preceding financial year.(xvi)In our opinion and according to the information andexplanations given to us, no term loans were acquiredduring the reporting period by the Company.(xvii) According to the information and explanations givento us and on an overall examination of the balancesheet of the Company, we report that no funds raisedon short-term basis have been used for long-terminvestment.(xviii) According to the information and explanations givento us, the Company has not made any preferentialallotment of shares to parties and companies coveredin the register maintained under Section 301 of theCompanies Act, 1956.(xix)(xx)(xxi)The Company has not issued any Secured debentures.Therefore, the provisions of clause 4(xix) of the Orderare not applicable to the Company.The Company has not raised any money by way ofpublic issue during the year. Therefore, the provisionsof clause 4(xx) of the Order are not applicable to theCompany.According to the information and explanations givento us, no fraud on or by the Company has been noticedor reported during the course of our audit.(xi)(xii)In our opinion and according to the information andexplanations given to us, the Company has notdefaulted in repayment of dues to financial institution,banks or debenture holders.Based on our examination of the records and theinformation and explanations given to us, theCompany has not granted any loans and advances onMumbai: 22nd February, 2007For A. F. FERGUSON & CO.Chartered AccountantsA. C. KhannaPartnerMembership No.: 1781425


Clariant Chemicals (India) LimitedBalance Sheetas at 31st December, 200631-12-2006 31-03-2006ScheduleRs. lakhsRs. lakhsSOURCES OF FUNDSShareholders’ fundsShare capital 1 2666.07 1165.00Share capital suspense account 1A — 1501.07Reserves and surplus 2 28358.24 30543.9031024.31 33209.97Loan fundsSecured loans 3 142.44 3597.85Unsecured loans 4 478.96 1995.82621.40 5593.67Deferred Tax Liability - Net (See note 5, Schedule 19) 981.82 525.6432627.53 39329.28APPLICATION OF FUNDSFixed Assets 5Gross block 37516.86 37983.02Less : Accumulated depreciation 21799.47 22485.44Net block 15717.39 15497.58Capital work-in-progress and advances, etc. 801.13 518.8216518.52 16016.40Investments 6 4650.58 11326.19Current assets, loans and advancesInventories 7 12817.66 12528.37Sundry debtors 8 13735.88 14514.50Cash and bank balances 9 3962.86 1388.96Loans and advances 10 6773.86 7448.9037290.26 35880.73Less:Current liabilities and provisionsLiabilities 11 18612.61 17164.36Provisions 12 7396.47 6729.6826009.08 23894.04Net current assets 11281.18 11986.69Miscellaneous expenditure-Voluntary Retirement Scheme 177.25 —(To the extent not written off or adjusted) {See note 5 , Schedule 18}32627.53 39329.28Significant accounting policies 18Notes to the accounts 19For and on behalf of the Board,Per our report attachedFor A.F. Ferguson & Co.Chartered AccountantsA. C. KhannaPartnerR. A. Shah ChairmanH. Meier Vice-Chairman & Managing DirectorB. S. Mehta}Diwan A. Nanda DirectorsK. J. BharuchaSunil K. NayakChief Financial Officer & Company SecretaryMumbai, 22nd February, 200726Mumbai, 22nd February, 2007


Profit and Loss Accountfor the nine months period ended 31st December, 2006April 06 toApril 05 toDecember 06 March 06ScheduleRs. lakhsRs. lakhsINCOMESales – Gross 75389.35 92465.33Less: Excise Duty Recovered on Sales 6684.88 7673.87Sales – Net 68704.47 84791.46Add: Processing charges — 804.69Turnover 68704.47 85596.15Other income 13 2431.75 2812.7271136.22 88408.87EXPENDITURECost of Materials 14 45496.75 55611.62Personnel Cost 15 5495.56 7032.73Interest (Net) 16 (6.75) 4.15Depreciation/Amortisation 5 1534.86 2446.99Other expenditure 17 14044.23 17368.6466564.65 82464.13Less: Service charges recovered 505.93 538.9166058.72 81925.22PROFIT BEFORE TAXATION 5077.50 6483.65Provision for taxationCurrent Tax 1250.00 2238.25Deferred Tax 456.18 37.66Fringe Benefit Tax 85.00 227.89(Excess)/Short provision for taxation in respect of earlier years — (59.33)PROFIT AFTER TAXATION 3286.32 4039.18Balance brought forward from last year 3866.49 2863.00Add : Transfer in terms of amalgamation (See note 1(a), Schedule 19) — 1308.30Available for appropriation 7152.81 8210.48APPROPRIATED AS FOLLOWSGeneral reserve 330.00 1000.00Proposed dividend 4798.93 2932.68Corporate tax on proposed dividend 673.05 411.31Balance carried to the Balance Sheet 1350.83 3866.497152.81 8210.48Significant accounting policies 18Notes to the accounts 19Basic and Diluted earnings per share (in Rupees) 19 12.33 15.15(See note 4, Schedule 19)(Not(Annualised)annualised)Face value per share (in Rupees) 10.00 10.00For and on behalf of the Board,Per our report attached to the Balance SheetFor A.F. Ferguson & Co.Chartered AccountantsA. C. KhannaPartnerR. A. Shah ChairmanH. Meier Vice-Chairman & Managing DirectorB. S. Mehta}Diwan A. Nanda DirectorsK. J. BharuchaSunil K. NayakChief Financial Officer & Company SecretaryMumbai, 22nd February, 2007Mumbai, 22nd February, 200727


Clariant Chemicals (India) LimitedCash Flow Statement for the nine months period ended 31st December, 2006April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsA. CASH FLOW FROM OPERATING ACTIVITIES :Net Profit before tax and Extra ordinary items 5077.50 6483.65Adjustments for :Depreciation 1534.86 2446.99Unrealised foreign exchange (gain)/loss (Net) 6.34 25.78Interest income (211.92) (480.97)Dividend income (61.44) (297.82)Loss/(profit) on sale of assets (Net) (32.62) (56.98)Adjustment on Sale of Land — 117.74Loss/(profit) on sale of Investments (Net) (43.05) (54.69)Amortisation of Voluntary Retirement Scheme compensation 10.43 —Provision for Diminution in value of investment written back — (0.53)Provision for Doubtful debts written back (Net) (71.58) (139.27)Provision for Leave encashment (92.21) 127.15Provision for Ex-Gratia Gratuity 2.88 15.55Provision for Stamp Duty in connection with Integration — 741.50Provision for Gratuity 0.80 40.27Interest expenses 205.17 485.12Investment written-off — 0.14Assets written-off 121.93 147.18Operating profit before working capital changes 6447.09 9600.81Adjustments for :Trade and other receivables 2206.61 548.65Payment of Voluntary Retirement Scheme compensation (187.68) —Inventories (289.29) (1744.10)Trade, other payables and Provisions (53.30) 531.11Cash generated from operations 8123.43 8936.47Direct taxes paid – (Net of refunds) (1521.37) (2697.79)Net cash from operating activities 6602.06 6238.68B. CASH FLOW FROM INVESTING ACTIVITIES :Purchase of fixed assets (2215.09) (3342.83)Sale of fixed assets 136.48 190.97Purchase of investments (13623.56) (42141.12)Investment in subsidiaries (60.00) (281.48)Sale of investments 20402.22 40963.94Loans and advances to subsidiary (295.57) (475.00)Interest received 70.13 659.18Dividend received 61.44 297.82Net cash from/(used in) investing activities 4476.05 (4128.52)28


Cash Flow StatementApril 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsC. CASH FLOW FROM FINANCING ACTIVITIES :Cash credit & Packing credit (Net) (3330.41) 571.02Reduction of Share Capital of erstwhile BTP India Private Limited — (2470.00)Proceeds from borrowings — 12381.23Repayment of borrowings (1641.86) (12622.16)Interest paid (207.75) (501.96)Dividend/dividend tax paid (3324.19) (2316.67)Net cash used in financing activities (8504.21) (4958.54)NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 2573.90 (2848.38)CASH AND CASH EQUIVALENTS AS AT BEGINNING OF THE PERIOD 1388.96 367.81CASH AND CASH EQUIVALENTS – TAKEN OVER ON AMALGAMATION — 3869.53CASH AND CASH EQUIVALENTS AS AT THE END OF THE PERIOD 3962.86 1388.96Notes :1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Accounting Standard-3 on Cash Flow Statementissued by the Institute of Chartered Accountants of India.2. Direct taxes paid are treated as arising from operating activities and are not bifurcated between investing and financing activities.3. Cash and Bank balances includes Rs. NIL (Previous Year – Rs. 5.50 lakhs) which is not available for use by the Company.4. The figures of current reporting period of nine months ended December 31, 2006 are not strictly comparable with the figures relating toprevious reporting period of twelve months ended March 31, 2006.5. Figures for the previous year have been regrouped wherever necessary to conform to this period’s classification.For and on behalf of the Board,Per our report attached to the Balance SheetFor A.F. Ferguson & Co.Chartered AccountantsA. C. KhannaPartnerR. A. Shah ChairmanH. Meier Vice-Chairman & Managing DirectorB. S. Mehta}Diwan A. Nanda DirectorsK. J. BharuchaSunil K. NayakChief Financial Officer & Company SecretaryMumbai, 22nd February, 2007Mumbai, 22nd February, 200729


Clariant Chemicals (India) LimitedSchedules forming part of the Balance SheetSCHEDULE 1 : SHARE CAPITAL31-12-2006 31-03-2006Rs. lakhsRs. lakhsAuthorised30000000 equity shares of Rs. 10/- each 3000.00 3000.00Issued and subscribed26660745 (Previous year : 11650000) equity shares of Rs. 10/- each fully paid 2666.07 1165.00Notes:Of the above:(a) 15010745 equity shares issued as fully paid up pursuant to a contract for aconsideration other than cash.(b) 8167080 equity shares are held by EBITO Chemiebeteiligungen AG.6075000 (Previous year : NIL) equity shares are held by Clariant International AG.2660000 (Previous year : NIL) 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 ofRs. 669.06 lakhs from general reserve.SCHEDULE 1A : SHARE CAPITAL SUSPENSE ACCOUNT3031-12-2006 31-03-2006Rs. lakhsRs. lakhsShare capital suspense — 1501.07Note:In terms of the scheme of amalgamation in the previous year between Clariant (India) Limited,Vanavil Dyes and Chemicals Limited, Kundalika Investments Limited, BTP India Private Limited,the transferor companies and the Company, 15010745 equity shares of Rs. 10/- each fully paid,were issued during the period to the shareholders of the transferor companies whose names appearedon their register of members on the record date viz 21st April, 2006.Of the above:(i) 6075000 equity shares were issued to Clariant International AG.(ii) 2660000 equity shares were issued to BTP Limited, UK.The ultimate holding company being Clariant AG, Switzerland.SCHEDULE 2 : RESERVES AND SURPLUS31-12-2006 31-03-2006Rs. lakhsRs. lakhsCapital reserveAs per last Balance Sheet 730.11 0.10Add : Transfer in terms of amalgamation * — 27.16Add : Excess of share capital of transferor companies overthe amount credited by the company to the share capital * — 702.85730.11 730.11Capital redemption reserveAs per last Balance Sheet 137.50 137.50Securities premium accountAs per last Balance Sheet 3545.65 2023.50Add : Transfer in terms of amalgamation * — 1522.153545.65 3545.65Investment allowance reserveAs per last Balance Sheet 20.00 —Add : Transfer in terms of amalgamation * — 20.0020.00 20.00General reserveAs per last Balance Sheet 22244.15 11033.34Add : Transfer from Profit and Loss Account 330.00 1000.00Add : Transfer in terms of amalgamation (Net of adjustments) * — 10210.8122574.15 22244.15Profit and Loss Account 1350.83 3866.4928358.24 30543.90* (See note 1(a), Schedule 19)


Schedules forming part of theBalance SheetSCHEDULE 3 : SECURED LOANSFrom banks :31-12-2006 31-03-2006Rs. lakhsRs. lakhsShort Term Loan : 142.44 3472.85Rs. 142.44 lakhs (Previous year : Rs. 3432.00 lakhs) secured by hypothecation of presentand future stock-in-trade and spare parts, loose tools, book debts, outstanding monies,receivables, claims, bills, right to or in movable properties and movable assets, etc.Rs. NIL (Previous year : Rs. 40.85 lakhs) secured by way of first charge on inventoriesand book debts, both present and future, and by second charge on other movableand immovable properties, both present and future.Term Loan : — 125.00(Repayable within one year Rs. NIL, Previous year : Rs. 100 lakhs)(Secured by first charge on plant and machinery)142.44 3597.85SCHEDULE 4 : UNSECURED LOANS31-12-2006 31-03-2006Rs. lakhsRs. lakhsPrivately placed Non-convertible debentures :9% Non-convertible debentures redeemable at par (Redeemed on 12th April, 2006) — 1000.00Other Loans :From banks :Short Term Loan — 475.00From others :Interest-free sales tax deferral scheme granted byState Industries Promotion Corporation of Tamil Nadu Limited 478.96 520.82478.96 1995.82SCHEDULE 5 : FIXED ASSETSRs. lakhsGROSS BLOCKDEPRECIATION/AMORTISATIONNET BLOCKTransfer in Transfer in For theterms of terms of periodAs at amalgama- Sales and As at As at amalgama- Sales and (See note 3 As atAs atAs at31-03-2006 tion * Additions deductions 31-12-2006 31-03-2006 tion * deductions below) 31-12-2006 31-12-2006 31-03-2006Intangible AssetsSoftware license fees 379.17 — — — 379.17 379.17 — — — 379.17 — —Tangible AssetsLand freehold 80.49 — — — 80.49 — — — — — 80.49 80.49Land leasehold 14.87 — — — 14.87 4.06 — — 0.12 4.18 10.69 10.81Buildings 5987.42 — 191.57 47.34 6131.65 2297.16 — 5.78 (280.12) 2011.26 4120.39 3690.26Plant, machinery,equipment etc. 28754.73 — 1676.66 2008.96 28422.43 18431.00 — 1922.69 1510.63 18018.94 10403.49 10323.73Furniture, fixtures andoffice appliances 1719.64 — 96.26 244.96 1570.94 946.46 — 194.73 114.47 866.20 704.74 773.18Vehicles 1046.70 — 15.97 145.36 917.31 427.59 — 97.63 189.76 519.72 397.59 619.11Total 37983.02 — 1980.46 2446.62 37516.86 22485.44 — 2220.83 1534.86 21799.47 15717.39Previous year 20647.00 15518.50 2954.87 1137.35 37983.02 12683.51 8211.12 856.18 2446.99 22485.44 15497.58Capital work-in-progress 642.14 483.11Advances against capital orders 158.99 35.71801.13 518.8216518.52 16016.40Notes :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.Rs. 600 (Previous year : Rs. 1200) being the cost of shares yet to be allotted.2. * Transfers after adjustments as on April 1, 2005 pursuant to the scheme of amalgamation. (See note 1(a), Schedule 19)3. See note 28 and 29, Schedule 19.31


Clariant Chemicals (India) LimitedSCHEDULE 6 : INVESTMENTS (AT COST)Long Term31-12-2006 31-03-2006Rs. lakhsRs. lakhsNon-trade - Unquoted38250 (Previous year : 38250) 5.15% Rural Electrification Corporation Limited Bonds ofRs. 10000/- each fully paid up 3825.00 3825.00In fully paid units of Rs. 10/- each(Acquired pursuant to Scheme of Amalgamation) *NIL (Previous year : 1000000) TATA Fixed Horizion Series 1 - Plan A (371 days) - Growth — 200.00NIL (Previous Year : 2000000) JM Fixed Maturity Plan - YS01 - Growth Option (133) — 100.00NIL (Previous Year : 2000000) Reliance Fixed Maturity Fund - Annual Plan - Series 1 - Growth Option — 200.00Long Term - Non-trade - Unquoted 3825.00 4325.00TradeIn Subsidiary Company - Unquoted500000 (Previous year : 500000) fully paid equity shares of Rs. 10/- eachin Chemtreat Composites India Pvt. Ltd. (See note 15, Schedule 19){Acquired during the previous year} 325.00 265.00Long Term - Trade - Unquoted 325.00 265.00Total Long Term 4150.00 4590.00CurrentNon-trade - UnquotedIn fully paid units of Rs. 10/- eachNIL (Previous Year : 5049182) Principal PNB - Fixed Maturity Plan - 91 Days - Series I — 504.92NIL (Previous Year : 3484111) Canliquid Fund - Institutional - Daily Dividend Reinvest — 349.84NIL (Previous Year : 5562056) Kotak FMP - Series XVI - Dividend — 556.21NIL (Previous Year : 5505854) LIC MF Liquid Fund - Dividend Plan — 602.79NIL (Previous Year : 13788661) LIC MF Floating Rate Fund - Short Term Plan - Dividend Plan — 1389.48NIL (Previous Year : 7476901) UTI Money Market Fund Daily Dividend Option — 1302.95NIL (Previous Year : 4053920) Prudential ICICI FMP - Yearly - Series XXV - Dividend — 405.394493133 (Previous Year : NIL) Reliance Liquid Fund - Cash Plan - Dividend Reinvestment 500.58 —In fully paid units of Rs. 1000/- eachNIL (Previous Year : 162429) DSP Merrill Lynch Liquidity Fund - Institutional - Daily Dividend — 1624.61Current - Non-trade - Unquoted 500.58 6736.19Total Investments 4650.58 11326.19* (See note 1 (a), Schedule 19)Aggregate value of unquoted investments 4650.58 11326.19The following are the Investments which have been purchased and sold during the period :April 06 - December 06Nos.Rs. lakhsNon trade Current - unquotedIn fully paid units of Rs. 10/- eachJM Money Manager Super Plus Plan 3002431 300.24Principal PNB Fixed Maturity Plan - 91 Days Series I 18682 1.87Canliquid Fund - Institutional - Daily Dividend Reinvest 9565442 960.47Kotak Liquid (Institutional Premium) - Daily Dividend 2173384 265.76Kotak FMP Series XVI - Dividend 25194 2.52LICMF Liquid Fund - Dividend Plan 17790479 1953.41LIC MF Floating Rate Fund - Short term Plan - Dividend Plan 12558 1.27Deutsche Insta Cash Plus 8745301 900.85Deutsche Insta Cash Plus Institutional 24935129 2498.37UTI - Money Market Fund Daily Dividend Option 2055484 358.2732


Schedules forming part of theBalance SheetSCHEDULE 6 : INVESTMENTS (AT COST) ContinuedThe following are the investments which have been purchased and sold during the period :April 06 - December 06Nos.Rs. lakhsReliance Floating Rate Fund - Daily Dividend Plan 5723899 575.93Reliance Treasury Institutional Option - Daily Dividend Option 657180 100.43Reliance Liquid Fund - Cash Plan - Daily Dividend Option 5385465 600.00Prudential ICICI Liquid Plan Institutional Plus - Daily Dividend Option 2414752 286.18Prudential ICICI FMP - Yearly Series XXV - Dividend 12932 1.29Birla Cash Plus - Institutional Daily Dividend Reinvestment 928466 100.30Birla Cash Plus - Institutional Premium Daily Dividend Reinvestment 16766789 1679.95In fully paid units of Rs. 1000/- eachDSP Merrill Lynch Liquidity Fund - Institutional - Daily Dividend 480 4.80TATA Liquid Super High Investment Fund - Daily Dividend 104878 1129.63UTI Liquid Cash Plan Institutional - Daily Income Option 63815 650.54UTI Liquid Cash Plan Institutional Premium - Daily DIV Reinvestment 49088 500.43Standard Chartered Liquidity Manager Plus - Daily Dividend 25044 250.47SCHEDULE 7 : INVENTORIES31-12-2006 31-03-2006Rs. lakhsRs. lakhsAt lower of cost and net realisable value (As certified by the Management)Stores and spare parts 400.96 324.91Raw materials 4131.64 3586.00Packing materials 130.85 102.45Finished goods 6851.83 6762.46Work-in-progress 1302.38 1752.5512817.66 12528.37SCHEDULE 8 : SUNDRY DEBTORS31-12-2006 31-03-2006Rs. lakhsRs. lakhsSecured(Considered good)Under six months 947.83 1072.84Over six months 83.08 17.671030.91 1090.51UnsecuredUnder six months (Considered good) 12424.35 13311.26Over six months (Including doubtful debts Rs. 80.88 lakhs; 361.50 265.19Previous year : Rs. 152.46 lakhs; balance considered good)12785.85 13576.4513816.76 14666.96Less: Provision for doubtful debts 80.88 152.4613735.88 14514.5033


Clariant Chemicals (India) LimitedSCHEDULE 9 : CASH AND BANK BALANCES31-12-2006 31-03-2006Rs. lakhsRs. lakhsCash on hand 14.18 10.02Cheques on hand 2777.35 168.62With scheduled banks :On current accounts 1170.58 782.35On Margin accounts — 22.07On fixed deposit accounts 0.75 405.901171.33 1210.323962.86 1388.96SCHEDULE 10 : LOANS AND ADVANCES31-12-2006 31-03-2006Rs. lakhsRs. lakhs(Unsecured - considered good, unless otherwise stated)Advances and loans to a subsidiary (See note 17, Schedule 19) 770.57 475.00Advances recoverable in cash or in kind or for value to be received 3309.53 4799.83VAT set off admissible 171.76 102.03Advance payment of Income tax (Net of Provision for taxation) 1727.66 1472.42Balances with Customs and Excise on current account 794.34 599.626773.86 7448.90SCHEDULE 11 : CURRENT LIABILITIES31-12-2006 31-03-2006Rs. lakhsRs. lakhsAcceptances — 178.81Sundry creditors 17188.27 15589.62(Includes Rs. 2137.42 lakhs; Previous year Rs. 2069.80 lakhs due to small scale industrial units){See note 12, Schedule 19}Deposits 1296.89 1282.21Interest accrued but not due on loans 0.18 2.76Unpaid dividends* 122.63 102.83Unclaimed fixed deposits* 1.28 1.49Unpaid interest on matured fixed deposits* 3.36 6.6418612.61 17164.36* There is no amount due and outstanding to be credited to Investor Education and Protection FundSCHEDULE 12 : PROVISIONS31-12-2006 31-03-2006Rs. lakhsRs. lakhsRetirement Benefits:Leave encashment 652.82 745.03Gratuity 279.88 329.12Ex-gratia Gratuity 90.03 87.15Others:Provision for taxation (Net of advance payment of Income tax) 901.76 832.89Provision for unearned premium* — 650.00Provision for stamp duty in connection with Integration* — 741.50Proposed dividend 4798.93 2932.68Corporate Tax on proposed dividend 673.05 411.317396.47 6729.68* (See note 6, Schedule 19)34


Schedules forming part of the Profit and Loss AccountSCHEDULE 13 : OTHER INCOMEApril 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsDividend on long term non-trade investments — 3.27Dividend on current non-trade investments 61.44 294.55Export Incentives 253.50 404.60Profit on sale of fixed assets (Net) 32.62 56.98Cash discounts 24.87 16.81Rental income 256.14 346.56Indenting commission 279.06 421.88Exchange Gain (Net) 48.19 —Provision for doubtful debts written back (Net) 71.58 139.27Profit on sale/changes in the carrying amount of current investments (Net) 9.81 15.17Profit on sale/changes in the carrying amount of long term investments (Net) 33.24 39.52Miscellaneous (See note 27(a), Schedule 19) 1361.30 1074.112431.75 2812.72SCHEDULE 14 : COST OF MATERIALSApril 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsRaw materials consumed 29873.42 33135.97Packing materials consumed 1662.40 1790.84Purchase of finished goods (Previous year : Net of goods destroyed in flood) 13600.13 21545.91(Increase)/Decrease in stocks of finished goods and work-in-progress :Opening stockFinished goods 6762.46 3173.96Add : Transfer in terms of scheme of amalgamation * — 3008.066762.46 6182.02Work-in-progress 1752.55 1028.64Add : Transfer in terms of scheme of amalgamation * — 443.251752.55 1471.898515.01 7653.91Less : Closing stockFinished goods 6851.83 6762.46Work-in-progress 1302.38 1752.558154.21 8515.01360.80 (861.10)45496.75 55611.62* (See note 1(a), Schedule 19)SCHEDULE 15 : PERSONNEL COSTApril 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsSalaries, wages, bonus, etc. 4313.47 5040.38Amortisation of Voluntary Retirement Scheme compensation 10.43 —Contribution/Provision for provident fund, superannuation scheme, gratuity fund, etc.(See note 27 (b), Schedule 19) 583.24 1189.60Welfare expenses 606.50 829.715513.64 7059.69Less : Charged to capital accounts 18.08 26.965495.56 7032.7335


Clariant Chemicals (India) LimitedSCHEDULE 16 : INTEREST (NET)April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsInterest PaidOn loans for fixed period 4.62 135.34Others 200.55 349.78205.17 485.12Less : Interest received (Gross) :(Tax deducted at source Rs. 14.91 lakhs; Previous year : Rs. 37.93 lakhs)On Investments – Long Term Non-trade 148.42 196.99Others 63.50 283.98211.92 480.97(6.75) 4.15SCHEDULE 17 : OTHER EXPENDITUREApril 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsStores and Spare parts etc. consumed 615.66 1100.99Repairs and maintenance:Plant and machinery 560.84 782.59Buildings 248.04 454.94Others 171.50 324.71Power and fuel 3400.74 3677.13Rent (including lease payments) {See note 8, Schedule 19} 373.88 424.10Rates and taxes (including water charges) 394.89 559.31Insurance 197.16 291.32Clearing, Forwarding and transport 1375.07 1459.47Travelling and Conveyance 671.71 853.39Commission 207.23 280.51Cash Discount 619.14 715.60Other discounts on sales 1449.48 1743.88Brokerage on exports 74.72 80.93Adjustment on Sale of Land — 117.74Assets written-off 121.93 147.18Bad debts and advances written off 108.95 141.03Excise Duty (Net) 172.43 47.84Exchange Loss (Net) — 35.57Flood Loss (Net) — 130.84Integration Expenses (See note 27 (c), Schedule 19) — 925.85Miscellaneous (See note 13, Schedule 19) 3280.86 3073.7214044.23 17368.6436


NotesNotesSchedule 18Forming Part of the Balance Sheet and Profit and Loss Account for the nine months period ended 31st December, 2006SIGNIFICANT ACCOUNTING POLICIESThe financial statements are prepared at historical cost on the accrual basis of accounting and in accordance with the standards on accountingissued by the Institute of Chartered Accountants of India and referred to in Section 211(3C) of the Companies Act, 1956. The significant accountingpolicies are as follows :1. SALESThe Company recognises sale of goods on despatch to customers. Sales are net of excise duty, sales tax and trade discounts, wherever applicable.2. 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 at the year end.3. 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.4. RETIREMENT BENEFITS(a) Retirement benefits to employees comprise of payment to gratuity, superannuation and provident funds and ex-gratia gratuity under therules of the Company.(b)Liabilities in respect of retirement gratuity benefit to employees are provided in terms of The Payment of Gratuity Act, 1972 or the Company’sGratuity Scheme approved by the Commissioner of Income-tax, whichever is beneficial. The adequacy of the fund is confirmed by anactuarial valuation obtained at the year end.Contributions for superannuation made to LIC under the Company’s Superannuation Scheme are charged to the Profit and Loss Account.Contributions to the Provident Funds are made at a pre-determined rate and charged to the Profit and Loss Account.(c)Liabilities in respect of leave encashment benefit and ex-gratia gratuity payable on retirement to a category of employees, are providedbased on an actuarial valuation obtained at the year end and charged to the Profit and Loss Account.5. VOLUNTARY RETIREMENT SCHEMEExpenditure incurred on voluntary retirement scheme is amortised over a period of three years. (See Note 30, Schedule 19)6. FIXED ASSETS AND DEPRECIATION(A)(B)(C)(D)All fixed assets are stated at cost less depreciation, wherever applicable. Cost comprises the purchase price and any other attributablecost of bringing the asset to its working condition for its intended use. Borrowing cost relating to funds borrowed for acquisition ofqualifying 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 the Companies Act,1956 except for :(a)(b)certain items of furniture, fixture, vehicle, plant, machinery and equipment on which a depreciation rate of 20% on straight line method isapplied,electronic data processing (EDP) hardware such as servers on which a depreciation rate of 20% and for other EDP equipments includingpersonal computers and printers on which depreciation rate of 25% on straight line method is applied.(c) Exchange differences capitalised which are depreciated over the remaining useful life of the assets. (See note 28 and 29, Schedule 19)7. IMPAIRMENT OF ASSETSThe carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/externalfactors. An impairment loss will be recognised wherever the carrying amount of an asset exceeds its estimated recoverable amount. Therecoverable amount is greater of the asset’s net selling price and value in use. In assessing the value in use, the estimated future cash flows arediscounted to the present value using the weighted average cost of capital. Previously recognised impairment loss is further provided orreversed depending on changes in circumstances.8. INVENTORIESInventories are valued at the lower of cost and estimated net realisable value after providing for obsolescence. The cost of inventories isgenerally arrived at on the following bases :Raw materials, packing materials, trading items and stores and spares – Weighted average cost.Finished goods and work-in-progress – Absorption costing at works cost.37


Clariant Chemicals (India) Limited9. SUNDRY DEBTORS/LOANS AND ADVANCESSundry debtors and loans and advances are stated after making adequate provision for doubtful debts/advances.10. INVESTMENTSLong term investments are stated at cost less provision for diminution in value, other than temporary. Current investments are stated at the lowerof cost and fair value. Dividends are accounted for when the right to receive the dividend payment is established.11. LEASESLeases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operatingleases. Operating lease payments are recognised as an expense in the Profit and Loss Account on a straight-line basis over the lease term.12. FOREIGN CURRENCY TRANSLATIONS(a) Monetary items denominated in foreign currency are translated at the exchange rate prevailing on the last day of the accounting year. Inrespect of items covered by forward contracts, the premium or discount arising at the inception of such a forward exchange contract isamortised as expense or income over the life of the contract. Any profit or loss arising on cancellation of such a forward exchange contractis recognised as income or expense for the period. Foreign currency transactions are accounted at the rate prevailing on the date oftransaction.(b)(c)Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency are reportedusing the exchange rate at the date of transaction.Gain or loss arising out of translation/conversion is taken credit for or charged to the Profit and Loss Account except exchange differencesarising due to repayment or restatement of liabilities incurred for the purpose of acquiring of fixed assets in respect of transactions inforeign currencies entered into prior to April 1, 2004 and in respect of any fixed asset that has been acquired from a country outside India,in which case the exchange differences are adjusted in the carrying amount of the respective fixed assets.13. INCOME TAXIncome-tax expense comprises current tax and deferred tax charge or credit. The current tax is determined as the amount of tax payable inrespect of the estimated taxable income for the period. The deferred tax charge or credit is recognised using prevailing enacted or substantivelyenacted tax rates. Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtualcertainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation infuture. Deferred tax assets/liabilities are reviewed at each Balance Sheet date based on developments during the year and available case laws,to reassess realisation/liabilities.14. 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. Provisions are notdiscounted to its present value and are determined based on best estimate of the expenditure required to settle the obligation at the BalanceSheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed,unless the possibility of an outflow of resources embodying the economic benefit is remote.Schedule 19Notes on the Balance Sheet and Profit and Loss Account for the nine months period ended 31st December 20061. (a) In accordance with the Scheme of Amalgamation (‘the Scheme’) of erstwhile Clariant (India) Limited, Vanavil Dyes and Chemicals Limited,BTP India Private Limited and Kundalika Investments Limited (herein after referred to as the “Transferor Companies”) with the Company asapproved by the members at a Court convened Extra Ordinary General Meeting held on 8th December, 2005 and subsequently sanctionedby the Honourable High Court of Judicature at Madras on 22nd February, 2006 and Honourable High Court of Judicature at Bombay on24th February, 2006 which was modified vide order dated 17th March, 2006, the entire business and the whole of the undertaking of theTransferor Companies being all its assets and properties and all its debts and liabilities as defined in the Scheme have been transferred toand vested in the Company retrospectively with effect from 1st April, 2005. The Scheme had accordingly been given effect to in the previousaccounting year.(b)The Board of Directors in their meeting held on 14th September, 2006 had decided to change the accounting year from financial yearApril- March to calendar year January-December. Accordingly, the Company has closed its accounting year for a period of 9 months ended31st December, 2006.In view of the above, the figures of current reporting period of 9 months ended 31st December, 2006 are not strictly comparable with thefigures relating to previous reporting period of 12 months ended 31st March, 2006.2. Segment Information for the nine months period ended 31st December, 2006 (As required by Accounting Standard (AS)-17 “SegmentReporting”)(a) The Company is organised into three primary business segments mainly :(i) Intermediates and Colours :38Consist of pigment dyestuffs and their dispersion, Intermediates for dyes, pesticides and pharmaceuticals


Notes(ii) Dyes and Specialty Chemicals :Includes dyestuff synthetic resins, binder materials, auxiliaries and chemicals(iii) Masterbatches :Covers commodity and specialty Masterbatches for Plastics and nylon fibers(b)(c)(d)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.Segment Revenue in each of the above Business Segments primarily includes Sales and Processing charges.(e) (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 and liabilitiesrespectively.Information about Primary Business Segments :RevenueThe secondary segments of the Company are geographical segments mainly:-(i) India(ii) Outside IndiaApril 06 to December 06 April 05 to March 06Rs. lakhsRs. lakhsInter-Dyes andMaster-Total Inter- Dyes and Master- TotalmediatesSpecialtybatches mediates Specialty batches& ColoursChemicals & Colours ChemicalsExternal Sales/Revenue 25563.37 41350.61 1790.49 68704.47 35510.33 48401.28 1684.54 85596.15Less: Inter Segment Revenue — — — — — — — —Total Revenue (Net) 25563.37 41350.61 1790.49 68704.47 35510.33 48401.28 1684.54 85596.15ResultsSegment Results 1073.15 4804.66 244.48 6122.29 1531.88 6360.43 125.52 8017.83Unallocated Corporate Expenses (Net) (1112.98) (1827.85)Operating Profits5009.31 6189.98Interest Income/Dividend Income 273.36 778.79Interest Expenses (205.17) (485.12)Profit Before Taxation 5077.50 6483.65Current Tax/Deferred Tax (1706.18) (2216.58)Fringe Benefit Tax (85.00) (227.89)Profit After Tax 3286.32 4039.18Other InformationSegment Assets 19752.77 22421.43 1355.84 43530.04 23405.49 21848.58 1123.85 46377.92Unallocated Corporate Assets 13201.66 15372.98Total Assets 56731.70 61750.90Segment Liabilities 7978.22 9773.31 336.06 18087.59 7518.50 8885.87 280.33 16684.70Unallocated Corporate Liabilities 1547.75 3032.46Total Liabilities 19635.34 19717.16Capital Expenditure 625.32 852.60 121.57 1599.49 1970.08 935.53 72.71 2978.32Unallocated Corporate Capital Expenditure 663.28 35.32Total Capital Expenditure 2262.77 3013.64Depreciation 869.62 569.72 56.19 1495.53 1321.45 884.24 59.05 2264.74Unallocated Corporate Depreciation 39.33 182.25Total Depreciation/Amortisation 1534.86 2446.99Non cash expenses other thanDepreciation/Amortisation 0.35 55.50 3.96 59.81 87.87 136.69 9.91 234.47Unallocated Corporate Non cash expensesother than Depreciation/Amortisation 8.07 831.49Total Non cash expenses other thanDepreciation/Amortisation 67.88 1065.9639


Clariant Chemicals (India) LimitedInformation about Secondary Segments :40April 06 to December 06 April 05 to March 06Rs. lakhsRs. lakhsRevenue by Geographical Market India Outside Total India Outside TotalIndiaIndiaExternal Sales 52302.59 16401.88 68704.47 62201.88 23394.27 85596.15Segment Assets 39726.59 3803.45 43530.04 43224.75 3153.17 46377.92Additions to Fixed Assets 1599.49 — 1599.49 2978.32 — 2978.32Footnotes:1 Total assets do not include :(a) Advance income tax Rs. 1727.66 lakhs (Rs. 1472.42 lakhs)(b) Miscellaneous Expenditure Rs. 177.25 lakhs (Rs. NIL)2 Total Liabilities exclude the following :(a) Proposed dividend Rs. 4798.93 lakhs (Rs. 2932.68 lakhs)(b) Tax on dividend Rs. 673.05 lakhs (Rs. 411.31 lakhs)(c) Provision for Taxation Rs. 901.76 lakhs (Rs. 832.89 lakhs)(d) Deferred Tax liability (Net) Rs. 981.82 lakhs (Rs. 525.64 lakhs)3. Related Party Disclosure as required by Accounting Standard-18 “Related Party Disclosures” are given below:Relationship :(a) Holding Company :EBITO Chemiebeteiligungen AG, Clariant International AG and Clariant Participations AG, Switzerland together hold 63.40% equity shares inthe Company, the ultimate holding company being Clariant AG, Switzerland.(b) Subsidiary of the Company :The Company has subsidiary Chemtreat Composites India Pvt. Ltd. – 100% shareholding (w.e.f. 13th February, 2006)(c) Other related parties in the Clariant group where common control exists :Fellow Subsidiaries Companies :Clariant Life Science Molecules (Florida) Inc., USAClariant Participations B.V., NetherlandsClariant Life Science Molecules (America) Inc., USAClariant (Oesterreich) GmbH, AustriaUS dormant BTP - CompaniesClariant Benelux S.A., BelgiumClariant (Argentina) S.A., ArgentinaClariant Service (Schweiz) AGClariant S.A., BrazilClariant Finance (Luxembourg) S.A., LuxembourgClariant Colorquímica (Chile) Ltda., ChileClariant Produkte (Schweiz) AGClariant (Colombia) S.A., ColombiaClariant Corporation, USAClariant (Guatemala) S.A., GuatemalaClariant Export AGClariant (Mexico) S.A. de C.V., MexicoClariant (Canada) Inc., CanadaClariant Productos Quimicos S.A. de C.V., MexicoClariant Consulting AG, SwitzerlandClariant (Peru) S.A., PeruClariant Verwaltungs GmbH, GermanyClariant (Uruguay) S.A., Uruguay(Formerly known as Clariant GmbH)Clariant (Venezuela) S.A., VenezuelaClariant Produkte (Deutschland) GmbHClariant (Australia) Pty. Ltd., AustraliaClariant Vertrieb (Deutschland) GmbH & Co. KGClariant (Tianjin) Ltd., ChinaClariant Specialty Fine Chemicals (Deutschland) GmbHClariant Chemicals (China) Ltd., ChinaClariant Masterbatches (Deutschland) GmbHClariant Masterbatches (Guangzhou) Ltd.Industriepark Griesheim GmbH & Co. KG, GermanyClariant Pigments (Tianjin) Ltd., ChinaTechnische Services Gersthofen GmbHClariant Masterbatches (Beijing) Ltd., ChinaClariant (Danmark) A/S, DenmarkClariant Masterbatches (Shanghai) Ltd., ChinaClariant Ibérica Servicios S.L.Clariant Trading (China) Ltd.Clariant Ibérica Producción S.A.Clariant (China) Ltd., Hong KongClariant Ibérica Comercial S.L.Clariant Chemicals (Guangzhou) Ltd.Clariant Masterbatch Ibérica S.A., SpainP.T. Clariant Indonesia, IndonesiaClariant (Finland) Oy, FinlandClariant (Japan) K.K., JapanClariant Huningue, FranceDia Fine K.K., JapanK.J. Quinn, France


NotesClariant (Korea) Ltd., South KoreaClariant Masterbatches (Korea) Ltd.Clariant Pigments (Korea) Ltd.Clariant (Malaysia) Sdn. Bhd., MalaysiaClariant Masterbatches (Malaysia) Sdn. Bhd., MalaysiaClariant (New Zealand), Ltd., New ZealandClariant (Singapore) Pte. Ltd., SingaporeClariant Chemicals (Thailand) Ltd., ThailandClariant Masterbatches (Thailand) Ltd., ThailandClariant Chemicals (Taiwan) Co. Ltd., TaiwanClariant (Gulf) FZE, United Arab EmiratesEgyptian German Company for Dyes & Resins S.A.E., EgyptClariant (Egypt) S.A.E., EgyptClariant Masterbatches (Saudi Arabia) Ltd.Clariant (Maroc) S.A., MoroccoClariant (Pakistan) Ltd., Karachi, PakistanClariant Türkiye A.S., TurkeyClariant Southern Africa (Pty) Ltd., South AfricaBTP World S.A., LuxembourgClariant Finanz AG, SwitzerlandClariant Reinsurance Ltd., BermudaClariant Insurance (Liechtenstein) AG, LiechtensteinClariant Finance (BVI) Ltd., British Virgin IslandsClariant Beteiligungen AGClariant Chemiebeteiligungen AGClariant (Sverige) Holding ABClariant (France), FranceClariant LSM (France) Holding EURL, FranceClariant Specialty Fine Chemicals (France) S.A.S.Clariant Masterbatch Huningue S.A.S.Clariant Masterbatches (France) S.A.S.Clariant Masterbatches (St. Jeoire)Clariant Holdings UK Ltd., Great BritainClariant UK Ltd., Great BritainUK dormant Clariant - Companies, Great BritainClariant Horsforth Ltd., Great BritainBTP Ltd., Great BritainBTP Insurance Company Ltd., Great BritainUK dormant BTP - Companies, Great BritainClariant Masterbatches UK Ltd.Masterplast Ltd., IrelandClariant Masterbatches (Italia) SpA.Clariant Life Science Molecules (Italia) SpA., ItalyClariant Servizi (Italia) S.p.A.Clariant Prodotti (Italia) S.p.A.Clariant Distribuzione (Italia) S.p.A.Dick Peters B.V., NetherlandsClariant (Norge) AS, NorwayClariant Quimicos (Portugal) Lda., PortugalClariant (Sverige) AB, SwedenClariant Masterbatches Norden AB, SwedenAssociate Companies :Clariant Consulting (Middle East) Ltd., SwitzerlandBCI Betriebs-AG, SwitzerlandClariant Oil Services Ltd., SwitzerlandClariant CR s.r.o., Czech RepublicAbieta Chemie GmbH, Gersthofen, GermanyInfraServ GmbH & Co. Gendorf KG, GermanyInfraServ GmbH & Co. Höchst KG, GermanyInfraServ GmbH & Co., Knapsack KG, GermanyInfraServ GmbH & Co., Ruhrchemie KG, GermanyInfraServ GmbH & Co., Wiesbaden KG, GermanyIndustriepark Griesheim Verwaltungs GmbH, GermanyClariant Beteiligungs-GmbH, GermanyClariant Vertrieb (Deutschland) Verwaltungs GmbH, GermanyClariant Zweite Chemie GmbH, GermanyITN Nanovation AGEPS Ethylen-Pipeline-Süd GmbH & Co. KGEthylen-Pipeline-Süd Geschäftsführungs GmbHAguas Industriales de Tarragona S.A., Spain (AITASA)S.T.E.I.H. Sàrl, FranceClariant (Hellas) S.A., GreeceClariant Polska Sp. z.o.o, PolandColex Sp. z.o.o., PolandClariant Europa EWIVClariant Hungaria Kft, HungaryOmnexus N.V., NetherlandsClariant (RUS) LLC, Russian FederationClariant Distribucija SL, d.o.o., SloveniaClariant (Ecuador) S.A., EcuadorConcentrados Plasticolor S.A., GuatemalaClariant (Honduras) S.A., HondurasClariant Trading (Panama) S.A., PanamaClariant (El Salvador) S.A. de CV, El SalvadorClariant (Bangladesh) Ltd, BangladeshHangzhou Baihe Clariant Pigments Co., Ltd.Chemcolour Industries (NZ) Ltd., New ZealandClariant (Philippines) Corp., PhilippinesClariant (Vietnam) Ltd., VietnamClariant Oil Services Angola Lda., AngolaClariant Tunisie S.A., TunisiaCompagnie Tunisienne de Chimie Industrielle, TunisiaKemoks Kimya Sanayi, TurkeyInternational School of the Basel Region AG, SwitzerlandStarfire Systems Inc., U.S.A.(d) Key Management Personnel :H. Meier : Vice-Chairman & Managing Director41


Clariant Chemicals (India) LimitedDuring the period the following transactions were entered into with related parties :(i) Holding Company, Subsidiary Companies, Fellow Subsidiaries and Associates :April 06 toApril 05 toDecember 06 March 06Rs. lakhs Rs. lakhsHolding Company :Transactions during the period :Sale of GoodsClariant International AG 909.53 501.07Services rendered and othersClariant International AG 84.67 108.44EBITO Chemiebeteiligungen AG — 56.73Purchase of GoodsClariant International AG 5065.25 3889.26Services received and othersClariant International AG 345.01 374.36Dividend PaidClariant International AG 898.38 364.50EBITO Chemiebeteiligungen AG 668.25 490.02Balances outstanding as at the end of the period :Amount Payable 1627.90 1272.99Amount Receivable 153.05 175.47Subsidiary Companies :Transactions during the period :Services rendered and othersChemtreat Composites India Pvt. Ltd. 35.57 —Advances/Loan given during the yearChemtreat Composites India Pvt. Ltd. 260.00 475.00Balances outstanding as at the end of the period :Amount Receivable 770.57 475.00Fellow Subsidiaries :Transactions during the period :Sale of GoodsClariant Produkte (Deutschland) GmbH 3147.85 2908.30Clariant Corporation 1681.73 1956.21Clariant (China) Ltd. 1445.32 1466.24Clariant UK Ltd. 1387.55 686.16Others 4525.89 12310.96Services rendered and othersClariant Produkte (Deutschland) GmbH 79.49 206.52Clariant Export AG 132.48 41.89Others 51.72 150.26Purchase of GoodsClariant Verwaltungs GmbH, Germany 7.91 1631.65Clariant UK Ltd. 374.93 457.28Clariant Benelux SA 1758.00 28.81Others 1230.11 1925.69Services received and othersClariant UK Ltd. — 34.62Clariant Verwaltungs GmbH, Germany — 9.49Clariant SA Brazil 21.22 3.48Clariant Southern Africa (PTY) Ltd. 4.06 0.23Others 14.35 40.28Dividend PaidBTP Ltd., UK 292.60 570.00Balances outstanding as at the end of the period :Amount Payable 406.57 474.85Amount Receivable 2535.85 2567.9142


NotesDuring the period the following transactions were entered into with related parties : (Contd.)(i)Holding Company, Subsidiary Companies, Fellow Subsidiaries and Associates : (Contd.)Associate Companies:Transactions during the period :Sale of GoodsApril 06 toApril 05 toDecember 06 March 06Rs. lakhs Rs. lakhsChemcolour Industries (NZ) Ltd. 15.65 11.10Clariant (Philippines) Ltd. 32.98 —Purchase of GoodsAbieta Chemie GmbH 6.59 13.91Services received and othersClariant Consulting (Middle East) Ltd. 18.02 11.03Clariant (Philippines) Corp., 3.04 1.77Services rendered and othersClariant Consulting (Middle East) Ltd. 3.66 —Balances outstanding as at the end of the period :Amount Payable — 17.74Amount Receivable 5.27 2.51(ii) Key Management Personnel :Remuneration paid 111.76 114.53Remuneration paid to ex-Vice Chairman & Managing Director oferstwhile Clariant (India) Ltd. — 125.09Sale of Assets — 9.39Commission Payable (Net) 15.75 33.09(iii) Relatives of the Key Management Personnel :4. Earnings per share :Rent Payment — 11.88April 06 toApril 05 toDecember 06 March 06(a) Net profit after taxation for the Period (Rs. lakhs) 3286.32 4039.18(b) Number of equity shares outstanding 26660745 11650000(c) Number of shares in Share Capital Suspense Account — 15010745(d) Total (b) + (c) 26660745 26660745(e) Basic and Diluted earnings per share (In Rupees) 12.33 15.15(Notannualised)(Annualised)(f) Face value per share (In Rupees) 10.00 10.005. Deferred Taxes:The major components of deferred tax assets and deferred tax liabilities are set out below:April 06 toApril 05 toDecember 06 March 06Rs. lakhs Rs. lakhsDeferred Tax Assets(i) Provision for Doubtful debts 27.25 51.31(ii) Provision for retirement benefits 331.99 356.93(iii) Expenses allowable for tax purposes when paid 53.07 94.90(iv) Integration Expenses 202.81 247.28(v) Payment/Provision for Voluntary Retirement Scheme 508.09 802.09(vi) Others 1.21 1.211124.42 1553.72Deferred Tax LiabilitiesDepreciation/Amortisation 2106.24 2079.36Deferred Tax Assets/(Liabilities) — Net (981.82) (525.64)43


Clariant Chemicals (India) Limited6. The movements in the provisions are summarised as under :Rs. lakhsAs on Additional Amount used/ As onAs on1st April, provision made Reversed 31st December,31st March,2006 during the Period during the Period 2006 2006(i) Provision for Unearned premiumin respect of Sale of Land 650.00 — 650.00 — 650.00(ii) Provision for Stamp Dutypursuant to the Scheme of Amalgamation 741.50 — 741.50 — 741.507. On 15th February 2005, the Company had received an order of the Sub-Divisional, Thane demanding Rs. 121 lakhs for the lease of land to ThaneMunicipal Corporation, Fire Brigade and Maharashtra State Electricity Board without obtaining prior permission in writing against which theCompany had filed a writ petition on 23rd February 2005 before the Bombay High Court. The Hon’ble High Court has granted interim stay in termsof the petition on 14th July 2005.April 06 toApril 05 toDecember 06 March 06Rs. lakhs Rs. lakhs8. In respect of all assets taken on lease on or after 1st April, 2001 :(a) In respect of Operating leases, where lease agreements have been formally entered into, minimumlease payments recognised in the Profit and Loss Account for the period are as follows:Residential flats, office premises, vehicles, equipment and machinery, computers etc. 360.33 406.53(b) There are no restrictions such as those concerning dividends, additional debt and further leasing,imposed by the lease agreements entered into by the Company.(c) Contingent rent payments in respect of vehicles are dependent upon the excess of actual usage, ifany, over stipulated usage.9. Expenditure on Research and Development during the Period44(a) Capital expenditure 23.90 37.16(b) Revenue expenditure charged to Profit and Loss Account 358.07 563.87381.97 601.0310. Estimated amount of contracts remaining to be executed on capital account and not provided for 315.60 175.1511. Contingent liabilities not provided for (also see note 7, Schedule 19) :(a)In respect of income tax matters decided against the Company, in respect of which the Company isin further appeal 1095.55 986.66decided in favour of the Company against which the department is in appeal 14.78 14.78(b) In respect of sales tax matters 297.92 77.82(c) In respect of excise matters 819.95 639.53(d) In respect of bills of exchange discounted with banks 2555.84 1589.06[since realised Rs. 1401.74 lakhs (Rs. 895.39 lakhs)](e) Other matters in dispute 6.76 6.76(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.12. The names of the small scale industrial undertakings to whom the Company owes, an amount outstanding for more than 30 days are :Advent Dyestuffs & Chem P. Ltd. Hema Dyechem Pvt. Ltd. Niranjan PlasticsAlginates Allied Chem P. Ltd. Hemali Dye Chem Nirvip Dyes & Chemicals P. Ltd.Alpanil Industries Hercules Pigment Industry Nivam Instruments Pvt. Ltd.Alps Chemicals Pvt. Ltd. Jackson Chemical Industries Nrox SpecialitiesAmtex Dye-Chem Industries Jay Chem Ohm Polytech Pvt. Ltd.Amzole India Pvt. Ltd. K. K. Corporation Panchsheel IntermediatesApurva Chemicals Kanshu Chemical Industries Panna Chemicals & Solvents P. LtdAuxichem Karsandas Mavji Premier Solvents Pvt. Ltd.Britacel Silicones Ltd. Kiri Dyes & Chemicals Pvt.Ltd. Prima ChemicalsChem Coat Chemical Industries L.N. Chemical Industries Ranka Organics Pvt. Ltd.Chromatic India Ltd. L.V. Associates S.P. Engineering & Trading Co.Core Chemicals (Mumbai) Pvt. Ltd. Link Bulk Drug Products P. Ltd. Sauradip Chemical Ind. Pvt. Ltd.


NotesD.K.Pharma Chem Pvt. Ltd. Lumis Biotech Pvt. Ltd. Sealwell IndiaDhanashree Plastics Mahavir Chemicals Shanti IndustriesDimple Chemicals & Services Mahesh Engineering Corporation Shrenik EngineersDispo Dye Chem Pvt. Ltd. Makwell Plastisizers Pvt. Ltd. Sita Chemicals Pvt. Ltd.Dragon Drugs Pvt. Ltd. Manish Minerals & Chemicals Sohan Dye Chem Pvt. Ltd.Esteem Inds.Pvt. Ltd. Mass Dye-Chem Pvt. Ltd. Solar Dyes IndustriesFairdeal Corporation Maulik Dyechem Speciality Organics Pvt. Ltd.Fibre Chem Industries Mazda Colours Ltd. Sterling Auxiliaries Pvt. Ltd.Fineotex Chemical Industries Mec Elec Industries Sudarshan Chemicals Ind. Ltd.Flame Pharmaceuticals Pvt. Ltd. Meghna Packaging Synthetic Dyes And ChemicalsGlowhite Chemicals Pvt. Ltd. Memba Chem Industries Pvt. Ltd. Techno Colour CorporationGrand Organics Pvt. Ltd. Menu Engineering Works Vikram PlasticizersGujarat Clay Mills Pvt. Ltd. Modhera Chemicals Pvt. Ltd. Yogeshwar Chemicals Ltd.Hema Chemical IndustriesNeo ColourThe above information and that given in Schedule-11 ‘Current Liabilities’ regarding small scale industrial undertakings is restricted to the partiesfrom whom the Company purchases raw materials, packing materials and finished goods. This has been determined to the extent such partieshave been identified on the basis of information available with the Company. This has been relied upon by the auditors.13. Miscellaneous Expenses in Schedule 17: Other Expenditure include :(a) Auditors’ remuneration and expenses :(b)(c)April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhs(Excluding(ExcludingService Tax)Service Tax)(i) Audit fees 20.00 35.54(ii) Company law matters — 3.50(iii) Taxation services — 5.80(iv) Other services - miscellaneous reports 26.00 25.62(v) Out-of-pocket expenses 1.22 2.02Non Compete Fees of Rs. 154.20 lakhs (Rs. NIL) paid to ex-Managing Director.Legal and Professional charges of Rs. 769.70 lakhs (Rs. 243.90 lakhs) towards consultancy.47.22 72.4814. 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 asfollows:(a) Forward Exchange Contracts outstanding as atCurrency31-12-2006 31-03-2006Amount inAmount inforeignAmount foreign AmountcurrencyRs. lakhs currency Rs. lakhsEUR / INR — — 237210 127.00CHF / INR — — 200000 68.77195.77(b)Foreign currency exposures not covered by a derivative instrument(i) Amount receivable on account of export of goods and services31-12-2006 31-03-2006CurrencyAmount inAmount inforeignAmount foreign AmountcurrencyRs. lakhs currency Rs. lakhsUSD 8199019 3675.23 5338925 2367.67EUR 213507 125.60 193315 102.13CHF 2583 0.94 133554 46.09GBP 1512 1.67 65611 51.48JPY — — 785000 3.003803.44 2570.3745


Clariant Chemicals (India) Limited(ii) Amount payable on account of import of goods and services31-12-2006 31-03-2006CurrencyAmount inAmount inforeignAmount foreign AmountcurrencyRs. lakhs currency Rs. lakhsUSD 2137474 946.48 2800781 1252.26EUR 2929480 1708.23 1136690 622.89CHF 343438 124.74 865611 299.92GBP 38602 33.54 64406 50.352812.99 2225.4215. In terms of the share purchase agreement for Chemtreat Composites India Private Limited (fully owned subsidiary) dated 13th February, 2006 readwith supplemental agreement of even date and letter of Indemnity and Guarantee dated 26th December, 2006, the Company has paidRs. 60 lakhs (Rs. NIL) during the current period towards full and final settlement and has been included in cost of investment in subsidiary.16 (a) Amount paid/payable by the Company to Directors (including Managing Director) as remuneration for services rendered in any capacity :46April 06 toApril 05 toDecember 06 March 06Rs. lakhs Rs. lakhsDirectors’ sitting fees 1.22 1.68Salaries 95.85 38.72Commission 23.75 42.31Other perquisites and benefits in cash or in kind 0.16 39.50120.98 122.21Note: (i) Provision for leave encashment and gratuity benefit which is based on actuarial valuation done on an overall Company basisis excluded from above.(ii) Excludes non compete fees of Rs.154.20 lakhs paid to ex-Managing DirectorIn respect of the period April 05 to March 06:• In the absence of records, the quantum of excess remuneration paid, if any, as compared to the 1969 ManagerialRemuneration Guidelines in respect of a sum of Rs. 3.33 lakhs paid to an ex-managing director of erstwhile Clariant (India)Limited for the years 1981 and 1982, has not been ascertained.• Excludes remuneration of Rs.125.09 lakhs paid to ex-managing director and Rs.6.50 lakhs payable to non wholetimedirectors of erstwhile Clariant (India) Limited.• Excludes sitting fees of Rs.1.64 lakhs & Rs.1.62 lakhs paid to the non wholetime directors of erstwhile Clariant (India) Limitedand erstwhile Vanavil Dyes and Chemicals Limited respectively.• Excludes Rs. 62.20 lakhs paid to ex-managing director of erstwhile Clariant (India) Limited as consultant of the Company fora period from 20th March, 2006 to 31st March, 2006.(b) Computation of net profit for commission payable to the Directors in accordance with Section 198 of the Companies Act, 1956 :April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhs Rs. lakhs Rs. lakhsProfit after tax as per Profit and Loss Account 3286.32 4039.18Add: Provision for Taxation-Net 1791.18 2444.47Managerial Remuneration 120.98 122.21Wealth Tax 7.20 6.75Amortisation of Voluntary Retirement Scheme Compensation 10.43 —Integration expenses — 925.85Flood Loss — 130.84Adjustment on Sale of Land at Thane — 117.741929.79 3747.865216.11 7787.04Less: Profit on sale of Investments 43.05 54.69Provision for doubtful debts written back (Net) 71.58 139.27Provision for Unearned premium written back 50.00 —Provision for diminution in the value of investments written back — 0.53Capital receipts-Surrender of Tenancy right — 30.00Reversal of Depreciation on change of Method 399.70 —(See note 28, Schedule 19)Capital Profit on Sale of Fixed Assets 41.86 107.35606.19 331.84Net profit as per Section 198 4609.92 7455.20


NotesApril 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhs Rs. lakhs Rs. lakhsCommission:To Vice-Chairman & Managing Director1. Fixed Commission 15.75 29.042. Variable Commission — 15.75 7.27 36.31restricted to sum as determined by the Board of Directors.To Directors who are not in whole-time employment of theCompany @ 1% of net profit i.e. Rs. 46.10 lakhs (Rs. 74.55 lakhs)restricted to sum as determined by the Board of Directors. 8.00 6.0023.75 42.3117. Advances and loans to a subsidiary include due from Chemtreat Composites India Private Ltd Rs. 770.57 lakhs (Rs. 475.00 lakhs). Maximum amountdue during the Period Rs. 770.57 lakhs (Rs. 475.00 lakhs). This amount is interest free and repayable on demand.18. Class of goodsUnitApril 06 to December 06 April 05 to March 06AnnualAnnualInstalledProduction* Installed Production*capacitycapacity(a) Pigment dyestuffs and their dispersions M. Tonnes 10040** 4373**# 9870** 7708**#(b) Synthetic organic dyestuffs M. Tonnes 1590** 1665** 1337** 1671 **(c) Synthetic resins, binder materials M. Tonnes 52450 36823 39410 38035auxiliaries and Chemicals(d) Intermediates (including catalysts) for M. Tonnes 17770 3832 19530 8366dyes, pesticides, pharmaceuticals, etc.(e) Master batches M. Tonnes 1060 667 1060 536* Excluding captive consumption** At different concentrations# Includes third party production of 47 tonnes (2061 tonnes)Notes:1 The classification between the class of goods and the installed capacities have been certified by the Vice-Chairman & Managing Directoron 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, 1951.19. Class of goodsUnitOpeningStock transferredClosingSales (inclusive ofStockon amalgamation*Stockexcise duty)ValueValueValueValueQty. Rs. lakhsQty.Rs. lakhsQty.Rs. lakhsQty.Rs. lakhs(a) Pigment dyestuffs and their M. Tonnesdispersions 663 2276.11 — — 690 2479.72 4299 15143.60(568) (1794.68) (141) (319.42) (663) (2276.11) (5693) (18919.66)(b) Synthetic organic dyestuffs M. Tonnes 188 482.62 — — 184 390.01 1669 4286.51(—) (—) (155) (391.89) (188) (482.62) (1638) (5046.44)(c) Synthetic resins, binder materials M. Tonnesauxiliaries and Chemicals 1994 1197.18 — — 2188 1433.21 36629 28119.60(995) (600.79) (1366) (851.84) (1994) (1197.18) (38191) (28056.44)(d) Intermediates (including catalysts) for M. Tonnesdyes, pesticides, pharmaceuticals, etc. 184 539.93 — — 170 460.37 3846 7305.64(65) (175.33) (1) (3.02) (184) (539.93) (8248) (12111.66)(e) Master batches M. Tonnes 19 33.84 — — 16 30.94 670 1761.78(—) (—) (46) (84.07) (19) (33.84) (556) (1530.90)(f) Trading items (including dyes,chemicals, pigments,masterbatches, etc.) M. Tonnes 1460 2232.78 — — 1176 2057.58 13350 18772.22(319) (603.16) (907) (1357.82) (1460) (2232.78) (18822) (26800.23)6762.46 — 6851.83 75389.35(3173.96) (3008.06) (6762.46) (92465.33)Note: 1 Previous year figures have been regrouped/reclassified wherever necessary to conform to the current period’s classification.2 * See note 1(a), Schedule 1947


Clariant Chemicals (India) Limited20. Class of GoodsPurchase of finished goodsApril 06 to December 06 April 05 to March 06QuantityValue Quantity* ValueM. Tonnes Rs. lakhs M. Tonnes Rs. lakhs*Trading Items:Dye, Chemicals, pigments, masterbatches, etc. 11906 13600.13 18838 21545.91* Net of goods destroyed in flood.21. Raw Materials consumed:April 06 to December 06 April 05 to March 06QuantityValue Quantity ValueM. Tonnes Rs. lakhs M. Tonnes Rs. lakhs(a) Acetic Acid Glacial 7627 2443.69 9359 3234.91(b) Others (None of the items individually exceed 10%of the total value of raw materials consumed) 27429.73 29901.0629873.42 33135.97Note: Raw materials consumed have been arrived at after write down of certain items and excesses and shortages on physical verification.22. Consumption of raw materials, components and spare parts:(i)Raw materials:April 06 to December 06 April 05 to March 06PercentagePercentageof totalof totalConsumptionRs. lakhs Consumption Rs. lakhsImported 28.31 8455.79 30.38 10065.40Indigenous 71.69 21417.63 69.62 23070.57100.00 29873.42 100.00 33135.97(ii)Components and spare parts referred to in Paragraph 4D (c) of Schedule VI of the Companies Act, 1956 are assumed to be thoseincorporated in the goods produced and not those used for maintenance of plant and machinery.23. Value of imports (C.I.F.) :48April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhs(i) Raw materials and trading items 12564.25 14472.15(ii) Components and spare parts 32.80 19.66(iii) Capital goods 267.20 138.5724. Expenditure in foreign currency (subject to deduction of tax where applicable):April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhs(i) Brokerage on exports 74.72 70.19(ii) Interest 138.26 162.14(iii) Others (includes exchange loss) 721.98 972.2425. Remittance in foreign currency on account of dividend:April 06 toApril 05 toDecember 06 March 06Number of non-resident shareholders where direct remittances have been made by the Company 3 3Number of shares on which dividend is remitted 16902080 52242080(Previous Year : includes 60,75,000 shares of erstwhile Clariant (India) Limited held by one shareholder;3,80,00,000 shares of erstwhile BTP India Private Limited held by one shareholder)Year to which dividend relates 2005-2006 2004-2005Amount remitted (Rs. lakhs) 1859.23 1424.52


Notes26. Earnings in foreign exchange :April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhs(i) Exports (F.O.B.) 15908.67 22766.29(ii) Know-how 164.76 147.82(iii) Others (insurance, freight, commission, claims, exchange gain etc.) 1124.69 1350.8327. (a) Miscellaneous Income includes Rs. 220 lakhs (Rs. NIL) towards Remnant Cost received from Dystar India Ltd. on termination of TollManufacturing agreement w.e.f. 1st April, 2006.(b)(c)In respect of previous year Contribution to Provident fund, Superannuation scheme, Gratuity fund, etc. under ‘Personnel cost’(Schedule-15) includes contribution of Rs. 330 lakhs on account of the higher actuarial liability of gratuity as on 31st July, 2005determined by the Company’s actuary appointed during the year as against the acturial liability of gratuity determined by the Company’sprevious actuary as on 31st March, 2005.Other Expenditure (Schedule-17) includes Integration expenses as follows, incurred by the Company on amalgamation of erstwhileClariant (India) Limited, Vanavil Dyes and Chemicals Limited, BTP India Private Limited and Kundalika Investments Limited with theCompany, pursuant to the Scheme of Amalgamation.April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsLegal and Professional Fees — 63.35Rates and taxes — 754.10Others — 108.40— 925.8528. Hitherto depreciation in respect of buildings, furniture, fixtures and office appliances and vehicles existing as on 31st March, 1995 has beencalculated on written down value method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 except forcertain items of furniture, fixtures and vehicles on which a depreciation rate of 20% on straight line method is applied. During the period, theCompany has changed the method of calculating depreciation from written down value method to straight line method which has resulted inreversal of depreciation of Rs. 399.70 lakhs (Rs. NIL). As a result of the change in the method of depreciation, the depreciation charge for theperiod is lower and profit before tax for the period is higher, each by Rs. 399.70 lakhs (Rs. NIL).29. From 1st April, 2006, the Company has changed the rate of depreciation as follows:Depreciation RateFromUpto1st April 2006 31st March 2006Plant and Machinery (Continous Process Plant) 6.67% 5.28%Vehicles 20.00% 9.50%As a result of the change in the rate of depreciation, the depreciation charge for the period is higher and the profit before tax is lower, each byRs. 333.43 lakhs (Rs. NIL)30. During the period the Company has changed it’s policy in respect of accounting for voluntary retirement expenses by amortising the expenses overa period of three years as against the earlier policy of charging it in the year when incurred. As a result ‘Personnel Cost’ for the period is lower andprofit before tax for the period is higher, each by Rs. 177.25 lakhs (Rs. NIL).31. Figures for the previous year have been regrouped wherever necessary to conform to the current period’s classification.32. The figures in brackets are those in respect of the previous accounting year.49


Clariant Chemicals (India) Limited33. Statement Pursuant to Part IV of Schedule VI to the Companies Act, 1956Balance Sheet Abstract and Company’s General Business ProfileI. Registration DetailsRegistration No. 1 1 - 1 0 8 0 6 State Code 1 1II.III.Balance Sheet Date 3 1 1 2 2 0 0 6Date Month YearCapital raised during the year (Amount in Rs. Thousands)Public IssueRights IssueN I L N I LBonus IssuePrivate PlacementN I L N I LPosition of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)Total Liabilities*Total Assets5 8 6 3 6 6 1 5 8 6 3 6 6 1Sources of FundsPaid-up CapitalReserves and Surplus2 6 6 6 0 7 2 8 3 5 8 2 4Secured LoansUnsecured Loans1 4 2 4 4 4 7 8 9 6Application of FundsNet Fixed Assets Investments Net Current Assets**1 6 5 1 8 5 2 4 6 5 0 5 8 1 0 2 9 9 3 6Miscellaneous ExpenditureAccumulated Losses1 7 7 2 5 N I L*including Shareholder’s funds**includes deferred tax liabilities (Net) Rs. 98182IV.Performance of Company (Amount in Rs. Thousands)Turnover (Gross Revenue)@Total Expenditure7 1 1 3 6 2 2 6 6 0 5 8 7 2@ includes Miscellaneous income Rs. 243175+ - Profit Before Tax + - Profit After Tax√ 5 0 7 7 5 0 √ 3 2 8 6 3 2Earnings per Share in Rs.**(Not annualised) Dividend Rate %1 2 . 3 3 1 8 0** Earning per share have 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 Company.Item 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 RFor and on behalf of the Board,R. A. Shah ChairmanH. Meier Vice-Chairman & Managing DirectorB. S. MehtaDiwan A. Nanda Directors}K. J. BharuchaSunil K. NayakChief Financial Officer & Company Secretary50Mumbai: 22nd February, 2007


NotesStatement Pursuant to Section 212 of the Companies Act, 1956Name of the Subsidiary CompanyChemtreat CompositesIndia Private Ltd.1. Financial year of the Subsidiary Company April, 2006 to December, 20062. Total issued and paid-up share capital of theSubsidiary Company :(a) Issued 5,00,000 equity shares of Rs. 10/- each(b) Subscribed and Paid-up 5,00,000 equity shares of Rs. 10/- each3. Extent of Interest of Clariant Chemicals (India) Ltd. 5,00,000 at the end of the financial period equity shares of Rs. 10/- each4. Net aggregate amount of profits :(a) Post-tax profit/(loss) for the year Rs. 281.89 lakhs(b) Profit/(Loss) carried to its Balance Sheet Rs. 276.79 lakhsNo adjustment has been made in the accounts of the Company in respect of the profit/(loss) earning by the Subsidiary Company.For and on behalf of the Board,R. A. Shah ChairmanH. Meier Vice-Chairman & Managing DirectorB. S. MehtaDiwan A. Nanda Directors}K. J. BharuchaSunil K. NayakMumbai: 22nd February, 2007Chief Financial Officer & Company SecretaryAuditors’ Report to the MembersAUDITORS’ REPORT TO THE BOARD OF DIRECTORS OFCLARIANT CHEMICALS (INDIA) LIMITED ON THECONSOLIDATED FINANCIAL STATEMENTS OF CLARIANTCHEMICALS (INDIA) LIMITED1. We have audited the attached Consolidated Balance Sheet ofClariant Chemicals (India) Limited and its subsidiary (theClariant Chemicals (India) Group ), as at December 31, 2006and also the Consolidated Profit and Loss Account and theConsolidated Cash Flow Statement for the nine months periodended on that date annexed thereto. These financialstatements are the responsibility of Clariant Chemicals (India)Limited’s management. Our responsibility is to express anopinion on these financial statements based on our audit.2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining on a test basis, evidence supporting theamounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used andsignificant estimates made by management, as well asevaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for ouropinion.3. We report that the consolidated financial statements havebeen prepared by the Clariant Chemicals (India) Limited’smanagement in accordance with the requirements ofAccounting Standard (AS) 21, Consolidated FinancialStatements, issued by the Institute of Chartered Accountantsof India.4. In our opinion and to the best of our information andaccording to the explanations given to us, the attachedConsolidated Financial Statements give a true and fair view inconformity with the accounting principles generally acceptedin India:(i) in the case of the Consolidated Balance Sheet, of thestate of affairs of the Clariant Chemicals (India) Group asat December 31, 2006;(ii) in the case of the Consolidated Profit and Loss Account,of the profit of the Clariant Chemicals (India) Group forthe nine months period ended on that date; and(iii) in the case of the Consolidated Cash Flow Statement, ofthe cash flows of the Clariant Chemicals (India) Groupfor the nine months period ended on that date.Mumbai, 22nd February, 2007For A. F. FERGUSON & CO.Chartered AccountantsA. C. KhannaPartnerMembership No.: 1781451


Clariant Chemicals (India) LimitedConsolidated Balance Sheetas at 31st December, 200631-12-2006 31-03-2006ScheduleRs. lakhsRs. lakhsSOURCES OF FUNDSShareholders’ fundsShare capital 1 2666.07 1165.00Share capital suspense account 1A — 1501.07Reserves and surplus 2 28636.02 30539.7931302.09 33205.86Loan fundsSecured loans 3 142.44 3597.85Unsecured loans 4 478.96 1995.82621.40 5593.67Deferred Tax Liability - Net (See note 5, Schedule 19) 1024.82 525.8532948.31 39325.38APPLICATION OF FUNDSFixed Assets 5Gross block 38444.92 38153.45Less: Accumulated depreciation 21811.24 22486.37Net block 16633.68 15667.08Capital work-in-progress and advances, etc. 812.80 1041.8517446.48 16708.93Investments 6 4325.58 11061.19Current assets, loans and advancesInventories 7 12934.60 12528.37Sundry debtors 8 14223.07 14514.50Cash and bank balances 9 3965.10 1441.87Loans and advances 10 6036.21 6982.1037158.98 35466.84Less:Current liabilities and provisionsLiabilities 11 18763.41 17181.80Provisions 12 7396.57 6729.7826159.98 23911.58Net current assets 10999.00 11555.26Miscellaneous Expenditure-Voluntary Retirement Scheme 177.25 —(To the extent not written off or adjusted) {See note 5, Schedule 18}32948.31 39325.38Significant accounting policies 18Notes to the accounts 19Per our report attachedFor A.F. Ferguson & Co.Chartered AccountantsA. C. KhannaPartnerFor and on behalf of the Board,R. A. Shah ChairmanH. Meier Vice-Chairman & Managing DirectorB. S. Mehta}Diwan A. NandaK. J. BharuchaDirectorsSunil K. NayakChief Financial Officer & Company SecretaryMumbai, 22nd February, 200752Mumbai, 22nd February, 2007


Consolidated Profit and Loss Accountfor the nine months period ended 31st December, 2006April 06 toApril 05 toDecember 06 March 06ScheduleRs. lakhsRs. lakhsINCOMESales – Gross 75898.50 92465.33Less: Excise Duty Recovered on Sales 6684.88 7673.87Sales – Net 69213.62 84791.46Add: Processing charges — 804.69Turnover 69213.62 85596.15Other income 13 2424.24 2812.7271637.86 88408.87EXPENDITURECost of Materials 14 45569.29 55611.62Personnel Cost 15 5479.65 7032.73Interest (Net) 16 (6.75) 4.15Depreciation/Amortisation 5 1545.70 2447.42Other expenditure 17 14117.90 17373.1166705.79 82469.03Less: Service charges recovered 470.36 538.9166235.43 81930.12PROFIT BEFORE TAXATION 5402.43 6478.75Provision for taxationCurrent Tax 1250.00 2238.25Deferred Tax 498.97 36.77Fringe Benefit Tax 85.25 227.99PROFIT AFTER CURRENT PERIOD’S TAXATION 3568.21 3975.74(Excess)/Short provision for taxation in respect of earlier years — (59.33)PROFIT AFTER TAXATION 3568.21 4035.07Balance brought forward from last year 3862.38 2981.16Add: Transfer in terms of amalgamation (See note 1(a), Schedule 19) — 1308.30Less: Deductions/Adjustments on amalgamation of subsidiaries — (118.16)Available for appropriation 7430.59 8206.37APPROPRIATED AS FOLLOWSGeneral reserve 330.00 1000.00Proposed dividend 4798.93 2932.68Corporate tax on proposed dividend 673.05 411.31Balance carried to the Balance Sheet 1628.61 3862.387430.59 8206.37Significant accounting policies 18Notes to the accounts 19Basic and Diluted earnings per share (in Rupees) (See note 4, Schedule 19) 19 13.38 15.13(Not annualised)(Annualised)Face value per share (in Rupees) 10.00 10.00Per our report attached to the Balance SheetFor A.F. Ferguson & Co.Chartered AccountantsA. C. KhannaPartnerFor and on behalf of the Board,R. A. Shah ChairmanH. Meier Vice-Chairman & Managing DirectorB. S. Mehta}Diwan A. Nanda DirectorsK. J. BharuchaSunil K. NayakChief Financial Officer & Company SecretaryMumbai, 22nd February, 2007Mumbai, 22nd February, 200753


Clariant Chemicals (India) LimitedConsolidated Cash Flow Statement for the nine months periodended 31st December, 2006April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsA. CASH FLOW FROM OPERATING ACTIVITIES :Net Profit before tax and Extra ordinary items 5402.43 6478.75Adjustments for :Depreciation 1545.70 2447.42Unrealised foreign exchange (gain)/loss (Net) 13.42 25.78Interest income (211.92) (480.97)Dividend income (61.44) (297.82)Loss/(profit) on sale of assets (Net) (32.62) (56.98)Adjustment on Sale of Land — 117.74Loss/(profit) on sale of Investments (Net) (43.05) (54.69)Amortisation of Voluntary Retirement Scheme compensation 10.43 —Provision for Diminution in value of investment written back — (0.53)Provision for Doubtful debts written back (Net) (71.58) (139.27)Provision for Leave encashment (92.21) 127.15Provision for Ex-Gratia Gratuity 2.88 15.55Provision for Stamp Duty in connection with Integration — 741.50Provision for Gratuity 0.80 40.27Interest expenses 205.17 485.12Investment written-off — 0.14Assets written-off 121.93 151.65Operating profit before working capital changes 6789.94 9600.81Adjustments for :Trade and other receivables 1617.78 542.70Payment of Voluntary Retirement Scheme compensation (187.68) —Inventories (406.23) (1744.10)Trade, other payables and Provisions 167.61 531.11Cash generated from operations 7981.42 8930.52Direct taxes paid - (Net of refunds) (1521.89) (2697.85)Net cash from operating activities 6459.53 6232.67B. CASH FLOW FROM INVESTING ACTIVITIES :Purchase of fixed assets (2418.80) (3555.94)Sale of fixed assets 136.48 190.97Purchase of investments (13623.56) (42141.12)Investment in subsidiaries (60.00) (281.48)Sale of investment 20402.22 40963.94Interest received 70.13 659.18Dividend received 61.44 297.82Net cash used in investing activities 4567.91 (3866.63)54


Consolidated Cash Flow StatementC. CASH FLOW FROM FINANCING ACTIVITIES :April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsCash credit and Packing credit (Net) (3330.41) 571.02Reduction of Share Capital of erstwhile BTP India Private Limited — (2470.00)Proceeds from borrowings — 12381.23Repayment of borrowings (1641.86) (12826.64)Interest paid (207.75) (501.96)Dividend/dividend tax paid (3324.19) (2316.67)Net cash used in financing activities (8504.21) (5163.02)NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 2523.23 (2796.98)CASH AND CASH EQUIVALENTS AS AT BEGINNING OF THE YEAR 1441.87 497.89CASH AND CASH EQUIVALENTS-TAKEN OVER ON AMALGAMATION — 3739.45ADDITIONS ON TAKE OVER OF CHEMTREAT COMPOSITES INDIA PRIVATE LIMITED — 1.51CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR 3965.10 1441.87Notes:1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Accounting Standard-3 on Cash Flow statements issuedby the Institute of Chartered Accountants of India.2. Direct taxes paid are treated as arising from operating activities and are not bifurcated between investing and financing activities.3. The figures of current reporting period of nine months ended December 31, 2006 are not directly comparable with the figures relating to previousreporting period of twelve months ended March 31, 2006.4. Figures for the previous year have been regrouped wherever necessary to conform to this period’s classification.Per our report attached to the Balance SheetFor A.F. Ferguson & Co.Chartered AccountantsA. C. KhannaPartnerFor and on behalf of the Board,R. A. Shah ChairmanH. Meier Vice-Chairman & Managing DirectorB. S. Mehta}Diwan A. NandaK. J. BharuchaDirectorsSunil K. NayakChief Financial Officer & Company SecretaryMumbai, 22nd February, 2007Mumbai, 22nd February, 200755


Clariant Chemicals (India) LimitedSchedules forming part of the Consolidated Balance SheetSCHEDULE 1 : SHARE CAPITALAuthorised31-12-2006 31-03-2006Rs. lakhsRs. lakhs30000000 equity shares of Rs. 10/- each 3000.00 3000.00Issued and subscribed26660745 (Previous year : 11650000 ) equity shares of Rs. 10/- each fully paid 2666.07 1165.00Notes :Of the above:(a) 15010745 equity shares issued as fully paid up pursuant to a contract for aconsideration other than cash.(b) 8167080 equity shares are held by EBITO Chemiebeteiligungen AG.6075000 (Previous year : NIL) equity shares are held by Clariant International AG.2660000 (Previous year : NIL) 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 capitalisationof Rs. 669.06 lakhs from general reserve.SCHEDULE 1A : SHARE CAPITAL SUSPENSE ACCOUNT31-12-2006 31-03-2006Rs. lakhsRs. lakhsShare capital suspense — 1501.07Note:In terms of the scheme of amalgamation in the previous year between Clariant (India) Limited,Vanavil Dyes and Chemicals Limited, Kundalika Investments Limited, BTP India Private Limited,the transferor companies and the Company, 15010745 equity shares of Rs 10/- each fully paid,were issued during the period to the shareholders of the transferor companies whose namesappeared on their register of members on the record date viz 21st April, 2006Of the above:(i) 6075000 equity shares were issued to Clariant International AG.(ii) 2660000 equity shares were issued to BTP Limited, UK.The ultimate holding company being Clariant AG, Switzerland.SCHEDULE 2 : RESERVES AND SURPLUSCapital reserve5631-12-2006 31-03-2006Rs. lakhsRs. lakhsAs per last Balance Sheet 730.11 3.86Add: Transfer in terms of amalgamation * — 27.16Add: Excess of share capital of transferor companies overthe amount credited by the company to the share capital * — 702.85Less: Deductions/Adjustments on amalgamation of subsidiaries * — (3.76)Capital redemption reserve730.11 730.11As per last Balance Sheet 137.50 137.50Securities premium accountAs per last Balance Sheet 3545.65 2023.50Add: Transfer in terms of amalgamation * — 1522.15Investment allowance reserve3545.65 3545.65As per last Balance Sheet 20.00 7.19Add: Transfer in terms of amalgamation * — 20.00Less: Deductions/Adjustments on amalgamation of subsidiaries * — (7.19)20.00 20.00


Schedules forming part of theConsolidated Balance SheetSCHEDULE 2 : RESERVES AND SURPLUS (Contd.)31-12-2006 31-03-2006Rs. lakhsRs. lakhsGeneral reserveAs per last Balance Sheet 22244.15 11905.16Add: Transfer from Profit and Loss Account 330.00 1000.00Add: Transfer in terms of amalgamation (Net of adjustments) * — 10210.81Less: Deductions/Adjustments on amalgamation of subsidiaries * — (871.82)22574.15 22244.15Reserve for Environmental upgradationAs per last Balance Sheet — 53.50Less: Deductions/Adjustments on amalgamation of subsidiaries * — (53.50)— —Profit and Loss Account 1628.61 3862.3828636.02 30539.79* (See note 1(a), Schedule 19)SCHEDULE 3 : SECURED LOANSFrom banks :31-12-2006 31-03-2006Rs. lakhsRs. lakhsShort Term Loans : 142.44 3472.85Rs. 142.44 lakhs (Previous year : Rs. 3432.00 lakhs) secured by hypothecation of present and futurestock-in-trade and spare parts, loose tools, book debts, outstanding monies, receivables, claims, bills,right to or in movable properties and movable assets, etc.Rs. NIL (Previous year : Rs. 40.85 lakhs) secured by way of first charge on inventories and book debts,both present and future and by second charge on other movable and immovable properties,both present and future.Term Loan:— 125.00(Repayable within one year Rs. NIL; Previous year : Rs. 100 lakhs)(Secured by first charge on plant and machinery)142.44 3597.85SCHEDULE 4 : UNSECURED LOANS31-12-2006 31-03-2006Rs. lakhsRs. lakhsPrivately placed Non-convertible debentures :9% Non-convertible debentures redeemable at par — 1000.00(Redeemed on 12th April, 2006)Other Loans :From banks :Short Term Loan — 475.00From others :Interest-free sales tax deferral scheme granted byState Industries Promotion Corporation of Tamil Nadu Limited 478.96 520.82478.96 1995.8257


Clariant Chemicals (India) LimitedSchedule 5FIXED ASSETSRs. lakhsGROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCKAs at Additions Transfer Additions Sales and As at31-03-06 on acquisition in terms of deductions 31-12-06As at As at Additions on Transfer Sales and For the As at31-12-06 31-03-06 acquisition in terms of deductions period 31-12-06of Chemtreat amalgama- of Chemtreat amalgama- (See note 3tion* tion* below)As at As at31-12-06 31-12-06As at As at31-12-06 31-03-06Intangible AssetsGoodwill on consolidation 166.44 — — 60.00 — 226.44 — — — — — — 226.44 166.44Software license fees 379.17 — — — — 379.17 379.17 — — — — 379.17 — —Tangible AssetsLand freehold 82.68 — — — — 82.68 — — — — — — 82.68 82.68Land leasehold 14.87 — — — — 14.8714.87 4.06 — — — 0.12 4.184.18 10.6910.69 10.81Buildings 5987.42 — — 434.21 47.34 6374.296374.29 2297.16 — — 5.78 (278.72) 2012.662012.66 4361.634361.63 3690.26Plant, machinery, equipment etc. 28756.53 — — 2126.94 2008.96 28874.5128874.51 18431.93 — — 1922.69 1519.98 18029.2218029.22 10845.2910845.29 10324.60Furniture, fixtures and office appliances 1719.64 — — 100.97 244.96 1575.651575.65 946.46 — — 194.73 114.56 866.29866.29 709.36709.36 773.18Vehicles 1046.70 — — 15.97 145.36 917.31917.31 427.59 — — 97.63 189.76 519.72519.72 397.59397.59 619.11Total 38153.45 — — 2738.09 2446.62 38444.9238444.92 22486.37 — — 2220.83 1545.70 21811.2421811.24 16633.68Previous year 25843.75 13.41 10321.75 3121.31 1146.77 38153.45 15632.39 5.45 5262.24 861.13 2447.42 22486.37 15667.08Capital work-in-progress 653.81 983.54Advances against capital orders 158.99 58.31812.80 1041.8517446.48 16708.93Notes :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.Rs. 600 (Previous year : Rs. 1200) being the cost of shares yet to be allotted.2 . * Transfer after adjustments as on April 1, 2005 pursuant to the scheme of amalgamation. (See note 1 (a), Schedule 19)3. See note 16 and 17, Schedule 1958


Schedules forming part of theConsolidated Balance SheetSCHEDULE 6 : INVESTMENTS (AT COST)31-12-2006 31-03-2006Rs. lakhsRs. lakhsLong termNon-Trade-unquoted 3825.00 4325.00CurrentNon-Trade-unquoted 500.58 6736.194325.58 11061.19Aggregate value of unquoted investments 4325.58 11061.19SCHEDULE 7 : INVENTORIES31-12-2006 31-03-2006Rs. lakhsRs. lakhsAt lower of cost and net realisable value(As certified by the Management)Stores and spare parts 400.96 324.91Raw materials 4201.99 3586.00Packing materials 131.99 102.45Finished goods 6891.48 6762.46Work-in-progress 1308.18 1752.5512934.60 12528.37SCHEDULE 8 : SUNDRY DEBTORS31-12-2006 31-03-2006Rs. lakhsRs. lakhsSecured(Considered good)Under six months 947.83 1072.84Over six months 83.08 17.671030.91 1090.51UnsecuredUnder six months (Considered good) 12911.54 13311.26Over six months (Including doubtful debts Rs. 80.88 lakhs; 361.50 265.19Previous year : Rs. 152.46 lakhs; balance considered good)13273.04 13576.4514303.95 14666.96Less: Provision for doubtful debts 80.88 152.4614223.07 14514.5059


Clariant Chemicals (India) LimitedSCHEDULE 9 : CASH AND BANK BALANCES31-12-2006 31-03-2006Rs. lakhsRs. lakhsCash on hand 14.18 10.02Cheques on hand 2777.35 168.62With scheduled banks :On current accounts 1172.82 783.26On margin accounts — 22.07On fixed deposit accounts 0.75 457.901173.57 1263.233965.10 1441.87SCHEDULE 10 : LOANS AND ADVANCES31-12-2006 31-03-2006Rs. lakhsRs. lakhs(Unsecured – considered good, unless otherwise stated)Advances recoverable in cash or in kind or for value to be received 3323.65 4801.35VAT set off admissible 188.29 106.71Advance payment of Income tax (Net of Provision for taxation) 1727.93 1472.42Balances with Customs and Excise on current account 796.34 601.626036.21 6982.10SCHEDULE 11 : CURRENT LIABILITIES31-12-2006 31-03-2006Rs. lakhsRs. lakhsAcceptances — 178.81Sundry creditors 17339.07 15607.06(Includes Rs. 2137.75 lakhs; Previous year : Rs. 2069.80 lakhs due to small scale industrial units)Deposits 1296.89 1282.21Interest accrued but not due on loans 0.18 2.76Unpaid dividends* 122.63 102.83Unclaimed fixed deposits* 1.28 1.49Unpaid interest on matured fixed deposits* 3.36 6.6418763.41 17181.80* There is no amount due and outstanding to be credited to Investor Education and Protection FundSCHEDULE 12 : PROVISIONSRetirement Benefits :6031-12-2006 31-03-2006Rs. lakhsRs. lakhsLeave encashment 652.82 745.03Gratuity 279.88 329.12Ex-gratia gratuity 90.03 87.15Others :Provision for taxation (Net of advance payment of Income tax) 901.86 832.99Provision for unearned premium * — 650.00Provision for stamp duty in connection with Integration * — 741.50Proposed dividend 4798.93 2932.68Corporate Tax on proposed dividend 673.05 411.317396.57 6729.78* (See note 6, Schedule 19)


Schedules forming part of the Consolidated Profit and Loss AccountSCHEDULE 13 : OTHER INCOMEApril 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsDividend on long term non-trade investments — 3.27Dividend on current non-trade investments 61.44 294.55Export Incentives 253.50 404.60Profit on sale of fixed assets (Net) 32.62 56.98Cash discount 24.87 16.81Rental income 256.14 346.56Indenting commission 279.06 421.88Exchange Gain (Net) 40.68 —Provision for doubtful debts written back (Net) 71.58 139.27Profit on sale/changes in the carrying amount of current investments (Net) 9.81 15.17Profit on sale/changes in the carrying amount of long term investments (Net) 33.24 39.52Miscellaneous (See note 14(a), Schedule 19) 1361.30 1074.112424.24 2812.72SCHEDULE 14 : COST OF MATERIALSApril 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsRaw materials consumed 29982.56 33135.97Less : Raw materials consumed on trial production 12.75 —29969.81 33135.97Packing materials consumed 1664.88 1790.84Purchase of finished goods (Previous year : Net of goods destroyed in flood) 13600.13 21552.87(Increase)/Decrease in stocks of finished goods and work-in-progress :Opening stockFinished goods 6762.46 3538.34Add : Opening stock on commencement of Commercial Production 19.12 —Add : Transfer in terms of scheme of amalgamation * — 2636.726781.58 6175.06Work-in-progress 1752.55 1181.69Add : Transfer in terms of scheme of amalgamation * — 290.201752.55 1471.898534.13 7646.95Less: Closing stockFinished goods 6891.48 6762.46Work-in-progress 1308.18 1752.558199.66 8515.01334.47 (868.06)45569.29 55611.62* (See note 1 (a), Schedule 19)61


Clariant Chemicals (India) LimitedSCHEDULE 15 : PERSONNEL COSTApril 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsSalaries, wages, bonus, etc. 4313.47 5040.38Amortisation of Voluntary Retirement Scheme compensation 10.43 —Contribution/Provision for provident fund, superannuation scheme,gratuity fund, etc. [See note 14(b), Schedule 19] 583.24 1189.60Welfare expenses 606.50 829.715513.64 7059.69Less: Charged to capital accounts 33.99 26.965479.65 7032.73SCHEDULE 16 : INTEREST (NET)April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsInterest PaidOn loans for fixed period 4.62 135.34Others 200.55 349.78Less: Interest received (Gross);(Tax deducted at source Rs. 14.91 lakhs; Previous year: Rs. 37.93 lakhs)205.17 485.12On Investments – Long term Non-Trade 148.42 196.99Others 63.50 283.98211.92 480.97(6.75) 4.15SCHEDULE 17 : OTHER EXPENDITURE62April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsStores and Spare parts etc. consumed 626.27 1100.99Repairs and maintenance:Plant and machinery 568.66 782.59Buildings 248.04 454.94Others 176.19 324.71Power and fuel 3412.86 3677.13Rent (including lease payments) {See note 8, Schedule 19} 373.88 424.10Rates and taxes (including water charges) 395.31 559.31Insurance 198.00 291.32Clearing, Forwarding and transport 1391.31 1459.47Travelling and Conveyance 671.71 853.39Commission 207.23 280.51Cash Discount 619.14 715.60Other discounts on sales 1449.48 1743.88Brokerage on exports 74.72 80.93Adjustment on Sale of Land — 117.74Assets written-off 121.93 151.65Bad debts and advances written-off 108.95 141.03Excise Duty (Net) 172.43 47.84Exchange Loss (Net) — 35.57Flood Loss (Net) — 130.84Integration Expenses (See note 14 (c), Schedule 19) — 925.85Miscellaneous (See note 12, Schedule 19) 3303.07 3073.7214119.18 17373.11Less: Charged to capital accounts 1.28 —14117.90 17373.11


NotesNotes to the Consolidated financial statementsSchedule 18Forming Part of the Balance Sheet and Profit and Loss Account for the nine months period ended 31st December, 2006SIGNIFICANT ACCOUNTING POLICIES:BASIS OF PREPARATIONThe Consolidated Financial Statements are prepared in accordance with Accounting Standard (AS)21 on Consolidated Financial Statements issued byThe Institute of Chartered Accountants of India. The Consolidated Financial Statements comprise the financial statements of Clariant Chemicals (India)Limited and its subsidiary viz. Chemtreat Composites India Private Limited (voting power-100%). The said Company became subsidiary on and fromFebruary 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 accounting issuedby the Institute of Chartered Accountants of India and referred to in Section 211(3C) of the Companies Act, 1956. The significant accounting policies areas follows:1. SALESThe Company recognises sale of goods on despatch to customers. Sales are net of excise duty, sales tax and trade discounts, wherever applicable.2. 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 at the year end.3. 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.4. RETIREMENT BENEFITS(a)(b)Retirement benefits to employees comprise of payment to gratuity, superannuation and provident funds and ex-gratia gratuity under the rulesof the company.Liabilities in respect of retirement gratuity benefit to employees are provided in terms of The Payment of Gratuity Act, 1972 or the Company’sGratuity Scheme approved by the Commissioner of Income-tax, whichever is beneficial. The adequacy of the fund is confirmed by an actuarialvaluation obtained at the year end.Contributions for superannuation made to LIC under the Company’s Superannuation Scheme are charged to the Profit and Loss Account.Contributions to the Provident Funds are made at a pre-determined rate and charged to the Profit and Loss Account.(c)Liabilities in respect of leave encashment benefit and ex-gratia gratuity payable on retirement to a category of employees, are provided basedon an actuarial valuation obtained at the year end and charged to the Profit and Loss Account.5. VOLUNTARY RETIREMENT SCHEMEExpenditure incurred on voluntary retirement scheme is amortised over a period of three years.(See note 18, Schedule 19)6. FIXED ASSETS AND DEPRECIATION(A)(B)(C)(D)All fixed assets are stated at cost less depreciation, wherever applicable. Cost comprises the purchase price and any other attributable costof bringing the asset to its working condition for its intended use. Borrowing cost relating to funds borrowed for acquisition of qualifyingassets 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 the Companies Act,1956 except for :(a)(b)certain items of furniture, fixture, vehicle, plant, machinery and equipment on which a depreciation rate of 20% on straight line method isapplied;electronic data processing (EDP) hardware such as servers on which a depreciation rate of 20% and for other EDP equipments includingpersonal computers and printers on which depreciation rate of 25% on straight line method is applied;63


Clariant Chemicals (India) Limited(c)Exchange differences capitalised which are depreciated over the remaining useful life of the assets.(See note 16 and 17, Schedule 19).7. IMPAIRMENT OF ASSETSThe carrying amount of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors.An impairment loss will be recognised wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverableamount is greater of the asset’s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted tothe present value using the weighted average cost of capital. Previously recognised impairment loss is further provided or reversed depending onchanges in circumstances.8. INVENTORIESInventories are valued at the lower of cost and estimated net realisable value after providing for obsolescence. The cost of inventories is generallyarrived at on the following bases:Raw materials, packing materials, trading items and stores and spares — Weighted average cost.Finished goods and work-in-progress— Absorption costing at works cost.9. SUNDRY DEBTORS/LOANS AND ADVANCESSundry debtors and loans and advances are stated after making adequate provision for doubtful debts/advances.10. INVESTMENTSLong term investments are stated at cost less provision for diminution in value, other than temporary. Current investments are stated at the lower ofcost and fair value. Dividends are accounted for when the right to receive the dividend payment is established.11. LEASESLeases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operatingleases. Operating lease payments are recognised as an expense in the Profit and Loss Account on a straight-line basis over the lease term.12. 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 accounting year. Inrespect of items covered by forward contracts, the premium or discount arising at the inception of such a forward exchange contract isamortised as expense or income over the life of the contract. Any profit or loss arising on cancellation of such a forward exchange contractis recognised as income or expense for the period. Foreign currency transactions are accounted at the rate prevailing on the date oftransaction.Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency are reportedusing the exchange rate at the date of transaction.Gain or loss arising out of translation/conversion is taken credit for or charged to the Profit and Loss Account except exchange differencesarising due to repayment or restatement of liabilities incurred for the purpose of acquiring of fixed assets in respect of transactions inforeign currencies entered into prior to April 1, 2004 and in respect of any fixed asset that has been acquired from a country outside India,in which case the exchange differences are adjusted in the carrying amount of the respective fixed assets.13. INCOME TAXIncome tax expense comprises current tax and deferred tax charge or credit. The current tax is determined as the amount of tax payable in respectof the estimated taxable income for the year. The deferred tax charge or credit is recognised using prevailing enacted or substantively enacted taxrates. Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty ofrealisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferredtax assets/liabilities are reviewed at each Balance Sheet date based on developments during the year and available case laws, to reassessrealisation/liabilities.14. CONTINGENCIES/PROVISIONS64Provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodyingeconomic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to itspresent value and are determined based on best estimate of the expenditure required to settle the obligation at the Balance Sheet date. These arereviewed at each Balance Sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed, unless the possibility ofan outflow of resources embodying the economic benefit is remote.


NotesSchedule 19Notes on the Balance Sheet and Profit and Loss Account for the nine months period ended 31st December, 20061. (a) In accordance with the Scheme of Amalgamation (‘the Scheme’) of erstwhile Clariant (India) Limited, Vanavil Dyes and Chemicals Limited,BTP India Private Limited and Kundalika Investments Limited (herein after referred to as the “Transferor Companies”) with the Company asapproved by the members at a Court convened Extra Ordinary General Meeting held on 8th December, 2005 and subsequently sanctionedby the Honourable High Court of Judicature at Madras on 22nd February, 2006 and Honourable High Court of Judicature at Bombay on24th February, 2006 which was modified vide order dated 17th March, 2006, the entire business and the whole of the undertaking of theTransferor Companies being all its assets and properties and all its debts and liabilities as defined in the Scheme have been transferred toand vested in the Company retrospectively with effect from 1st April, 2005. The Scheme had accordingly been given effect to in the previousaccounting year.(b)The Board of Directors in their meeting held on 14th September, 2006 had decided to change the accounting year from financial yearApril-March to calendar year January-December. Accordingly, the Company has closed its accounting year for a period of 9 months ended31st December, 2006.In view of the above, the figures of current reporting period of 9 months ended 31st December, 2006 are not strictly comparable with thefigures relating to previous reporting period of 12 months ended 31st March, 2006.2. Segment Information for the nine months period ended 31st December, 2006 (As required by Accounting Standard (AS)-17 ‘‘SegmentReporting’’)(a)The Company is organised into three primary business segments mainly:(i)(ii)(iii)Intermediates & Colours:Consist of pigment dyestuffs and their dispersion, Intermediates for dyes, pesticides and pharmaceuticals.Dyes & Specialty Chemicals:Includes dyestuff synthetic resins, binder materials, auxiliaries and chemicals.Masterbatches:Covers commodity and specialty Masterbatches for Plastics and nylon fibers.(b)The secondary segments of the company are geographical segments mainly:(i)(ii)India.Outside India.(c)(d)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.Segment Revenue in each of the above Business Segments primarily includes Sales and Processing Charges.(e) (i) Segment Revenue and Results:The expenses which are not directly attributable to the business segment are shown as unallocated corporate cost.(ii)(iii)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.Assets and liabilities that cannot be allocated between the segments are shown as a part of unallocable corporate assets andliabilities respectively.Information about Primary Business Segments:April 06 to December 06 April 05 to March 06Rs. lakhsRs. lakhsInter-Dyes andMaster-Total Inter- Dyes and Master- TotalmediatesSpecialtybatches mediates Specialty batches& ColoursChemicals & Colours ChemicalsRevenueExternal Sales/Revenue 26072.52 41350.61 1790.49 69213.62 35510.33 48401.28 1684.54 85596.15Less: Inter Segment Revenue — — — — — — — —Total Revenue (Net) 26072.52 41350.61 1790.49 69213.62 35510.33 48401.28 1684.54 85596.15ResultsSegment Results 1398.08 4804.66 244.48 6447.22 1526.98 6360.43 125.52 8012.93Unallocated Corporate Expenses (Net) (1112.98) (1827.85)Operating profits 5334.24 6185.08Interest Income/Dividend income 273.36 778.79Interest Expenses (205.17) (485.12)65


Clariant Chemicals (India) LimitedInformation about Primary Business Segments: (Contd.)April 06 to December 06 April 05 to March 06Rs. lakhsRs. lakhsInter-Dyes andMaster-Total Inter- Dyes and Master- TotalmediatesSpecialtybatches mediates Specialty batches& ColoursChemicals & Colours ChemicalsProfit Before Taxation 5402.43 6478.75Current Tax/Deferred Tax (1748.97) (2215.69)Fringe Benefit Tax (85.25) (227.99)Profit After Tax 3568.21 4035.07Other InformationSegment Assets 21091.07 22421.43 1355.84 44868.34 23939.83 21275.02 1123.85 46338.70Unallocated Corporate Assets 12334.77 15425.89Total Assets 57203.11 61764.59Segment Liabilities 8164.59 9773.31 336.06 18273.96 7535.94 8885.87 280.33 16702.14Unallocated Corporate Liabilities 1512.18 3032.46Total Liabilities 19786.14 19734.60Capital Expenditure 811.59 852.60 121.57 1785.76 2068.99 935.53 72.71 3077.23Unallocated Corporate Capital Expenditure 723.28 35.32Total Capital Expenditure 2509.04 3112.55Depreciation 880.46 569.72 56.19 1506.37 1321.45 884.67 59.05 2265.17Unallocated Corporate Depreciation 39.33 182.25Total Depreciation 1545.70 2447.42Non-cash expenses other thanDepreciation/Amortisation 0.35 55.50 3.96 59.81 92.34 136.69 9.91 238.94Unallocated Corporate Non-cash expensesother than Depreciation/Amortisation 8.07 831.49Total Non-cash expenses other thanDepreciation/Amortisation 67.88 1070.43Information about Secondary Segments:April 06 to December 06 April 05 to March 06Rs. lakhsRs. lakhsRevenue by Geographical MarketIndiaOutside IndiaTotal India Outside India TotalExternal Sales 52302.59 16911.03 69213.62 62201.88 23394.27 85596.15Segment Assets 40577.70 4290.64 44868.34 43185.53 3153.17 46338.70Additions to Fixed Assets 1785.76 — 1785.76 3077.23 — 3077.23Footnotes:(i) Total assets do not include:(a) Advance income tax Rs. 1727.93 lakhs (Rs. 1472.42 lakhs)(b) Miscellaneous Expenditure Rs. 177.25 lakhs (Rs. NIL)(ii)Total Liabilities exclude the following:(a)(b)(c)(d)Proposed dividend Rs. 4798.93 lakhs (Rs. 2932.68 lakhs)Tax on dividend Rs. 673.05 lakhs (Rs. 411.31 lakhs)Provision for Taxation Rs. 901.86 lakhs (Rs. 832.99 lakhs)Deferred Tax liability (Net) Rs. 1024.82 lakhs (Rs. 525.85 lakhs)3. Related Party Disclosure as required by Accounting Standard – 18 “Related Party Disclosures” are given below:Relationship:(a)Holding Company:EBITO Chemiebeteiligungen AG, Clariant International AG and Clariant Participations AG, Switzerland together hold 63.40% equity shares inthe company, the ultimate holding company being Clariant AG, Switzerland.(b)Other related parties in the Clariant group where common control exists:66Fellow Subsidiaries:Clariant Life Science Molecules (Florida) Inc., USAClariant Life Science Molecules (America) Inc., USAUS dormant BTP – CompaniesClariant (Argentina) S.A., ArgentinaClariant S.A., BrazilClariant Colorquímica (Chile) Ltda., ChileClariant (Colombia) S.A., ColombiaClariant (Guatemala) S.A., GuatemalaClariant (Mexico) S.A. de C.V., MexicoClariant Productos Quimicos S.A. de C.V., MexicoClariant (Peru) S.A., PeruClariant (Uruguay) S.A., UruguayClariant (Venezuela) S.A., VenezuelaClariant (Australia) Pty. Ltd., Australia


Notes(b)Other related parties in the Clariant group where common control exists: (Contd.)Fellow Subsidiaries:Clariant (Tianjin) Ltd., ChinaClariant Chemicals (China) Ltd., ChinaClariant Masterbatches (Guangzhou) Ltd.Clariant Pigments (Tianjin) Ltd., ChinaClariant Masterbatches (Beijing) Ltd., ChinaClariant Masterbatches (Shanghai) Ltd., ChinaClariant Trading (China) Ltd.Clariant (China) Ltd., Hong KongClariant Chemicals (Guangzhou) Ltd.P.T. Clariant Indonesia, IndonesiaClariant (Japan) K.K., JapanDia Fine K.K., JapanClariant (Korea) Ltd., South KoreaClariant Masterbatches (Korea) Ltd.Clariant Pigments (Korea) Ltd.Clariant (Malaysia) Sdn. Bhd., MalaysiaClariant Masterbatches (Malaysia) Sdn. Bhd., MalaysiaClariant (New Zealand), Ltd., New ZealandClariant (Singapore) Pte. Ltd., SingaporeClariant Chemicals (Thailand) Ltd., ThailandClariant Masterbatches (Thailand) Ltd., ThailandClariant Chemicals (Taiwan) Co. Ltd., TaiwanClariant (Gulf) FZE, United Arab EmiratesEgyptian German Company for Dyes & Resins S.A.E., EgyptClariant (Egypt) S.A.E., EgyptClariant Masterbatches (Saudi Arabia) Ltd.Clariant (Maroc) S.A., MoroccoClariant (Pakistan) Ltd., Karachi, PakistanClariant Türkiye A.S., TurkeyClariant Southern Africa (Pty) Ltd., South AfricaBTP World S.A., LuxembourgClariant Finanz AG, SwitzerlandClariant Reinsurance Ltd., BermudaClariant Insurance (Liechtenstein) AG, LiechtensteinClariant Finance (BVI) Ltd., British Virgin IslandsClariant Beteiligungen AGClariant Chemiebeteiligungen AGClariant (Sverige) Holding ABClariant Participations B.V., NetherlandsClariant (Oesterreich) GmbH, AustriaClariant Benelux S.A., BelgiumClariant Service (Schweiz) AGClariant Finance (Luxembourg) S.A., LuxembourgClariant Produkte (Schweiz) AGClariant Corporation, USAAssociate Companies:Clariant Consulting (Middle East) Ltd., SwitzerlandBCI Betriebs-AG, SwitzerlandClariant Oil Services Ltd., SwitzerlandClariant CR s.r.o., Czech RepublicAbieta Chemie GmbH, Gersthofen, GermanyInfraServ GmbH & Co. Gendorf KG, GermanyInfraServ GmbH & Co. Höchst KG, GermanyInfraServ GmbH & Co., Knapsack KG, GermanyInfraServ GmbH & Co., Ruhrchemie KG, GermanyInfraServ GmbH & Co., Wiesbaden KG, GermanyIndustriepark Griesheim Verwaltungs GmbH, GermanyClariant Beteiligungs-GmbH, GermanyClariant Vertrieb (Deutschland) Verwaltungs GmbH, GermanyClariant Zweite Chemie GmbH, GermanyITN Nanovation AGEPS Ethylen-Pipeline-Süd GmbH & Co. KGEthylen-Pipeline-Süd Geschäftsführungs GmbHAguas Industriales de Tarragona S.A., Spain (AITASA)S.T.E.I.H. Sàrl, FranceClariant (Hellas) S.A., GreeceClariant Export AGClariant (Canada) Inc., CanadaClariant Consulting AG, SwitzerlandClariant Verwaltungs GmbH, Germany(Formerly known as Clariant GmbH)Clariant Produkte (Deutschland) GmbHClariant Vertrieb (Deutschland) GmbH & Co. KGClariant Specialty Fine Chemicals (Deutschland) GmbHClariant Masterbatches (Deutschland) GmbHIndustriepark Griesheim GmbH & Co. KG, GermanyTechnische Services Gersthofen GmbHClariant (Danmark) A/S, DenmarkClariant Ibérica Servicios S.L.Clariant Ibérica Producción S.A.Clariant Ibérica Comercial S.L.Clariant Masterbatch Ibérica S.A., SpainClariant (Finland) Oy, FinlandClariant Huningue, FranceK.J. Quinn, FranceClariant (France), FranceClariant LSM (France) Holding EURL, FranceClariant Specialty Fine Chemicals (France) S.A.S.Clariant Masterbatch Huningue S.A.S.Clariant Masterbatches (France) S.A.S.Clariant Masterbatches (St. Jeoire)Clariant Holdings UK Ltd., Great BritainClariant UK Ltd., Great BritainUK dormant Clariant – Companies, Great BritainClariant Horsforth Ltd., Great BritainBTP Ltd., Great BritainBTP Insurance Company Ltd., Great BritainUK dormant BTP – Companies, Great BritainClariant Masterbatches UK Ltd.Masterplast Ltd., IrelandClariant Masterbatches (Italia) SpA.Clariant Life Science Molecules (Italia) SpA., ItalyClariant Servizi (Italia) S.p.A.Clariant Prodotti (Italia) S.p.A.Clariant Distribuzione (Italia) S.p.A.Dick Peters B.V., NetherlandsClariant (Norge) AS, NorwayClariant Quimicos (Portugal) Lda., PortugalClariant (Sverige) AB, SwedenClariant Masterbatches Norden AB, SwedenClariant Polska Sp. z.o.o., PolandColex Sp. z.o.o., PolandClariant Europa EWIVClariant Hungaria Kft, HungaryOmnexus N.V., NetherlandsClariant (RUS) LLC, Russian FederationClariant Distribucija SL, d.o.o., SloveniaClariant (Ecuador) S.A., EcuadorConcentrados Plasticolor S.A., GuatemalaClariant (Honduras) S.A., HondurasClariant Trading (Panama) S.A., PanamaClariant (El Salvador) S.A. de CV, El SalvadorClariant (Bangladesh) Ltd., BangladeshHangzhou Baihe Clariant Pigments Co., Ltd.Chemcolour Industries (NZ) Ltd., New ZealandClariant (Philippines) Corp., PhilippinesClariant (Vietnam) Ltd., VietnamClariant Oil Services Angola Lda., AngolaClariant Tunisie S.A., TunisiaCompagnie Tunisienne de Chimie Industrielle, Tunisia67


Clariant Chemicals (India) Limited(b)(c)Other related parties in the Clariant group where common control exists: (Contd.)Associate Companies:Kemoks Kimya Sanayi, TurkeyInternational School of the Basel Region AG, SwitzerlandStarfire Systems Inc., U.S.A.Key Management Personnel:H. Meier Vice-Chairman & Managing DirectorDuring the period the following transactions were entered into with related parties:(i)Holding Company, Fellow Subsidiaries and Associates:Holding Company:Transactions during the period:Sale of GoodsApril 06 toApril 05 toDecember 06 March 06Rs. lakhs Rs. lakhsClariant International AG 909.53 501.07Services rendered and othersClariant International AG 84.67 108.44EBITO Chemiebeteiligungen AG — 56.73Purchase of GoodsClariant International AG 5065.25 3889.26Services received and othersClariant International AG 345.01 374.36Dividend PaidClariant International AG 898.38 364.50EBITO Chemiebeteiligungen AG 668.25 490.02Balances outstanding as at the end of the period:Amount Payable 1627.90 1272.99Amount Receivable 153.05 175.47Fellow Subsidiaries:Transactions during the period:Sale of GoodsClariant Produkte (Deutschland) GmbH 3221.88 2908.30Clariant Corporation 2116.85 1956.21Clariant (China) Ltd. 1445.32 1466.24Clariant UK Ltd. 1387.55 686.16Others 4525.89 12310.96Services rendered and othersClariant Produkte (Deutschland) GmbH 79.49 206.52Clariant Export AG 132.48 41.89Others 51.72 150.26Purchase of GoodsClariant Verwaltungs GmbH, Germany 7.91 1631.65(Formerly known as Clariant GmbH)Clariant UK Ltd. 374.93 457.28Clariant Benelux SA 1758.00 28.81Others 1230.11 1925.69Services received and othersClariant UK Ltd. — 34.62Clariant Verwaltungs GmbH, Germany — 9.49(Formerly known as Clariant GmbH)Clariant SA Brazil 21.22 3.48Clariant Southern Africa (Pty.) Ltd. 4.06 0.23Others 14.35 40.2868


NotesDuring the period the following transactions were entered into with related parties: (Contd.)(i)Holding Company, Fellow Subsidiaries and Associates: (Contd.)April 06 toApril 05 toDecember 06 March 06Rs. lakhs Rs. lakhsHolding Company:Dividend PaidBTP Ltd., UK 292.60 570.00Balances outstanding as at the end of the period:Amount Payable 406.57 474.85Amount Receivable 3023.04 2567.91Associate Companies:Transactions during the period:Sale of GoodsChemcolour Industries (NZ) Ltd. 15.65 11.10Clariant (Philippines) Ltd. 32.98 —Purchase of GoodsAbieta Chemie GmbH 6.59 13.91Services received and othersClariant Consulting (Middle East) Ltd. 18.02 11.03Clariant (Philippines) Corp., 3.04 1.77Services rendered and othersClariant Consulting (Middle East) Ltd. 3.66 —Balances outstanding as at the end of the period:Amount Payable — 17.74Amount Receivable 5.27 2.51(ii)(iii)Key Management Personnel:Remuneration paid 111.76 114.53Remuneration paid to ex-Vice Chairman & Managing Director of erstwhile Clariant (India) Ltd. — 125.09Sale of Assets — 9.39Commission Payable (Net) 15.75 33.09Relatives of the Key Management Personnel:Rent Payment — 11.88April 06 toApril 05 toDecember 06 December 064. Earnings per share :(a) Net profit after taxation for the period (Rs. lakhs) 3568.21 4035.75(b) Number of equity shares outstanding 26660745 11650000(c) Number of shares in Share Capital Suspense Account — 15010745(d) Total (b) + (c) 26660745 26660745(e) Basic & Diluted earnings per share (In Rupees) 13.38 15.14(f) Face value per share (In Rupees) 10.00 10.00April 06 toApril 05 toDecember 06 December 06Rs. lakhsRs. lakhs5. Deferred Taxes:The major components of deferred tax assets and deferred tax liabilities are set out below:Deferred Tax Assets(i) Provision for Doubtful debts 27.25 51.31(ii) Provision for retirement benefits 331.99 356.93(iii) Expenses allowable for tax purposes when paid 53.07 94.90(iv) Integration Expenses 202.81 247.28(v) Payment/Provision for Voluntary Retirement Scheme 508.09 802.09(vi) Others 1.21 1.211124.42 1553.7269


Clariant Chemicals (India) LimitedApril 06 toApril 05 toDecember 06 December 06Rs. lakhsRs. lakhs5. Deferred Taxes: (Contd.)Deferred Tax LiabilitiesDepreciation/Amortisation 2149.24 2079.572149.24 2079.57Deferred Tax Assets/(Liabilities) – Net (1024.82) (525.85)6. The movements in the provisions are summarised as under:Rs. lakhsAs on Additional Amount used/ As onAs on1st April, provision made Reversed 31st December,31st March,2006 during the period during the period 2006 2006(i) Provision for Unearned premium inrespect of Sale of Land 650.00 — 650.00 — 650.00(ii) Provision for Stamp Duty pursuant to theScheme of Amalgamation 741.50 — 741.50 — 741.507. On 15th February, 2005, the Company had received an order of the Sub-Divisional, Thane demanding Rs.121 lakhs for the lease of land to ThaneMunicipal Corporation, Fire Brigade and Maharashtra State Electricity Board without obtaining prior permission in writing against which theCompany had filed a writ petition on 23rd February, 2005 before the Bombay High Court. The Hon’ble High Court has granted interim stay in terms ofthe petition on 14th July, 2005.April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhs8. In respect of all assets taken on lease on or after 1st April, 2001:(a) In respect of Operating leases, where lease agreements have been formally entered into, minimumlease payments recognised in the Profit and Loss Account for the period are as follows:Residential flats, office premises, vehicles, equipment and machinery, computers etc. 360.33 406.53(b) There are no restrictions such as those concerning dividends, additional debt and further leasing,imposed by the lease agreements entered into by Clariant Chemicals (India) Limited.(c) Contingent rent payments in respect of vehicles are dependent upon the excess of actual usage, ifany, over stipulated usage.9. Expenditure on Research and Development during the period:(a) Capital expenditure 23.90 37.16(b) Revenue expenditure charged to Profit and Loss Account 358.07 563.87381.97 601.0310. Estimated amount of contracts remaining to be executed on capital account and not provided for 315.60 175.1511. Contingent liabilities not provided for (also see note 7, Schedule 19):(a) In respect of income tax matters decided against the Company, in respect of which the Company isin further appeal 1095.55 986.6670decided in favour of the Company against which the department is in appeal 14.78 14.78(b) In respect of sales tax matters 297.92 77.82(c) In respect of excise matters 819.95 639.53(d) In respect of bills of exchange discounted with banks [since realised Rs. 1401.74 lakhs(Rs. 895.39 lakhs)] 2555.84 1589.06(e) Other matters in dispute 6.76 6.76(f) Disputed Labour matters – Amount not ascertained.In respect of items (a) to (c), (e) & (f) future cash outflows in respect of contingent liabilities isdeterminable only on receipt of judgements pending at various forums/authorities.


Notes12. Miscellaneous Expenses in Schedule 17: Other Expenditure include:(a)(b)(c)Auditors’ remuneration and expenses:April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhs(Excluding(ExcludingService Tax)Service Tax)(i) Audit fees 22.00 35.54(ii) Company law matters — 3.50(iii) Taxation services — 5.80(iv) Other services - miscellaneous reports 26.00 25.62(v) Out-of-pocket expenses 1.22 2.02Non Compete Fees of Rs. 154.20 lakhs (Rs. NIL) paid to ex-Managing Director.Legal & Professional charges of Rs. 769.70 lakhs (Rs. 243.90 lakhs) towards consultancy.49.22 72.4813. Amount paid/payable by Clariant Chemicals (India) Limited to Directors (including Managing Director) as remuneration for services rendered in anycapacity:April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsDirectors’ sitting fees 1.22 1.68Salaries 95.85 38.72Commission 23.75 42.31Other perquisites and benefits in cash or in kind 0.16 39.50120.98 122.21Note: (i) Provision for leave encashment and gratuity benefit which is based on actuarial valuation done on an overall Company basis isexcluded from above.(ii) Excludes non compete fees of Rs.154.20 lakhs paid to ex-Managing DirectorIn respect of the period April 2005 to March 2006:• In the absence of records, the quantum of excess remuneration paid, if any, as compared to the 1969 ManagerialRemuneration Guidelines in respect of a sum of Rs. 3.33 lakhs paid to an ex-managing director of erstwhile Clariant (India)Limited for the years 1981 and 1982, has not been ascertained.• Excludes remuneration of Rs.125.09 lakhs paid to ex-managing director and Rs.6.50 lakhs payable to non wholetime directorsof erstwhile Clariant (India) Limited.• Excludes sitting fees of Rs.1.64 lakhs & Rs.1.62 lakhs paid to the non wholetime directors of erstwhile Clariant (India) Limitedand erstwhile Vanavil Dyes and Chemicals Limited respectively.• Excludes Rs. 62.20 lakhs paid to ex-managing director of erstwhile Clariant (India) Limited as consultant of the Company for aperiod from 20th March, 2006 to 31st March, 2006.14. (a) Miscellaneous Income includes Rs. 220 lakhs (Rs. NIL) towards Remnant Cost received from Dystar India Ltd. on termination of TollManufacturing agreement w.e.f. 1st April, 2006.(b) In respect of previous year Contribution to Provident fund, Superannuation scheme, Gratuity fund, etc. under ‘Personnel Cost’(Schedule-15) includes contribution of Rs.330 lakhs on account of the higher actuarial liability of gratuity as on 31st July, 2005 determinedby the Company’s actuary appointed during the year as against the acturial liability of gratuity determined by the Company’s previousactuary as on 31st March, 2005.(c) Other Expenditure (Schedule-17) includes Integration expenses as follows , incurred by the Company on amalgamation of erstwhile Clariant(India) Limited, Vanavil Dyes and Chemicals Limited, BTP India Private Limited and Kundalika Investments Limited with the Company, pursuantto the Scheme of Amalgamation.April 06 toApril 05 toDecember 06 March 06Rs. lakhsRs. lakhsLegal and Professional Fees — 63.35Rates and taxes — 754.10Others — 108.40— 925.8515. The company has not amortised the Goodwill arising out of the acquisition of subsidiary company as against the previous year’s policy of amortisingit over a period of five years. As a result, the profit before tax for the period is higher and Depreciation/Amortisation charge for the period is lower,each by Rs. 33.97 lakhs (Rs. NIL).71


Clariant Chemicals (India) Limited16. Hitherto depreciation in respect of buildings, furniture, fixtures and office appliances and vehicles existing as on 31st March, 1995 has beencalculated on written down value method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 except for certainitems of furniture, fixtures and vehicles on which a depreciation rate of 20% on straight line method is applied. During the period, the Company haschanged the method of calculating depreciation from written down value method to straight line method which has resulted in reversal ofdepreciation of Rs. 399.70 lakhs (Rs. NIL). As a result of the change in the method of depreciation, the depreciation charge for the period is lowerand profit before tax for the period is higher, each by Rs.399.70 lakhs (Rs. NIL).17. From 1st April, 2006 the Company has changed the rate of depreciation as follows:DepreciationRateFromUpto1st April, 2006 31st March, 2006Plant and Machinery (Continous Process Plant) 6.67% 5.28%Vehicles 20.00% 9.50%As a result of the change in the rate of depreciation, the depreciation charge for the period is higher and the profit before tax is lower, each byRs. 333.43 lakhs (Rs. NIL).18. During the period the Company has changed it’s policy in respect of accounting for voluntary retirement expenses by amortising the expenses overa period of three years as against the earlier policy of charging it in the year when incurred. As a result ‘Personnel Cost’ for the period is lower andprofit before tax for the period is higher, each by Rs. 177.25 lakhs (Rs. NIL).19. Figures for the Previous year have been regrouped wherever necessary to conform to the current period’s classification.20. The figures in brackets are those in respect of the previous accounting year.72


Financial and Operational Analysis1. Shareholders FundsShareholders Funds also known as Networthrepresents Shareholders ownership in the Company. Itcomprises of money directly invested by shareholdersi.e. Share capital and all earnings reinvested back in tothe Company i.e. Reserves and surplus. Networth of anybusiness enterprise signifies its financial soundnessand solvent position of a going concern. The annualisedreturn on Networth as at 31st December 2006 is 14%indicating what the Company has been able to earn onthe equity entrusted to it.1.1 Share CapitalThe Company has only one class of shares viz. Equityshares of Rs. 10/- each. While the Authorised Capital ofthe Company remained unchanged at 300 lakhs equityshares, the Issued and paid up capital increasedpursuant to 1,50,10,745 equity shares issued to theshareholders of the transferor companies in terms ofthe scheme of amalgamation. Promoters shareholdingremained unchanged at 63.40%.is generally met from the internal accruals andshort-term borrowings from banks. In view of thenegligible borrowings, the debt equity ratio as on31st December, 2006 is 0.02. Considering the cash andbank balances available, as on the date the Company isvirtually debt free.2.1 Secured LoansSecured loans consist of short-term borrowings fromconsortium of banks for working capital requirements.These borrowings are secured by way of lien/hypothecation of inventories, book debts and othermonies receivable and by endorsement of certainexport documents. The balance outstanding as on31st December, 2006 amounting to Rs. 142 lakhs mainlycomprise of export credits availed by Company atconcessional rate of interest.2.2 Unsecured loansUnsecured loans consist of Rs. 479 lakhs interest freesales tax deferral scheme granted by Government ofTamil Nadu. During the period Rs. 42 lakhs was repaid.The ratio of Shareholders' Fund to the borrowed Fundsas at 31st December, 2006 is 98:2.1.2 Reserves and SurplusThe Company’s Reserves and surplus comprises ofBalance in Reserves and Profit and Loss Account builtout of retained earnings. The reserves consists ofCapital reserve, Securities premium reserve, Generalreserve and reserves created as per statutoryrequirements. The Ratio of Paid up share capital andReserves and surplus as at 31st December, 2006 standsat 9:91.3. Fixed AssetsFixed assets consist of assets created by Company overa period of time. The assets of Company have neverbeen revalued in the past and therefore, the gross blockconsists of original cost of the assets acquired. Duringthe period the Company has added Rs. 1980 lakhs to itsgross block of assets, 85% being in plant, machineryand equipment. Assets with a written down value ofRs. 226 lakhs was deleted during the period beingobsolete and unusable.4. InvestmentsWith a view to earn a reasonable return on fundssurplus to its operational needs, the Company investsits temporary surplus funds in units of debt-orientedplans of mutual funds. Easy liquidity and safety of fundsare the prime consideration in selection of the fundsand plans. During the period, the Company has investedand withdrawn Rs. 13122 lakhs of its short-term surplusfunds.Closing investments as at 31st December, 2006comprises of Rs. 3825 lakhs invested in Governmentnotified bonds to save Capital gain tax, Rs. 325 lakhs inCompany's wholly owned subsidiary viz. ChemtreatComposites India Private Limited and Rs. 500 lakhs inliquid plan of Mutual Fund.2. Loan FundsCompany has no long-term borrowings from financialinstitutions or banks. The working capital requirement5. Current Assets, Loans and AdvancesCurrent assets are those liquid assets, which are eitherheld in cash or can be converted into cash in a short73


Clariant Chemicals (India) Limited74period. Among the important items included in Currentassets besides Cash and Bank balances are:i. Inventories viz. raw/packing materials, work-inprogress,stores, and finished goods. The inventoryas on 31st December, 2006 represents 50 days ofaverage net sales as against 53 days as of theprevious year end.ii. Receivables net of provision for doubtful debt viz.money owned to the Company primarily bycustomers. The period end receivables indicatesaverage credit period of 54 days as against 61 daysin the previous year.iii. Loans & advances (mainly-tax paid in excess ofprovisions, contractual deposits, prepaid expensesand advances/loans to employees and thirdparties).During the period there is a decrease of 3% in totalcurrent assets excluding Cash & Bank balances ascompared to the previous year.6. Current LiabilitiesCurrent liabilities generally represent money theCompany owes to suppliers/vendors and others innormal course of business. Sundry creditors includeamounts payable to vendors for supply of goods,liabilities for excise, sales tax and other expenses.Deposits include security deposits from distributorsand deposits from others for lease of buildingsand infrastructures. Unclaimed dividends representdividend paid, but not encashed by shareholders, andare represented by a bank balance of equivalentamount.7. ProvisionsProvisions as at the period end consist of leaveencashment, gratuity and ex-gratia gratuity, proposeddividend and corporate tax thereon. Liability for leaveencashment, gratuity and ex-gratia gratuity is valued onactuarial basis. Proposed dividend represents thedividend recommended by the Board of Directorssubject to approval of shareholders and will be paidafter the Annual General Meeting. Corporate tax on thedividend declared is worked out at effective tax rate of14.025% on the proposed dividend. Dividends receivedby the shareholders will be exempt from tax.8. SalesSales comprise of products sold by the Company indomestic and export markets that are eithermanufactured locally or purchased from variousindigenous and up-country sources. Sales arerecorded at net of trade discounts and inclusive ofexcise duty wherever applicable. The ratio of domesticsales to export sales during the year is 76:24. The exportsales are mainly to the affiliates of the Clariant groupworld over. The Company deals in 3 major segments viz.Intermediates and Colours, Dyes and SpecialtyChemicals, and Masterbatches contributing 37%, 60%and 3% of Company's sales respectively.9. Operating ProfitsThe operating profits are income before depreciation,interest and taxes (EBDIT) and EBDIT is a standardvalue used to analyse the ability of a Company togenerate cash from operations. The highly challengingand competitive market environment continued itspressures on the margin and the Company's operatingprofit for the period is Rs. 6605 lakhs at 9.61% of thesales.10. DepreciationDepreciation on fixed assets is calculated on straightline method, at the rates and in the manner specifiedunder schedule XIV of the Companies Act, 1956 with afew exceptions as stated in significant accountingpolicies. Freehold land is not amortised or depreciatedwhile leasehold land is amortised over the period oflease. The depreciation as a percentage of gross blockat the period end is 4% as compared to 6% for theprevious year.11. Interest (net)Interest income comprises of interest recovered fromdebtors on delayed payments, interest on investments,interest on bank deposits, income tax refunds and loansto employees etc. Interest is paid on fixed term loan,short-term bank borrowings and on security depositsreceived from distributors. As the interest receipts arehigher than interest payments there is net surplus ofRs. 7 lakhs.


Financial andOperational Analysis12. Distribution of Revenue:15. Earning per Share (EPS):This is, perhaps, the fundamental investor ratiowherein, we work out the amount of profits earned perequity share issued. A steady growth in EPS year afteryear indicates a good track record of the Company’sprofitability. The EPS for nine months is 12.33 whenannualised is 16.44 i.e. an increase of 8.5% over theprevious years annualised EPS of 15.15.13. Profits before Taxation:Profit before provision for Income tax generallyreferred to as PBT reflects the profit earned by theCompany from operations and services beforeprovision for Income tax. The PBT for the period ofnine months in absolute terms is at Rs. 5077 lakhs and7.39% of sales, marginally lower as compared to 7.57%in the previous year.14. Profits after Taxation:Profit after tax commonly known as PAT is net earningafter considering the provision for tax liability viz.Current tax, deferred tax and fringe benefit tax. It is theProfit available for distribution of dividend toshareholders and ploughing back in business for futuregrowth. Due to lower incidence of taxation, the PAT asa percentage to sales for the nine months period isslightly higher at 4.78% as against 4.72% in the previousyear.16. Dividend per Share (DPS):Whereas EPS shows what shareholders earned by wayof profit for a period, DPS shows how much of the profitwas actually distributed to the shareholders by theCompany as dividend. In view of consistency inperformance, the Board of Directors at their meetingheld on 22nd February, 2007 has proposed a dividend ofRs. 18 (180%) per share including the ‘Golden Jubilee’special dividend of Rs. 10 (100%) per share on facevalue of Rs. 10/- each. The total incidence of dividendand tax thereon for the current period is Rs. 5472 lakhsas compared to Rs. 3344 lakhs for the previous financialyear, a quantum jump of 64%. The total payout onaccount of dividend including tax thereon is 76% ofProfit available for appropriation as against 41% in theprevious year.Note:The figures for 2006 are for the period April 2006 to December 2006.75

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