INDIAN RAYON AND INDUSTRIES LIMITED - Aditya Birla Nuvo, Ltd

Forays Into New Business Segments and Acquisitions in the existing businessDuring the year, your Company ventured into the Life Insurance business teaming up with Sunlife of Canada as strategic partner,having a 69% stake. Your Company has invested Rs.83 crores towards it.Insurance Regulatory Development Authority (IRDA) has granted licence to Birla Sunlife Insurance Co. Ltd in February 2001. Thelife insurance business has started towards end of March 2001.To make its mark on the world map, your Company through its wholly owned subsidiary at Mauritius, acquired the global rightsfor Louis Philippe, Allen Solly and Peter England at a cost of US $ 2.26 Million.FINANCEEmanating from healthy cash flows, no fresh borrowings have been made by your company during the year, barring a concessionalloan of Rs.12 crores for the desalination plant at Rayon Division, Veraval. In the Insurance business the investment of Rs.83 crores wasalso met from internal accruals. This was accomplished without affecting the existing Capex and growth plans. Most of the short termborrowings have been repaid during the year. Your Company now enjoys a healthy Debt Equity Ratio of 0.28 : 1.FINANCIAL RESTRUCTURINGIn the interest of the shareholders, your Directors considered a proposal to buyback shares as a way to return the surplus cash.Your Company expects to generate cash in excess of its requirements. There are limited growth opportunities available to meet thecompany’s hurdle rate of return on investment, given the extremely difficult market environment. Your Directors therefore felt that ashare buyback would be the most tax-efficient way to return surplus cash to you. This would provide an exit route from the stock tothose of the shareholders who wish to exit, without substantially impacting either the price at which the shareholders exit, or adverselyaffecting the interest of ongoing shareholders.Consequently your Directors have decided to seek your approval in an ensuing Annual General Meeting, so that the company canbuyback up to 15% of the equity shares at a price not exceeding Rs. 95/- per Share. The details of the buyback programme will befinalised after seeking your approval and considering the then prevailing market conditions.HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONSYour Company firmly believes that intellectual capital and people power will see organisations through successfully in today’shighly competitive global environment. Therefore employees of the Organisation will be a source of competitive advantage.To make this happen, your Company has put in place a forward-looking human resource policy that factors people, their skill setsand the business needs of the organisation in a holistic manner.Building, developing and upgrading employee competences is an ongoing endeavour. At Gyanodaya, the Aditya Birla Institute ofManagement Learning, your Company’s managers and executives undergo structured training aimed at further enhancing their skillsand equipping them to become globally competitive.As part of a proactive strategy, one that envisages a continual process of renewal, your Company has been inducting fresh talentand new skills at different management levels, attuned to the needs of the businesses.Alongside your management is ensuring more of delegation, empowerment and decentralisation in a meaningful manner, tofoster the sense of ownership among its people.To gauge employee perception of these processes and their implementation, your Company enlisted its participation in an OrganisationHealth Survey conducted by a reputed external agency on behalf of the Aditya Birla Group. The Group’s Corporate HRD facilitated theprocess. Based on the survey feedback, your management put together new and enhanced people-centric work measures.At the end of the day, people relations continue to be harmonious at all of your Company’s plants.33